From German East African Rupees to British East African Shillings in Tanganyika: The King and the Kaiser Side by Side

Abstract

Pallaver situates German East Africa within the framework of the broader East African region as a way to illuminate the processes of currency standardization in the colonial context. The monetary geography of the region was determined first by the circulation of the rupee and later by Great Britain’s interests to create a common currency for its East African colonies. Pallaver argues that transimperial, international, and regional contexts influenced currency circulation across and within colonies, drawing attention to forms of colonial money and their use by distinct groups, such as African laborers and Indian traders.

Résumé

Pallaver situe l’Afrique orientale allemande dans le cadre de la région élargie de l’Afrique de l’Est comme un moyen d’éclairer les processus de normalisation monétaire dans le contexte colonial. La géographie monétaire de la région a été déterminée d’abord par la circulation de la roupie et plus tard par les intérêts de la Grande-Bretagne à créer une monnaie commune pour ses colonies d’Afrique de l’Est. Pallaver soutient que les contextes transimpériaux, internationaux et régionaux, ont influencé la circulation de l’argent à travers et au sein des colonies, attirant l’attention sur les formes de monnaie coloniale et leur utilisation par des groupes distincts, tels que les travailleurs africains et les commerçants indiens.

Resumo

Neste artigo, Pallaver enquadra a África Oriental alemã na região mais vasta da África Oriental no seu todo, com vista a compreender os processos de padronização da moeda no contexto colonial. A geografia monetária desta região foi, em primeiro lugar, determinada pela circulação da rupia e, mais tarde, pelos interesses da Grã-Bretanha, que pretendia criar uma moeda comum nas suas colónias da África Oriental. Pallaver defende que os contextos trans-imperiais, internacionais e regionais influenciaram a circulação da moeda entre as várias colónias e dentro de cada uma delas, chamando assim a atenção para a existência de várias moedas coloniais e para a sua utilização pelos diversos grupos, nomeadamente os trabalhadores africanos e os comerciantes indianos.

Introduction

During European rule in Africa, colonial authorities transitioned away from imposing imperial currencies in favor of developing new territorial currencies. The processes were common to most colonies, but each colony transitioned according to a particular variety of circumstances and initiatives. This article places German East Africa (GEA) in the framework of the broader East African region as a way to shed light on processes of currency standardization and regulation in the colonial context. For the colonial state, implementing a system of territorial money was a way to facilitate the raising of revenues and to create macroeconomic conditions that favored commercial exchanges between the colony and the imperial metropole. At the same time, a territorial colonial currency was a potent political tool projecting power and fostering identity by limiting foreign influence (Cohen 1998:35). Colonial currencies had “a clear demarcating and ‘mapping’ function,” as the borders between the colonies differentiated between competing claims of colonial powers (Mwangi 2001:766). A statement by the British Colonial Office in 1920, commenting on the possibility of accepting German East African (GEA) rupee coins in the British protectorates of East Africa, epitomizes the orthodoxy: “It is not altogether satisfactory, even at this time of the day, that the King and the Kaiser should circulate side by side in the British Protectorates […].” ¹ However, the individual colonial states, in their intent to construct discrete spaces of currency circulation, had to consider the realities of currency use that had been in place before the establishment of colonial rule. Indeed, the coastal regions of East Africa and the Zanzibar archipelago had for decades been part of a trading area where the Indian rupee was the dominant currency in commercial exchange. For this reason, the European powers that colonized the area all used rupees, which were each engraved with the symbols of the individual issuing powers. Britain kept the Indian rupee, which was also the currency of British India, whereas the other colonial powers introduced their own rupees. Germany created the Deutsch-Ostafrikanische Rupie, and Italy introduced the rupia italiana in Somalia. Thus, Britain, Germany, and Italy all adapted their colonial currencies to the “monetary geography” (Cohen 1998:8) of East Africa as it was defined by the Indian rupee.

Seen from GEA, the analysis of the spatial relations of currency circulation illuminates how the economic and geographical space of the rupee predated colonialism and how transimperial, transcolonial, and international contexts influenced the policies of currency design. Later, Great Britain’s interests reshaped the monetary geography of the region, as GEA was occupied by the British during the First World War and then became a League of Nations mandate. The discussion about the establishment of the mandate unfolded at a time when Uganda and Kenya were experiencing a profound currency instability known as the “East African rupee crisis” (Maxon 1989; Mwangi 2001; Pallaver 2019a). The crisis ultimately led to the separation of Kenya and Uganda from the “rupee area” and the introduction of a new currency, the East Africa (EA) shilling. In Tanganyika, Britain as the mandate power aimed at economic standardization and thus at the establishment of a common currency for Kenya, Uganda, and Tanganyika (McCarthy 1977:583). Yet, the fact that Tanganyika was a League of Nations mandate required that any currency decisions take into consideration the interests of Africans, who had to be protected, as enshrined in the mandate charter (Brennan 2012:11; Gorman 2014).

