Coll 6/10 'Hejaz-Nejd Affairs: Financial Situation and Internal Situation' [‎306r] (618/1310)

THIS DOCUMENT IS THE PROPERTXOF HIS BBX1AJJNIC
EASTERN (Arabia).
CONFIDENTIAL.
5575
MAJESTY’S GOYERNMENT
August 18. 1932.
Section 2 .
3^o)-
[E 4169/165/25]
No. 1.
(No 21)8 Slr A ' R y an t0 Sir John Simon.—{Received August 18.)
Sir
’ wtttt t . ivr rr J edda, July \% V$&1.
WITH reference to Mr. Hope Gill s despatch No. 140 of the 20th March
and previous correspondence relative to the financial situation of this country I
“n™ he i n° n0Ur > t0 ^ fo i >wa ^ a translation of a regulation published in the
Umm-al-Qui a of the 17th June, regarding the mode of settlement of
o. J r’T^u deh . f \ The W 0 f dl p n s of the regulation is in some respects obscure,
ana 1 snould not like to vouch for the complete accuracy of the translation. The
piinciple appears to be that all debts (meaning, presumably, debts dating from
betore the current financial year, although this is not stated) will, except as
provided in articles 1, 2, 5 and 6, be paid by drafts on customs, where such drafts
have not already been issued in respect of them, and that such drafts will be
accepted in payment of 25 per cent, of the duty on newly-imported goods.
Claimants who are not themselves importing merchants are*to nominate such
merchants in whose name the drafts will be issued. I understand that, as might
be expected, the market for drafts on customs is very poor, but it is too soon & to
judge of the practical effect of the regulation.
„ . 2 \ I re P ort ed elsewhere on a representation made to me by the Acting
Heiazi Minister for Foreign Affairs regarding the discouraging advice alleged
vjru- een & iven b y Majesty's Government to the business friends of a
M. Ydhbi, who is interested in enterprise in this country. I suggested, in this
connexion, to 8>heikh \ ussuf \asin that the Hejazi Government were themselves
destroying any credit they might have. This led the sheikh to give me on the
26th June his general views about the financial situation. He spoke of the
poverty of the Hejaz and the conditions in other countries, referring, inter alia, to
the loss imposed on so many people by Great Britain’s abandonment of the gold
standard.
3. I explained to Sheikh Yussuf at some length that what I complained of
was not the effects of the poverty of the Hejaz, which might well necessitate
special arrangements with creditors, but the financial methods employed, which
were such that no creditor knew where he stood. I had not, I said, pressed him
on the subject of claims in which His Majesty’s Government were interested,
because we had been absorbed in the Transjordan Used in three contexts: the geographical region to the east of the River Jordan (literally ‘across the River Jordan’); a British protectorate (1921-46); an independent political entity (1946-49) now known as Jordan frontier, but I ran him through
the list in order to illustrate my thesis. It had been announced last autumn that
one-fourth of the whole revenue would be assigned to the payment of old debts,
and I had in January given Sheikh Fuad Hamza my views as to how the
Government might be expected to deal with the floating debt problem. The
arrangement of last autumn seemed to have been lost sight of, and there was now
a new regulation which I did not quite understand, but which seemed to produce
certain definite effects.
4. I told Sheikh Yussuf that article 1 of the new regulation seemed to me
to be a grand arrangement for creditors who had special arrangements. I
expected to hear at any moment that Egyptian Shell had been paid the amounts
due for the benzine which the Government had acquired in peculiar circumstances
last September, and in respect of which the Director-General of Finance had made
and then dishonoured a special agreement. 1 was interested, however, in other
claims, about which no special arrangements had been made. I gave, as one
example, the small sum due to His Majesty’s Government for the Hejazi share
in the expenditure on the MacDonnell investigation. Was it really intended, I
asked, that I should take out drafts on customs and get a local importing merchant
to discount them for me ? The sheikh replied in a rather shocked tone that the
regulation did not apply to the case in point. I referred also to a subject on
which I had spoken to him on the 12th June, but with which I have not felt it
necessary to trouble you, namely, the action (successful in some cases) of the
[542 s—2]