Brief History of Money in Islam
REVIEW-No16 final
6/15/05
10:40 AM
Page 51
A Brief History of Money in Islam and Estimating the Value of Dirham and DÏn¥r
M. Zarra Nezhad
Abstract: Before the appearance of Islam, dÏn¥r and dirham were the currencies in use in the Byzantine and Iran empires, respectively. Both currencies were in use in preIslamic Arabia and continued to be so in the Islamic state. In 74 AH the Islamic dÏn¥r and dirham were minted. Estimating their value is a matter of considerable importance to those doing research in Islamic economics. This paper estimates the value of these two currencies using two methods ‘natural value’ and ‘purchasing power’. It finds that a dÏn¥r was worth 261 to 293 thousand riyals or USD 32.5-36.5.
I. Introduction Money has long been a medium of exchange, a standard of payment, the unit of account and a store of value. The currencies in ancient time were metal coins, particularly gold and silver. The dÏn¥r (gold) was the currency unit in the Byzantine empire, and the dirham (silver) in the Persian empire before Islam. A few decades after the conquest of these empires, the Islamic state began to mint the Islamic dÏn¥r and dirham. Estimating their equivalent value in modern times is necessary in the study of the economic history of Muslims and the economic system of Islam. The next section of this paper explains the role of money, section three discusses the Islamic coins and section four briefly reviews minting of money by Islamic states. Then, section five estimates the value of Islamic currency using two different methods, ‘natural value’ and ‘purchasing power’. The exchange rate
DR M. ZARRA NEZHAD is Assistant Professor of Economics, at the Shahid Chamran University, Ahvaz, Iran.
© 2004, international association for islamic economics Review of Islamic Economics, Vol. 8, No. 2, 2004, pp. 51–65.
REVIEW-No16 final
6/15/05
10:40 AM
Page 52
52
Review of Islamic Economics, Vol. 8, No. 2, 2004
of dÏn¥r to dirham is
6/15/05
10:40 AM
Page 51
A Brief History of Money in Islam and Estimating the Value of Dirham and DÏn¥r
M. Zarra Nezhad
Abstract: Before the appearance of Islam, dÏn¥r and dirham were the currencies in use in the Byzantine and Iran empires, respectively. Both currencies were in use in preIslamic Arabia and continued to be so in the Islamic state. In 74 AH the Islamic dÏn¥r and dirham were minted. Estimating their value is a matter of considerable importance to those doing research in Islamic economics. This paper estimates the value of these two currencies using two methods ‘natural value’ and ‘purchasing power’. It finds that a dÏn¥r was worth 261 to 293 thousand riyals or USD 32.5-36.5.
I. Introduction Money has long been a medium of exchange, a standard of payment, the unit of account and a store of value. The currencies in ancient time were metal coins, particularly gold and silver. The dÏn¥r (gold) was the currency unit in the Byzantine empire, and the dirham (silver) in the Persian empire before Islam. A few decades after the conquest of these empires, the Islamic state began to mint the Islamic dÏn¥r and dirham. Estimating their equivalent value in modern times is necessary in the study of the economic history of Muslims and the economic system of Islam. The next section of this paper explains the role of money, section three discusses the Islamic coins and section four briefly reviews minting of money by Islamic states. Then, section five estimates the value of Islamic currency using two different methods, ‘natural value’ and ‘purchasing power’. The exchange rate
DR M. ZARRA NEZHAD is Assistant Professor of Economics, at the Shahid Chamran University, Ahvaz, Iran.
© 2004, international association for islamic economics Review of Islamic Economics, Vol. 8, No. 2, 2004, pp. 51–65.
