British currency in the Middle East: Difference between revisions
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| ⚫ | The history and development of '''British currency in the Middle East''' emerged from the 19th century. [[United Kingdom|British]] involvement in the [[Middle East]] began with the [[Colony of Aden|Aden]] Settlement in 1839. The [[British East India Company]] established an anti-piracy station in [[Aden]] to protect British shipping that was sailing to and from India. The [[Trucial States]] were similarly brought into the British Empire as a base for suppressing sea piracy in the [[Persian Gulf]]. Involvement in the region expanded to [[Egypt]] because of the [[Suez canal]], as well as to [[Bahrain]], [[Qatar]], and [[Muscat, Oman|Muscat]]. [[Kuwait]] was added in 1899 because of fears about the proposed [[Berlin-Baghdad Railway]]. There was a growing fear in the [[United Kingdom]] that Germany was a rising power, and there was concern about the implications of access to the [[Persian Gulf]] that would arise from the Berlin-Baghdad Railway. After the [[World War I|First World War]] the British influence in the Middle East reached its fullest extent with the inclusion of [[Mandatory Palestine|Palestine]], [[Emirate of Transjordan|Transjordan]] and [[Iraq]]. |
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==Contents== |
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At first, [[Indian rupee]]s were introduced to Aden and the [[Arab states of the Persian Gulf|Gulf States]], and later during the [[World War I|First World War]] to [[Mesopotamia]]. After the First World War, the Indian rupee was replaced in [[British East Africa]] by a [[East African florin|florin]] and then a [[shilling]], which eventually replaced the Indian rupee in Aden by 1951. Meanwhile, in 1927, a new [[Palestine pound]] at par with the [[pound sterling]] was introduced in the mandate territories of Palestine and Transjordan to replace the Turkish and Egyptian currencies. The [[East African Shilling]] in Aden was replaced in 1965 with the [[South Yemeni dinar|South Arabian dinar]] at par with the pound sterling. |
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(2) Background |
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(3) Cyprus |
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| ⚫ | For nearly four hundred years, silver [[Spanish dollar]]s ([[pieces of eight]]) had served as the international currency, and most of these coins were minted in [[Mexico City]], [[Lima]], and [[Potosí]] in the [[New World]]. The policy of introducing the [[Pound sterling|sterling]] currency into all of the British colonies began with an imperial order-in-council dated 1825. The timing of the British imperial order-in-council corresponded to the drying up of the source of the Spanish dollars following revolutions in [[Latin America]], and also the introduction of a successful [[gold standard]] into the [[United Kingdom]] in 1821, based on the [[gold sovereign]]. |
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| ⚫ | In 1825, the [[British Empire]] had not as yet reached its widest extent. Following the [[American Revolution]], Britain's attention switched to [[India]], but [[British India]] was originally controlled by the [[British East India Company]]. The British government did not take direct control over India until after the [[Indian mutiny]] of 1857. Hence the imperial order-of-council of 1825 did not apply to India. As such, the already circulating silver [[rupee]] continued to be the currency of India for the entire duration of the [[British Raj]], and afterwards into independence. The Indian rupee was not only the currency of India but also the currency of an extended region beyond, which stretched across the [[Indian Ocean]] to the east coast of [[Africa]], up through the [[horn of Africa]], through [[Aden]] and [[Muscat, Oman|Muscat]] in Southern Arabia and Eastern Arabia, and along the Arabian coast of the [[Persian Gulf]], extending even as far inland as [[Mesopotamia]]. These [[Middle East]] territories did not become a part of the British Empire until a period ranging from the 1840s until after the [[World War I|First World War]]. |
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(4) Palestine |
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The [[Middle East]] was the last major addition to the British Empire, and therefore just like India, was unaffected by the 1825 imperial order-in-council. The 1825 order-in-council was limited largely to the remnants of the old Empire in [[North America]] and the [[West Indies]], along with [[New South Wales]], [[Gibraltar]], and some spoils of the [[Napoleonic wars]] such as the [[Cape of Good Hope]], [[Malta]], and [[Mauritius]]. It is said that the British Empire had three currency zones, and that the three currencies were the [[pound sterling]], the [[dollar]], and the rupee. The situation in the British territories of the Middle East was however somewhat complicated, because it involved a situation in which Indian rupees, Turkish [[piastre]]s, and Egyptian piastres gradually gave way to systems based on units of the sterling system, but without ever involving the introduction of the full sterling coinage. |
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(5) Arabia and Mesopotamia |
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==Middle East== |
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The situation as regards currency in the British territories in the [[Middle East]] was quite different from the situation as regards the [[currencies of the British West Indies]]. |
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[[East Africa]] and the Middle East were late additions to the [[British Empire]], and by then, the British government had already learned from experience in [[Canada]], [[India]] and [[Hong Kong]] that it is highly impractical to impose a new currency in the place of already existing practices. |
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(7) The Sterling Area |
