Introducing The Islamic Dinar and Dirham By Umar Vadillo
Achnagairn House, Scotland 1995
From the beginning of Islam until the fall of the Khalifate the dinar and dirham were the Shari'ah currency of the Ummah
THE HISTORY OF THE ISLAMIC DINAR AND DIRHAM
In the beginning, the Muslims used the gold and silver by weight and the dinar and dirham that they used were made by the Persians.
The first dated coins that can be assigned to the Muslims are copies of silver dirham of the Sasanian Yezdigird III, stuck during the Khalifate of Uthman (radhiaAllahuanhu). These coins differ from the original ones in that an Arabic inscription is found in the obverse margins, normally reading “In The Name of Allah”. Since then, the writing in Arabic of the Name of Allah and parts of Quran on the coins became a custom in all minting made by the Muslims.
Under what was known as the coin standard of the Khalif Umar ibn al-Khattab, the weight of 10 dirhams was equivalent to 7 dinars (mithqals).
In the year 75H (695 CE), the Khalif Abdalmalik ordered Al-Haddjadj to mint the first dirhama, thus he established officially the standard of Umar in al-Khattab.
In the next year, he ordered the dirhams to be minted in all the regions of Dar-al-Islam. He ordered that the coins be stamped with the sentence 'Allah is Unique, Allah is Eternal'.
He ordered the removal of human figures and animals from the coins and that they be replaced with letters.
This command was then carried on throughout the history of Islam. The dinar and the dirham were both round, and the writing was stamped in concentric circles. Typically on one side it was written the 'tahlil' and the 'tahmid', that is 'La ilaha illa Allah' and 'Alhamdulillah'. And on the other side was written the name of the Amir and the date. Later on it became common to introduce the blessing on the Prophet salalLaahu alayhi wasalam and sometimes, ayat of the Quran.
Gold and silver coins remained the official currency until the fall of the Khalifate. Since then, dozens of different paper currencies were made in each of the new pot-colonial national states created from the dismemberment of Dar-al-Islam.
LAW OF ENTRUSTING PROPERTY
>Allah says in the Qur'an :
'And amongst the People of the Book there are those who, if you were to entrust them with a treasure (qintar), he would return it to you. And amongst them is he, who, if you were to entrust him with a dinar would not return it to you, unless you keep standing over him.' Al-Qur'an 3, 75
Qadi Abu Bakr ibn al-Arabi, the greatest authority on Qur'anic Law wrote in his famous 'Ahkam al-Qur'an' about this ayat:
'The benefit that can be taken from this is the prohibition of entrusting the People of the Book with goods.'
Qadi Abu Bakr said “ The question concerning entrusting property is legislated by the text of Qur'an.”. This means that the ayat is a legal judgment of absolute validity and of the greatest importance to the Deen.
Entrusting wealth to a non-muslim is not allowed, but furthermore, taking a non-muslim as a partner outside Dar-al-Islam (where we stand over them) is extremely restricted, because they might misuse or might use our wealth in a forbidden transactions.
Since paper money is a promise of payment, can it be permitted to trust the issuers while they hold the payment (our property) outside our jurisdiction ?
History has also demonstrated repeatedly that paper money has been a permanent instrument of default and cheating the Muslims. In addition, Islamic Law does not permit the use of promise of payment as a medium of exchange.
WHAT IS THE ISLAMIC DINAR AND DIRHAM
According to Islamic Law ….
The Islamic dinar is a specific weight of gold equivalent to 4.25 grams. The Islamic Dirham is a specific weight of silver equivalent to 2.975 grams.
Umar ibn al-Khattab established the known standard relationship between them based on their weights: '7 dinars must be equivalent to 10 dirhams' in weight.
HOW CAN I USE THEM?
