Treat this as algebra.
let m be the original number of sacks the mule is carrying.
let d be the original number for the donkey
Quote: "if you gave me one sack, i would have twice as many as you; "
so
d+1 = 2(m-1)
multiplied out:
d+1 = 2m - 2
Quote: "if i gave you one of my sacks, then we would have equal loads.""
so
d-1 = m+1
Now we have simulataneous equations.
Lets rearrange the second, to
d = m+2
Now substitute this into the first equation for d:
(m+2)+1 = 2m - 2
Neaten it up
m+3 = 2m-2
m+5 = 2m
m = 5
Now we can use this to work out d:
d = m+2
d = 5+2
d = 7
So the donkey had 7 sacks, the mule 5.
QED
EDIT: Sid kinda beat me to it...