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Chapter 13

Cash and wealth--Capital as understood by Persians--Hidden
fortunes--Forms of extravagance--Unbusiness-like
qualities--Foreign examples--Shaken confidence of natives in
foreigners--Greed for money--Small merchants--Illicit ways of
increasing wealth--The Persian a dreamer--Unpunctuality--Time no
money and no object--Hindrance to reform--Currency--Gold, silver,
and copper--Absorption of silver--Drainage of silver into
Transcaspia--Banknotes--The fluctuations of the Kran--How the
poorer classes are affected by it--Coins old and new--Nickel
coins--The Shai and its subdivisions.

The Persian does not understand the sound principles on which alone extensive business can be successful. Partly owing to prevailing circumstances he is under the misapprehension that hard cash is synonymous with wealth, and does not differentiate between treasure, savings, and savings transformed into capital. This is probably the main cause of the present anaemic state of business in the Shah's Empire. Thus, when we are told there is in Persia enormous "capital" to be invested, we are not correctly informed. There are "enormous accumulations of wealth" lying idle, but there is no "capital" in the true meaning of the word. These huge sums in hard cash, in jewellery, or bars of gold and silver, have been hidden for centuries in dark cellars, and for any good they are to the country and commerce at large might as well not exist at all.

Partly owing to the covetousness of his neighbours, partly owing to a racial and not unreasonable diffidence of all around him, and to the fact that an Asiatic always feels great satisfaction in the knowledge that he has all his wealth within his own reach and protection, rich men of Persia take particular care to maintain the strictest secrecy about their possessions, and to conceal from the view of their neighbours any signs which might lead them to suspect the accumulation of any such wealth. We have already seen how even the houses of the wealthiest are purposely made humble outwardly so as to escape the notice of rapacious officials, and it is indeed difficult to distinguish from the outside between the house of a millionaire and that of a common merchant.

The Persian, it must be well understood, does not hide his accumulated treasure from avaricious reasons; on the contrary, his inclinations are rather toward extravagance than otherwise, which extravagance he can only satisfy under a mask of endless lies and subterfuges. No honest ways of employing his wealth in a business-like and safe manner are open to the rich Persian under the present public maladministration, nor have the foreign speculations in the country offered sufficient examples of success to induce natives to embark upon them again. Far from it; these enterprises have even made Persians more sceptical and close than before, and have certainly not shown foreign ways of transacting business at the best.

That is why, no other way being open to him, the Persian who does wish to get rid of his wealth, prefers to squander his money, both capital and income (the latter if he possesses land), in luxurious jewellery and carpets, and in unhealthy bribery and corruption, or in satisfying caprices which his voluptuous nature may suggest. The result? The Persian is driven to live mostly for his vanity and frivolity--two unbusiness-like qualities not tending to the promotion of commercial enterprise on a large scale, although it is true that in a small way his failings give rise and life to certain industries. For instance, even in remote, poor and small centres where food is scarce and the buildings humble, one invariably finds a goldsmith, filigree-workers and embroidery makers, whereas the necessaries of life may be more difficult to obtain.

Of course Persia contains a comparatively small number of Persians of a more adventurous nature, men who have travelled abroad and have been bitten with the Western desire for speculation to increase their money with speed, if not always with safety; but even these men have mostly retired within their shells since the colossal fiascos of the speculations started in Persia by foreign "company promoters." A considerable number of Persians, seduced by glowing prospectuses and misplaced faith in everything foreign, were dreadfully taken in by the novel experiments--everything novel attracts the Persian considerably--and readily unearthed solid gold and silver bars, that had lain for centuries in subterranean hiding-places, and now came out to be converted into shares in the various concerns, hardly worth the paper on which they were printed, but promising--according to the prospectus--to bring the happy possessors fabulous incomes.

We have seen how the Sugar Refinery, the Glass Factory, the "Gas" Company--a more appropriate name could not have been given--and the ill-fated Mining Company have created well-founded suspicion of foreign ways of increasing one's capital, nor can we with any fairness blame the Persians for returning to their old method of slow accumulation. True enough, a fortune, if discovered, has a fair possibility of being seized in the lump by a greedy official, but that is only a possibility; whereas, when invested in some foreign speculations the loss becomes a dead certainty! More even than the actual loss of the money, the Persians who burned their fingers by meddling with foreign schemes felt the scorn of their friends, of whom they had become the laughing stock.

