In this writing, we will attempt to look into Islamic history to undestand what is happening today, particularly to trace the ideas and thoughts about money and the worthless paper money or fulus, its role as a medium of exchange and how it impacted general economic activities. Among the scholars the Shafi’te Taqi al-Din Ahmad ibn ‘ Ali al-Maqrizi stands out as the most vocal critic of the Circassian monetary policy. It is thus, imperative to highlight al-Maqrizi’s ideas on money, the monetary system and his proposal for monetary reform so that our objective in returning to the gold dinar standard can achieved in a more convincing fashion.
Al-Maqrizi full name is Ahmad bin Abd al-Qader bin Muhammad bin Ibrahim bin Tamim al-Bali al-Abidi al-Hsini. He was also known as Taqi al-Din al-Maqrizi. He was born in Cairo in 766 AH/ 1364 AD and died on Thursday 26 of Ramadhan 845AH/1441 AD. He was buried in Friday in Hush al-Sufiah al-Bibarsiah in Cairo. Al-Maqrizi was exceptionally fortunate in that his grandfather from his father’s side Shaikh Muhi al-Deen al-Qader (732/1331) and his grandfather from his mother’s side Shamsul-Din ibn Saiqh (786/1384) were scholars in Hadiths, Arabic and Fiqh. Even when al-Maqrizi was still young he accompanied his grandfather to classes held by scholars. He received his formal education in Cairo where he studied the Quran, Prophet Muhammad traditions and other branches of Islamic studies such as dialectical theology, usul-fiqh. He also studies Arabic literature, philosophy, mathematics and astronomy. one of the famous teachers of al-Maqrizi was Ibn Khaldun.
Al-Maqrizi devoted most of his life to his literary work in the field of history and biography. Like all other scholars al-Maqrizi held academic posts in important schools (madrassas). He was first appointed by Sultan Barkuk to teach Hadiths in Muayyadiah School in Cairo. Al-Maqrizi also served the government of the mamluk under Sultan Barkuk. He began his career as a government officer in Diwan al-Insha in 791/1388 AH. He was promoted from the periphery of the mamluk bureaucracy to its center. He worked as a Qadi of the Shari Mazhab. Later he was Imam of the Mesjid al-Hakim al-Fatimi. Al-Maqrizi quickly moved up to his exceptional capabilities and receved his most important appointment as the Muhtasib (Ombudsman) of Cairo and al-Wajeh al-Bahri of Sultan Barquq (801/1398). He was responsible for the conduct of the markets and the control of the merchants. The post of Muhtasib in Cairo is the highest position among other muhtasib. After spending ten years in Damascus, al-Maqrizi moved to Cairo and withdrew from all government post. He lived a life of fame and respect for the rest of his life. He devoted himself to research in Islamic history wher he made his house as a center for teaching until his death in 845 H/ 1441 AD).
Why Fulus (Copper Coins) Were Used to Replace the Dinar and Dirham as Money?
In the Islamic Dinar system the role of fiat money as a medium of exchange will be replaced by dinar-backed money. By definition, fiat money is money not redeemable for any commodity and its status as money is conferred by the government. In Islamic history, the introduction of copper coins or fulus as money by the Mamluks (648/1250) coupled with famine created a period of high inflation or ghala’, leading to its downfall. The fulus unlike the dinar can easily be produced at will. Without control, excessive supply of copper fulus leads to spiraling inflation. The same applies in modern times when excessive fiat money creation created overspending and asset bubbles
The hyperinflation during the Mamluk dynasty is caused by the monetary system, namely the use of fulus as money. In addition, al-Maqrizi also believe that inflation is also caused by non-monetary factors such as monopoly and hoarding and rising cost of production. Since money was the main cause of hyperinflation, it is worthy to examine al-Maqrizi’s view on money.
In the Ighathat al-Ummah bi-kashf al-ghummah, al-Maqrizi examined money in Islamic history. Gold and silver were used since the beginning of the Prophetic era and throughout the rule of the Khalifa Rashidin. In the Ighatat al-Maqrizi said:
“The currency that was in circulation among the Arabs in pre-Islamic times consisted if gold and silver only. From other countries, the Arabs received gold dinars, among which were the imperial dinars from the Byzantine empire. The dinar was called dinar because of its weight, but it was also a coin. When God sent forth His prophet Muhammad, the Prophet confirmed all these weights used by the inhabitants of Mecca and said: ‘The weight is that of Mecca’ abd according to another version 9he said0: ‘The weight is that of Medina’. The Messenger of God prescribed the Zakat on money accordinly: for every five uqiyahs of pure and unadultered silver he imposed a zakat of five dirhams, i.e equivalent to one nawat and every twenty dinars he imosed half a dinar”. This system was adopted without the slightest alteration by Abu Bakar during his tenure as caliph, following the death of the Messenger of God. When Umar ibn Khattab became caliph, he kept the currencies as they were and did not alter them until the year 18/639-40 during the sixth year of his caliphate..”
