Abstract
This chapter examines colonial and post-colonial monetary policies in the Arabian Sea in the middle decades of the twentieth century and their circumvention through gold smuggling. Mathew delineates the diasporic financial networks that connected populations around the coasts of the Arabian Sea and the British banks and imperial monetary systems that tried to govern their transactions. Then the chapter moves through the Second World War and the period of decolonization to show how these merchant networks continued to subvert monetary policies, forced post-colonial governments to reform their policies and ultimately helped to hasten the end of the Sterling Area in the 1960s.
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Notes
- 1.
Rajat Kanta Ray, ‘Asian Capital in the Age of European Domination: The Rise of the Bazaar, 1800–1914,’ Modern Asian Studies 29:3 (July 1995) 449–554; Sugata Bose, A Hundred Horizons: The Indian Ocean in the Age of Global Empire (Cambridge, MA, Harvard University Press, 2006), chapter 3; Claude Markovits, The Global World of Indian Merchants, 1750–1947: Traders of Sind from Bukhara to Panama (Cambridge, UK, Cambridge University Press, 2000); Pedro Machado, Ocean of Trade: South Asian Merchants, Africa and the Indian Ocean, c.1750–1850 (Cambridge, UK, Cambridge University Press, 2014).
- 2.
R.K. Seshadri, From Crisis to Convertibility: The External Value of the Rupee (Madras, Orient Blackswan, 1993); S.K. Verghese, ‘International Monetary Crises and the Indian Rupee,’ Economic and Political Weekly 8:30 (July 28, 1973) 1342–8; G. Balachandran, John Bullion’s Empire: Britain’s Gold Problem and India Between the Wars (Richmond, UK, Curzon, 1996).
- 3.
See for example: Phillip W. Bell, The Sterling Area in the Postwar World: Internal Mechanism and Cohesion, 1946–52 (New York, Oxford University Press, 1956); Susan Strange, Sterling and British Policy: A Political Study of an International Currency in Decline (Oxford, Oxford University Press, 1971); Catherine Schenk, Britain and the Sterling Area: From Devaluation to Convertibility in the 1950s (London, Routledge, 1994); Catherine Schenk, The Decline of Sterling: Managing the Retreat of an International Currency, 1945–1992 (New York, Cambridge University Press, 2010).
- 4.
Balachandran, John Bullion’s Empire; Lawrence Officer, ‘Gold Standard,’ EH.Net Encyclopedia, Robert Whaples, ed., March 26, 2008, http://eh.net/encyclopedia/article/officer.gold.standard; Barry Eichengreen, Golden Fetters: The Gold Standard and the Great Depression, 1919–1939 (New York, Oxford University Press, 1996); Ian M. Drummond, The Floating Pound and the Sterling Area, 1931–1939 (Cambridge, UK, Cambridge University Press, 1981).
- 5.
Johan Mathew, ‘Moral Economies of Violence along the Arabian Sea Littoral,’ in Trading Circuits, Mobile Cultures: Port Cities and Littoral Societies of the Indian Ocean (unpublished manuscript); Lakshmi Subramanian, Indigenous Capital and Imperial Expansion: Bombay, Surat and the West Coast (New Delhi, Oxford University Press, 1996); Sanjay Subrahmanyam and C.A. Bayly, ‘Portfolio Capitalists and the Political Economy of Early Modern India,’ Indian Economic & Social History Review 25:4 (December 1988) 401–24; Mohammed Reda Bhacker, Trade and Empire in Muscat and Zanzibar: The Roots of British Domination (London, Routledge, 1992).
- 6.
Ray, ‘Asian Capital in the Age of European Domination’; Wambui Mwangi, ‘Of Coins and Conquest: The East African Currency Board, the Rupee Crisis, and the Problem of Colonialism in the East African Protectorate,’ Comparative Studies in Society and History 43:4 (October 2001) 763–87; Charles Schaefer, ‘Selling at a Wash: Competition and the Indian Merchant Community in Aden Crown Colony,’ Comparative Studies of South Asia, Africa and the Middle East 19:2 (1999) 16–23.
- 7.
