File 1283/1913 Pt 5 'MESOPOTAMIA TRADE Issue of new Trade Report' [‎104v] (204/270)

( 2 ) The Imperial Bank of Persia.
(3) The Imperial Ottoman Bank.
All these banks have offices in London and the Eastern Bank has branches
in Bombay and other Indian towns. Branches of the Eastern Bank are in
existence at Amara and Baghdad. The Imperial Ottoman Bank have a branch
at Baghdad and Messrs. Lynch represent the Bank of Persia at Amara. The
^Alliance Bank of Simla, which is a concern of growing importance in India,
have it under contemplation to establish branches in Mesopotamia, and they
propose to despatch a representative to Basrah in the coming cold weather to
examine the situation. The question of Banking in South Persia and the Gulf
Ports is discussed separately later.
63. Finally, agriculture will require careful financial nursing. It has
hitherto been an established practice for the cultivator to borrow money on the
security of a crop before it has matured, giving a campiala in consideration
for the loan, which bears interest at relatively high rates. The present
exchange banks or any others that open branches in Mesopotamia may pro
bably not consider that the financing of agriculture is within their scope and it
would seem desirable that Government should at an early date inaugurate a
co-operative banking system on the lines of the movement which in India has
made such rapid progress and attained such a sound position. It is understood
that the agricultural bank system in Egypt has not been an entire success, but
before any decision is arrived at, it would seem desirable that the features both
of the social structure and of the administration >n Mesopotamia should be
carefully compared with those obtaining in India and Egypt. It is essential
that some system 0 f agricultural credit should be created.
61. Before the war the currency at Basrah was a very complicated matter,
but for present purposes it is sufficient to say that the Turkish gold lira was
the standard for trade payments and the silver mejidi for the payment of
Government dues and for date purchases. The deficiency in local silver coinage
was made up by foreign coinage, chiefly Persian, which was tolerated since it
was indispensable to business, in spite of the fact that the free circulation of
foreign coin was restricted by regulations. Indian silver was also current
though occasionally impounded under the regulations. Certain fictitious coins
were also used as units of computation in particular classes of transactions with
a view to lessen the inconvenience caused by othe fluctuations of the actual
coins.
After the British occupation, the exchange value of the lira was provision
ally fixed at Rs. 13-8 and it was decided to accept for the time all Turkish
coins offered in payment of revenue. All liras received were kept in deposit,
as there were obvious objections against permitting them to circulate. The
accumulation of Turkish coins in the Treasury was, however, less than was
expected and Indian currency was established in the country without any
difficulty.
65. The circulation of Indian coin and notes is now on much the same
footing in Mesopotamia as in India. Quantities of Indian notes have been
absorbed. The rate of exchange is maintained at a regular level and merchants
are thereby enabled to work on a narrower margin of profit. The level is
maintained by the grant to merchants of supply bills or telegraphic transfers on
Bombay or Calcutta at par, both from Basrah and from the larger towns in
Mesopotamia where treasuries have been established. New notes are put
v into circulation as frequently as possible and every effort is made to meet
promptly a demand for notes or cash wherever it arises. Merchants are
in the habit of sending their remittances to Bombay or Amara or vice verm
by means of notes and the popularity of the notes is illustrated by the
fact that at one time they were at 1 per cent, premium at Amara. Every
effort is made to provide sufficient quantities of small change by issuing
packets of mixed change as part of rupee payments made by the Eastern
Bank.
The kran continued for a time to be current in Basrah and was accepted
as equivalent to a four anna piece. During the period when the kran was