During the Ummayad, we can find that the original coins of 1 mithqal is 4.44 gram (the standing chaliph coins), on the time of Abdulmalik bin Marwan he change the 1 mithqal to 4.25 gram or in other words he decreasing the weight (debasement), later Khalifah Umar bin Abdul Aziz made a correction and he said that the Dirham of Abdulmalik bin Marwan is not 7/10 but 7/10.5, during this time the purity of the dinar is well maintained. The debasement of purity of money however, began during the end of the Abbasid era when the ruling government is weakening. By debasement, the pure gold content in the dinar became less. Greshem’s law stating that bad money chase away good money is the order of the day. The Egyptians under the Fatimid rule also used gold. When Eqypt under Ayubi took power from Fatimi and made aligience to Abassid, he introduced silver (dirham) while keeping gold in government treasury. In this early period of the Mamluk, currency system under the dinar and dirham is still intact. However, in the later period the system began to use the fulus (copper) as money eventually leading to hyperinflations and widespread poverty. The crisis or ghala was described in all of al-Maqrizi’s four books.
Al-Maqrizi provided some explanations behind the adoption of the fulus over the dinar and dirham in the late Mamluk era. First, there was scarcity in silver (dirham) partly due to international trade where merchants took out silver out of the country to make payments. Silver was also used make decorative and luxurious household and palatial items as well as utensils. In this manner, the amount of silver dirham currency in circulation became more scarce. Maqrizi was against the idea of using gold and silver as commodity or article of trade. It can only be used as money. To make matter worse, the government had been storing gold in the treasury, thus limiting the amount of gold dinar in circulation.
Secondly, when the dinar and dirham were in short supply, the level of economic activity declined since people have less currency to execute their daily transactions. To alleviate further decline in the economic activities the government began to import large quantities of fulus (copper) to be used as currency or money since they are cheaper and abundant in supply.
According to al-Maqrizi, the introduction of the fulus was initiated by Sultan Barkuk during the second period (1382 -1399 AD ) of the Mamluk rule. In the Nuqud, al-Maqrizi observed:
“During the time of Barquq, his wazir increases the quantity of fulus. Traders from the western Europe (firanj) brought red copper to Cairo to sell them to the government to make profit. The minting of fulus in large quantities continued for many years. These firanj took away silver dirham from Eqypt to their countries. The people of Egypt converted silver dirham into decorations and utensils for both personal and business purposes. These incidents continued until it is rare and difficult to find silver (a’zat). Meantime, fulus is found in abundance and serve as money and the measure of value”.
When Sultan Barkuk died 801 Hijrah, prices began to increase. The changes in the price level can be classified into three stages. In the first stage (801-805 H) price increases but not sharply. In the second stage (806-814 H), the economy was struck by hyperinflation. In both stages, the country is ruled by Sultan Faraj bin Barkuk. In the Ighatat, al-Maqrizi desribed the situation:
“This continued until the death of al-Zahir Barquq in the middle of Shawwal 801/20 June 1399. on that date, in Cairo, one irdabb of wheat is sold for less than thirty dirhams. The next day its price reached fourty dirhams. Prices continues to rise until one irdabb of wheat sold for more than seventy dirhams in the year 802/1399-1400″
The inflation was further aggravated by natural calamities when the River Nile failed to flood in 806/1403-4. Excess supply of the fulus exceeded the depleting supplies of food and commodities due to the famine. Al-Maqrizi says:
“Wheat prices remained at this level (seventy dirhams) until the Nile failed to reached its plentitude in 806/1403-4. This led to calamity: prices soured so high that the price of one irdabb of wheat exceeded four hundred dirham of accounts. Prices of commodities such as foodstuffs, drink and clothing followed a similar trend, thus causing an increase unheard of in recent times in the wages of such persons as construction workers, labourers, craftsmen and artisans”
In the Suluk, Al-Miqrizi further described the nature of inflation in Eqypt:
“A calf sold for 7,000 dirhams of account although its regular price was only 500; one pair of geese sold for 2,200 and one egg cost 2 dirhams of account. In the same year, the rate of the dinar jumped in two months from 100 dirhams of account in mid Jumada to 310 in Rajab”
The third stage saw the reintroduction of the silver dirham by Sultan Muaayad who followed the monetary reform proposed by al-Maqrizi. By the end of his rule, decline in population (black death) brought in a period economic slowdown.
