Tom Hodgkinson: When the dirham was invented 1,400 years ago, it was pegged to the price of a chicken. Its buying power is the same today

 

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What is money? It is a means of exchange. You buy a book from me for £10 and I use the £10 to buy food. It kind of works. The problem is that national currencies do not keep their value. If I bury a £1 coin in the back garden and dig it up in 100 years' time, it will be worthless.

Money also loses its value as wages rise. Today, my annual income is roughly the same as it was in 1994. But the price of oil, beer and most other useful commodities has shot up, so my spending power is greatly diminished.

The clever, rich people invest in oil, property and suchlike so their money remains safe. They convert their useless, constantly devaluing sterling notes into an asset that grows rather than diminishes in value. We could probably all do well to follow their lead, and avoid savings altogether in favour of buying stuff we like and which may also keep its value: art, jewellery, wine, land.

At the anti-capitalist end of the political spectrum, we witness noble experiments to escape the grip of the state-controlled money system, such as the Local Exchange Trading System, whereby you do a bit of gardening for your neighbour and she does some book-keeping for you. Barter is the word.

Then there are the local currencies such as the Brixton pound and the Totnes pound, which aim to keep money circulating in local communities rather than being sucked out of it by the big chains, which transfer the profits made from local trade to their shareholders.

But there is another way, and it is being pioneered by a group of British Sufi Muslims. They say we should use silver and gold coins in everyday transactions. Silver and gold do suffer fluctuations in price, but over long periods they remain stable.

Following a visit from Adnan Ashfaq of the Dinar Exchange to our retail establishment last week, I proudly stuck a sign to the front door: we accept silver dirhams. Adnan explained that a three-gram silver dirham is worth about £4. When the dirham was invented, around 1,400 years ago, the amount of silver it contained was pegged to the price of a chicken. Its buying power is the same today.

The gold dinar, 4.25 grams of gold, is worth around £180, which was the cost of a sheep, and still is. So over 1,400 years, the currency has not devalued. A gold sovereign, the British version of the dirham, today is worth around £210. It would make sense, then, to transfer your sterling, government money into silver and gold. Silver and gold also have the advantage of not rusting. Unlike my £1 coins or £20 notes, I could bury my silver and gold coins in the garden, dig them up in 100 years' time and they would be as good as new.

It also makes sense to use silver and gold for everyday transactions. I paid all my Idler contributors a gold sovereign each for their contribution to the magazine. Gold and silver coins are also a truly international currency: I could use them to buy stuff all over the world or sell them at a jeweller in exchange for local currency.

Locally, I could exchange my silver dirham for a pint in the local pub. Or I could use a mixture of currencies: sterling and silver. I could pay my mechanic with it, provided he was philosophically attuned to the idea.

Gold and silver coins have a romance about them that adds to the lustre. I am reading Daniel Defoe's Robinson Crusoe (1719) to my young son right now. It really does talk about pieces of eight (the piece of eight, or "peso de ocho", was an eighth of a silver dollar and weighed 3.44 grams, just slightly heavier than the silver dirham).

In the old days, before the establishment of the Bank of England in 1694 in order to make a loan of £1,200,000 to the government, real money was the norm, and London's streets teemed with a variety of currencies. Why should that not happen again? If I want to accept silver dirhams in my shop, then I am free to do so.

OK, it's true that our only silver transaction so far has been from Adnan himself, who paid four silver dirhams for £16 worth of books. But, as the sages used to say, a journey of 1,000 miles starts with one small step.

Tom Hodgkinson is editor of 'The Idler'

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