These transcolonial and international contexts also influenced currency circulation within the colonies, which was characterized by the use of different forms of colonial money. In order to illuminate these spaces of currency circulation and how they shifted over time, this article examines the forms of colonial money and their use by distinct groups within GEA. Denominations used were often specific to different groups of currency users—Africans, Indians, and European settlers. Subsidiary coins, for example, were largely employed by African traders, laborers, and producers, whereas paper notes were used by Indian shopkeepers and traders. The spatial organization of currency relations was thus also shaped by the circulation of different forms of money and their use by discrete groups who played diversified roles in the processes of economy building and were therefore affected by currency policies in different ways.

The first part of this article briefly reconstructs the history of the rupee as regional money in East Africa. The second section investigates relations between specific coinage, money use, and delineations of economic space in the creation of a separate rupee for GEA. Such an analysis goes beyond the existing factual accounts of German East African currency and banking history (Deeken 1913; Hintze 1912; Wehling 1929; Meyer 1996). The third section explores currency matters in the relationship between Britain and Germany under the conditions of the First World War. The final section, focusing on the transition from rupees to EA shillings, discusses how the subsequent reconfiguration of political spaces intersected with currency policies and the interests of different groups of currency users.

Indian, German, and Italian Rupees: Transregional Currency Circulation and Territorialization

German colonial rule was established in a region of East Africa in which the Indian rupee had been in circulation for decades. The circulation of the Indian rupee had been favored by the trade relationships between East Africa and Western India and the crucial role played by Indian merchants in the Zanzibar economy. Yet, before the 1860s, the rupee had not been commonly circulated in Zanzibar. As Catherine Eagleton (2022) has recently argued, its adoption as the primary currency of Zanzibar and the East African coast was the result of a regulation of the monetary system introduced by the Sultan of Zanzibar to solve problems of currency stability caused by the outbreak of the American Civil War. Before the war, multiple currencies were circulating in Zanzibar, including gold sovereigns, Maria Theresa thalers—a silver coin struck by the Vienna mint that was extremely popular in the region—and French francs. Owing to the war, imports of American cotton cloth—a commodity greatly in demand in East Africa—were dramatically reduced. German merchants thus began to import English cotton cloth rather than Maria Theresa thalers. The scarcity of Maria Theresa thalers led to the fluctuation in the values of the circulating currencies. Pressed by Zanzibar’s merchants, the Sultan issued a proclamation that listed the coins that were legally accepted in Zanzibar and fixed their value in Maria Theresa thalers. Following the advice of the British consul in Zanzibar, in 1863 the Sultan also added the Indian rupee to the list of accepted coins (Eagleton 2022:223–26). After these regulations were imposed, Indian rupees started to become more and more abundant, to the extent that at the time of European colonization the Indian rupee and its fractional coin, the copper pice (1/64 of a rupee), were the only currency in daily use in Zanzibar and in the coastal regions of East Africa under the Sultan’s domain.

During the initial phase of German colonial rule in the region, the German East African Company (Deutsch Ostafrikanische Gesellschaft, DOAG) administered the protectorate on behalf of the German Reich. In 1890, the Reich granted the DOAG the right to issue coins. Given the predominance of the Indian rupee, the DOAG decided to issue rupees and pice (pesa), with the inscription of its name and symbols (its coat of arms) and those of the Reich (the German eagle with crown or the effigy of the emperor) (Schnee 1920:693). Engraving the coins with the symbols of the German Reich was a way to distinguish the GEA rupee from the Indian rupee and thus differentiate spaces of currency circulation. Yet, in terms of value, the DOAG one-rupee coin had the same size and silver content as the Indian one-rupee coin. The latter continued to circulate not only within the company’s territory, but also in the British protectorates to the North and in Zanzibar. The DOAG’s creation of a modified rupee was obviously aimed at maintaining existing regional trade links.

