Beginning of a journey at a caravanserai:
"Every province is privileged with a mint of its own."
All about money
The birth of Iran's modern monetary system
September 6, , 2000
The Iranian
From "For
God, Mammon, and Country : A Nineteenth Century Persian Merchant"
by Shireen Mahdavi (2000, Westview Press). See photos
here.
Mahdavi was born in Tehran and educated at the London School of Economics
and Political Science, University of Utah and the University of London.
Prior to the Iranian Revolution she taught at the Institute of Social Research
in Tehran, was involved in research in the field of social affairs and
served as an advisor to the government. She has written extensively on
various aspects of Iranian history with special emphasis on the nineteenth
century.
Haj Muhammad Hassan [Amin al-Zarb] became involved with the Mint in
1294/1877 in a decade of crisis for the Persian monetary system, which
was on a bimetallic standard. This crisis was related to both internal
and external causes as well as bimetallism. Prior to that date there were
local Mints in all the major towns of Iran: Tehran, Tabriz, Rasht, Hamadan,
Kirmanshah, Kashan, Isfahan, Shiraz, Yazd, Kirman, Mashhad and Mazanderan.
The provincial Mints were farmed out by the governor to the highest bidder,
and the Mint farmers were at liberty to mint coins of gold, silver and
copper. The major monetary units were the gold tuman, the silver qiran,
and the copper shahi, as follows:
Persian Monetary Denominations
-- 1 gold tuman.............equivalent
10 silver qirans
-- 1 silver qiran.............equivalent 20 copper shahis
-- 1 shahi......................equivalent 50 dinars
-- 4 shahis
also called abbasi..........equivalent of 200 dinars
-- 2 shahis
also called sannar.........equivalent of 100 dinars
-- 1 shahi
also called 2 pul...........equivalent of 50 dinars
-- 1/2 shahi
also called pul..............equivalent of 25 dinars
-- 1 pul.........................equivalent of 2 jandaks
-- 1 jandak
or 2 ghaz......................equivalent of 12 1/2 dinars
-- 1 ghaz.......................equivalent of 6.25 dinars
The basic coin of everyday use in Persia with which most daily transactions
were carried out was the copper coin shahi and the unit of currency with
which ordinary people dealt with daily was the dinar. The preponderance
of the currency in circulation consisted of copper coins. However, these
coins can not be considered as money, in the way the term is generally
understood, but were more like convenient tokens as their exchange value
into silver constantly declined and copper coins could not be redeemed
at par.
There was a vast difference in value between coins minted in different
towns. Rabino reported that in 1877 there was a difference of 17% in value
between the qiran of Hamadan and that of Tehran. This disparity created
difficulties in the financial system of the country as a whole.
The Money Market Review of February 24th 1866 commented on the situation
thus:
It is especially to be remarked that every province (there are thirteen
of them) is privileged with a mint of its own; and as each mint master
invariably has to pay for his place to get back his money, and profit by
speculation into the bargain, is of course his chief object. He, therefore,
gives short weight, and, moreover the coin just struck is no sooner circulated
in the bazaar than a host of clippers use their scissors to their advantage,
and to the detriment of the public. This is the more easy as none of the
present Persian coins have milled edges...
The copper coin was consequently, as can be seen from the above report,
also the coin manipulated by provincial officials to subsidize their income.
Not only in Gilan but in other places too frequently the copper coins were
withdrawn and reissued after heavy taxation by changing the value of the
new coin. This happened either at Naw Ruz or when the governor was changed.
The best way of describing this process is with the old saying about "going
to bed with a ten penny piece in one's breeches and finding only five there
in the morning", since if a person had not turned in the old ones
and obtained new ones, he woke up in the morning to discover the old ones
worthless. Simultaneously, for every ten old coins returned only five new
ones were received. In this way each time the authorities withdrew the
old coins, they were left with a substantial number of additional new coins
with which to pay for their bureaucratic expenses such as salaries. As
a result people in any locality were forced to convert copper coins into
gold or silver before their value changed. This fact also contributed to
the preponderance of foreign bullion coins in circulation, primarily Russian
coins in the north and Indian rupees in the south...
The chaotic internal monetary situation then consisted of the following:
coins of differing value were struck at various mints throughout the country;
as they did not have milled edges they were clipped, further reducing their
value; and silver and gold were being exported whilst there was a large
balance of trade deficit. All of the above factors combined to create inflation...
