'File 38/3 I, P. C. L. Qatar Concession' [‎111r] (226/484)

CONFIDENTIAL
NOTE ON SILVER CURRENCY - QATAR - JANUARY 1945
(Enclosure to P.C.L. letter No. DO/CU.1/3878
dated the 8th January 1945 addressed to
Political Agent A mid-ranking political representative (equivalent to a Consul) from the diplomatic corps of the Government of India or one of its subordinate provincial governments, in charge of a Political Agency. , Bahrain.)
From the year 1937, when the Concession payments
were taken over, the Company acceded to the Ruler of
Qatar’s request to he paid in silver rupees Indian silver coin also widely used in the Persian Gulf. . It was
understood^that silver coins were necessary for payments
to the pearlers and subsidies to Bedouins. In addition,
Qatar was and is largely dependent upon the dhow A term adopted by British officials to refer to local sailing vessels in the western Indian Ocean. traffic
of her neighbours for the majority of foodstuffs and
commodities, and silver was in general the most acceptable
form of currency. Incidentally, for some years notes
were very difficult to obtain in Bahrain. A situation was
thus created in which silver was preferred for circulation
and notes even if required or acceptable were unobtainable
in sufficient quantities. This established a precedent
as regards the Company’s payments to Qatar.
With the outbreak of war silver was in great demand
and Government measures, it is understood, had to be
published to introduce and stabilise the general use of
notes in Bahrain and on the Trucial Coast A name used by Britain from the nineteenth century to 1971 to refer to the present-day United Arab Emirates. . Up to quite
recently 4% to 10% was charged on notes at Dubai and
Sharjah. The situation in Dubai and Sharjah at one time
resulted in Airways and Gray, Mackenzie & Co. themselves
demanding payment in silver. Qatar, in its somewhat
isolated position, that is, without regular steamer com
munications, has very naturally been among the last to
lose suspicion of notes. The precise position^at the^ t
moment in Qatar and the Trucial Coast A name used by Britain from the nineteenth century to 1971 to refer to the present-day United Arab Emirates. on the silver vis-a-
vis note Question is not known, but it would seem natural
to assume'that, if the Ruler is very insistent on silver,
this points to the fact that he still expects to lose on
notes or lose possible advantages from silvejj^
Copies of two letters No. DO/CU.1/3503 dated the £5th
July 1943 and DO.No. e/1021 dated the 28th July 1943, which
passed between the Company and the Agency An office of the East India Company and, later, of the British Raj, headed by an agent. on this subject,
are attached. fC~J
As far as the Company is concerned, the position is
that the Shaikh can be expected to refuse to accept a credit
to his account in the Eastern Bank Ltd., Bahrain, or pay
ments in notes. In 1943 he refused to acknowledge the
Company’s action in crediting his account, and returned
the Bank’s advice. As will probably be remembered, it was
eventually arranged for him to be paid in silver some
months after the payment was due. For 1944 the Company was
again permitted to obtain silver. It was assumed that
general currency conditions in Qatar accounted for the
grant of the permit. Minor recurring charges and salaries
are still paid by the company in silver.
It is not known if there is any legislation affecting
this currency problem in Qatar.
Naturally the Company would prefer to pay the Shaikh’s
dues as they arise by crediting his account in the Eastern
Bank Ltd. and other miscellaneous payments in notes, but
in order to preserve amicable relations, the Company is
prepared to continue payments in silver as long as silver
is procurable and the freight, insurance and other Bank
charges are v/ithin reason.