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The sterling unit of account entered the Middle East through [[Palestine (region)|Palestine]], in the form of the [[Palestine pound]], which was introduced into Palestine in 1927 to end the confusion that had arisen as a result of the twin circulation of Turkish and Egyptian money in the territory. The Palestine pound was created at par with the pound sterling, but it was not used in conjunction with the pounds, shillings and pence coinage. It was used in conjunction with a decimal system. |
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==Introduction== |
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| ⚫ | [[United Kingdom|British]] involvement in the [[Middle East]] began with the [[Colony of Aden|Aden]] Settlement in 1839. The [[British East India Company]] established an anti-piracy station in [[Aden]] to protect British shipping that was sailing to and from India. The [[Trucial States]] were similarly brought into the British Empire as a base for suppressing sea piracy in the [[Persian Gulf]]. Involvement in the region expanded to [[Egypt]] because of the [[Suez canal]], as well as to [[Bahrain]], [[Qatar]], and [[Muscat, Oman|Muscat]]. [[Kuwait]] was added in 1899 because of fears about the proposed [[Berlin-Baghdad Railway]]. There was a growing fear in the [[United Kingdom]] that Germany was a rising power, and there was concern about the implications of access to the [[Persian Gulf]] that would arise from the Berlin-Baghdad Railway. After the [[World War I|First World War]] the British influence in the Middle East reached its fullest extent with the inclusion of [[Mandatory Palestine|Palestine]], [[Emirate of Transjordan|Transjordan]] and [[Iraq]]. |
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In the Middle East, [[Pound sterling|sterling]] coinage never formed a part of the circulating currency. That was in contrast to the situation in the [[Eastern Caribbean]], where sterling coinage was used in conjunction with a [[Spanish dollar]] unit of account. |
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==Background== |
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| ⚫ | For nearly four hundred years, silver [[Spanish dollar]]s ([[pieces of eight]]) had served as the international currency, and most of these coins were minted in [[Mexico City]], [[Lima]], and [[Potosí]] in the [[New World]]. |
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The Palestine pound was also used in [[Emirate of Transjordan|Transjordan]] where it later became referred to as the [[dinar]]. The name dinar then became the preferred name for the pound sterling unit of account as it spread to other Middle East territories. Iraq adopted the dinar in 1931 to replace the Indian rupee that had been introduced by the British during the [[World War I|First World War]]. |
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| ⚫ | In 1825, the [[British Empire]] had not as yet reached its widest extent. Following the [[American Revolution]], Britain's attention switched to [[India]], |
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Meanwhile, after the First World War, the price of silver rose dramatically. In [[British East Africa]], at the moment when the silver rupee rose to the value of two shillings sterling, the authorities opportunistically introduced a [[East African florin|florin]] system to replace the rupee, with the florin being equal to the rupee at two shillings. Shortly after that, in 1922, the monetary system in British East Africa was changed again, this time to a shilling system. The [[East African shilling]] was now on par with the shilling sterling, but although the earliest versions of the East African shilling and the [[East African florin]] corresponded in shape, size, and weight with the corresponding sterling coins, the full set of sterling coinage was never introduced into British East Africa, as it was in [[British West Africa]] and in the British territories in [[Southern Africa]]. The East African shilling was originally used in [[Kenya]], [[Uganda]] and [[Tanganyika (territory)|Tanganyika]] but it soon spread to [[Zanzibar]] and [[British Somaliland]], eventually crossing from the [[Horn of Africa]] to [[Aden]] on the Arabian coast in 1951, where it replaced the rupee in that territory. In 1961, [[Kuwait]] adopted the dinar as a new unit of account to replace the Indian rupee, and in 1965 the dinar unit replaced the shilling in [[Aden]] at twenty shillings to the dinar. In 1966 the rupee was replaced by the dinar in [[Bahrain]], and in [[Abu Dhabi]], while in [[Qatar]], [[Dubai]] and the remaining [[Trucial States]], the rupee was replaced by the [[Saudi riyal]] which was a direct descendant of the [[Maria Theresa Thaler]]. The Maria Theresa Thaler was a variety of the silver [[Thaler]] coin first minted in [[Jáchymov|Joachimsthal]], [[Bohemia]], and the [[Thaler]] is the German coin upon which the Spanish eight [[Spanish real|real]] coin was modelled. It is these [[Spanish dollar]]s (or [[pieces of eight]]) that are the parent coinage of the modern [[US dollar]]. The word '[[dollar]]' originates from the word Thaler. |
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Since the Middle East was a late addition to the [[British Empire]], the British government had by then already learned from their experiences in places such as [[Canada]], [[Ceylon]], [[Mauritius]], and [[Hong Kong]] that it is highly impractical to impose a new currency in the place of already existing practices. So, even though the pound unit of account eventually spread into the Middle East, the associated shillings and pence coinage never circulated there. This was the opposite of the situation in the [[Eastern Caribbean]], where sterling shillings and pence coinage was used in conjunction with a [[Spanish dollar]] unit of account. |
