An Ottoman Piatsre (Sultan Selim III, 1789) and a Maria Theresa Thaler (later restrike of the 1780 coin). Photo: James Dawson
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When it comes to coins, Isis is clearly not as good as gold

A plan by the terrorist organisation to issue its own currency – in gold – reveals a further attempt to play on the history of the early Caliphs.

A cynic may say that what the leader of terrorist organisation Isis, Abu-Bakr Al-Baghdadi, and Winston Churchill have in common that they have attacked the Kurds but another thing may be the gold standard. It was recently reported that Isis plans to introduce its own currency, issued in gold, silver and copper. Though – unlike Churchill, who shortly will appear on the new £5 note and appears on the still legal tender 1965 five Shilling coin – Baghdadi won’t appear on his currency. The designs, in accordance with Islamic artistic traditions of not showing humans or animals, will apparently depict Arabic writing, mosques, palm trees, crescents and even a world map.

The plan seems to be a currency based on the bullion value of the metals in the coins, in contrast to all present world currencies which merely have a (widely accepted) token value. It is based on Isis’s interpretation of Sharia law and financial systems and deliberately emulates the currencies – the gold dinar and silver dirham – established by the early Caliphs.

The early Islamic Empire initially relied on Byzantine coins or copies of pre-Islamic Persian Sassanid coins. It was not until nearly 60 years after the death of Prophet Mohammed that they started to introduce their own coins. The Byzantines had pointedly placed the image of Christ on their latest issues and so the Umayyad Caliph of Damascus, Abd al-Malik, introduced a new standardised Islamic silver dirham in 691AD. The original coins, flouting any ban on human images, depicted the Caliph himself. It was not until 697AD that coins minted with only Arabic calligraphy were produced. These provided the pattern for most subsequent Islamic coinage. Though as the Islamic Empire fractured local rulers started producing their own money. Italian renaissance coins, issued to more exacting standards, started replacing local monetary systems in the late 1400s. Later silver dollars (Austrian thalers and Spanish pieces of eight) became widely circulated. The most popular Middle Eastern coin became the Maria Theresa thaler, the buxom image of the Holy Roman Empress being more popular with traders than Arabic calligraphy. The coin had a trusted weight set in 1754 at one-tenth of a Cologne Mark and continued to be produced following her death in 1780, its use for trade purposes being confirmed by the Vienna Currency Treaty 1857 (it is still minted today). The alternative coinage of the Turkish Ottoman emperors, who had assumed the title Caliphs of Islam could not keep up. It became debased, produced from billon, an alloy with less than 50 per cent silver. The Ottomans were also late in adopting Western scientific advances – they continued to produce imprecise hammered coins until 1844, only then introducing Western-style mechanically milled coins. Despite still ruling the Middle East, further decline led to the Ottoman Empire defaulting on its debt. In 1881 Ottoman finances were taken over by Western governments and corporations under the Ottoman Public Debt Administration.

Precious metals on the face of it sound like an ideal material for money, something durable that holds its value over time. But experience has proved this wrong, all world currencies now use base metal or paper. Bullion values are dictated by supply and demand, based on the usefulness or desirability of a commodity. Gold and silver do not have many practical uses, beyond jewellery or a perhaps tarnishable sets of cutlery. Their value is not intrinsic and is susceptible to great fluctuations. If the ratio between the value of gold and silver changes then bad money drives out the good as people spend the devalued coins but keep the increased value ones. The amount of coins in circulation is also just a fractional amount of money in an economy, the rest is in bank balances, debts owed or other commodities.

Problems with the gold standard include the finding the metal: greater availability leads to inflation; scarcity leads to deflation, which limits demand and cuts investment. The coins themselves are subject to clipping, people cutting small bits off the edges, and hoarding, as Germany experienced in the lead up to its hyper-inflation in the early-1920s. Harsh punishments will not help bolster the currency as people become wary of handling clipped coinage, avoid all but the most essential transactions or resort to barter. Sooner or later gold and silver currencies have to be debased.

Precious metal was commonly used in all pre-modern currencies but coins were relatively rare only circulating amongst the few. To have a wider cash-based economic system required a different approach. It was Sir Isaac Newton (scientist and habitué of the Bank of England’s last one pound note) who formally established the gold standard, whereby paper currency was backed by gold reserves, in 1717. Other European countries adopted the gold standard in the 1800s, the recently united Germany being one of the last to do so in 1872. However, countries left the gold standard in the First World War. Churchill, as Chancellor of the Exchequer, put Britain back on the gold standard in 1925. Criticised for the deflation that led to 1926’s General Strike and for the disastrous consequences of Britain’s inability to respond to the Wall Street Crash, the National Government took Britain off the gold standard for good in 1931. The Bretton Woods financial system established in 1946 left the American dollar as the only currency backed by gold, with all other major currencies pegged to the dollar. This persisted until the Nixon Shock 1971 when draws on US gold reserves, mainly from France, and the costs of the Vietnam War took America (and the world) off the gold standard.

British coins continued to contain silver for many years after leaving the gold standard. The original 0.925 quality silver in half-crowns, florins, shillings and sixpences was cut to 0.500 in 1920, just enough to still merit the name silver, and our coins stayed this way until the dollar became the world’s reserve currency in 1946. The First World War, Great Depression and Second World War had largely forced other countries to abandon silver earlier. Switzerland continued minting in silver until 1969, but if you visit today you won’t find any 5 Franc coins older than the first cupro-nickel coins issued in 1968. Gold and silver coins are generally only found in commemorative coins issued for collectors.