There is no doubt that to-day the confidence of the natives towards foreigners has been very much shaken, and excepting a few men whom they well know, trust and respect, they regard most Europeans as adventurers or thieves. The "treasuring" of capital instead of the investment of it is, therefore, one of the reasons why industries in Persia seldom assume large proportions. It is only the small merchant, content to make a humble profit, who can prosper in his own small way while more extensive concerns are distrusted.

But it must not be understood that Persians do not care for money. There is, on the contrary, hardly a race of people on the face of the earth with whom the greed for money is developed to such an abnormal extent as in all classes in the land of Iran! But, you will ask, how can money be procured or increased fast and without trouble in a country where there is no commercial enterprise, where labour is interfered with, where capital cannot have a free outlet or investment? An opening has to be found in illicit ways of procuring wealth, and the most common form adopted is the loan of money at high interest on ample security. As much as 50 per cent., 80 per cent., 100 per cent. and even more is demanded and obtained as interest on private loans, 15 per cent. being the very lowest and deemed most reasonable indeed! (This does not apply to foreign banks.) All this may seem strange in a Mussulman country, where it is against all the laws of the Koran to lend money at usury, and it is more strange still to find that the principal offenders are the Mullahs themselves, who reap large profits from such illegal financial operations.

The Persian is a dreamer by nature; he cannot be said to be absolutely lazy, for he is always absorbed in deep thought--what the thoughts are it does not do to analyse too closely--but he devotes so much time to thinking that he seldom can do anything else. His mind--like the minds of all people unaccustomed to hard work and steady, solidly-built enterprise--runs to the fantastic, and he ever expects immense returns for doing nothing. The returns, if any, and no matter how large they may be, are ever too small to satisfy his expectations.

As for time, there is no country where it is worth less than to the natives of Persia. The mañana of the Spaniards sinks into perfect insignificance when compared with the habits of the land of Iran. Punctuality is unknown--especially in payments, for a Persian must take time to reflect over everything. He cannot be hurried. A three months' limit of credit--or even six months--seems outrageously short in the eyes of Persians. Twelve months and eighteen, twenty, or twenty-four months suit him better, but even then he is never ready to pay, unless under great pressure. He does disburse the money in the end, capital and interest, but why people should worry over time, and why it should matter whether payment occurs to-day or to-morrow are quite beyond him.

If he does transact business, days are wasted in useless talk and compliments before the subject with which he intends to deal is incidentally approached in conversation, and then more hours and days and weeks, even months have to elapse before he can make up his mind what to do. Our haste, and what we consider smartness in business, are looked upon by the Persian as quite an acute form of lunacy,--and really, when one is thrown much in contact with such delightful placidity, almost torpor, and looks back upon one's hard race for a living and one's struggle and competition in every department, one almost begins to fancy that we are lunatics after all!

The Persian must have his hours for praying, his hours for ablutions, more hours for meditation, and the rest for sleep and food. Whether you hasten or not, he thinks, you will only live the number of years that God wills for you, and you will live those years in the way that He has destined for you. Each day will be no longer and no shorter, your life no sadder and no happier. Why then hurry?

Amid such philosophic views, business in European fashion does not promise to prosper.

Unable to attach a true meaning to words--his language is beautiful but its flowery form conduces to endless misunderstandings--casual to a degree in fulfilling work as he has stipulated to do it; such is the Persian of to-day. Whether the vicissitudes of his country, the fearful wars, the famines, the climate, the official oppression have made him so, or whether he has always been so, is not easy to tell, but that is how he is now.

Besides all this, each man is endowed with a maximum of ambition and conceit, each individual fully believing himself the greatest man that ever lived and absolute perfection. Moreover the influence of Mullahs is used to oppose reform and improvement, so that altogether the economic development of production, distribution and circulation of capital is bound to be hampered to no mean extent. On examining things carefully it seems almost astonishing that the trade of Persia should be as well developed as it is.

Another difficulty in the way is the currency, which offers some interesting lessons, and I am indebted to the author of a paper read before the Statistical Society for the following details.

Gold is not produced in Persia. Bar gold is imported in very small quantities only. Gold coin is a mere commodity--is quite scarce, and is mostly used for presents and hoarding. It is minted principally from Russian Imperials and Turkish pounds which drift into Persia in small quantities in the course of business. Goldsmiths, too, in their work, make use of foreign coins, although some gold and silver bullion is imported for manufacturing purposes.

