The Chargé in Saudi Arabia (Shullaw) to the Secretary of State
[Received 6:35 p.m.]
22. My 12, February 10, 11 p.m. Representative of Palestine Currency Control Board in Jidda for past week explaining to Saudi Government British proposal for Saudi note issue.
Outline of proposal: (1) Saudi Arab Currency Control Board to be located in London and composed of Saudi Arab Minister, British Government representative and Bank of England representative; (2) British Government will supply Board with sterling amount equal to number of new rials needed for Saudi internal requirements or an estimated 25 million rials; (3) Board to issue rial notes with actual issuance in Saudi Arabia handled jointly by Saudi Arab official and agent of currency board. To be noted that present plan does not contemplate participation by any bank; (4) currency needs in excess of sterling amount provided by British Government must be backed by additional capital supplied board by Saudi Arab Government from other income sources; (5) same sterling exchange as rupees; (6) plan if adopted effective January 1, 1944.
Religious objections to paper currency still finding voice but believed balance in favor of some form of note issue. Plan proposed now under consideration by Saudi Government.
Repeated to Cairo.