REVIEW-No16 final
6/15/05
10:40 AM
Page 52
52
Review of Islamic Economics, Vol. 8, No. 2, 2004
of dÏn¥r to dirham is
References: Ibn Sal¥m Ab‰ Ubayd, G. (1919). Alamval (Properties). Cairo: Maktabatu Alkoliat Alazharia. Ab‰ Yal¥, M. H. (1938). A^k¥m Ab‰ Yal¥ (Governmental Laws). Cairo: Matbaatu Alhalabi. al-DhahabÏ, Shams al-DÏn M. (1934). Ta^riru al-dirham wa al-dÏn¥r (History of Derham and DÏn¥r). Cairo: Edaratu Altabaa. al-¤urr al ¢AmilÏ, M. (1978). Was¥’il al-shÏ¢a (Shiite Traditions). Tehran: ®l al-Bayt. al-¤usaynÏ al-ShirazÏ, M. (1976). Min al-tamaddn al-Isl¥mÏ (From Islamic Development). Beirut: Dar Al-ߥdiq. ¢Abd al-¤ayy al-KattanÏ. (n.d.). al-Tar¥tÏb al-Id¥riyya (Administrational Systems). Beirut: Hassan Jalalasa. Al-MaqrÏzÏ, Ab‰’l-Abbas A. (1911). al-Maw¥¢i· wa’l-I¢tib¥r bi-dhikr al-khi~a~ wa’l®lh¥r (Advice and Taking Advice by Recalling the Previous Works). Cairo: Matbaatu Ahalabi. Al-MaqrÏzÏ, Ab‰’l-Abbas A. (1913). al-Nuq‰d (Currencies). Cairo: Daru Ehia Aluloom. Al-M¥wardi, ¢AlÏ ibn Mohammad. (1938). al-A^k¥m al-Sul~aniyya (Govermental Laws). Beirut: Daru Altabaa. al-ShahÏd al-Th¥ni, Z. M. (1976). Shar^ al-Luma¢ (Exposition of Luma¢ Traditions). Qum: Moasesatu Ahlelbait. REVIEW-No16 final 6/15/05 10:40 AM Page 65 Review of Islamic Economics, Vol. 8, No. 2, 2004 65 al-shaykh, ßad‰q. (1957). al-FaqÏh (Jurisprudent). Najaf: Sadooq. Al-Bal¥dhurÏ, A. (1956). Fut‰h Al-buld¥n (Conquest of Cities). Cairo: Alkutobu Alarabia. Al-BayhaqÏ, E. (1923). al-Ma^¥sin Wa’l-Mas¥wi’ (Virtues and Evils). Tehran: Nashr ¢lm. DamÏrÏ, Kam¥l al-DÏn (n.d.). ¤ay¥t Al-¤ayaw¥n (Life of Creature). Cairo: Kubra. D‰rÏ, ¢AbdulazÏz. (1948). T¥rÏkh al-Ir¥q al-Iqti|¥dÏ (Economic History of Iraq). Bagdad: Mabaatu Alhoria. Gardeezy, Abusaeed (1934). Zayn al-Akhb¥r (Good Traditions). Tehran: Doniaeh Ketab. Ibn AbÏ al-¤adÏd, E. M. (1959-64). Shar^ Nahj al-Bal¥qha (Exposition of Nahj alBal¥qha). Corrected by A. Ebrahim Mohammad. Cairo: Matbaatu Almoniria. Ibn al-Ukhwa (1934). Ma¢¥lim Al-qurba fÏ A^k¥m Al-^isba (Signs of Similarity in Municipal Rules). Beirut: Markaz Nashr Maktab Aluloom Alislamia. Ibn al-AthÏr, E. Sh. (1937). al-K¥mil fÏ’l-T¥rÏkh (The Complete History). Cairo: Matbaatu Almoniria. Ibn al-JawzÏ (1932). al-Munta·am fÏ T¥rÏkh al-Mul‰k wa’l-Umam (History of Kings and Nations).Cairo: Ma~ba¢at al-®d¥b. Ibn Khald‰n, A. M. (1917). Muqaddimat (Introduction to History). Cairo: Ketabu Alshabab. Ibn Khald‰n, A. M. (1962). Sikka (Coins). Cairo: n.a. Ibn ¢Asakir, A. (1975). TarÏkh MadÏnat Dimashq (History of Damascus). Beirut: Rawat al-Sh¥m. Im¥m ShushtarÏ (1964). T¥rÏkh Miqy¥s¥t d¥r A|r ¤uk‰mat Isl¥mÏ, (History of Measurements in Islam).Tehran: Chup Alrahim. al-Kha~ib al-Baghd¥di, A. (1913). T¥rÏkh Baghd¥d (History of Baghd¥d). Beirut: D¥r al-Kutub al-Islamiyya. KulaynÏ, R¥zÏ. (n.d). U|‰l al-k¥fÏ (Adequate Principals). Tehran: Islamia. Qud¥ma Ibn Ja¢far (1974). al-Khar¥j. London: Nashru bin Shams. ßub^Ï, ߥli^ (1976). al-Nu·um al-Isl¥miyya (Islamic Systems). Beirut: D¥r al-¢®lim. Zayd¥n, JurjÏ (1958). T¥rÏkh al-Tamaddun al-Isl¥mÏ (History of Islamic Development). Cairo: Daru Alhelal. Zarra Nezhad, Mansour (1988)., Review of Economic Problems of Primary Islamic States, Masters Dissertation. Tehran: Tarbiat Moddares University.