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.