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| ⚫ | In 1970, The [[Sultanate of Oman]] replaced the rupee with the [[Omani rial]] unit that was on par with the [[pound sterling]]. Meanwhile, the dinar units in the other parts of the [[Persian Gulf]] region had already risen in value against the pound sterling as a result of sterling's devaluation in 1967, and so the new Omani rial was not equal in value to the dinars in the nearby territories. |
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The currency units that are used in [[Israel]], [[Jordan]], [[Iraq]], [[Kuwait]], [[Bahrain]], [[Oman]], and the [[Yemen]] are all descended from the pound sterling, while the currency units that are used in [[Saudi Arabia]], [[Qatar]], and the [[United Arab Emirates]] are all descended from the Maria Theresa Thaler. This largely explains the factor of ten difference in value on average between Bahrain, Kuwait and Oman on the one hand, and Saudi Arabia, Qatar, and the United Arab Emirates on the other hand. Bahrain, Kuwait and Oman are using units that are descended from sterling, whereas Saudi Arabia, Qatar, and the United Arab Emirates are using units that are descended from the Maria Theresa Thaler. |
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==Cyprus== |
==Cyprus== |
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| footer = £1 Cyprus pound note issued in 1955 |
| footer = £1 Cyprus pound note issued in 1955 |
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| image1 = Cyprus-1-pound-1955-F.jpg |
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| image2 = Cyprus-1-pound-1955-F-verso.jpg |
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The British introduced [[pound sterling|sterling]] to [[Cyprus]] in 1879, a year after taking ''de facto'' control of the island from the [[Ottoman Empire]]. The exchange rate was £1 stg = 180 [[Turkish piastre]]s. The [[Cypriot pound|Cyprus Currency Board]] was established in 1927 and held the responsibility of administering the [[Cypriot pound]]. The Cypriot pound maintained its fixed exchange rate with sterling until 1972, some twelve years after Cyprus gained independence from the United Kingdom. |
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The first territory in the Middle East to adopt the [[pound sterling]] unit of account was [[Cyprus]]. At the time of the occupation in 1878, for the purpose of paying the troops, the British government instructed that a [[Turkish lira]] was to be rated at 9/10 of a [[pound sterling]]. There was a complication, however, in that although one [[Turkish lira|lira]] was equal to 100 [[Turkish piastre]]s, this rate differed in practice between different locations, as well as the fact that the copper piastre itself had depreciated relative to the silver piastre, such that in the bazaars, you needed 175 copper piastres to buy a British [[gold sovereign]]. An additional problem was the fact that gold coins had a tendency to leave the island for Constantinople where they could obtain an even greater amount of piastres than what was paid for them in Cyprus. Meanwhile, the Treasury pointed out that it would be unwise to introduce British shillings and pence, at once, as this would be seen as a foreign currency system, so in order to solve these problems, the British government demonetised the debased [[Turkish piastre]]s and introduced a new legal tender bronze British piastre at 180 to the gold sovereign. With this altered rating, the people made a profit when paying sovereigns into the treasury in settlement of their debts and this reduced the incentive to ship the sovereigns to Constantinople. So, in 1879, after taking ''de facto'' control of the island from the [[Ottoman Empire]], The British introduced the [[pound sterling]] unit into [[Cyprus]] at 180 bronze British piastres. Having deliberately avoided introducing shillings and pence, the new 9 piastre and 18 piastre coins did however correspond respectively in size and value to the shilling and florin coins in the UK. The pre-1879 para, at 40 para to the kuruş/piastre continued as a unit of account appearing on postage stamps, but it was never seen on any coins or banknotes. |
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Initially the Cyprus pound was divided into 20 [[shillings]], in common with its United Kingdom counterpart. However, unlike the United Kingdom shilling, the Cyprus shilling was divided into 9 piastres, thus establishing a nomenclature link to the earlier Ottoman currency. The piastre was itself divided into 40 para (like the kuruş). The para denomination did not appear on any coins or banknotes but was used on postage stamps. |
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The [[Cypriot pound|Cyprus Currency Board]] was established in 1927 and held the responsibility of administering the [[Cypriot pound]]. |
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In 1947, the word "'''''shilling'''''" appeared for the first time on the 9 piastre and 18 piastre coins, but then in 1955, Cyprus adopted a decimal system, whereby there is 1,000 Mils in a pound. When the UK floated the [[pound sterling]] on 23 June 1972, some twelve years after Cyprus had obtained independence, the [[Cypriot pound]] began to diverge from the 1:1 parity it had maintained with the UK unit since its foundation in 1879. |
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| ⚫ | The [[Egyptian pound]] (known as the ''geneih'') replaced the [[Egyptian piastre]] in 1834, with 100 piastre = 1 pound. The Egyptian pound was also used in [[Anglo-Egyptian Sudan]] between 1899 and 1956, and [[Cyrenaica]] when it was under [[British Military Administration (Libya)|British occupation]] and later an [[Emirate of Cyrenaica|independent emirate]] between 1942 and 1951. It also circulated in [[Mandatory Palestine]] from 1918 to 1927, when the [[Palestine pound]] was introduced. |
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In 2008, Cyprus adopted the [[euro]] and the [[Cypriot pound]] ceased to exist. |
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==Palestine== |
==Palestine== |
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[[File:1 Palestine Pound 1939 Obverse.jpg|thumb|300x300px|A £1 Palestine pound note from 1939]] |
