Coll 6/91 'Saudi Arabia. Policy of H.M.G. Qn. of credits and guarantee of assistance to Ibn Saud.' [‎256r] (512/680)

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formerly held by Mr. Philby’s Sharquieh (Limited). (It is doubtful whether that
monopoly was ever strictly observed, and Messrs. Sharquieh say they get on just
a^s well in importing Ford cars without it.) The share capital of the Arab Car
Company is put down as 6,880 shares of one gold pound each. There is also a
^debt to the Ministry of Finance of some 2^ million Saudi piastres. On the assets
side of the balance sheet there is one item of 1,780,000 piastres owed by the Nejdi
Car Company: a somewhat doubtful asset. Since the publication of the report
more Dodge and some Bussing-Nag lorries have been imported, and some thirty
30-cwt. lorries mounted with machine guns for mobile defence. The Chevrolet
agents have also sold some cars.
7. I he unfortunate barter transaction with Germany (Saudi lambskins for
German goods) ended dismally; the expensive Mercedes-Benz motor vehicles had
not all arrived when war broke out. About ten cars had arrived, but the two
ambifiances and a fire engine are likely to remain undelivered for some time.
8. Wireless telephone communications, with apparatus supplied through
the California Arabian Standard Oil Company, between Taif and Riyadh were
formally inaugurated by a conversation between the King speaking at Riyadh
and the Amir Feisal at Fail, on the 24th June. His Majesty hoped that it would
be the first step in linking up all the districts of his kingdom with wireless
telephones. The oil surveyors, as well as the Mahd mine, make extensive use of
this method of communication, and there are wireless telephone sets now installed
at Qatif, Qariah and Hafr. three stations in Hasa. as well as elsewhere.
9. In the complete absence of any published Government accounts, it is
difficult to say much about Saudi finance and currency. During the summer it was
proposed to open a branch of the Netherlands Trading Society at Dhahran, but
the project fell through and the considerable number of American oil producers
in Hasa have to manage as best they can with the Eastern Bank at Bahrein. The
Minister of Finance raised the question of a national bank for Saudi Arabia in
August; he asked whether any British institution would take on the tasks of
financing the Government’s operations and maintaining the stability of the
currency, and the question is being examined. The Government, through the
Minister of Finance, bought some shares in the Mahd mine. The Ministry of
Finance has also shown an encouraging interest in the affairs of Hejazi merchants.
The very high customs dues were reduced by 20 per cent, early in the summer, and
although this concession was stated to be temporary, it has already been extended
more than once, and is now in force till the end of the Arabic year next February.
Ft also applies to importations into Nejd ports. Measures of assistance to Hejazi
traders also included the grant of advances to exporters, and of a period in which
to pay customs dues instead of paying them at once. Under the heading
“ finance ” one other item must be mentioned : the purchase of £80.000 worth of
arms from Italy, delivered in October 1939.
10. Flie immediate effect of the outbreak of war was to cause a small panic
among local merchants, leading them to withdraw all the gold they could from *
the Netherlands Trading Society. Prices rose in proportion to the sterling value
of gold, and though efforts were made to stabilise prices at their pre-war level
and to equate the Saudi riyal to the rupee, both of these admirable proposals were
rather unsuccessful. The Government showed signs of apprehension about "old
by prohibiting its export on the 6th October; they also made arrangements through
the good offices of the Government of India to ensure the receipt of large sums
of gold owed them by the California Arabian Standard Oil Company. A loan of
a million dollars as an advance against future royalties was also obtained by the
Government. In fact, the Government seem to have taken all possible measures
to discount the loss of revenue which will certainly be a feature of the comino
pilgrimage. One disquieting feature of the financial situation at the end of the
period under review was the fact that sterling, either in the form of cheques or
of notes, was almost impossible to exchange in local exchange institutions, though
the Egyptian pound was more negotiable. Prices, however, showed a tendency
to drop when it was discovered that food-stuffs from India and elsewhere were
not limited in any way; and the promises of any help that might be necessary in
facilitating the shipment of commodities, which were generously made by'the
Government of India, will have reassured the Saudi Government.