'File 8/15 Arab Series - 1933-1939' [‎33v] (66/434)

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manner. This reduces the total of their purchasing power and with it that of
the shopkeepers and other classes of Hejazi who live by them.
4. The decline in customs receipts cannot be measured, for no statistics are
available, but must be considerable. The decreased number of pilgrims, the
uncertainty of future numbers, the decline in the purchasing power of the
people, the excessive increase of customs dues last May (see Jedda despatch
No. 154) and the heavy stocks still held by local merchants as a legacy from the
last eighteen months, have all contributed to the reduction of imports. Figures
contributed privately by the Director of Customs are remarkable ; during the
first eight months of the current Arabic year (April to November 1933) the
number of packages imported through Jedda was 9,847, as compared with 48,735
during a similar period last year. *
5. Customs receipts are in any case heavily mortgaged by the system of
drafts which the Saudi Government have adopted to an increasing extent in the
last two years as a means of satisfying creditors without paying them. Fuad
Bey Hamza told me on the _lst December that no such drafts had been issued
since the beginning of the current Arabic year. My information suggests that
this statement is not entirely accurate, and that certain favoured creditors,
notably the importing firm mentioned in paragraph 2, have, in effect, received
such drafts ; and that, moreover, these new drafts are “ 100 per cent.” ones,
i.e., allowing the importer to admit goods free of all duty until the amount of
the draft is paid off, instead of the “ 25 per cent.” once formerly issued which
merely entitle him to write-off one-quarter of the amount of duty on each
consignment while paying the remaining three-quarters in cash. In any case,
the total of the drafts issued previous to this Arabic yegr and still unredeemed
must be very large. The Soviets are stated to hold such drafts in respect of
their 1931, importation of kerosene and benzine, but to be holding them, until
such time as they can import with less certainty of loss.
6. All Government revenue is collected—one might say snatched—at the
earliest moment and remitted to Riyadh. Forced loans on merchants, which
were such a feature of the autumn of 1931, have not been in evidence, principally
because of the lack of merchants rich enough to afford them, though this method
was recently resorted to to pay Mr. Philby for a consignment of tyres. A
tendency to impose new taxes, for example, on motor launches and on water-
carts, is, however, noticeable.
7. Meantime other Government expenditure is cut down to the barest
minimum. Official salaries are even more in arrear than usual ; for many months
employees were being paid on the principle “ one-third cash, one-third kind,
one-third carried forward,” but even this now been modified 1 to “ all carried.”
Bribing is consequently even easier, cheaper and more prevalent than before.
Money is refused for all kinds of necessary and even profitable expenditure ; the
condenser engineer laments the lack of essential spares, and the piping necessary
to supply Jedda with good water is not forthcoming. Even contingency
allowances for Government offices have of late been held up. Redemption of
debt, in such an atmosphere, seems the height of improbability.
8. The currency position reflects the general situation : the Saudi rial,
which a year ago stood at 184 to the £ gold and two years ago at 174, is now
fluctuating round 26. The value of its silver content is understood to be about
30 and, while at the moment it is showing a slight tendency to rise, as it does
each year before the pilgrimage on account of the demand for it created by the
arrival of pilgrims, the general opinion is that, after the pilgrimage, it will
depreciate to nearly 30.
9. Despite the catalogue of depression in the preceding paragraphs, there
is some reason to believe that the regime is in reality far from bankrupt and
that its protestations of poverty are the result of Semitic cupidity and dislike
of disbursement, far more than of actual lack of money. The Minister of
Finance has been noticed to be far less worried than he might be expected to be
and the Roval Familv still seem able to afford luxurv cars. The money, however,
it is agreed, is not, in the Heiaz, but where it has been remitted so steadily and
so long by the faithful Minister of Finance—Riyadh.
10. T am sending a copv of this despatch to the Principal Secretary of State
for Foreign Affairs, Department of Overseas Trade.
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