[[File:1 Palestine Pound 1939 Obverse.jpg|thumb|300x300px|A £1 Palestine pound note from 1939]] |
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Following the institution of the [[Mandatory Palestine|British Mandate for Palestine]] in 1918, the [[Egyptian pound]] was introduced |
Following the institution of the [[Mandatory Palestine|British Mandate for Palestine]] in 1918, the [[Egyptian pound]] was introduced into Palestine, and circulated alongside the [[Ottoman lira]]. To end the confusion that had arisen as a result of the twin circulation of Turkish and Egyptian money in the territory, in 1927 the British authorities established the Currency Board for Palestine, which introduced the [[Palestine pound]], equal in value to the [[pound sterling]], which was legal tender in Mandatory Palestine and in [[Emirate of Transjordan|Transjordan]]. |
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The Currency Board was dissolved in May 1948, with the end of the British Mandate, but the Palestinian pound continued in circulation for a transitional period: |
The Currency Board was dissolved in May 1948, with the end of the British Mandate, but the Palestinian pound continued in circulation for a transitional period: |
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* [[Israel]] adopted the [[Israeli pound]] (or Israeli lira) in 1952. |
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* [[Israel]] adopted the [[Israeli pound]] on 16 August 1948 at par with the [[Palestine pound]], and meanwhile the 1:1 parity with the [[pound sterling]] continued until 1952, after which the external value of the [[Israeli pound]] began to drop rapidly. |
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* [[Jordan]] adopted the [[Jordanian dinar]] in 1949. The name dinar then became the preferred name for the pound sterling unit of account as it spread to other Middle East territories. The [[Jordanian dinar]] maintained its 1:1 parity with the pound sterling until 18 November 1967 when Harold Wilson devalued the pound. The [[Jordanian dinar]] did not devalue in parallel, hence breaking the sterling parity. |
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* [[Jordan]] adopted the [[Jordanian dinar]] in 1949. |
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==Arabia and Mesopotamia== |
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Prior to British involvement in Arabia, [[Kuruş|Ottoman piastre]]s and [[Maria Theresa thaler]]s circulated in the region, with the [[Maria Theresa thaler|thaler]] typically valued at 20 [[Kuruş|piastres]]. |
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[[Image:Tallero di Maria Teresa.jpg|380px|thumb|[[Silver coin]]: 1 thaler [[Maria Theresia]]]] |
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Then, with the arrival of the British in [[Aden]] in 1839, [[Indian rupee]]s were introduced to the Arabian coast. British influence soon spread to the [[Arab states of the Persian Gulf|Gulf States]], and the [[Indian rupee]] spread into those territories too. Later, during the [[World War I|First World War]] the [[Indian rupee]] also spread into [[Mesopotamia]]. |
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On 22nd January 1928, [[Saudi Arabia]] introduced a new silver [[Saudi riyal|riyal]] loosely based on the [[Maria Theresa thaler]] but adjusted in weight, slightly, so as to correspond in value, exactly to a tenth of a British [[gold sovereign]]. However, in 1936, the [[Saudi riyal|riyal]] was debased so as to correspond in weight and fineness to the [[Indian rupee]]. |
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Meanwhile, on 19 April 1931, [[Iraq]], which had emerged as a British [[Mandate for Mesopotamia|Mandate]] on the territory of [[Mesopotamia]], adopted the [[Iraqi dinar]] at a 1:1 parity with the [[pound sterling]], to replace the [[Indian rupee]]. This 1:1 parity with sterling continued through until 18 November 1967 when Harold Wilson devalued the pound. Iraq did not follow suit and hence the parity was broken. |
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On 1 October 1951, the [[Indian rupee]] was replaced in [[Aden]] by the [[East African shilling]] with twenty [[East African shilling|shilling]]s being equal in value to one [[pound sterling]]. Meanwhile, back in 1922 the [[East African shilling]] had itself been created as a monetary unit out of the Indian rupee when the rising price of silver in the wake of the first world war caused the Indian rupees that circulated in [[British East Africa]] to rise in value to two shillings sterling. The [[East African shilling]] was launched on par with the shilling sterling at the value of half an Indian rupee. |
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In 1959, as a measure to prevent gold smuggling, the [[Reserve Bank of India]] and the Indian government, in conjunction with the British authorities, replaced [[Indian rupee]] in the Gulf States with the [[Gulf rupee]] at a 1:1 parity. |
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On 1 April 1961, [[Kuwait]] adopted a [[Kuwaiti dinar|dinar]] unit at a 1:1 par with the [[pound sterling]] to replace the [[Gulf rupee]], and it remained at this parity until 18 November 1967, when Harold Wilson devalued the [[pound sterling]]. As with the case of the [[Jordanian dinar]] and the [[Iraqi dinar]], Kuwait did not devalue in tandem, hence the 1:1 parity with the pound was broken that year. |
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On 1 April 1965, the [[South Yemeni dinar|South Arabian dinar]] replaced the [[East African shilling|shilling]] in [[Aden]] at twenty shillings to the dinar, and in this case, [[Aden]] did devalue in parallel with sterling on 18 November 1967, hence maintaining its 1:1 parity with sterling beyond the date of the British withdrawal from [[Aden]], less than a fortnight later. The [[South Yemeni dinar]], meanwhile continued the 1:1 parity with sterling, at least into 1971, after which information about its value became hard to find, but by 1983, it had already diverged considerably from the sterling parity. The divergence probably began in June 1972 when the UK floated the pound sterling, because figures in the 1983 Financial Times ''"World Value of the Pound"'', suggest that the [[South Yemeni dinar]] had probably followed a similar course to that of the [[Omani riyal]] next door. The South Yemeni unit eventually ceased to exist when the [[South Yemen]] united with the [[North Yemen]] in 1990. |
