Coll 5/5 ‘Arabia: Hejaz Air Force; Recruitment of personnel by HMG; Instruction of Hejazi pilots’ [‎143r] (287/703)

I
*r
17
PROSPECTS IN
ARABIA
CHANGED POLICY IN
FINANCE
THE NEW RAILWAY
By H. St. John Philby
MECCA
Returning to Arabia towards the end of last
year, I fouhd'her in the depths of the slough of
economic despond. During the fasting month
of Ramdhan (January), always for obvious
reasons a period of physical and psychological
exhaustion, the sky was black with clouds. There
seemed to be no ground for any optimism.
The country was heavily in debt. Trade was
at a standstill. The very rains had failed. Hunger
stalked the land and beggars thronged the
streets. Even the officials were heavily in arrears
of pay ; even the Government was economizing
on essential services. The outlook seemed hope
less, while many of the activities of the State
were justly giving rise to the gravest apprehen
sion even in sympathetic quarters. Yet the
Government, though silent under a storm of
criticism, was by no means idle: and the
crescent of the new moon that announced the
end of the fast revealed a break in the clouds
that brought hope to hearts which had begun to
despair.
With the Great War Arabia passed at one
bound from the patriarchal stage into the
modern world, but economically she remained in
the Middle Ages. Dread of foreign exploitation
was a barrier to material progress, and, however
excusable this attitude may have been, it left in
simple fact that prosperity of the country at the
mercy of the foreigner. All the eggs were in
one basket. Everything depended on the annual
pilgrimage, and for the first three years of
Wahabi rule everything went well, and the
pilgrims from Java, India, Egypt, and other
countries poured into the Hejaz, bringing wealth
in their train. With the slump came the reckon
ing. The Government of Sa’udi Arabia had
A NGL O-FGYP TIAn h
SUDAW \
(9227») r-N PtSudan r
Neje
J Jauf
Gt N e fu d /
^^ HaiLo
N E J ;
- Riyadh
Medina VA 0
°JVIecca
v Miles.
0 100 ZOO 30 0
k.xiSi'
spent lavishly and had built up no reserve;
suddenly the position became really serious. One
of the leading citizens of Jeddah, with 50 years’
experience of the Hejaz, could declare that the
local cor
/
7
17
CHANGED POLICY IN
FINANCE
PROSPECTS IN
ARABIA
THE NEW RAILWAY
By H. St. John Philby
MECCA
Returning to Arabia towards the end of last
year, I found her in the depths of the slough of
economic despond. During the fasting month
of Ramdhan (January), always for obvious
reasons a period of physical and psychological
exhaustion, the sky was black with clouds. There
seemed to be no ground for any optimism.
The country was heavily in debt. Trade was
at a standstill. The very rains had failed. Hunger
stalked the land and beggars thronged the
streets. Even the officials were heavily in arrears
of pay; even the Government was economizing
on essential services. The outlook seemed hope
less, while many of the activities of the State
were justly giving rise to the gravest apprehen
sion even in sympathetic quarters. Yet the
Government, though silent under a storm of
criticism, was by no means idle: and the
crescent of the new moon that announced the
end of the fast revealed a break in the clouds
that brought hope to hearts which had begun to
despair.
With the Great War Arabia passed at one
bound from the patriarchal stage into the
modern world, but economically she remained in
the Middle Ages. Dread of foreign exploitation
was a barrier to material progress, and, however
excusable this attitude may have been, it left in
simple fact that prosperity of the country at the
mercy of the foreigner. All the eggs were in
one basket. Everything depended on the annual
pilgrimage, and for the first three years of
Wahabi rule everything went well, and the
pilgrims from Java, India, Egypt, and other
countries poured into the Hejaz, bringing wealth
in their train. With the slump came the reckon
ing. The Government of Sa'udi Arabia had
spent lavishly and had built up no reserve;
suddenly the position became really serious. One
of the leading citizens of Jeddah, with 50 years’
experience of the Hejaz, could declare that the
local conditions resulting from the general de
pression were worse than anything known during
the worst periods of Turkish or Sharifian rule.
To me they recalled the most distressing features
of life at Jeddah during the . siege of 1924-5,
when the tune was set by the piteous cries of
the beggars, imploring help in the name of the
Lord.
The economic troubles of Arabia had begun
during the pilgrimage ceremonies of 1931. From
an average of about 100,000 a year the nutpber
of pilgrims had dropped to the region of 40,000
in 1930. It was still smaller the following year.
The pilgrims were assembled as usual at Muna
for the holidays after the ’Arafat ceremony; the
vendors of foodstuffs and mementos had as
usual spread out their wares at every point of
vantage along the streets. Every third or fourth
stall concerned itself with money-changing,
chaffering the silver and nickel coins of the realm
against the gold and paper of foreign lands.
Under the laws of the country a silver Riyal
(the equivalent of a florin) is worth 22 nickel
pennies, but on this occasion the Shroffs (money
changers) had decided to do a little speculation
at the expense of the nickel coins. The Riyal
was to be attacked later if the nickel offensive
prospered. The value of the penny, the pet coin
of the poorest, dropped slowly at first and then
more rapidly, being quoted at 24, then 30, then
40, from which there was a facilis descensus to
the 80's and worse. The Government could
have stopped the rot by prompt and firm action,
but it was badly advised, and did nothing till
the rate had touched 44, representing 100 per
cent, depreciation.
TRIUMPH OF THE SHROFFS
At that stage, incredible as it may seem,
it accepted the fait accompli of the triumph of
the Shroffs. A royal decree fixed the value of
the Riyal at 44 pennies, and the officials of
the Finance Department went forth to buy
poor pennies against good silver at the new rate.
They soon found that they could improve even
on this. They could and did get 80 and more
pennies for their florin; and the next day the
royal decree was rescinded, restoring the par of
exchange to the original 22.
The Shroffs and the Government had made
profits, while the poor had lost, and, once for
all, the coins of the realm had lost their savour.
An enterprising merchant, warning his agent at
Medina by telegram to be careful in dealings
in local currency, found'himself in gaol. But
nothing could be done to re-establish public
confidence in the royal superscription, for in
Arabia there is no image on the coins. The
banks left the local currency to find its natural
level, and the Riyal fell steadily to its intrinsic
silver value. Standing at the artificial rate of
10 to £1 (gold), it had been the Shroffs’ real
objective. Now you can buy 20 Riyals for a
golden sovereign.
Thus in terms of silver the cost of living
increased by 100 per cent., and trade suffered.
The sudden drying up of the ordinary sources
of revenue warned the Government of its
coming difficulties. The total debt of the
country was then about £300,000 (gold), while
the officials and police were among the first to
feel the strain, as their salaries fell into arrears.
By November, 1931, these arrears were
estimated to represent the equivalent of a six
months’ salary bill. The Government now took
resolutely the only action possible. It
declared a year’s moratorium, thus gaining a
much-needed respite, and introduced ad
ministrative economies. But, as time passed,
the prospects of an improvement in the world
situation and of a better pilgrimage became
more remote. Pessimism gained ground, and
the Ibn Rifada trouble of last summer created
a sense of hopelessness. Drafts on the Customs
revenues were handed out in satisfaction of
debts and even in payment of salaries. And so
the process of mortgaging the future resources
of the State went on until the day of reckoning
came in November, 1932.
The Government now found itself unable to
meet its obligations under the terms of the