A Riyal Mystery
For collectors of notes from Saudi Arabia, one of the most coveted notes is the first 10-riyal Pilgrims’ Receipt, issued in 1953. Fortunately, the note is not impossible to acquire, and the yearnings of the serious collector are sure to be satisfied, given time. But, what would be the reaction of a collector if they learnt that the 10-riyal note was not the only denomination issued by the Saudi Arabian Monetary Agency (SAMA) in 1953? What if, in addition to the 10-riyal note, 100- and 1000-riyal notes were also issued?
The possibility of the existence of two unknown Pilgrims’ Receipts in the denominations of 100 and 1000 riyals would appear unlikely, but perhaps not all that improbable. While there is scant evidence for their existence, the source suggesting their existence is impeccable, it is none other than SAMA!
The issue of Pilgrims’ Receipts was part of a plan, instigated through the International Monetary Fund (IMF) and the American ‘Point Four’ program at the request of King Abdul Aziz, to provide a stable monetary system for Saudi Arabia. Until the early 1950s, there was no official currency in Saudi Arabia and all financial matters relating to the income and expenditure of the Kingdom were handled by the King and his advisers, as the wealth of the Kingdom was the private property of the King.
Although various attempts had been made to introduce standard coins for use throughout the Kingdom, these had failed because the coins were made from gold or silver. During a period when the value of gold and silver fluctuated greatly, many people were able to make a profit by purchasing coins at their face value and selling them for their bullion value. At one stage it was profitable enough for entrepreneurs to counterfeit full-bodied gold sovereigns of the Kingdom, so that they could exchange them for silver riyals. The Kingdom had fixed the value of one gold sovereign to forty silver riyals, and when the price of silver increased, the value of silver in forty riyals was worth more than the gold in the sovereign.
As well as facing difficulties with currency, the Kingdom was being overwhelmed with income from oil revenues. Although various schemes for a central bank had been proposed by advisers to the King and by various external banking authorities, the idea had been rejected due to Islamic prejudice against banks. Banks, by their very nature, earn profits from interest and the earning of interest goes against the teachings of the Koran. However, by 1950 the financial problems of the Kingdom had grown to such a level that action had to be taken, and in December of that year King Abdul Aziz petitioned the United States of America for assistance.
In President Truman’s inaugural address, delivered on 20 January 1949, he had announced a program for America’s foreign policy. In the speech he outlined four courses of action, the fourth course (or ‘Point Four’ of his foreign policy) was the delivery of aid to underdeveloped areas of the world in the form of technical assistance. Aid delivered under this policy became known as the Point Four program and, in response to the request from Abdul Aziz, America sent a team of experts to Saudi Arabia under the new assistance initiative.
Led by Arthur Young, the team looked at the possibility of creating a central bank for Saudi Arabia, as well as stabilizing and controlling currency, foreign exchange, and payments by the government. The plan prepared by Young was ultimately accepted by the King, although the charter of the central bank was to include a clause stating that interest was to be neither earned nor given. In creating a central bank, sensibilities regarding the title of the authority were appeased by referring to it as a ‘Monetary Agency’, rather than a ‘Bank’.
Royal Decrees numbered 30/4/1/1046 and 30/4/1/1047 authorizing the formation of SAMA were promulgated on 20 April 1952 (25 Rajab 1371H), and the Agency was inaugurated on 4 October 1952 (14 Muharram 1372H). The president of SAMA was Abdul Aziz Abdullah al-Sulaiman and the Vice President was Najjeb Ibrahim Salha. Following a recommendation by Arthur Young, George Albert Blowers, an American, became the first Governor of the Saudi Arabian Monetary Agency. Blowers had been the Governor of the Bank of Ethiopia and the General Manager of the Bank of Monrovia, Liberia (both authorities being Central Banks of their respective countries). The Deputy-Governor of the Bank was Rasem Bey Khalidi, who had been the manager of the Arab Bank in Jidda. Other directors of the Agency were Salem bin Mahfouz and Hussain al-Attas.