Silver, too, is not obtainable in Persia except in very small quantities, and the imported silver comes from Great Britain, via the Gulf or via Hamburg and Russia. In the year 1901 the Persian Government, in connection with the Russian Loan, imported some three million tomans' worth of silver to be minted, and the Imperial Bank of Persia another million tomans; while some 500,000 tomans more were brought into the country by other importers. But under normal circumstances the annual output hardly ever exceeds three to four million tomans. In 1900 it was something between 2,000,000 and 2,500,000 tomans.

The Mint--like all other institutions of Persia--is in a tumbling-down condition, with an ancient plant (1877) so obsolete and worn as to be almost useless. Partly owing to the insufficient production of coin, partly because of the export in great quantities of Persian silver coin into Transcaspia, and, last but not least, owing to the Persian custom of "making a corner" by speculators, the commercial centres of Persia suffer from a normal dearth of silver coins. Persian silver coin has for the foregoing reasons a purchasing power of sometimes 20 per cent. beyond its intrinsic value. In distant cities, like Yezd or Kerman, it is difficult to obtain large sums in silver coin at face value, as it disappears into the villages almost as soon as it arrives by caravan or post. New coin is generally in great demand and commands a premium.

So the yearly drain of silver coin from Teheran as soon as it is minted is very considerable, especially to the north, north-east and north-west provinces. This coin does not circulate but is almost entirely absorbed and never reappears, the people themselves holding it, as we have seen, as treasure, and huge quantities finding their way into Transcaspia and eventually into Afghanistan, where Persian coin is current and at a premium, especially on the border land.

In Transcaspia Persian coin is cherished because the nominally equivalent Persian coin contains a much larger quantity of silver than the Russian. Russian silver is a mere token of currency, or, at best, stands midway between a token and a standard or international currency, and its difference when compared with the Persian coin amounts to no less than 21.92 per cent. in favour of the Persian. Persian coin, although defective and about 2 per cent. below legal weight and fineness, is a standard or international currency.

It appears that a good deal of the silver exported into Transcaspia finds its way to Chinese Turkestan, where it is converted into bars and ingots, and is used for the inland trade to China. The Russian Government have done all in their power to prevent the competition of Persian and Russian coins in their Transcaspian provinces. A decree was issued some eleven years ago forbidding the importation, and in 1897 a second Ukase further prohibited foreign silver from entering the country after the 13th of May (1st of May of our calendar), and a duty of about 20 per cent. was imposed on silver crossing the frontier. All this has resulted in silver entering the provinces by smuggling instead of openly, but it finds its way there in large quantities just the same as before.

The Government of Persia does not issue bank-notes, which would be regarded with suspicion among the people, but it is interesting to find that the monopoly granted to the Imperial Bank of Persia for the issue of paper money has had excellent results, in Teheran particularly, where the Bank is held in high esteem and the notes have been highly appreciated. In other cities of Persia which I visited, however, the notes did not circulate, and were only accepted at the Bank's agencies and in the bazaar by some of the larger merchants at a small discount.

Naturally, with the methods adopted by Persians, and the insecurity which prevails everywhere, the process of convincing the natives that a piece of printed paper is equivalent to so many silver krans, and that the silver krans will surely be produced in full on demand is rather a slow one; but the credit of the Imperial Bank and the popular personality of Mr. Rabino, the manager, have done much towards dispelling the suspicions, and since 1890 the notes have assumed a considerable place in the circulation. In September 1890 the circulation of them amounted to 29,000 tomans; in 1895 it had gradually increased to 254,000 tomans, and by leaps and bounds had reached the sum of 1,058,000 in 1900.[1] It is rather curious to note that in the previous year, 1899, the note circulation was 589,000 tomans, and became very nearly double in the following twelve months.

This only applies to Teheran and the principal cities; in the villages, and in out-of-the-way towns, notes are out of the question, and even silver coins are very scarce. A two-kran piece of the newer type is seldom found, and only one-kran pieces, little irregular lumps of silver, are occasionally to be seen. Copper is really the currency and is a mere subsidiary or token coinage with a value fluctuating according to local dearth or other causes at almost every place one goes to.