1. I can save them because they are wealth in themselves
2. I can pay zakat as it is a requisite in the Islamic Law
3. I can use it as dowry in marriage.
4. I can buy and sell with them as they are a legitimate medium of exchange.
IJMA (CONSENSUS) ON THE MITHQAL
'The Revelation (wahyu) undertook to mention them (dinar and dirham) and attached many judgments to them, for example zakat, marriage and hudud etc. Therefore, within the Revelation they have to have a reality and specific measure for assessment (of zakat etc.) upon which its judgement may be based rather than on the non-shari'e (other coins or commodity).
Know that there is a consensus (ijma) since the beginning of Islam and the time of the Companions and the Followers that the dirham of the shari'ah is that which, ten weighs seven mithqals (weight of a dinar) of gold. The weight of a mithqal of gold is seventy-two grains of barley, so thet the dirham which is seven-tenths of it is fifty and two-fifths grains. All these measurements are firmly established by consensus.' Ibn Khaldun, Al-Muqaddimah
Gold or silver are the most stable currency the world has ever seen from the beginning of Islam. Until today, the value of the Islamic bimetallic currency that the remained surprisingly stable in relation to basic consumable goods:
A chicken at the time of the Prophet salalLaahu alayhi wasalam costed one dirham. Today, 1400 years later, a chicken costs approximately one dirham.
In 1400 years, inflation is zero. Could we say the same about the dollar or any other paper currency in the last 30 years?
In the long term, the bimetallic currency has proven to be the most stable currency the world has ever seen. It has survived despite all the attempts by governments to transform it into a symbolic currency by imposing a nominal value different from its weight.
Gold cannot be inflated by printing more of it. It cannot be devalued by government decree, and unlike paper currency, it is an asset which does not depend on anybody's promise to pay.
Portability and anonymity of gold are both important, but the most significant fact is that gold is an asset that is no one's liability.
All forms of paper-money instruments : bonds, shares and even bank deposits are promise to repay money borrowed. Their value is dependent on the investor's belief that the promise will be fulfilled. As junk bonds and the Mexican peso have illustrated, a questionable promise soon loses value.
Gold is not like this. A piece of gold is independent of the financial system, and its worth is underwritten by 5000 years of human experience.
PAYMENT OF ZAKAT
Zakat cannot be paid with a promise of payment. Zakat can only be paid with tangible merchandise, called in Arabic 'ayn. It cannot be paid with a promise to pay or a debt, called in Arabic dayn.
From the beginning of Islam, zakat was paid with dinars and dirhams. Most significant is that the payment of zakat was never allowed in paper-money during all the Ottoman period right until the fall of the Khalifate in 1924.
Shaykh Muhammad Illish (1802-1881) the great Maliki qadi said that if you were to pay zakat with paper-money, only its value as merchandise (value of paper) can be accepted. Therefore its nominal value is irrelevent as payment of zakat.
'If the zakat was obligatory by considering its substance as a merchandise, then the nisab would not be stipulated according to its value but according to its substance and its quantity as is the case with silver, gold, grain or fruit. Since its substance (paper) is irrelevant (in value) with respect to the zakat, then it should be treated as the copper, iron or other similar substances.' Shaykh Illish
The return of the payment of zakat in gold and silver is an essential part of the re-establishment of Islam.
BUYING AND SELLING
The Dinar and Dirham are the currency of the Ummah. No more hundreds of different paper currencies diseased by inflation. In the past, the Muslims were able to travel throughout the Islamic World and trade with Dinars as they could at home. From the 15th century onwards the Europeans started to introduce the banking promisory note in the Muslim lands. Paper-money gave European traders an incredible purchasing power that overwhelmed and eventually surpassed the Muslim's superiority in world trading.
Gold was money, and for at least two centuries before, most bonds including government ones were gold bonds. The financial demands after the First World War led governments to print paper-money in excess, at first suspending convertibility to gold until it was finally terminated.
HOW IMPORTANT IS THE DINAR AND DIRHAM TO THE DEEN OF ISLAM ?