In 1891, the DOAG ceased to exist, and the German state created the colony of Deutsch-Ostafrika (German East Africa, GEA). However, DOAG rupees and pesa continued to be issued until 1902, when the state regained its right to mint coins (du Toit 1950:37–39; Deeken 1913:38). Beginning in 1904, the German imperial government issued the new GEA rupee. The exchange rate between the GEA rupee and the pound sterling was fixed at 15 GEA rupees for 1 pound sterling, the same rate that existed between the Indian rupee and sterling (Hintze 1912:83; Deeken 1913:45) ². The region’s well-established economic ties with Zanzibar arguably prompted the decision to maintain a rupee currency in GEA. In 1902, Zanzibar received 67 percent of GEA’s exports and provided 57 percent of its imports (Eberlie 1960:196). For the same reasons, the other European colonial powers in the region, Great Britain and Italy, also opted for the adoption of the rupee.

In 1888, the Imperial British East Africa Company (IBEAC) had received the right to issue money in the form of one-rupee coins and copper pice together with the Royal Charter that allowed it to administer the British-occupied territories in East Africa (MacDermott 1893:11). After the transfer of the administration to Britain in 1895, the British government declared the Indian rupee and its fractional coins the official currency of the East Africa Protectorate (EAP, from 1920 Kenya) and Uganda. According to the Foreign Office and colonial officers based in East Africa, by adopting a currency in use in a vast area of the Indian Ocean region under British control, including not only Zanzibar and British India, but also Aden, British Somaliland, Ceylon, the Seychelles, and Mauritius, the amounts of rupees in circulation could be naturally controlled by trade operations, and the demand for additional currency could be easily met by importing new coins from India (Clauson 1944:16–17; Pallaver 2015:481).

In 1910, the Italian rupee was adopted in Somalia (Caroselli 1922:377; Sessa 2020). The Italian colonial government drew inspiration from GEA, where, in the words of a well-known Italian colonial officer, Germany had “overcome its most tenacious nationalist and imperialist preconceptions” and adopted a rupee currency (Caroselli 1922:377). The value of the Italian rupee was fixed at 15 to the pound sterling, as in GEA. Carlo Rossetti (1914:64), the Director of the Italian Colonial Office, explained the move by stressing the prerequisites of a good colonial administration, namely a monetary system that considered commercial relations with neighboring territories rather than with the “motherland.” Somalia’s dominant trade relations were with Zanzibar and Aden, which both used the Indian rupee. Conscious of its own marginal position in the region, Italy even tried to persuade Britain to agree to a monetary convention on the model of the Latin Union called the “Union of the Indian Ocean.” In this union, all the different types of rupees ought to be accepted as payment. The British, however, refused because they did not trust the stability of the Italian rupee (Rossetti 1914:57; Caroselli 1922:368).

The decision to adopt a rupee currency was clearly shaped by existing local and regional monetary conditions. All one-rupee coins (DOAG, GEA, IBEAC, Italian, and Indian) had the same fineness (.917), weight (11.664 grams) and diameter (30–31 mm). They only differed in their national symbols that, as mentioned above, served to define and delimit the borders of the colonies with the circulation of a single legal tender. With regard to the subsidiary coins, before 1898 all types of copper pice (DOAG, IBEAC, EAP, and Zanzibar) were equally accepted in British East Africa, GEA, Zanzibar, and Italian Somalia. This was clearly a way to facilitate trade within the region. When in 1898 the Indian rupee became the official currency of the EAP and Uganda, the governments of the other East African colonies issued regulations sanctioning their own coinage alone as legal tender. ³ Yet in border areas, multiple currency use persisted in spite of the new regulations. In the Ugandan region bordering GEA, for example, the British authorities occasionally received GEA rupees as revenue and exchanged them for Indian rupees at the German consulate in Mombasa. ⁴ GEA rupees received and accepted as payments for hut tax were given to Arab merchants who traded with the German colony. ⁵ Existing interregional trade connections and the porousness of colonial borders clashed with the homogenizing intentions of the colonial powers in terms of currency circulation.

Rupees and Hellers: A Currency Suitable for German East Africa

The introduction of the rupee in GEA highlights the relevance of transregional, transcolonial, and local contexts to designs of imperial monetary policies. In its other African colonies—Togo, Cameroon, and German Southwest Africa—the German government introduced the German mark, thereby extending Germany’s monetary system to its colonies (Deeken 1913). Karl Helfferich—the director of the colonial division of the German Ministry for Foreign Affairs and the main driver of Germany’s colonial monetary reforms—explained his vision during a conference organized by the Institut Colonial International (ICI), which discussed best practice in colonial monetary reforms. In his view, the choice of the GEA rupee was a means of creating an efficient colonial monetary system, which required the consideration both of the commercial interests of the “motherland” and those of the indigenous people. ⁶ On the same occasion, Bernard Dernburg—former head of the German Imperial Colonial Office—argued that it was necessary “to adapt a bit to the ideas of the indigenous people” and to pay particular attention to the small denomination coins largely used by Africans (ICI 1912:143–44; Krozewski 2022).