Following a number of reforms, including the issuance of gold and silver coins under the control of SAMA (but which had been ordered prior to the creation of SAMA), the Agency turned its attention to the issuance of paper money. Although SAMA was specifically denied authority to issue paper currency under its charter, George Blowers and his team circumvented the strict letter of the law by issuing ‘Pilgrims’ Receipts’, as a form of traveller’s cheque. The plan to issue the receipts was announced to the public on 23 July 1953 and they were introduced into circulation two days later on 25 July 1953 . (The date of 29 July, or 18 Dhu’l Qa’dah 1372, has also been given as the date the receipts were introduced .)
It is at this point that the question of what denominations were actually issued is raised. Most references to the first issue of Saudi Arabian Pilgrims’ Receipts nominate the issue of only one denomination – a 10-riyal note. However, the following extract from the International Financial News Survey (issued by the IMF) suggests otherwise. The source of this extract is a press release by the Saudi Arabian Monetary Agency dated 23 July 1953.
Issue of ‘Pilgrims’ Receipts’ in Saudi Arabia
The Saudi Arabian Monetary Agency has announced a plan to make it easier for the large number of pilgrims coming each year to Mecca and Medina to change their money into Saudi riyals and Saudi sovereigns. As of July 25, the Monetary Agency started issuing through the local banks Pilgrims’ Receipts in denominations of 10, 100, and 1,000 riyals, in exchange for either Saudi riyals (and Saudi sovereigns) or foreign exchange. The denomination is printed on each note in six different languages for the benefit of the pilgrims. The issue of these Receipts means that pilgrims, or merchants and others who handle large sums of money, will not have to carry large amounts of gold or silver coins. The Receipts can be used to make all necessary payments within Saudi Arabia. They can be changed at any time into Saudi riyals (or Saudi sovereigns at the regular rate of 40 riyals per sovereign), and no discount or commission for changing them will be permitted. Immediately on presentation, the Monetary Agency and the banks will redeem the Receipts at their full face value.
Pilgrims’ Receipts will serve the same purposes as travellers’ checks and will be handled in much the same way. The only difference is that it will not be necessary to endorse the Receipts before using them.
During pilgrimages in past years, there has always been a shortage of riyals and a surplus of foreign currencies in Saudi Arabia, which has resulted in sharp changes in exchange rates. The issue of Pilgrims’ Receipts is a useful and effective way of economizing on the use of riyals at this peak season, and will simplify the Monetary Agency’s task of stabilizing the exchange value of the riyal. It introduces an element of flexibility that will assure the ability of the Agency to hold the dollar-riyal exchange rate firm, and to keep the rates for other currencies on the local market in line with rates in other free markets.
The 10-riyal Pilgrims’ Receipt has all the appearances of a bank note. With the title of the issuing authority across the top of the note, the conditions for its use are printed to either side of the state emblem of Saudi Arabia. The Arabic clause on the front of the note at the left reads:
‘I declare that the Monetary Agency has in its vault the amount of ten Arabic riyals available for whosoever holds this receipt, it is negotiable, and the full value of this receipt will be given immediately to the holder at any of the Monetary Agency branches. First issue 1372.’
The clause on the right reads:
‘This receipt was issued by the Agency to facilitate the carrier’s pilgrimage and therefore allows him to get the Arabic Riyal in his hands with ease during his stay in Saudi Arabia, and without him incurring any exchange fees.’
Below the clause on the left-hand side is the signature the Vice President of SAMA, Najjeb Ibrahim Salha. Below the right-hand clause are the signatures of George Blowers and Rasem Bey Khalidi, the Governor and Vice Governor of SAMA.
Below the signatories, the value of the receipt is repeated in six languages, to facilitate its identification by the pilgrims handling the receipts. The six languages are (from left to right): English, Malay, Farsi, Arabic, Urdu and Turkish. The last five of these six languages are used on the back of the receipt to repeat the sentence that appears in English at the bottom on the front of the note:
‘The Saudi Arabian Monetary Agency holds in it vaults ten riyals at the disposal of the bearer of this fully negotiable receipt.’
