Although the first steps were thus taken, incredible difficulties prevented de Lesseps from pushing forward with his work.  Towards the close of 1862 the actual results were only a narrow “rigole” cut from the Mediterranean to Lake Tinseh, and the extension of the freshwater canal from Rasel-Wady to the same point.  The principal work done in 1863 was the continuation of the fresh-water canal to Suez.  At this point a fresh obstacle arose which threatened to stop the work altogether.  Among the articles of the concession of 1856 was one providing that four-fifths of the workmen on the canal should be Egyptians.  Said Pasha consented to furnish these workmen by conscription from different parts of Egypt, and the company agreed to pay them at a rate equal to about two-thirds less than was given for similar work in Europe, and one-third more than they received in their own country, and to provide them with food, dwellings, etc.  In principle this was the corvee, or forced labour.  The fellaheen were taken away from their homes and set to work at the canal, though there is no doubt that they were as well treated and better paid than at home.  The injustice and impolicy of this clause had always been insisted upon to the sultan by the English government, and when Ismail Pasha became viceroy, in the year 1863, he saw that the constant drain upon the working population required to keep twenty thousand fresh labourers monthly for the canal was a loss to the country for which nothing could compensate.  In the early part of 1864 he refused to continue to send the monthly contingent, and the work was almost stopped.

By the consent of all the parties, the subjects in dispute were submitted to the arbitrage of the French Emperor Napoleon III., who decided that the two concessions of 1854 and 1856, being in the nature of a contract and binding on both parties, the Egyptian government should pay an indemnity equal to the fellah labour and $6,000,000 for the resumption of the lands originally granted, two hundred metres only being retained on each side of the canal for the erection of workshops, the deposit of soil, etc., and $3,200,000 for the fresh-water canal, and the right of levying tolls on it.  The Egyptian government undertook to keep it in repair and navigable, and to allow the company free use of it for any purpose.  The sum total of these payments amounted to $16,800,000, and was to be paid in sixteen instalments from 1864 to 1879.

The company now proceeded to replace by machinery the manual labour, and, thanks to the energy and ingenuity of the principal contractors, Messrs. Borel and Lavalley, that which seemed first of all to threaten destruction to the enterprise now led to its ultimate success.  Without the machinery thus called into action, it is probable that the canal would never have been completed when it was.  The ingenuity displayed in the invention of this machinery, and its application to this vast undertaking, constituted one of the chief glories in the enterprise of M. de Lesseps.