National Archives of India: Department of Commerce and Industry, Sept. 1905, Commerce and Trade Branch, Proceedings 11–23, File 19, Report of H.W. Maclean on the Conditions and Prospects of British Trade in Persia &c. in Secretary of State for India to Government of India 22/7/1904.
- 8.
Regarding this “complementarity” of currencies see Akinobu Kuroda, ‘The Maria Theresa Dollar in the Early Twentieth-Century Red Sea Region: A Complementary Interface between Multiple Markets,’ Financial History Review 14:01 (2007) 89–110.
- 9.
See Machado, Ocean of Trade, chapter 1.
- 10.
Guildhall Library, Eastern Bank Records: 39, 010/20 N.S. Golder, Eastern Bank London to M. Gunn, Eastern Bank Bahrain 9/4/1948; Report by Mr. Findlay 1/10/1947; British Library, India Office Records (Henceforth IOR): R/15/6/189 Said bin Taimur, Sultan of Muscat, to Hickinbotham, Political Agent in Muscat 10/10/1939, p. 208; Government of India Foreign Department to Secretary of State for the Commonwealth, Memorandum No. 5978, 28/5/1948, p. 120; Mathew, Margins of the Market, chapter 4.
- 11.
Schaefer, ‘Selling at a Wash.’
- 12.
IOR: R/15/5/309 Political Agent in Kuwait to Political Resident in the Persian Gulf 6/1/1941; MSS Eur C446 Anecdotes of Smuggling in Bombay in the 1930s.
- 13.
IOR: R/15/2/352 Report from Cairo Censorship, 6/3/1941m p. 69; C.G.L. Grenier, Customs Director Bahrain to Alban, Political Agent in Bahrain 6/5/1941.
- 14.
Patrick B. Sweeney, ‘A Game Warden’s Permit for a Corpse: The Life and Times of a Customs Officer’ (Unpublished MSS in British Library, n.d.) 155.
- 15.
IOR: R/15/2/351 Special Report by A.B. 4/3/1941, p. 217.
- 16.
IOR: R/15/3/309 Chancery, British Embassy Baghdad to Intelligence Bureau, Government of India 30/4/1940; Anonymous letter to Financial Secretary, British Embassy Baghdad 27/4/1940.
- 17.
IOR: R/15/3/309 VG Matthews, Collector of Customs Bombay to Central Board of Revenue, Simla, 3/6/1944.
- 18.
IOR: R/2/596/7 Maneklal Lallubhai, Member of State Council Junagadh to McClenaghan, Collector of Salt Revenue, Bombay 29/3/1941; Report from anonymous informer 14/3/1941; Reports by Customs Agents 18/3/1941.
- 19.
IOR: R/15/2/352 Report from Cairo Censorship, 6/3/1941, p. 69; C.G.L. Grenier, Customs Director Bahrain to Alban, Political Agent in Bahrain 6/5/1941; R/15/3/309 Collector of Excise and Salt Revenue Madras Presidency to Political Agent in Kuwait 20/5/1942.
- 20.
British Library, India Office Records (IOR): R/15/3/309 Collector of Central Excises and Salt Revenue, Madras, Order No. D351, 28/5/1943.
- 21.
IOR: R/15/5/309 Collector of Central Excises and Salt Revenue, Madras, Order No. D351, 28/5/1943; Political Agent in Kuwait to Political Resident in the Persian Gulf 16/5/1944; Indian Censor intercept—Fahad Khalifah Shaheen Al-Ghanim, Bombay to Abdul Latif Mohammad Thaniyan, Kuwait 25/3/1944.
- 22.
IOR: R/15/5/309 Anonymous letter to Financial Secretary, British Embassy, Baghdad 27/4/40.
- 23.
IOR: R/15/2/352 Capt. J.B. Howes to Political Agent in Kuwait 16/8/1941, p. 58; R/15/2/351 Political Agent in Bahrain, Memorandum No. 148, 21/5/1940; R/15/2/352 Conclusions of a conference regarding gold and silver smuggling in Bahrain 28/2/1942, pp. 200–2; A. Gunn, Eastern Bank to Political Agent in Bahrain 7/4/1942.
