مجموعة ٦/ ١٩ "الجزيرة العربية: (المملكة العربية السعودية) التقرير السنوي لمملكة الحجاز ونجد." [ظ‎‎١‎٨] (٥٤٠/٣٧)

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19. In January the Iraq Government sent to Jedda a new Charge d’Affaires,
Thabit Abdul Nur, and through him they put forward proposals for the con
clusion of three agreements : (1) a currency agreement; (2) a three-cornered barter
arrangement with Japan; and (3) a military agreement. Thabit Bey, who is a
convert from, Christianity, is a bustling pan-Arab with an exaggerated conception
of the “ progress ” which Iraq has made and a contempt for the backwardness
of the Hejaz, and he may have tried to carry things with too high a hand. In any
case, Ibn Saud was unwilling to be rushed, and he asked for the confidential
advice of His Majesty’s Government, through Sir R. Bullard, on all of the pro
posed arrangements. It seemed likely at first that Thabit Bey had put forward
some if not all of these proposals on his own responsibility, in view of his character,
the nature of some of the proposals, and the fact that the Iraq Government had
not mentioned any such projects to His Majesty’s Ambassador in Bagdad, as they
might have been expected to do under the first article of the Anglo-Iraqi Treaty
of 1930; but this theory was disposed of when the Iraq Legation’s letters were
shown to Sir R. Bullard, and when, on being asked by His Majesty’s Ambassador
how Thabit Bey was getting on in Jedda, the Iraqi Minister for Foreign Affairs
referred to the currency and barter proposals and gave some details about them.
20. The essence of the currency proposal was that Iraq and Saudi Arabia
should have a common currency : either Iraqi notes with special distinguishing
marks should be introduced into Saudi Arabia, or else new notes should be issued
for circulation in both countries. The agreement would be for nine years; the
profits of the Saudi Government were fixed at 60,000 dinars a year for the first
three years and at 100,000 dinars for the last six years, and the Saudi Govern
ment were “ requested to take their profits for the first six years beforehand, as an
advance.” In spite of the offer of an advance of £480,000, the Saudi Government
viewed the proposal with hesitation. They asked His Majesty’s Government
whether the scheme in general was to the Saudi Government’s advantage, and, if
so, whether the suggested profit was fair; and whether Saudi Arabia would not
be to some extent in the power of the Iraq Government in view of the fact that the
scheme would be under the control of the Iraq Currency Board in London, on
which the Saudi Government would have only one representative. They took the
opportunity to ask whether it would be possible for the Saudi Government to
establish a note currency on the same lines as that of Iraq, “ on the understanding
that the Board should hold certain amounts of gold and that, as to the rest, the
cover should consist of company securities and not bonds of State loans, in order
that usury might be avoided.”
21. After careful consideration by His Majesty’s Government, a reply to
the following effect was returned to the Saudi Government’s enquiry :—•
(1) The scheme could only be regarded as desirable and in the financial
interests of Saudi Arabia if (a) notes or token coins were fully covered
by sterling securities, whether guaranteed by Iraq or by His Majesty’s
Government themselves, and (b) if notes or token coin would be readily
accepted by nationals of Saudi Arabia to an adequate extent.
(2) The calculation of the fair share of Saudi Arabia in the net profit of a
note issue would depend on the amount of notes likely to circulate in
Iraq and Saudi Arabia respectively, and of that it was difficult to
form an estimate.
(3) The scheme would certainly involve danger if a dispute occurred between
Iiaq and Saudi Arabia, or if on their part Iraq made new currency
arrangements different from those then in force.
On the other hand, the establishment of an independent currency board for Saudi
Arabia seemed unlikely to be feasible. The notes would have to be fully covered
m sterling securities readily marketable in London, such as British Government
securities and notes or else token coins of a lower intrinsic value than the present
Saudi nyals would have to be acceptable to the population; but a final opinion on
tnai point could only be given after local enquiry by an expert.
22. On receipt of this reply the Saudi Government expressed their gratitude
for the opinion, which they said coincided with their own.