The Pitiless Pashas

Fashionable hostesses in Cairo and Alexandria always knew better than to invite Mohammed Farghaly Pasha and Aly Yehia Pasha to the same party. Bitter personal enemies, they were also business rivals and the biggest cotton exporters in Alexandria. But last February, Farghaly and Yehia evidently struck a business truce. They began buying Ashmouni (medium-staple) cotton futures (Egypt's biggest cotton crop) on the Alexandria exchange until they had invested more than $63 million in 140 million pounds of cotton.

A fortnight ago, the cotton pit in the antiquated bourse on Alexandria's Mohammed Aly Square exploded with the news that the two pashas owned or controlled every bale of Ashmouni cotton in Egypt. Ashmouni rocketed to $80.36 a hundredweight, nearly double its price five months ago. When frantic speculators who had sold Ashmouni short tried to make delivery with other grades of cotton, the pashas appealed to the Egyptian cabinet. On their plea that "foreigners" were trying to cheat them, the cabinet passed a retroactive law banning delivery of substitute grades.

That clinched the corner for Farghaly and Yehia, and the bourse closed for 24 hours last week to forestall a panic. (In New York, cotton traders said the corner would have little effect on U.S. markets.) At week's end, the pashas' paper profits were estimated at $28 million. But some Egyptian traders thought that Farghaly and Yehia might have overreached themselves. They might find it impossible to unload their enormous holdings without breaking the market and collapsing prices.

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