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[[File:Yemen 1.jpg|thumb|Dinar notes under the [[Federation of South Arabia]]]] |
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On 1 October 1965, [[Bahrain]] replaced the [[Gulf rupee]] with a [[Bahraini dinar]] unit at fifteen shillings [[sterling]]. This rose to seventeen shillings and sixpence against the pound on 18 November 1967 when [[Bahrain]] did not devalue with the [[pound sterling]]. |
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In 1966, India devalued the rupee prompting [[Qatar]], [[Dubai]], and all the [[Trucial States]] with the exception of [[Abu Dhabi]], to introduce a new [[Qatari riyal|riyal]] unit at par with the pre-devaluation rupee. [[Abu Dhabi]] meanwhile, instead chose to adopt the [[Bahraini dinar]], although in 1973, it changed to the [[United Arab Emirates dirham]] in line with the rest of the sheikdoms in the [[United Arab Emirates|UAE]]. |
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In summary, the currency units that are used in [[Israel]], [[Jordan]], [[Iraq]], [[Kuwait]], [[Oman]], and the [[Yemen]] are all descended from the pound sterling unit, and the [[Bahraini dinar]] partially so, whereas the currency unit that was first used in [[Qatar]] and [[Dubai]] in 1966, replaced the Indian rupee at its pre-devaluation exchange rate. Meanwhile, during this same period in time, the pre-devaluation rupee just happened to be very close to par with the riyal of [[Saudi Arabia]], which was even used in Qatar and Dubai on a temporary basis, prior to their new currency being ready. And although a near parity has carried on to the present day with respect to the [[Saudi riyal]], the [[Qatari riyal]], and the [[United Arab Emirates]] dirham, it is actually only the [[Saudi riyal]] that is descended from the [[Maria Theresa Thaler]]. |
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The [[Maria Theresa Thaler]] was a variety of the silver [[Thaler]] coin first minted in [[Jáchymov|Joachimsthal]], [[Bohemia]], in 1519, and known as the [[Joachimsthaler]]. The word '[[dollar]]' originates from the word Thaler, and due to the similarity between the German thalers and the slightly earlier Spanish eight [[Spanish real|real]] coin, the latter eventually became known in the English speaking world as [[Spanish dollar]]s (or [[pieces of eight]]), these being the parent coins the modern [[US dollar]]. |
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==Egypt== |
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At the beginning of the 19th century, Egypt and Turkey shared a common currency, the Ottoman [[piastre]], divided into 40 paras. However, under [[Muhammad Ali of Egypt|Muhammad Ali]], Egypt started to issue its own coinage, and in 1834, by which time Egypt was now nominally independent from Ottoman rule, a [[khedive|khedival]] decree was issued, adopting an exclusively Egyptian monetary system whereby Egypt went into a [[silver]] and [[gold]] [[bimetallic standard]] based on the [[Maria Theresa thaler]] rated at 20 piastres. The [[Maria Theresa thaler]] was a popular silver [[trade coin]] in the region around that time.<ref>{{cite book|author=Markus A. Denzel|title=Handbook of World Exchange Rates, 1590-1914|url=https://books.google.com/books?id=2T7l7Wi2ESsC&pg=PA599|year=2010|publisher=Ashgate Publishing|isbn=978-0-7546-0356-6|page=599|quote=The piastre of 1839 contained 1.146 grammes of fine silver, the piastre of 1801 approximately 4.6 grammes of fine silver. The most important Egyptian coins, the bedidlik in gold (= 100 piastres; 7.487 grammes of fine gold) and the rial in silver (20 piastres; 23.294 grammes of fine silver)|access-date=2017-10-02|archive-date=2023-04-11|archive-url=https://web.archive.org/web/20230411065413/https://books.google.com/books?id=2T7l7Wi2ESsC&pg=PA599|url-status=live}}</ref> In the wake of this currency reform, Egypt minted a gold coin known as the bedidlik, equal to 100 piastres, and a silver rial coin of 20 piastres corresponding to the [[Maria Theresa Thaler]]. In 1839, a piastre contained 1.146 grams of silver, and meanwhile the British gold sovereign was rated at 97.5 piastres. While 100 Egyptian piastres and the bedidlik coin were referred to as a '''pound''' in the English speaking world, this was not the principle unit in the new Egyptian monetary system of 1834. Reference to an [[Egyptian pound]] unit of account appeared in 1884 on a £E50 promissory note signed by [[Charles George Gordon|General Gordon]] at the [[Siege of Khartoum currency|Siege of Khartoum]], but it wasn't until the next year in 1885 that this unit of account would become the official unit.{{Css Image Crop|Image = SUD-S111b-Siege of Khartoum-50 Egyptian Pounds (1884).jpg|bSize = 228|cWidth = 220|cHeight = 142|oTop = 2|oLeft = 3|Location = right|Description=£E50 [[Siege of Khartoum currency|promissory note]] issued and hand-signed by Gen. [[Charles George Gordon|Gordon]] during the [[Siege of Khartoum]] (26 April 1884)<ref>{{Cite book |url=https://books.google.com/books?id=22dKPgAACAAJ&q=standard+catalog+of+specialized+issues|page=1070|title= Standard Catalog of World Paper Money Specialized Issues|edition=11|publisher=Krause|isbn=978-1-4402-0450-0|editor-last=Cuhaj|editor-first=George S.|year=2009}}</ref>}} |
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Meanwhile, back in 1840, despite Egypt's separate coinage, it was agreed under the Turkish-Egyptian treaty dated that same year, that the Turkish and Egyptian strikes should nevertheless maintain equal value. However, in 1844, the Ottoman piastre was devalued in conjunction with the creation of a new [[Ottoman lira]] unit, and Egypt didn't follow suit. Hence the Egyptian and Turkish units split from each other in value, with the Egyptian unit continuing its exchange value of 97.5 piastres to the pound sterling. |
