The small change crisis in Egypt in 1941

Nickel metal globally

As tensions escalated during World War II, and by the second quarter of 1941, nickel became increasingly scarce for coinage due to its use in weapons manufacturing. Priority for supplying the metal shifted to war factories rather than mints, driving up the price of nickel ore. Nickel became a strategic commodity, with warring nations vying for it, leading to a surge in its price. Britain and the United States controlled global nickel exports to prevent Germany from accessing it, particularly nickel sourced from Canada, which produced approximately 1 TP3 T80% of the world's nickel ore. This created a crisis for mints and countries that relied on nickel for their coins. Consequently, many mints worldwide turned to other metals to produce coins for circulation. Several European countries switched to zinc during the war, while others, like the United States, opted for steel. Even Canada, once a major nickel producer, resorted to using copper.

impact Nickel on the Egyptian market

News of the high price of nickel spread among greedy individuals in Egypt, leading some manipulators (as described by Egyptian newspapers) to hoard nickel coins circulating in the markets. This made it difficult for the public to exchange money and obtain small change. The crisis worsened in October 1941, creating a shortage of small change known as the "change crisis." An Egyptian newspaper, published on October 23, 1941, reported that merchants were demanding 6 to 10 piasters to break down a pound into piasters and two-piaster coins. The newspaper also noted that tram and bus workers, as well as passengers, were suffering due to the crisis, as they lacked change, leading to disruptions in tram and bus services. Shopkeepers were also affected by the crisis, but they faced greater difficulties than tram and bus workers due to their different circumstances.

military order

Returning to the previous day, October 22, 1941, Military Order No. 188 concerning nickel and bronze coins was issued. This order was issued on the first day of Eid al-Fitr, as the shortage of small change was particularly acute during Ramadan due to the public's increased need for small bills. Based on this order, Egyptian security forces raided several homes and shops, seizing large quantities of nickel coins that their owners had hoarded. The seized coins were then released into circulation, and the Ministry of Finance announced a reward of one-quarter of the confiscated amount for anyone who provided information leading to the arrest of someone withdrawing nickel coins from circulation for hoarding. Regarding postage stamps, a newspaper article noted that postage stamps had become a substitute for small change in many shops. Shop owners and customers would either complete the missing piaster or two with stamps of the same denomination. Other shops refused to deal with postage stamps, and their employees would ask those wishing to buy if they had “change” before they offered them what they wanted to buy.

Egyptian regions

In Daqahliya, nickel coins disappeared from the markets until transactions became limited to the exchange of postage stamps. The passenger would pay the fare twenty millimes in postage stamps and take the change of five piasters in postage stamps. Bus workers and craftsmen accepted dealing with postage stamps, but railway employees refused the stamps.

اFor a breakthrough

The crisis began to ease gradually after the British Embassy agreed to the Ministry of Finance’s request to transfer quantities of nickel coins minted in Birmingham, which arrived in November of the same year. The crisis was completely resolved in December, specifically on the first day of Eid al-Adha, when King Farouk recommended that the Ministry of Finance open its doors on the first day of the Eid holiday to distribute large quantities of nickel coins to companies, cinemas, and hotels.

Dr. Mazen Ibrahim

Sources: Egyptian newspapers between October and December 1941