- 24.
IOR: R/15/2/351 Political Agent in Bahrain, Memorandum No. 148, 21/5/1940; R/15/2/352 Capt. J.B. Howes to Political Agent in Kuwait 16/8/1941, p. 58; R/15/5/309 Political Agent in Kuwait to Collector of Customs, Karachi 7/2/1942; Imperial Bank of Persia, Kuwait Branch to Imperial Bank of Persia, Basra Branch 6/5/1942.
- 25.
IOR: R/15/2/352 p. 25, Political Agent in Bahrain to Hickinbotham, Political Agent in Kuwait 11/5/1942.
- 26.
IOR: MSS Eur C446 Anecdotes of Smuggling in Bombay in the 1930s.
- 27.
IOR: R/15/2/352 Political Agent in Bahrain to Hickinbotham, Political Agent in Kuwait 11/5/1942, 25.
- 28.
Bell, The Sterling Area in the Postwar World; Schenk, Britain and the Sterling Area.
- 29.
Schenk, Britain and the Sterling Area, 10, 25–26.
- 30.
IOR: R/20/B/1622 Governor of Aden to Secretary of State for the Colonies 24/7/1948; Secretary of State for the Colonies to Governor of Aden 12/10/1948; R/20/B/1623 Note from A. Besse 10/10/1955.
- 31.
Hamish McDonald, The Polyester Prince: The Rise of Dhirubhai Ambani (St. Leonards, Australia: Allen & Unwin, 1999) 15.
- 32.
IOR: R/15/5/310 R.H. Newall, Commercial Secretary, British Legation, Beirut to Under-Secretary, Commercial Relations and Exports Department, Board of Trade 23/9/1949.
- 33.
National Archives of the United Kingdom: FO371/4978 Political Resident in the Persian Gulf to Foreign Office, Eastern Department 6/5/1949.
- 34.
Saudi Arabian Monetary Agency, ‘Saudi Currency,’ The Historical Framework of the Currency of Saudi Arabia, 2014, http://www.sama.gov.sa/sites/samaen/Currency/Pages/HistoricalInfo.aspx.
- 35.
IOR: L/E/8/7831 Commonwealth Relations Office to E.A. Midgley, Office of the High Commissioner, New Delhi, April 1949; Foreign Office to British Middle East Office, Cairo and Jedda, 6/5/1949; Michael E. Edo, “Currency Arrangements and Banking Legislation in the Arabian Peninsula,” Staff Papers—International Monetary Fund 22:2 (July 1, 1975) 510–38, https://doi.org/10.2307/3866487.
- 36.
Edo; Saudi Arabian Monetary Agency, ‘Saudi Currency.’
- 37.
State Bank of Pakistan, Annual Report (1951) 7; James Russell Andrus and Azizali F. Mohammed, The Economy of Pakistan (Stanford: Stanford University Press, 1958) 373; Peter Symes, ‘The Haj Notes of Pakistan,’ Banknotes of Pakistan, May 1999, http://www.pjsymes.com.au/.
- 38.
Reserve Bank of India Act (Amendment) May 1, 1959; Republic of India, “The Foreign Exchange Regulation Act” (1973); J. O. Ronall, “Banking Developments in Kuwayt,” Middle East Journal 24:1 (January 1, 1970) 87–90.
- 39.
‘Gold Smuggling from Kuwait Ends: Indian Currency May not be Withdrawn,’ The Times of India, November 12, 1958, 1; ‘Reserve Bank Bill Passed: Bid to Curb Smuggling,’ The Times of India, April 30, 1959, 8; Pranay Gupte, Dubai: The Making of a Megapolis (Penguin Books India, 2011) 413; Peter Symes, ‘Gulf Rupees,’ Banknotes of the Arab World, December 1999, http://www.pjsymes.com.au/.
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Mathew, J. (2019). Gilding the Waves: Gold Smuggling and Monetary Policies Around the Arabian Sea, 1939–1967. In: Serels, S., Campbell, G. (eds) Currencies of the Indian Ocean World. Palgrave Series in Indian Ocean World Studies. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-20973-5_8
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