At the beginning of the twentieth century, a change in the small denomination coins in use became urgent. The main reason was that despite colonial currency reforms, cowry shells had continued to be used as currency in Uganda and parts of GEA. One reason for this was that—as opposed to cowries—the copper pice had too high a value to be suitable for small payments, especially in those areas situated far from the coast (Pallaver 2015). Discussions on the reform of the subsidiary coinage occurred in GEA and the British Protectorates at about the same time, and this led to the introduction of the decimal division of the rupee. ⁷ In 1903 and 1905 respectively, the rupee was divided into one-hundred hellers in GEA and into one-hundred East African (EA) cents in the EAP and Uganda. ⁸ In 1904, GEA issued one-heller and half-heller coins, followed in 1908 by five-heller coins and ten-heller coins.

Those who used the various currencies accepted some coins but rejected others. The material of the coins was often the reason for the rejection. In GEA, for example, half-heller coins proved to be unpopular because they were too thin and were easily lost. Their minting was discontinued in 1906, and they were withdrawn from circulation in 1915. ⁹ The five-heller coin was very large compared to other coins, in order to comply with Africans’ alleged preference for big coins. ¹⁰ However, as it often happened, this might have been a misunderstanding on the part of those who designed the coins, as African currency users actually did not appreciate the coin precisely because it was too big (Jahresbericht 1911–12:XI). In 1913, therefore, the authorities replaced this coin with a smaller one minted in nickel and drilled with a hole as the ten-heller coin, which was well liked by African currency users (Meyer 1996:114). The small denomination EA cents issued in Uganda and the EAP were all coined with a hole. According to the colonial government, this was a way to promote their use by Africans, who in Uganda put cowries on strings (Pallaver 2015). In the case of the heller, the motivation was different, though. Ten-heller and five-heller coins were minted with a hole to distinguish them from silver rupees which had a similar color (Deeken 1913:53–54; Jahresbericht 1907–8:40–41).

Among all the coins issued in GEA, one-heller coins were the most in demand by Africans and minted in the largest quantities during the German colonial period. One-heller coins became popular in trade in the region of Lake Tanganyika and Lake Victoria: 100,000 rupees in one-heller pieces were introduced in the area and gradually replaced cowry shells (Jahresbericht 1911–12:53). The success of the one-heller coins was similar to that of one-cent coins in Uganda and the EAP (Pallaver 2018:299). As Akinobu Kuroda has recently argued, exchanges in rural marketplaces required currencies small enough to negotiate prices at a minimum unit on a tiny scale (2020:30–31). The use of one-heller coins allowed for a more effective calculation of the exchange rate between the pesa and the heller. According to Paul Samassa, “That the blacks would now be content with the heller, as some had hoped, where they used to take the pesa, has not occurred; rather, they continue to demand pesas and convert them, as best they can, into heller, rounding upward” (Samassa 1909:241). Thus, when the heller replaced the pesa, people in the colony, despite using heller coins, continued to reckon in pesa; in these conversions, one-heller was the most suitable denomination for rounding up. Heller coins also facilitated the payment of labor, as German planters often paid their African laborers at the end of each working day using one-heller coins. ¹¹