Coins, as well as a means of exchange, convey historic value. They are metal, mass-produced and therefore survive. The designs portray the issuer’s political and artistic views. If the Isis coinage is produced the best that could be hoped for is that it becomes, after sufficient passage of time to let its memories of its crimes fade, a numismatic foot note. Though it is to be hoped that, like the disgusting zinc coins that were all the Third Reich could afford to produce in the Second World War, they are viewed with as much disdain by collectors.

Richard Burden
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The warnings Bosnian gravestones carry for us in 2016

Xenophobia does not usually lead to Srebrenica. But it can do.

Two weeks ago, I joined a visit to Bosnia organised by Remember Srebrenica. If you have ever seen one of the Commonwealth War Graves cemeteries in Northern France, you will have a sense of what the cemetery in Potocari, near Srebrenica, is like. Row upon row of identical white headstones stretching into the distance. Whereas in France, of course, most of the headstones are marked by the cross, in Potocari they are white obelisks. Overwhelmingly, they mark the graves of Muslims.

In the 1990s, the old battery factory of Potocari was the headquarters of Dutch troops. They had been deployed to uphold the United Nations designation of the enclave as a safe area. Their presence, however, did not stop Serb troops from rounding up around 25,000 people sheltering at the base in July 1995. Once the UN troops stood aside, families were divided. Most of the women and children were loaded and sent west to areas of the country still controlled by the Bosnian government. The men and boys were loaded on to separate trucks. Within days, most of them were systematically shot.

Many other men and boys had already taken to the woods to escape, only to face shells, snipers and ambush on the way. Some, like 19-year-old Hasan Hasanovic, made it through to free territory around Tuzla. Many did not. Those did not die in the woods were either persuaded to give themselves up, or were captured. Like the men and boys who had been taken from outside the UN base at Potocari, most simply disappeared. To this day, their bones are still being found in or near mass graves in eastern Bosnia.

And so, 21 years on, I met Hasan at Potocari. July1995 was the last time he saw his twin brother Hussein, his father Aziz or his uncle, Hasan.

The former UN Secretary General Kofi Annan described the Srebrenica massacre as the worst crime on European soil since the Second World War. Indeed, the word massacre doesn’t convey the enormity of what happened. Earlier this year, the International Criminal Tribunal for the former Yugoslavia found 1990s Bosnian Serb leader Radovan Karadzic guilty of involvement in genocide. The verdict in the trial of military leader Ratko Mladic is expected later this year.

Nobody who visits Potocari can fail to be moved by what you see there. For me, it brought back memories of how, as a new MP back in the 1990s, I was one of those calling for more assertive international action to stop the carnage that was unfolding in Bosnia. It was an unfamiliar position to find myself in. All my political life until that point, I had been amongst those opposing involvement in military action abroad. Now I found myself supporting intervention. For three years before the Srebrenica genocide, people in Sarajevo had been starved of food, medicines and even the means to defend themselves as their city was remorselessly pounded from the hills that surround it. We knew it. We could see it on TV. We also saw that neither Europe nor NATO nor the UN were taking action that could have stopped it.

There were always so many geopolitical reasons not to intervene effectively. I heard them day after day from Ministers in the House of Commons. But that did not help the men, women and children who were dying in Sarajevo, and in 1995 it did not save Hasan’s twin brother, his father, his uncle or the 8,000 others who ended up in the mass graves around Srebrenica.

Since I have returned from Bosnia, two things keep dominating my thinking. The first is about Syria. The political circumstances that have led to the destruction of Aleppo today are not the same as those facing Sarajevo in the 1990s. For people trapped there though, the parallels must feel much more real than the differences. I don’t claim to have an off-the-shelf action plan for what the international community should do today any more than anyone else does. I just keep thinking how in twenty years’ time, people visiting Aleppo - hopefully reconstructed as Sarajevo has been today - will ask: “How could the world have let this happen in 2016?” What will be our answer?

The other thing that dominates my thoughts is that the genocide in Bosnia hit people like me. A man I met, who unexpectedly found himself becoming a soldier in 1992, told me how, before the war, he wore a t-shirt, jeans and an earring. On a good day, he would to listen to the Ramones. On a bad day, it would be the Sex Pistols. I am a bit older than him, but this was still my generation. And it happened In Europe.

What is more, the murders and the ethnic cleansing were not committed by strangers. So often, they were committed by neighbours. These were normal people who had been whipped up to dehumanise those who they were told were “different”. They were told that their way of life was under threat. They internalised it. They believed it. And, down the line, they no longer needed persuading it was “them or us”.

Most of the time, xenophobia does not lead to the horrors that have scarred Srebrenica forever. But it can do. That a lesson for all of us must never forget. So next time you hear someone talking about people living either down the road or across the sea being "them" not "us", don't shrug and walk away. Speak up and speak out instead.

Richard Burden is Labour MP for Birmingham Northfield and a Shadow Transport Minister. He visited Bosnia with the Remembering Srebrenica charity in October 2016. You can find out more about the Remembering Srebrenica charity here.

Richard Burden is MP for Birmingham Northfield. Follow him on Twitter @RichardBurdenMP.