'File 61/11 V (D 95) Hejaz - Nejd, Miscellaneous' [‎243r] (502/530)

THIS DOCUMENT IS THE PROPERTY OF HIS BRITANNIC MAJESTY'S GOVERNMENT
CONFIDENTIAL.
[E 7969/234/25]
EASTERN (A rabia).
December 28, 1933.
S ection 1.
Mr. Calvert to Sir John Simon.—{Received December 28.)
(No. 351.)
Sir,
Jedda, December 5, 1933.
IN my telegram No. 197 of the 15th November I had the honour to indicate
certain aspects of the local financial situation which might have a bearing on
the Saudi attitude towards repayment of their debts. I submit herewith a
somewhat fuller review of the situation.
2. All indications are that the j Saudi Government are making the most
determined efforts to reduce expenditure to a minimum and to lose no chance
of augmenting their income, in order to leave themselves the widest possible
margin for the heavy expenditure entailed by the military preparations now
being undertaken. The latter are, of course, on a scale unparalleled in the
history of this country, for tribal contingents from every quarter of Arabia have
now been sent south, together with all available munitions, including even such
items as a battery of field-guns from Medina brought in by the* Turks before
the Great War. The tribesmen receive little or no actual pay, but need equip
ment, food and transport; a recent Mecca estimate put the present expenditure
under this head at £5,000 a day. The figure is doubtless exaggerated and will
be reduced in any case once the army has been transported to the required area,
but even a tenth of this figure would be a sufficient drain on the Saudi income.
To minimise it, the Government have recently taken to themselves importing
such necessaries as paraffin, rice and sugar through certain old and trusted local
firms such as Haji Zeinal Ali Ridha, with whom the Minister of Finance has
been in relations since his Bombay days. This practice has hit other merchants
hard.
3. The revenue has diminished almost to vanishing pcu£it. As you are
aware, the bulk of it is derived from two sources, pilgrim s and customs receipts.
( ( The pilgrimage of 1933, 20,000, was the worst since the inauguration of the
Saumregiine, and the prospects for 1934 tend to suggest that little, if any,
improvement can be looked for. At present three pilgrim ships have arrived
from the Straits and Java, bearing exiguous cargoes of pilgrims, and bookings
are reported poor. The decline in the average value of pilgrims is moreover
noticeable. Better-class and rich pilgrims are becoming rarer, and the tendency
seems to be more and more for the pilgrimage to be confined to peasants, who
bring with them the minimum sum necessary to do the pilgrimage in the cheapest
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.
(V; 4. The decline in customs re ceipts cannot be measured, for no statistics are
available,Tut 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 1st 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
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