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In 1885, Egypt went into a purely [[gold standard]], and the [[Egyptian pound]] unit, known as the {{transliteration|arz|juneih}}, was introduced at £E1 = 7.4375 grammes of fine gold. This unit was chosen on the basis of the gold content in the British [[gold sovereign]] and maintaining the exchange value of 97.5 piastres to the pound sterling, and it replaced the [[Egyptian piastre]] ({{transliteration|arz|qersh}}) as the chief unit of currency. This reform resulted in the [[Maria Theresa Thaler]] being adjusted to 21 piastres, with 20 piastres now being rated at 5 French francs, and the foreign exchange rates were fixed by force of law for the important currencies which had become acceptable in the settlement of internal transactions. It wasn't however until 1899 that banknotes started to appear with the word "pounds" on them, written in English. |
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Meanwhile, the piastre continued to circulate as {{frac|100}} of a pound, the para was discontinued in 1909, and the piastre was divided into tenths ({{lang|ar|عشر القرش}} {{transliteration|arz|'oshr el-qirsh}}). These tenths were renamed milliemes ({{transliteration|arz|malleem}}) in 1916. |
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Then, at the outbreak of [[World War I]], with the gold specie standard being suspended in the UK, the Egyptian pound used a [[pound sterling|sterling]] peg of one pound and sixpence sterling to one Egyptian pound. Inverted, this gives £E0.975 for one pound sterling. |
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This exchange value of 97.5 piastres to the pound sterling continued until the early 1960s when Egypt devalued slightly and switched to a peg to the [[United States dollar]], at a rate of E£1 = US$2.3. |
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| ⚫ | The Egyptian pound was also used in [[Anglo-Egyptian Sudan]] between 1899 and 1956, and [[Cyrenaica]] when it was under [[British Military Administration (Libya)|British occupation]] and later an [[Emirate of Cyrenaica|independent emirate]] between 1942 and 1951. It also circulated in [[Mandatory Palestine]] from 1918 to 1927, when the [[Palestine pound]] was introduced. |
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The Egyptian pound continued with its exchange rate of £E = £1 0s 6d sterling up until the beginning of the 1960s. |
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==Sterling area== |
==Sterling area== |
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At the outbreak of the [[Second World War]], the [[sterling area]] was formed as an emergency measure to protect the external value of the [[pound sterling]], mainly against the [[US dollar]]. All the territories mentioned above joined the sterling area since their respective [[Pound (currency)|pound]]s, [[dinar]]s, [[shilling]]s, or [[rupee]]s were pegged at a fixed value to the pound sterling. The Indian rupee at that time was pegged to the pound sterling at a fixed value of one [[shilling]] and six pence sterling. In the years after the war, [[Egypt]] |
At the outbreak of the [[Second World War]], the [[sterling area]] was formed as an emergency measure to protect the external value of the [[pound sterling]], mainly against the [[US dollar]]. All the territories mentioned above joined the sterling area since their respective [[Pound (currency)|pound]]s, [[dinar]]s, [[shilling]]s, or [[rupee]]s were pegged at a fixed value to the pound sterling. The Indian rupee at that time was pegged to the pound sterling at a fixed value of one [[shilling]] and six pence sterling. In the years after the war, [[Egypt]], [[Palestine (region)|Palestine]], the [[Sudan]] and [[Iraq]] left the sterling area. |
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As a result of the sterling devaluation of November 1967, the floating of the pound sterling in June 1972, and the ending of the [[Bretton Woods system]] of fixed exchange rates that was introduced in 1944, none of the currencies mentioned above retain any fixed parity to any of the sterling units of account. There is no visible relationship between these currencies today and the currency that is used in the United Kingdom. |
As a result of the sterling devaluation of November 1967, the floating of the pound sterling in June 1972, and the ending of the [[Bretton Woods system]] of fixed exchange rates that was introduced in 1944, none of the currencies mentioned above retain any fixed parity to any of the sterling units of account. There is no visible relationship between these currencies today and the currency that is used in the United Kingdom. |
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Revision as of 23:59, 12 April 2024
 | This article includes a list of general references, but it lacks sufficient corresponding inline citations. (September 2009) |
The history and development of British currency in the Middle East emerged from the 19th century. British involvement in the Middle East began with the Aden Settlement in 1839. The British East India Company established an anti-piracy station in Aden to protect British shipping that was sailing to and from India. The Trucial States were similarly brought into the British Empire as a base for suppressing sea piracy in the Persian Gulf. Involvement in the region expanded to Egypt because of the Suez canal, as well as to Bahrain, Qatar, and Muscat. Kuwait was added in 1899 because of fears about the proposed Berlin-Baghdad Railway. There was a growing fear in the United Kingdom that Germany was a rising power, and there was concern about the implications of access to the Persian Gulf that would arise from the Berlin-Baghdad Railway. After the First World War the British influence in the Middle East reached its fullest extent with the inclusion of Palestine, Transjordan and Iraq.
