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.

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“We don’t BeLiviu”: how Romania is rising against corruption

Night after night, activists gather in Victory Square to demand the resignation of the government.

For much of the year, the large tarmac square in front of the main government building in Bucharest is little more than a glorified roundabout, busy with traffic and surrounded by towering, communist-era blocks on one side and a wedge-shaped park on the other.

But when Romanians gather to protest, as they have done these past weeks in record numbers, it becomes a place of pent-up frustration; against the ruling class, the direction in which the country is heading and the way many politicians continue to use the public purse as a source of cash for their personal use. This was not how it was supposed to be, ten years after the country joined the European Union.

On 31 January Romania’s new government, in power for less than a month, sneaked in a piece of emergency legislation during a late-night session to weaken the punishment for abuse of power, negligence while in office and conflict of interest. In effect, the move decriminalised some forms of corruption, if the financial damage caused amounted to less than roughly £38,000.

Many Romanians and international observers saw it as a brazen attempt to help politicians facing legal problems, prominent among them Liviu Dragnea, the leader of Romania’s largest political party, the Social Democrats, and the president of the Chamber of Deputies (Romania’s House of Commons). Dragnea is facing trial for supposedly getting colleagues added to the public payroll even though they do not work for the state. He is one of many public officials facing a day in court; in fact, he has already faced the courts, earning a 2015 conviction for electoral fraud that barred him from becoming prime minister despite his party’s strong showing in parliamentary elections last December.

The backlash against the ordinance was swift, as night after night tens of thousands, even hundreds of thousands, and, once, half a million took to the streets to protest. On 5 February, between 500,000 and 600,000 people protested across Romania, with 300,000 in the government square alone. Demonstrations have also taken place in 50 towns and cities in the country, as well as in the Romanian diaspora.

The government backed down on its immediate plans and repealed the decree, but trust was by then long gone. Protests are now in their third week and, despite snowfall, show little sign of ending.

“This government needs to go. You can’t be elected in December and have hundreds of thousands on the streets in a month,” said Dorial Ilie, a 33-year-old PR worker, one cold evening in the square.

Romanians are fed up with corruption. The country sits 57th in Transparency International’s corruption perceptions index – up from 69th place in 2014, but corruption remains endemic, and Romania is near the bottom of the list when it comes to EU countries.

Despite the efforts of the country’s much-admired National Anti-corruption Directorate (DNA), set up in 2003 and responsible for the successful prosecution of thousands of politicians, civil servants, judges and business leaders, there is a sense that the rich and powerful still operate as if they were above the law. This was certainly not helped by the attempts to change the anti-corruption legislation.

“They had been planning to do this for years,” said Dan Popescu, a 46-year-old priest protesting in the square, echoing the sentiments of many of those around him.

The demonstrations, the largest in the country since the fall of Nicolae Ceausescu in 1989, have been an impressive display of people power in a country that is increasingly using the streets as a communication platform. Large-scale protests in Romania also brought down the last elected government in November 2015, after corruption was blamed for a fire in a Bucharest nightclub that left 64 dead, and before that, mass protests during the 2014 presidential election, this time over mismanagement of diaspora voting, arguably helped tip the balance in favour of the now-incumbent, Klaus Iohannis.

Protesters are hoping for a similar impact this time around, although, having survived a no-confidence vote in parliament on 8 February, the new government shows little willingness to depart.

At the same time, most of those gathering night after night in Victory Square – as the drab square outside the government building is officially known – are still loudly demanding the resignation of the government, but would probably settle for the resignations of Dragnea and the prime minister, Sorin Grindeanu.

After so many nights standing out in the cold, protesters have become very creative. Elaborate banners filled with puns (“We don’t BeLiviu”) have appeared, as have messages written with lasers and projected on to nearby buildings. Some have shone the Batman symbol on to the roof of a nearby museum, a funny (or perhaps desperate) plea for help. The national anthem is often sung. On Sunday, a sea of protesters held up pieces of paper coloured over their phone lights to create a vast Romanian flag.

Despite these touches of humour and inventiveness, there is a steely determination evident and it has only grown since the first night or two.

On 13 February the national parliament approved a referendum related to the fight against corruption, as proposed by the protest-supporting president. But most of those on the streets these past weeks would argue that they have already given their opinion on the matter.

Many Romanians are increasingly frustrated that they have to head out to protest time and again in order to hold their elected officials to account. Few believe that the present political class can change. “They’ll try again, in another way. Maybe in parliament, where they have a majority,” said Ioana David, an administrative worker for a construction company.

Even so, she – like so many others – is likely to continue to go out into Victory Square in the days and perhaps weeks ahead, in order to make sure her voice gets heard.

This article first appeared in the 16 February 2017 issue of the New Statesman, The New Times