The monetary reform proposed by al-Maqrizi is discussed in all his four books wrote on the history of Egyptian social, political and economic life and its monetary system. He blamed and critized the government for failing to uphold their responsibilities abused of power. The monetary mismanagement and failure to main economic stability was described in the Suluk as follows:
“The ghala hit Egypt in 806H. This is caused by the government administrators who hoaded food and commodities to sell them at a higher prices. They increase the rent on land in Eqypt causing the cost of production to rise drastically. They also destroy the monetary system by not following the Islamic standard of monetary regulation (ibtal assikah al Islamiah). They do so by using dinar from the west and deliberately increase the price of gold from 20 dirham to 240 dirham for each mithqal or dinar (hoarding of gold among government administrators was rampant). They want to make profit by purposely imposing high prices of gold). The system of dinar and dirham is then changed into the system of fulus. The fulus which was never used as a monetary base now becomes a medium of exchange and measure of value”.
Al-Maqrizi puts the fluctuation of the currency as the main cause the economic crises of Mamluk Egypt followed by hoarding and corruption of government officials. In the Ighatat he observed:
“We are presently at the beginning of the year 808/1405-6 and because of the fluctuation of the currency, the scarcity of the necessities of life and the malfeasance and poor judgment (on the part of officials), the situation is continually worsening due to greatly distressed and abominable conditions”
Al-Maqrizi’s proposals are as follows: First “We shall say: Know- May God guide you to your own righteousness and inspire you to follow the straight paths of your fellow humans – that the currencies that are legally, logically and customarily acceptable are only those of gold and silver and that many other metal is unsuitable as a currency. By the same token, the situation of the people cannot be sound unless they are obliged to follow the natural and legal course in this regard (i.e. currency), namely that they should deal exclusively with gold and silver for pricing goods and estimating labour costs.”
In this proposal, it is evident that all payments made in trading (al-bay’) and services (wages) must be made using only gold and silver. To ensure that people have confidence on the quality of the gold and silver currencies, al- Maqrizi proposed the prohibition of the debasement of money. This is further explained in his second proposal next.
Secondly “The price of 100 dirham of pure and unadultered silver is 6 mithqals of gold, to which is added ¼ dinar at current prices to be paid to the mint as a fee to cover the price of copper (used in the alloy), the taxes due the sultan, cost of firewoods, the wages of workers, and the like”
Forbidding debasement of money would also mean using silver dirham to pay wages as well as prices of goods and commodities. In this manner, the welfare of the people is guaranteed. This point was clearly spelt out by al-Maqrizi in the Ighatat. He said:
“If God would guide those whom He has entrusted with the welfare of His servants to reinstate gold as the exclusive basis for transactions as it was previously – to link the value of goods and the costs of labor – this would lead to the succor of the community, the amelioration of the general situation and the checking of the decay that heralds destruction”
Thirdly “One mithqal of gold will be exchanged for 24 silver dirham coins 24 dirham coins is equivalent to a weight of 140 dirhams in copper coins (fulus), which will be spent for purchasing insignificant goods and for daily household transactions. This will greatly benefit the population and cause prices to drop”
1) Using only gold and silver as money
2) Stop debasement of money and
3) Restricted use of the fulus, are expected to reduce the price level in the following way as described in the Ighatat:
“This will greatly benefit the population and cause the price to drop. Shortly thereafter, people will rush to the mint and bring forth such large quantities of (hoarded) silver that it will surpass the capacity of the mint. Consequently, the situation will improve, conditions will ease, wealth will be abundant and prosperity will increase infinitely. ‘God knows and you know not’ (Quran : 2:216)”
The superiority of gold and silver as money over fulus, was mentioned in the Khitat as:
“the price of goods under gold and silver increases slightly but under fulus price of goods increase rapidly“
In this manner, people who use gold and silver will find ease and comfort from the fruit of their labor. on this point al-Maqrizi says in the Ighatat:
“It is clear that if currency regained its previous status, anyone who received money, whether from land tax, rent from a property, a salary from the sultan, income from a religious endowment or wages would receive it in gold or in silver, according to whatever the officials deemed appropriate and would spend it on this needs for food, drink, clothing and other necessities. Despite the unstable (economic) conditions through which we are living, if (my proposal) were put into practice, anyone who received any money in these two currencies would not feel cheated at all”
God guides whom He wishes.Praise be to God alone and Peace be upon the Prophet after whom no other prophet will come (Al-Maqrizi)
The use of fulus is restricted to meet local needs such as fulfilling the sale and purchase of less expensive commodities such as food and daily household expenditure. on this point al-Maqrizi said in the Ighatat that:, debasement of money must not be allowed. Any activities of debasement must be stop and discontinued. This is because religious obligation such as Zakat payments was made on genuine money and not impure or debased money.
The important matter that we can outline from on this writing of al-Maqrizi in the Ighatat that he stressed that only gold and silver can be used as money.
1. Emad Rafiq Barakat
2. Sidi Abdullah
1. Ighathat al-Ummah bi-kashf al-ghummah
2. Al-suluk li-Ma’rifat dawal al-Muluk.
3. Shothur al-‘ugood fi thiker al-Nuqud
4. Adel Allouche, Mamluk Economics ( A study and Translation of Al-Maqrizi’s Ighathah), University of Utah Press, Salt Lake City, 1994.