According to John Iliffe (1979:132–33), colonial monetization in GEA was quite successful not only because the colonial state prioritized the process but also because people had a long experience in using money in the form of commodity currencies in nineteenth-century long-distance trade (see Pallaver 2019c). Indian intermediaries, who had been assigned a special function in the economic development of the colony by the governor Albrecht von Rechenberg (1906–12), played an important role in the process of colonial monetization. Indians held a monopoly in retail trade and mediated “between the villages and the railway,” collecting huge amounts of subsidiary coins from African consumers (Aiyar 2015:65; Bertz 2021; Gregory 1971:103–5). Indian retailers exchanged subsidiary coins for rupee coins with German settlers and employers, who used the small coins to pay their laborers. Africans largely preferred coins to pay for both produce and labor, and many kept part of their savings in rupee coins. ¹² They generally disliked notes, as they could easily be destroyed by water, fire, and insects (ICI 1912:143, 158). Moreover, banknotes did not lend themselves to making small payments, as they were generally only issued in high denominations (Comaroff & Comaroff 2005; Killingray 1978:45; Pallaver 2019b). The banknotes introduced in 1905 by the Deutsch-Ostafrikanische Bank were all high denomination—five, ten, fifty, one hundred, and five hundred rupees—and as such were used for large payments, which Africans generally did not make (Hintze 1912:104–16; Deeken 1913:48).On the other hand, Indian traders and shopkeepers were more familiar with the use of banknotes. Indians were the main commercial intermediaries in the colony, which is why they had large quantities of both coins and banknotes. For this reason, the Indian community was the one most dramatically affected by the laws that imposed the forced exchange of coins for banknotes during the First World War, as we discuss in the next section.

Currency Policies and Currency Users in German East Africa: Wartime Disconnections

One of the main problems that the German colonial administration faced during the First World War was the shortage of means of exchange. On March 1, 1915, the British initiated a naval blockade that completely stopped the supplies to the German colony, including that of coins. As a way to call in cash, the Deutsch-Ostafrikanische Bank increased its rate of interest from 4 to 5 percent. The outflow was sustained by the payment of salaries to government staff monthly rather than quarterly. In spite of this measure, by mid-1915 cash became even more scarce. The military campaign suffered as a result, because porters and soldiers could not be paid, and food for the army could not be bought. The government calculated that until November 1, 1915, 300,000 silver rupees had “disappeared” from circulation, being hoarded or traded outside the colony. When the colonial government moved its headquarters from Dar es Salaam to Tabora, it set up a provisional mint there which started production in 1916. With metal collected from all over the colony, including from German shipwrecks and used cartridge cases, the mint produced fifteen-rupee gold coins—known as Tabora sovereigns—as well as twenty-heller and five-heller brass coins. ¹³ In order to pay their African laborers, plantation owners also issued private tokens called “marken” (stamps), the value of which was expressed in hellers. ¹⁴

Along with the minting of coins, the government printed “interims banknoten” of one, five, ten, and twenty rupees on the paper used for government publications. These were therefore rather “crude” and even more easily damaged by water and insects than normal banknotes. The notes were used to pay African soldiers and porters, to purchase stores and foodstuffs for the army, and to pay the salaries of the Europeans employed by the army, whose number had increased from 260 in peacetime to 3,500 during the war. ¹⁵ But given the widespread preference for coins among Africans and the low quality of these banknotes, the printing of notes was insufficient to relieve the colony from cash scarcity. For this reason, in January 1916 the government prohibited people from owning more coins than necessary for personal requirements and for the continuation of business. Under the new ordinance, people were required to exchange their silver coins for banknotes. The authorities could confiscate excessive amounts of silver coins if people refused to accept paper money, on the agreement that the amounts requisitioned were to be repaid within six months after the termination of hostilities, plus 3 percent interest per annum. ¹⁶ If people refused to accept interim notes or to declare the amount of coins they possessed, they were fined 5,000 Rs (rupees) and/or imprisoned for three months. A total of about Rs18,000,000 were issued as interim notes during the war. ¹⁷ These currency regulations increased the general distrust of paper money. What is more, British intelligence discredited German paper currency by forging millions of twenty GEA rupee notes and circulating them in GEA (Strachan 2004:121).

As more and more German territory was occupied by British, Belgian, and South African forces between 1916 and 1918, people were allowed to exchange the GEA rupee and its subsidiary coins at par with the Indian rupee. ¹⁸ This was the only way to secure the cash needed to supply the Allied army. Porters and soldiers were given German currency individually to buy small provisions, such as chickens and eggs, whereas larger purchases such as cattle were made by supply officers. ¹⁹ The early decision to adopt a rupee currency in both GEA and British East Africa facilitated the acceptance of different rupee coins across colonial borders. But this was not without problems. During 1916, as a temporary solution to currency shortages, the salaries of porters and soldiers from the EAP and Uganda were partly paid by the British in GEA rupees that had been confiscated. ²⁰ Once they returned to the EAP and Uganda, porters were allowed to use these rupees to pay taxes to the government. ²¹ However, since GEA rupees were not legal tender in the British colonies, when porters and soldiers used them or tried to exchange them in local shops, they incurred a high loss. Local shopkeepers in the Voi district, for example, exchanged one GEA rupee for 42 EA cents, rather than for one-hundred EA cents or one Indian rupee, as was the practice in GEA. In this scenario, porters were losing about 58 per cent of the pay they had received for their service for the military. ²² Despite these problems, the tendency of the British colonial government was to pay porters with whatever currency they had, as a way to avoid unrest. Once the porters had been paid and demobilized, there was lesser risk that they could organize and cause unrest. Later, at the time of demobilization at the end of the war, porters from Uganda and Kenya were paid by the British almost exclusively with Indian one-rupee notes, despite the general dislike of this form of money. In 1921, these notes were demonetized overnight by the British colonial government, raising intense criticism from various sectors, including the Indian community in Kenya and the Lukiiko in Uganda, as well as widespread discontent among the general population. ²³