At first, Indian rupees were introduced to Aden and the Gulf States, and later during the First World War to Mesopotamia. After the First World War, the Indian rupee was replaced in British East Africa by a florin and then a shilling, which eventually replaced the Indian rupee in Aden by 1951. Meanwhile, in 1927, a new Palestine pound at par with the pound sterling was introduced in the mandate territories of Palestine and Transjordan to replace the Turkish and Egyptian currencies. The East African Shilling in Aden was replaced in 1965 with the South Arabian dinar at par with the pound sterling.
Introduction
For nearly four hundred years, silver Spanish dollars (pieces of eight) had served as the international currency, and most of these coins were minted in Mexico City, Lima, and Potosí in the New World. The policy of introducing the sterling currency into all of the British colonies began with an imperial order-in-council dated 1825. The timing of the British imperial order-in-council corresponded to the drying up of the source of the Spanish dollars following revolutions in Latin America, and also the introduction of a successful gold standard into the United Kingdom in 1821, based on the gold sovereign.
In 1825, the British Empire had not as yet reached its widest extent. Following the American Revolution, Britain's attention switched to India, but British India was originally controlled by the British East India Company. The British government did not take direct control over India until after the Indian mutiny of 1857. Hence the imperial order-of-council of 1825 did not apply to India. As such, the already circulating silver rupee continued to be the currency of India for the entire duration of the British Raj, and afterwards into independence. The Indian rupee was not only the currency of India but also the currency of an extended region beyond, which stretched across the Indian Ocean to the east coast of Africa, up through the horn of Africa, through Aden and Muscat in Southern Arabia and Eastern Arabia, and along the Arabian coast of the Persian Gulf, extending even as far inland as Mesopotamia. These Middle East territories did not become a part of the British Empire until a period ranging from the 1840s until after the First World War.
The Middle East was the last major addition to the British Empire, and therefore just like India, was unaffected by the 1825 imperial order-in-council. The 1825 order-in-council was limited largely to the remnants of the old Empire in North America and the West Indies, along with New South Wales, Gibraltar, and some spoils of the Napoleonic wars such as the Cape of Good Hope, Malta, and Mauritius. It is said that the British Empire had three currency zones, and that the three currencies were the pound sterling, the dollar, and the rupee. The situation in the British territories of the Middle East was however somewhat complicated, because it involved a situation in which Indian rupees, Turkish piastres, and Egyptian piastres gradually gave way to systems based on units of the sterling system, but without ever involving the introduction of the full sterling coinage.
Middle East
The situation as regards currency in the British territories in the Middle East was quite different from the situation as regards the currencies of the British West Indies.
East Africa and the Middle East were late additions to the British Empire, and by then, the British government had already learned from experience in Canada, India and Hong Kong that it is highly impractical to impose a new currency in the place of already existing practices.
The sterling unit of account entered the Middle East through Palestine, in the form of the Palestine pound, which was introduced into Palestine in 1927 to end the confusion that had arisen as a result of the twin circulation of Turkish and Egyptian money in the territory. The Palestine pound was created at par with the pound sterling, but it was not used in conjunction with the pounds, shillings and pence coinage. It was used in conjunction with a decimal system.
In the Middle East, sterling coinage never formed a part of the circulating currency. That was in contrast to the situation in the Eastern Caribbean, where sterling coinage was used in conjunction with a Spanish dollar unit of account.
The Palestine pound was also used in Transjordan where it later became referred to as the dinar. The name dinar then became the preferred name for the pound sterling unit of account as it spread to other Middle East territories. Iraq adopted the dinar in 1931 to replace the Indian rupee that had been introduced by the British during the First World War.
