The 1861 British loan to Morocco was made so that Morocco could meet the war indemnity demands of Spain after the Hispano-Moroccan War.[1]: 25
The 1860 Treaty of Wad Ras brought the war to an end. By terms of the treaty, Morocco was to pay Spain a war indemnity of 20 million duro (equivalent to $4 million 1861 US dollars)—far greater the balance of the Makhzen's treasury.[1]: 25 To help pay the indemnity, Morocco took a loan from private investors in Britain. The loan, issued by Sirs Robinson, Fleming and Philippe P. Blyth, amounted to £501,200, of which the Sultan actually received £426,000.[2] The British loan was to be repaid from half of the tariff revenue collected at Moroccan ports, to be overseen by European agents.[1]: 25 [2] The other half of the tariff revenue at Moroccan ports went toward the amount owed directly to Spain.[2] The 5% interest rate was to be paid in London to the London and County Bank.[2] The amortization of the loan was biannual.[2]
Britain had interests in Morocco, as apparent in the Anglo-Moroccan Treaty of 1856 and the activity of John Hay Drummond Hay.[2]
The annual repayment of the loan represented 12% of Morocco's customs revenues, and it was repaid regularly up until 1882, when the loan was repaid in full.[2] At this time, the British civil servants appointed by the British government to watch over the customs collection in Moroccan ports left the country.[2]