مجموعة ٦ / ٨ (١) "سلسلة مطبوعة: ١٩٢٩ إلى ١٩٣٨". [ظ‎‎٢‎٣‎١] (١٠٦٢/٤٦٧)

win be remembered that early in .the year the Government concentrated its
rfforts onTn attempt to maintain the recognised elements in the loca currency
at the official rates viz., £ gold 1 ^silver nyals 10=mckel current piastres
220 and that this attempt broke down as regards the gold-silver parity,
although silver did not slump quite as badly as might have been expected.
In my despatch No. 286 of July 14th, I forwarded a communique defining
to some extent the monetary policy on the basis of maintaining the above
rates and fixing corresponding rates for other currencies in general use,
which were to be still tolerated, including the Maria Theresa dollar and the
runee These decisions produced no effect as against market conditions and
the division is now mainly of historical interest only. When the United
Kingdom went oil the gold standard, the curious position arose that the
Heiaz possessed an official gold currency in the shape of English sovereigns
side bv side with its own silver. The Hejazi Government were as incapable
as most people of understanding the implications of such a situation, much
less devising a policy to deal with it. On October 16th they announced a
prohibition of the export of gold, except by permission of the Government
(see Mr. Hope Gill’s despatch No. 404 of October 19th). It was subsequent-
ly announced that the authorities empowered to grant permits or the export
of gold were the customs authorities and that detailed uistructions, which I
have not seen, would be issued later. I understand that the principle was
to allow gold to leave the country only on a guarantee being given that an
equivalent quantity of goods would be imported within three months. Apart
from this prohibition, the currency situation was allowed to work itself out
under the influence of market conditions. For a time, it was possible in
certain transactions, for gold and sterling to be treated as equivalent, but
this could obviously be neither general nor lasting. Gold tended to become
scarce in the local 'market. Sterling and Egyptian notes came into increas
ing use. The respective values, as expressed in riyals, adapted themselves
more or less to European exchange conditions, gold at a high premium and
the various paper issues at rates determined by their relation to sterling
with slight local variations resulting presumably from demand, supply and
native ideas as to the confidence they might (inspire. At the time of writing
the approximate rates in the bazars here are as follows :—
£ gold - Riyals 17|
£ sterling = Riyals 12^
£ Egyptian = Riyals 13
19 rupees = £1 gold.
10. I can best complete this account of the currency situation by giving
a string of isolated facts, not all of which I can interpret, as follows
(a) As already stated gold has tended to disappear from the market.
This is in part attributed to hoarding. It ds possible that
some has been sent to Riadh, where the King is believed by
some to be accumulating a reserve of treasure. Gold has also
been taken off the market by the Dutch Bank, which for
several weeks past has been buying. This Bank normally
sends a shipment of gold to Europe after the pilgrimage. Its
present policy of buying may be due to a desire on the part
of the head office to hold part of their gold reserve in Jedda.
Fluid gold is required for various local purposes and the
depletion has been sufficiently marked to produce a recent
enquiry by a firm here for a quotation for gold sovereigns from
abroad delivered in Jedda.
(b) The Soviet Legation here has been selling sterling notes in
considerable quantities. The origin of the notes and the
object of the Legation are obscure. Fears have been expressed
lest the notes should not be all genuine, but I have not heard
it seriously suggested so far that any of the notes here have
been forged.