Meanwhile, after the First World War, the price of silver rose dramatically. In British East Africa, at the moment when the silver rupee rose to the value of two shillings sterling, the authorities opportunistically introduced a florin system to replace the rupee, with the florin being equal to the rupee at two shillings. Shortly after that, in 1922, the monetary system in British East Africa was changed again, this time to a shilling system. The East African shilling was now on par with the shilling sterling, but although the earliest versions of the East African shilling and the East African florin corresponded in shape, size, and weight with the corresponding sterling coins, the full set of sterling coinage was never introduced into British East Africa, as it was in British West Africa and in the British territories in Southern Africa. The East African shilling was originally used in Kenya, Uganda and Tanganyika but it soon spread to Zanzibar and British Somaliland, eventually crossing from the Horn of Africa to Aden on the Arabian coast in 1951, where it replaced the rupee in that territory. In 1961, Kuwait adopted the dinar as a new unit of account to replace the Indian rupee, and in 1965 the dinar unit replaced the shilling in Aden at twenty shillings to the dinar. In 1966 the rupee was replaced by the dinar in Bahrain, and in Abu Dhabi, while in Qatar, Dubai and the remaining Trucial States, the rupee was replaced by the Saudi riyal which was a direct descendant of the Maria Theresa Thaler. The Maria Theresa Thaler was a variety of the silver Thaler coin first minted in Joachimsthal, Bohemia, and the Thaler is the German coin upon which the Spanish eight real coin was modelled. It is these Spanish dollars (or pieces of eight) that are the parent coinage of the modern US dollar. The word 'dollar' originates from the word Thaler.
In 1970, The Sultanate of Oman replaced the rupee with the Omani rial unit that was on par with the pound sterling. Meanwhile, the dinar units in the other parts of the Persian Gulf region had already risen in value against the pound sterling as a result of sterling's devaluation in 1967, and so the new Omani rial was not equal in value to the dinars in the nearby territories.
The currency units that are used in Israel, Jordan, Iraq, Kuwait, Bahrain, Oman, and the Yemen are all descended from the pound sterling, while the currency units that are used in Saudi Arabia, Qatar, and the United Arab Emirates are all descended from the Maria Theresa Thaler. This largely explains the factor of ten difference in value on average between Bahrain, Kuwait and Oman on the one hand, and Saudi Arabia, Qatar, and the United Arab Emirates on the other hand. Bahrain, Kuwait and Oman are using units that are descended from sterling, whereas Saudi Arabia, Qatar, and the United Arab Emirates are using units that are descended from the Maria Theresa Thaler.
Cyprus
The British introduced sterling to Cyprus in 1879, a year after taking de facto control of the island from the Ottoman Empire. The exchange rate was £1 stg = 180 Turkish piastres. The Cyprus Currency Board was established in 1927 and held the responsibility of administering the Cypriot pound. The Cypriot pound maintained its fixed exchange rate with sterling until 1972, some twelve years after Cyprus gained independence from the United Kingdom.
Initially the Cyprus pound was divided into 20 shillings, in common with its United Kingdom counterpart. However, unlike the United Kingdom shilling, the Cyprus shilling was divided into 9 piastres, thus establishing a nomenclature link to the earlier Ottoman currency. The piastre was itself divided into 40 para (like the kuruş). The para denomination did not appear on any coins or banknotes but was used on postage stamps.
Egypt
The Egyptian pound (known as the geneih) replaced the Egyptian piastre in 1834, with 100 piastre = 1 pound. The Egyptian pound was also used in Anglo-Egyptian Sudan between 1899 and 1956, and Cyrenaica when it was under British occupation and later an independent emirate between 1942 and 1951. It also circulated in Mandatory Palestine from 1918 to 1927, when the Palestine pound was introduced.
Palestine
Following the institution of the British Mandate for Palestine in 1918, the Egyptian pound was introduced into Palestine, and circulated alongside the Ottoman lira. To end the confusion that had arisen as a result of the twin circulation of Turkish and Egyptian money in the territory, in 1927 the British authorities established the Currency Board for Palestine, which introduced the Palestine pound, equal in value to the pound sterling, which was legal tender in Mandatory Palestine and in Transjordan.
The Currency Board was dissolved in May 1948, with the end of the British Mandate, but the Palestinian pound continued in circulation for a transitional period:
- Israel adopted the Israeli pound (or Israeli lira) in 1952.
- Jordan adopted the Jordanian dinar in 1949.
- In the West Bank, the Palestine pound continued to circulate until 1950, when the West Bank was annexed by Jordan, and the Jordanian dinar became legal tender there.
- In the Gaza Strip, the Palestine pound continued to circulate until April 1951, when it was replaced by the Egyptian pound, three years after the Egyptian army took control of the territory.
Sterling area
At the outbreak of the Second World War, the sterling area was formed as an emergency measure to protect the external value of the pound sterling, mainly against the US dollar. All the territories mentioned above joined the sterling area since their respective pounds, dinars, shillings, or rupees were pegged at a fixed value to the pound sterling. The Indian rupee at that time was pegged to the pound sterling at a fixed value of one shilling and six pence sterling. In the years after the war, Egypt, Palestine, the Sudan and Iraq left the sterling area.
As a result of the sterling devaluation of November 1967, the floating of the pound sterling in June 1972, and the ending of the Bretton Woods system of fixed exchange rates that was introduced in 1944, none of the currencies mentioned above retain any fixed parity to any of the sterling units of account. There is no visible relationship between these currencies today and the currency that is used in the United Kingdom.
See also
- British currency in Oceania
- British currency in the South Atlantic and the Antarctic
- British currency in the West Indies
- British currency in West Africa
- East African shilling
- Old Israeli shekel
- Palestine pound
- South Yemeni dinar
References
- Chalmers, R., "A History of Currency in the British Colonies" (1893)