Al-Qurtubi (d 1273), one of the greatest commentators of the Qur'an wrote in his renowned Tafsir about the following ayat in the Qur'an :
'O you who believe ! Obey Allah and obey the Messenger and those in command among you …' Qur'an 4, 59
The ayat is an order to 'obey the Sultan with respect to seven things : the minting of the dinar and dirham, fixing weights and measures, legal judgements, Hajj, Juma'ah, the two Eids and Jihad.'
The minting of the dinar and dirham is therefore the first obligation of the Sultan to be commanded and to be followed.
FATWA ON PAPER MONEY
Paper-money is not a legal medium of exchange.
If paper-money money is a debt representing a merchandise (dayn) :
The debt must have a definition of what is owed. Even if it is defined as a proper debt, a debt cannot be used as a medium of exchange. Paper-money as wealth is not allowed to be entrusted to non-Muslims.
If paper-money is a tangible merchandise ('ayn) : Its value only corresponds to its weight as paper. Equally, we take the value of the dinar by its weight and not by its nominal value. Either way, paper-money cannot be accepted as a medium of exchange.
IMPOSITION AND TYRANNY
We have heard the economists saying ' We need a flexible currency.'
'We need a currency that can be expanded and contracted according to the needs of the economy'>
'An increase in currency will quicken industry.'
These are fallacies to justify the insolvency of the issuers of the notes in order to avoid their obligations to pay. There is in truth a great charm in the idea of being able to pay off all our needs, satisfy all the governments expenses and o make the whole community prosperous, just by printing a few characters on bits of paper. But when a man is capable of believing that, he will believe anything. Another fallacy to justify theft is to say 'It is an emergency'. Certainly a war can influence people to accept what appears to be solutions. After the emergency comes the semi-emergency of a crisis, or an almost-emergency time or an almost-normal time. In any case, our individual rights are no longer in our hands. Any failure to repay in whole or in part what is due by the promisory note is but a form of theft.
Up until the 15th century, the Muslims were in total charge of world trading. From then on, the Europeans started to take over by the power of the Ring. The ring is a simple mathematical equation, which as mentioned by Richard Wagner in his famous opera, gives total power to the person who uses it, although it contains a curse : 'Whoever uses it, will never be loved'. Power was not wielded by gold, but by storing it in a guaranteed cave. People slaved to mine it, but ruled by whoever possessed the Ring.
The Ring did not just conquer the nation-states, for its power was so fascinating that it transformed the states themselves into banks. And the states becomes banks.
This convenient method of coining credit was soon discovered by the governments and they issued their own promisory notes (legal tender) in payments of their expenses. It was the only way for them to be able to borrow money without paying interest. Their promises to pay on demand being, in the estimation of the holders, equivalent to money in hand.
The governments who are incapable of containing their own expanding deficits, then created legal money. The Law of Legal Tender established that all money issued by the issuing authority must be accepted by force for any debt.
The Law of Legal Tender abolished the contractual law that guaranteed the freedom of the people to choose their medium of exchange. It imposes on the citizens an artificial currency with a value established by the government.
FRACTIONAL RESERVE BANKING
This mathematical formula is called the Fractional Reserve Banking and it is attached to debt and symbolic money which destroyed the Muslim Khalifate. This mathematical formula is what banking is all about.
The Fractional Reserve Banking needs a pre-condition. The existence and acceptance of symbolic money. Then it consists of lending at 'interest' this symbolic money that the banks do not have. By lending 20 times more than they have, all repayments of 10% become in accounting like 200% (20 X 10%).
We deposit $1. Fractional Reserve Banking allows banks to create 20 times the money deposited by customers. When this money is lent out as loans, and with a repayment with 10% interest rate to it, the banks have created 200% credit from $1 deposited. Hence creation of credit out of nothing.
The losers are the passive users of the currency who will suffer the inflation originated from the money created out of nothing.
Once the Muslims accepted the banks symbolic money they inadvertently endorsed the magical system which gave the banks a previously unthinkable world dominion.