***
Haj Muhammad Hassan became involved with the Mint in 1294/1877-8. This
involvement came about through Aqa Ibrahim Amin al-Sultan, a prominent
courtier and already member of the Dar al-Shura-yi Kubra. head of the royal
stables and other court departments and granaries of Tehran, who was to
become head of the Mint. Haj Muhammad Hassan had a longstanding relationship
with Aqa Ibrahim from the early days of his arrival in Tehran, and was
in many ways considered his protégé. It was in this year
that the nineteen provincial Mints were closed and a new automated plant
installed in Tehran. It is of interest in understanding the functioning
or lack thereof of the Qajar government system, to note that the new automated
plant was bought in 1863, and stayed in Rasht for over a decade. In 1866
Mr. Dickson reported:
Some machinery purchased in France for remodeling the Persian currency
has, since its arrival in Rasht, remained there embedded in the mud, those
concerned in the matter protesting that owing to its weight and bulk it
can not be transported. The truth, however, appears to be that the Mint
authorities find that it suits their purpose better to continue their present
system of issuing an uncertain coinage whereby they are said to make large
profits.
The sources are not clear as to whether it was this old machinery which
was repaired and brought to Tehran or whether new machinery was imported.
`Abdullah Mustawfi says that Amin al-Sultan imported new machinery with
the aid of Haj Muhammad Hassan, whereas Amin al-Dawla, who was the farmer
of the Mint at this time, says that he offered to repair the old machinery
which involved less cost, making the Shah happy and that it was the old
machinery which was installed. In either case the Mint became centralized,
with automatic machinery installed and new silver coins of 900 fineness
struck. The supply of bullion for the new coins came both from newly imported
silver bullion and remelting the provincial coins. After the departure
of Herr Pechan the new Mint was farmed out to Aqa Ibrahim Amin al-Sultan
but it was probably Haj Muhammad Hassan who was the overseer of technical
matters, as traditionally sarrafs specialized in the assaying of metals
and coins. It was thus that he was given the title Amin Ayyar (the Assayer
General) in 1294/1878, and later in the same year the title of Amin al-Zarb
(literally the Trustee of the Mint). It was not however until 1296/1879
that he was put in charge of the Mint. The decree of the Royal command
of his appointment reads as follows:
Haj Muhammad Hassan Isfahani who has been looking after the regulation
and the administration of the government Mint and the correct assay of
its currency has been favoured with our grace due to the attestation and
appeal of the loyal servant of the crown Amin al-Sultan. The aforesaid
person has been appointed as the trustee of the government Mint and three
hundred tumans from the one thousand tumans allocated to the assayers of
the Mint we grant to the above-mentioned Haji conditional upon the fact
that Amin al-Sultan acknowledges him as the trustee of the Mint and gives
him the above mentioned salary. (30th Jamadi II 1296, 22 June 1879.)
Above the decree is the seal of Nasir al-Din Shah and in the right hand
border his signature. According to the above decree Amin al-Zarb's salary
was approximately 1 tuman per day.
From 1296/1879 onwards most sources foreign and native report that Amin
al-Zarb was the Master of the Mint, which the Shah had farmed out to him
for 25,000 tumans annually. However, both the above decree, the unfinished
biography and Amin al-Dawla seem to contradict this assertion. According
to the decree, it is Aqa Ibrahim Amin al-Sultan who is in charge of the
Mint; according to Amin al-Dawla, it is Mirza `Ali Asghar Khan Amin al-Mulk
(later Amin al-Sultan, Prime Minister and Atabak `Azam); and according
to the unfinished biography both father and son. In reality there is no
contradiction in the various statements as the Shah delegated responsibility
for the Mint to the two Amin al-Sultans but Amin al-Zarb became responsible
for the actual daily operation. Whatever the truth of the exact running
of the Mint and the division of its profits, from this point onwards according
to contemporary accounts, hostile to Amin al-Zarb and recorded for posterity,
the whole onus of Persia's longstanding financial crisis fell upon the
shoulders of Amin al-Zarb. This has been disputed by some present day writers
and will be discussed later.
There can be no doubt that the only professional amongst the triangle
of persons involved with the Mint was Amin al-Zarb. From generation to
generation his forefathers had passed on the technique of assaying gold
and silver and it was always Amin al-Zarb who was called upon when such
a service was required.
The great yearning of all Persians involved in the country's finances
was for the discovery of silver mines. From time to time reports accompanied
by samples would come about the presence of silver in certain areas. On
such an occasion the Shah and the whole court would come to the Mint and
Amin al-Zarb would perform a public assaying.
Amin al-Zarb, being by this time the most prominent merchant, at the
same time as being involved with the Mint, was in a unique position to
have an overview of the problems associated with Persian methods of financial
transactions, which were done through barats and sarrafs or through transporting
cash in coins, there being no bank notes, from town to town. Aside from
the insecurity of transporting cash due to robbers, the logistics of such
a method are amazing. Rabino describes that a porter could carry about
L 300 in silver, an ass about L 600, a mule L 800 and a camel L 900. Therefore
the transportation of L 25,000 took 83 men, or 41 donkeys, or 31 mules
or 28 camels. To count and check this sum of money it would take an expert
moneychanger 16 days.
Amin al-Zarb, who was dealing with and conscious of these difficulties,
proposed in a letter to the Shah in 1296 /1879 the formation of a national
bank with private and public capital, a decade before the formation of
the Imperial Bank of Iran. After the preliminary remarks as required by
custom and court etiquette, he said in the letter;
...Obviously Your Majesty has observed the state of affairs in Europe.
