The Historical Framework Of The Currency Of Saudi Arabia

Saudi Currency

Historical Background:

Before the capture of Riyadh by King Abdulaziz Bin Abdulrahman Alfaisal in 1319H (1902G.), political anarchy and chaos prevailed all over Arabia. Conflicting loyalties created rival and antagonistic parties engaged in tribal disputes with no common cause to bring them together. Practically, each area was an independent region on its own. Our understanding of the present state as a distinct political entity never existed at that time. These miserable conditions lead to the collapse of all economic capabilities and potentials, transforming most of the communities of that time into poor nomadic tribes depending on barter system to deal in trade and commerce. Such conditions were very much typical of the inner parts of Arabia.

Political deterioration and economic collapse disabled many of the economic resources and activities of the local entities and tribal affiliations. Poverty and bankruptcy rendered the majority of the people unable to pay the heavy tax levied by the Ottomans. Tax, as well known, was the most important source of income for the Ottoman Empire and regional representatives who ran affairs on behalf of the Ottomans in Arabia. People remained impatient to rid themselves of that cruel political order which burdened them with such obligations compelling them to shrink back into backwardness and ignorance.

The capture of Riyadh by King Abdulaziz was the beginning of the real great change in the whole area. The beginning of the Twentieth century ushered the Third Era of the blessed Saudi Reign paving the way for the dawn of a new future for Arabia. Soon the new Saudi Era began to build solid bases for prosperity, stability and permanent security in the different parts of the area. By the blessings of Allah and the efforts continuously exerted since the early days of King Abdulaziz, the Kingdom of Saudi Arabia has evolved to become, in our modern times, a seat of commerce in the Islamic and Arab worlds and a basic important element in international economy.

Since the time when he captured Riyadh and set out to unite the country under The Banner of Tawheed (Oneness of God), King Abdulaziz has always been a fascinating character. For, even under such unfavorable circumstances, poor resources and global conflicts, he managed to establish a vast country based on solid rules and regulations to protect and secure its continuity depending, first of all, on the codes of Islamic Sharia, then on his own far sight and care for the interests of his nation.

The patient gradual reforms introduced by King Abdulaziz to the poor and chaotic monetary system and his successful creation of a special independent national monetary system, reflex the wise way by which he lead his country. When King Abdulaziz took over, various foreign gold, silver and bronze currencies were commonly used side by side in Arabia, regardless whether any of these currencies belonged to an existing country or not.

After capturing Riyadh, King Abdulaziz continued his endeavors to unite the country. Temporarily, he accepted the prevailing monetary situation but still he was preoccupied by the idea of establishing a single local monetary system. Money, as he realized, constituted one of the most important pillars for the sovereignty of the State and is one of the three bases for power. Therefore, in that early stage of the process of unifying the country, and in order to control monetary conditions in the markets of the Sultanate of Najd, he thought of issuing a copper coin currency for the Sultanate of Najd to control monetary conditions in local markets.

At that time, many different foreign currencies of the Ottoman Era continued to circulate. The most important of these was the Austrian Taler, also named "Maria-Theresien-Thaler" and locally called “Alriyal Alfransi”, literally “French Riyal”. Under this name, this currency was commonly used in most of the regions of the Arabian Peninsula and even in some other Arab countries. The Austrian Taler is a big one-ounce silver bullion -coin. For its accuracy, it became a weighing unit and remained used as such until now in local traditional markets. Although parts of Arabia were under the rule of the Ottoman Empire, people greatly trusted this Austrian coin, relied on it, and refused to use any other currency, not even an Ottoman one, as the main currency in carrying out their trade dealings. Some of the Ottoman administrative officials had to ask Istanbul, the seat of the Ottoman Empire, to supply them with big quantities of the French Riyal to meet the immediate needs of their regions.

Along with this “French Riyal”, other various Ottoman gold, silver and copper coins were used. However, preference was more for silver and copper (i.e.; the copper nickel) coins due to multiplicity of their denominations.  

Most famous of the Ottoman coins was “Alriyal Al-Majidi” (named after the Ottoman Sultan Abdulmajeed), and its subdivision “Para”, the plural of which is “Parat”. The front of this coin shows the full name of the Sultan signed in Tughra style inscription and the number of the years the Sultan reigned. The back of the coin shows the date and place of minting in addition to the date of taking over by the Sultan.   

The British Sovereign was as famous as the “French Riyal”.  It was given local names such as “Jineah George (George’s Guinea) because the coin was minted during the reign of “King George V”. The coin was also known by another local name; “Jineah Abu Khiyal” (Guinea of the Horseman) because a shape of an equestrian was embossed on the back of the coin. This coin came to Arabia from India, the Crown of the British Empire. There was great demand for this coin because it was of pure gold and had a stable weight. Indian Rupees, actually British coins minted during the British occupation of India, were also used in most of the Arabian region, particularly at the shores of the Arabian Gulf and the Red Sea. The profile the King of England embossed on these coins is a proof that they were actually British money. In addition, coins from Egypt, many other countries neighboring Arabia, East Asia and Eastern India (presently Indonesia) were also used.  

In these overwhelmingly chaotic conditions, King Abdulaziz worked hard to drive through and find some way to control monetary complications of his country. The first step, prior to the year 1340H (1992G.), was to counterstamp the word (Najd) on some of the commonly used and widely circulated currencies. The word was embossed on the French Riyal, Indian Rupees and its subdivisions. Likewise, it was also counterstamped on the Ten, Twenty, Forty Barat of the Ottoman Copper (and Copper nickels) in addition to the Five Qirshes (ie; Piasters) of some of the Turkish coins. The same was also done to the Two, Five, Ten and Twenty Qirshes of some of the Egyptian coins struck during the era of Egyptian Sultanate.  

This was the first step to establish reform. By this move, King Abdulaziz wanted to inform money exchangers and dealers that only the coins marked by (Najd) were the recognized official currency of his State. It was also a clear message to interpret the reality of the political situation in the Sultanate of Najd during that period. It was a bold step seen as the first stone laid by King Abdulaziz for the Saudi monetary system benefiting of the resources available at his hand at that time.

After the unification of Najd and Hijaz in 1343H (1925G), King Abdulaziz approved the use of the French Riyal, Ottoman coins and other foreign currencies prohibited in the past by former ruler of Hijaz Region, Shareif Hussein Bin Ali. As a protective measure, King Abdulaziz again gave his orders to counterstamp the word (Al-Hijaz) on these currencies. The rarest of these, perhaps, is the British monetary unit known as the (Bronze Penny) struck during the reign of King George V of Great Britain.

Although this move allowed for the flow of foreign currencies into the country, needs of the local market were still greater. This situation pointed out the importance of securing more coins to satisfy these needs. Accordingly, King Abdulaziz ordered the mint of more copper coins. These included denominations of the Half and the Quarter of the Qirsh. The front of the coin shows full name of the King (Abdulaziz Bin Abdulrahman Alfaisal Al-Saud) written in Tughra style inscription and the date of the mint (1343H.). The back of the two denominations shows their value and the place of minting; ie; Um Al-Qura. Therefore, both the Half and Quarter of the Qirsh denominations  can be considered as the first of the Saudi monetary issues because, like any ordinary currency of any other country in the world, these coins were legal tender, used under relevant specific decrees and distinguished by specific descriptions.   

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