Gold coins are disappearing!

Until 1914, Egypt disregarded the use of banknotes issued by the National Bank. Salaries for employees and workers were paid in gold, and people carried gold coins in their pockets and adorned themselves with them. When World War I broke out, the warring nations needed gold to pay for their purchases. Their banks and treasuries seized all gold coins and exchanged them for banknotes. The price of gold rose so high that the Egyptian government decided to follow suit. The need for gold was particularly acute at the outbreak of war for two reasons: the cotton harvest season and the need to pay for the crop, and the necessity of accumulating a large quantity of gold to meet all demands. Therefore, an order was issued on August 2, 1914, to cease the practice of paying banknotes in gold.

The public was uneasy about this decision, and in 1915 the government was forced to send new, stricter instructions to the branches of the Sultan's treasury and the provinces, requiring them to retain all gold currency they received and deposit it all into the public treasury. Furthermore, they were instructed to limit their dealings with the public and official departments to disbursing silver coins and banknotes. On this occasion, Al-Ahram newspaper noted that "the public in Egypt was not accustomed to carrying banknotes and storing them in the gold shop at the beginning of the current crisis. Most people, even in financial institutions, preferred the gold pound to the paper currency of its value. Whoever received gold would keep it in their possession and not spend it except in cases of extreme necessity. Now (in 1950), however, the fondness for gold has diminished."“

The people suffered from the circulation of these papers, as they were not used to exchanging the currency that they, their fathers, and their grandfathers had used for another currency. There were many incidents that indicated the Egyptians' ignorance of the use of this currency. The Egyptian could not imagine how the gold pound had disappeared from his pocket and been replaced by a piece of paper. He considered that the world had become less good with the disappearance of gold from his hand and the rise in prices. All Egyptians did not want to deal with paper, even the civilized ones did not trust except gold and silver, so what about the rural peasant who had never seen this paper in his life? If he was told that “money has been replaced by paper,” he would mock the one who said it and laugh and could not believe it. The government began to enact laws of punishment for those who did not accept dealing with this paper.

Incidents abounded and filled the newspapers of the time. For example, it was reported that three people tore a ten-pound note into three equal pieces, each taking a piece! Other newspapers wrote: “Banknotes have become so plentiful that the public is finding it difficult to spend them, and some are even accepting ten silver piasters instead of a five-pound note.” Al-Ahram newspaper recounted: “A donkey ate its owner’s loaf of bread, and inside the loaf was a ten-pound note. It was also said that a man placed the note, the price of his cotton harvest, beside him, and his wife took it and burned it under the teapot. And it happened that a woman found a banknote under her husband’s pillow and, believing someone was casting a spell to drive him away, took it, burned it, and threw it into the canal!”

While the demand for silver increased, leading to a scarcity of this small coin, Al-Ahram newspaper reported: “The silver crisis is intensifying these days, affecting both private and public sectors. Many merchants are being deprived of many things because they lack silver coins to complete payments made in paper currency. If a customer buys goods for thirty piasters and gives the merchant a fifty-piaster note, the merchant will not find twenty silver piasters in his safe to settle the account and will be forced to take back the goods.” A similar situation occurred with silver coins during World War II, when people hoarded them, believing that silver was worth more than paper currency or bronze coins. The government was forced to punish those hoarding them!

Sources: Various issues of the Egyptian newspaper Al-Ahram

Moheb Rizkalla