The precarious system of farming, accompanied by the corruption of officials, has given an opportunity for most frequent and flagrant abuses in the excessive over-issue of copper coin, so that in many cities copper issued at the nominal value of 20 shais per kran was current at 30, 40, 50, and even, in Eastern Persia, at 80 shais per kran. I myself, on travelling through Persia, never knew exactly what a kran was worth, as in almost every province I received a different exchange of shais for my krans. In Birjand and Sistan, particularly, the exchange differed very considerably.

This state of maladministration affects the poorer classes, for the copper currency forms their entire fortune. On coming to the throne the present Shah, with praiseworthy thoughtfulness, endeavoured to put a stop to this cause of misery in his people, and ordered the Government to withdraw some 720,000 tomans' worth of copper coins at 25 to 30 shais per kran. This had a good effect, and although much of the depreciated coin is still in circulation, particularly in out-of-the-way places, its circulation in the larger towns has been considerably diminished.

Lately the Government has adopted the measure of supplying the public with nickel coins, one-shai and two-shai pieces, which, although looked at askance at first, are now found very handy by the natives and circulate freely, principally in Resht, Kasvin, Teheran and Isfahan. In other cities I did not see any, nor would the natives accept mine in payment, and in villages no one would have anything to do with them as they were absolutely unknown. But wherever it has been possible to commence the circulation of these nickel coins--which were struck at the Brussels Mint and which are quite pretty--they have been accepted with great pleasure.

The old gold coins in circulation in Persia--very few and far apart--were the toman, half-toman, and two-kran piece. The gold had a legal fineness of 990. The legal weight in grains troy was: toman, 53.28; half-toman, 26.64; two-kran piece, 10.656. Weight in pure gold; toman, 51.7572; half-toman, 26.3736; two-kran piece, 10.54944.

The new coins are the two-tomans, one-toman (differentiated in 1879 and subsequent to 1879), half-toman and two-kran pieces, the gold having a legal fineness of 900. Legal weight:--

                    |         |   One toman.       |        |
                    |   Two   |        | Subsequent| Half   | Two kran
                    |  tomans.|  1879. | to 1879.  | toman. |  piece.
Grains troy         | 100.64  | 50.32  |    44.40  |  22.20 | 8.88
Weight in pure gold |  90.576 | 45.288 |    39.96  |  19.98 | 7.992

The new silver coinage consists of 2-kran pieces (five of which make a toman), one-kran, half-kran, and quarter-kran, all keeping to the legal fineness of 900 as in the older coins struck from 1857 to 1878:--

                           |  Two    | One    | Half   | Quarter
                           | krans.  | kran.  | kran.  |  kran.
Legal weight (grains troy) | 142.08  | 71.04  | 30.52  | 15.26
Weight in grains silver    | 127.872 | 63.936 | 27.468 | 13.734

The 1857 to 1878 coins were merely one-kran, half-kran, quarter-kran:--

                     | One kran. | Half kran. | Quarter kran.
Legal weight         |  76.96    |   38.48    |    19.24
Weight in pure silver|  69.264   |   34.632   |    17.316

The older coinage before 1857, a most irregular coin--of one kran--varied considerably and had an approximate average fineness of 855, an average weight (grains troy) of 75.88, and a weight in pure silver of grains troy 64.877, which is below the correct standard by no less than 6.76 per cent.

In the newest coinage of two-kran pieces, the coin most used in cities,--large payments being always made in two-kran pieces--we have an average fineness of 892.166; average weight, grains troy, 119.771; weight in pure silver, grains troy, 124.69, or 2.55 per cent. below the standard.

In nickel coinage, composed of 25 per cent. of nickel and 75 per cent. of copper, we have:--

Two shai pieces (grains troy) 69.45 One shai pieces (grains troy) 46.30

The copper coins are in great variety. There is the abassi (one-fifth of a kran) worth four shais, and very scarce now.

The sadnar (one-tenth of a kran) equivalent to two shais.

The (one) shai (one-twentieth of a kran).

The pul (one-fortieth of a kran), half a shai.

And the jendek (one-eightieth of a kran) a quarter shai; this coin only found in circulation in Khorassan.

When it is remembered that at the present rate of exchange the kran can be reckoned at fivepence in English money, and the toman as roughly equivalent to one American dollar, it will be seen that the subdivisions of the kran are rather minute for the average European mind.

Yet there are things that one can buy even for a jendek; think of it,--the fourth part of a farthing! But that is only in Khorassan.


[1] I understand this figure has since considerably increased.