Coll 6/19 'Arabia: (Saudi Arabia) Hejaz-Nejd Annual Report.' [‎165v] (331/540)

28
116. Lesser developments in the administrative sphere were, the announce
ment in June of the creation of councils to assist Governors, the adoption,
officially announced to the foreign missions, of a Royal Great Seal, and an
important redistribution of provincial governorates which illustrated the King’s
tendency to install wherever possible Nejdis enjoying his confidence. The
Ministry for Foreign Affairs was strengthened somewhat in personnel, if not in
organisation, and during the early part of the year Fuad Bey Hamza was a more
regular visitor to Jedda than he had been. Various changes in the Departments
of State are not worth mentioning in detail, but they afforded some indication of
a desire for better organisation.
117. The Keeper of the Key of the Kaaba died on the 4th January, and was
succeeded by another senior member of the Shaibis, a family of Quraysh descent,
in which the post has been hereditary since before the time of the Prophet.
Ibn Saud equipped himself in June with a Poet Laureate in the person of the
Secretary of the Legislative Council.
IV.— Financial, Economic and Commercial Affairs.
Finance.
118. The financial situation of the Saudi Government in 1933 was as hope
less as in 1932. If there was a difference between the two years, it was mainly
that there was even less method in 1933 in the madness of a Government, who
have destroyed their credit in reasonable financial markets, not so much by
inability to pay their debts as by the irresponsibility they show in regard to
them. The farce of publishing a budget, as had been done towards the end of
1931, was not repeated. The moratorium described in paragraph 118 of the
report for 1932 was allowed to run out without payment, or at least any all-round
payment, of the interest promised for the year of its duration. When the year
expired on the 17th November, no announcement was made of the intentions of the
Government. The system of settling debts by drafts presentable at the Customs
in part payment of new duty was neither maintained nor abandoned. On the
1st December Fuad Bey Hamza told His Majesty’s Charge d’Affaires that it had
been discontinued in April, but there was reason to believe that it was still
resorted to for urgent payments. Official salaries again fell heavily into arrear.
Mention is made elsewhere (paragraph 83) of the disappearance from the scene
of the Dutch financial adviser, who had been engaged in 1932.
119. There were two excuses for this fecklessness. Early in the year the
Government had real hopes of relief by means of the schemes which will presently
be described. As these hopes faded in every direction but one, a little later on, the
Saudi-Yemen crisis grew into a formidable threat of war, and its growth
dislocated all internal arrangements. It became necessary to cut down all
ordinary expenditure by fair means or foul, and both were used.
120. The principal scheme from which relief was expected in the early part
of the year was mainly a financial one, although it may have had an economic
side. In the first days of March Abdul Hamid Bey Shed id, representing the
ex-Khedive of Egypt and purporting to have full powers, completed negotiations
with the Government for the creation of a national bank with a capital of
£1 million gold. Half this capital was to be subscribed by the ex-Khedive’s
group. The Saudi Government were to have the option of subscribing £250,000,
and it was understood that, in the almost certain event of their not exercising it,
the promoters had another source in view. The remaining £250,000 was to be
offered for subscription in the Hejaz. The bank was to perform the functions
of a State bank and to receive all revenue on deposit. It was to have the privilege
of issuing notes, but their use was apparently not to be compulsory at the outset.
Its first operation was to be to lend £200,000 gold to the Government. Mr. Philby
was promised the post of conseiller to the bank, and one of his hopes was that it
might take over the business of Sharqieh (Limited), after it had provided funds
for the payment of the large amounts due by the Government to that firm and
those for whom it had acted as agent.
121. No one has ever discovered what commercial inducement the promotors
had to engage in a scheme so unsound on the face of it. They were possibly
promised industrial concessions, but the Saudi Government were already in treaty