The receipts were printed by Thomas De La Rue and Company Limited, of England, and are remarkable for their lack of security features. There is no watermark on the paper and there is no security thread in the paper. Apart from the printer’s imprint, the only indication that they have been printed by a security printer is the use of intaglio printing on the front of the receipts.
In deciding whether 100- and 1000-riyal Pilgrims’ Receipts were ever issued, consideration could be given to the figures stated for circulation. According to Arthur Young , Pilgrims’ Receipts to the value of 25 million riyals were issued during the Haj season of 1953, of which slightly more than one-fifth had been returned to SAMA by the end of the season (on 10 September). As only five prefixes are known to exist for the 10-riyal Pilgrims’ Receipts, a total of 50 million riyals must have been printed. If a similar amount of Pilgrims’ Receipts were issued in the second year (i.e. another 25 million), the stocks of notes would have been tested. As it transpired, the second issue of Pilgrims’ Receipts was distributed from 1954 and this tends to support the proposition that only 10-riyal notes were placed into circulation, with the stock of 10-riyal notes being exhausted in the second year.
Another question to consider, when pondering the possible existence of the higher denomination Pilgrims’ receipts, is why would such large denomination notes have been considered for issue? The simple answer is that pilgrims often travelled in large organized groups, and it is conceivable that the head of an organized group might wish to carry the necessary money in as few notes as possible.
While the extract from the International Financial News Survey states that receipts with values other than 10-riyals were issued, later issues of receipts by SAMA suggest that higher denomination receipts, if ever considered, were not issued. The release of a 5-riyal receipt and a new 10-riyal receipt in 1954, followed by a 1-riyal receipt in 1955, indicates that smaller denominations became a higher priority than larger denomination notes. However, there may have been another reason for the failure to issue (or to continue to issue) high denomination notes – counterfeiting! It appears that one reason for the issue of the 10-riyal receipt with a new design in 1954, was that the original receipts were being counterfeited. Obviously, more damage could be done with counterfeited 100- and 1000-riyal receipts notes if they were put into circulation.
The receipts issued in 1954 and 1955 were designed with features that were more difficult to counterfeit, but essentially carried the same features as the first Pilgrims’ Receipt. The 5- and 10-riyal receipts carried a view of the harbour foreshore at Jidda, with a single boat in the foreground of the 5-riyal note and two boats in the foreground of the 10-riyal note. Unlike the first issue, the two new notes carry a solid security thread and a watermark. The watermark is a monogram of ‘SAMA’ repeated all over the paper. The security thread is purported to be pure silver, as an indication of the backing given to the notes . Unlike the original receipts, there is no indication on the new receipts of who printed them, although it is believed to have been Thomas De La Rue and Company.
The signatories on the new 5- and 10-riyal receipts are the same as those for the first 10-riyal receipts, but by the time the 1-riyal receipt was issued in October 1955, the senior management at SAMA had changed. The Chairman of SAMA was now Sheikh Mohammad Surour al-Saban and Rasem Bey Khalidi had become the Vice Chairman. The new Governor of SAMA was R. D. Standish, who had taken over from George Blowers in 1954 following the end of his two-year contract, while the Vice Governor was now Sayed Matook A. Hassanain. For the 1-riyal receipt the signatories were:
Chairman of SAMA – Muhammed Surour Al-Saban
Governor of SAMA – R. D. Standish
The 1-riyal receipt is similar to the receipts issued in 1954, in that it contains the same clauses explaining the reason for its issue and the sentences in six languages advising of its convertibility. However, its front differs by being dominated by an illustration of the gate to the palace of King Saud bin Abdul Aziz in Riyadh.
The Pilgrim’s Receipts were used for many years, even going through a period of over issue. They were the precursor to later banknote issues by SAMA and are an important part of the development of currency in Saudi Arabia. Despite the announcement by SAMA concerning the issue of receipts in the denominations of 100 and 1000 riyals, it is almost certain that receipts in these values were not issued. However, if there is any substance to the announcement made by SAMA, there must be suspicion that proofs or specimens of these receipts might exist somewhere. To date they have not been recorded, but perhaps one day more will be known
This article was completed in August 2004
© Peter Symes