Previously the conditions in Europe were not as they are now; people lived
in hardship accompanied by much inconvenience. [illegible] from adversity
they produced many innovations. They thought of building steam ships. A
few of them gathered together and built [them] and operated them. When
they saw that there is profit in it, they built railways and telegraph
lines. [Then] they turned to building factories for silk reeling, sugar
making, crystal producing, brocade and felt making; to such an extent that
finally they supplied all the needs of the people with steam factories.
They know that it is [illegible] not to abandon the slightest technique
they acquired and applied themselves daily so that the task would be accomplished.
Thank God that there is nothing about the people of Iran which is any less
than those of Europe.
Summing up the whole it can be said that everything about Iran is better
than Europe. The main thing which has been the cause of European progress
is the formation of a bank. First they established a bank. When people's
money collected in the bank with the credit and capital of the bank they
accomplished great feat. They entered into large commercial transactions,
and important factories were built with money from the bank bringing about
the development of the country. It is evident that one or two people do
not have the capability to initiate and carry through great tasks. The
co-operation of the government and the people is needed for the accomplishment
of great works... The possibility of establishing a bank in Iran is better,
easier and greater than anywhere else in the world. Should this bank be
set up and credit established, from foreign countries they will give their
money into the bank's keeping and everyone will put whatever they have
into the bank, even the widows of Iran, each of whom has ten misqals of
gold or silver, will turn it into money and put it in the bank.
The procedure for the establishment of the bank is that four prominent
merchants should be the supervisors of this bank. And the bank should be
a governmental bank and the government should deposit one hundred to two
hundred thousand tumans in the bank as though it were being kept in the
royal treasury. A royal decree should be issued [to the effect] that this
bank belongs to the government, the debt of this bank is the debt of the
government and the claim of this bank is the claim of the government. A
special location should be assigned to this bank so that its special branches
can take in money from the people [who when depositing] should receive
an interest of one shahi per tuman and [when borrowing] they should pay
an interest of one hundred dinars per tuman and [with the money] buy and
sell merchandise. [The details] of its organization is lengthy and does
not fit into this petition. After the bank is established and has been
running for six months, shows profit, and it is noticed that it is a correct
and valid venture, it will attract attention. After [illegible] passes
this very same bank could start preparation for some important factories
which would alleviate the needs of the people of Iran from some European
goods. It can gradually and easily make preparation for railways and construct
them.
Assuming that the bank in the course of one year makes a profit of fifty
thousand tumans, preparation for a railway can be made in Europe. When
the preparations are completed, the road from [illegible] to Rasht can
be paved and with that fifty thousand tumans equipment a railway will be
built. After it is constructed there will be an income from transport charges
of 200 to 300 tumans daily. When people hear, see and understand that it
is possible and is making progress then the bank can make an announcement
that whoever wants to buy shares in the building of railways from Rasht
to Qazvin, the bank will go into partnership with them. Anyone can give
as much money as they want and accordingly the profits will be divided.
There are people in Iran who have money.
They pay a thousand tumans for a country estate from which they do not
even have an income of 500 tumans. How can they prevent themselves from
participating in railways when they can make ten kurur more in participating
in railways and the railway will be constructed by itself [without any
effort on their part]. Whatever factories are needed will come by themselves.
These things are not possible unless a reputable bank is founded. The formation
of a reputable bank does not involve any work and is possible in the simplest
and easiest manner. [All that is needed] is credit and security from those
in charge of the government. Should the remarks of your humble devoted
servant be acceptable to the blessed dust of the throne then the matter
can be referred to the Majlis-i Darbar A`zam and should they in unison
sign this petition, God willing a correct and reputable bank will be established.
Command is the sacred command of His Imperial Majesty. This petition is
that of the obedient devoted servant Haj Muhammad Hassan Amin dar al-Zarb.
-- 15 Sha`ban 1296/4th August 1878.
This letter is of importance from many different points of view, and
that is the reason why it has been produced in full. In the first place
the fact that Amin al-Zarb took it upon himself to propose to the Shah
projects of national importance suggests that by this time he had developed
a close enough relation with the Shah to be in a position to dare to make
proposals which the Shah might have thought of himself. It was the Shah
who had gone to Europe and seen the functioning of the various institutions.
Amin al-Zarb himself had not yet been to Europe. The letter presents the
picture of a man of vision who although preoccupied in the extreme with
private and public enterprises is concerned for the welfare and future
fate of his country. His emphasis on the construction of railways sprang
from his own personal experiences as a merchant, realizing that the greatest
impediment to the development of commercial enterprises in the country
was the lack of an efficient system of transport. Finally, his recognition
of the fact that economic progress depended upon industrialization, which
in turn like any other national venture depended on the participation of
the people whilst being initiated by the government, is of major significance.
See photos here.