After the establishment of the civil administration in January 1917, the British authorities kept the GEA rupee in circulation. They lacked an alternative to replace it and were also afraid of a negative reaction from the “natives.” ²⁴ For these reasons, Britain guaranteed that German coins would not be demonetized or withdrawn until they could be exchanged with British currency at par. ²⁵ In order to pay for imports, traders were allowed to take German coins to the banks in exchange for drafts in Nairobi at a commission of 1.5 percent. ²⁶ Subsidiary coins remained valid currency, though legal tender restrictions limited transactions for the public to the amount of Rs2 and for the government to Rs50. This regulation disadvantaged those in the colony who held small coins in large quantities, notably Indian traders and shopkeepers. A further repercussion was that Indian traders, especially those who had their dukas (shops) along the central railway that connected Dar es Salaam to Lake Tanganyika, started to refuse to accept hellers from their African customers, given that hellers had little use for buying imports. In pre-war days, German employers had used hellers to pay their African laborers. However, owing to the war and the occupation of GEA, they only employed a very limited number of laborers. The money was thus simply transferred from African consumers to Indian shopkeepers, who could neither put the coins into circulation nor exchange them for rupee coins or notes. It was estimated that in Tanga Indian traders held Rs100,000 in small coins, whereas the banks held only Rs50,000. A deputation of Indian merchants in Dar es Salaam asked the Political Officer to take action to relieve them from this coinage, as was the practice in the EAP. There, bankers and traders could take surpluses of subsidiary coins to the Treasury, where they exchanged them for rupee coins or banknotes. ²⁷ Given the critical role of Indians in the colony’s trade and the risk that the entire petty trade in the colony could be brought to a standstill, their request had to be accepted. ²⁸

Unlike coins, neither interim notes nor pre-war notes were accepted in the occupied territory of GEA. The fear was that the German government could print new banknotes and introduce them into these areas to support the German forces that continued to fight in GEA. Interim notes were only allowed for exchanges among the Germans themselves, but “any attempt to pass notes on to the natives or non-Germans [was] duly punished.” ²⁹ Indians, being the main intermediaries in the colony’s trade, owned large amounts of silver coins. For this reason, during the first years of the war they were the majority of those “compelled to hand over silver coin and to accept notes in lieu.” ³⁰ Thus, large quantities of interim notes that were not accepted by the British government remained in the hands of Indians.

After the war, the Indian community of GEA was severely hit by the government’s decision to not redeem the interim notes that had been forced on them during the war. As the British did not accept them, all claims of redemption hinged on the ultimate assets of the Deutsch-Ostafrikanische Bank, which was only able to cover a tiny part of the claims. Indians made numerous requests for the redemption of the notes and for support from the British government for their claims, arguing that notes taken to Germany by repatriated Germans had been redeemed at 1.5 marks to the rupee. ³¹ The Indian Association in Dar es Salaam sent a letter to the British government requesting the recovery of pre-war notes and interim notes. ³² The Indian Merchant Chamber and Bureau in Bombay sent letters of protest to the government of India, stating that “thousands of Indian residents for a number of years in German East Africa […] have been rendered penniless ….” ³³ From Zanzibar, the members of the Shia Ismaili Council sent a letter to the Aga Khan in London, stating that owing to the considerable amounts of German currency notes “lying unchangeable in the hands [of individuals],” the state of Indian people was “very pittyful.” Together with this formal letter, the Aga Khan received many private letters from prominent members of the Indian community in East Africa requesting support in the matter. ³⁴ This situation contributed to the massive financial losses experienced by Indian traders during the first years of the war due to the collapse of trade (Bertz 2021:5). Robert Sohr, Manager of Messrs. Scott Ellis and Co. in Mombasa, noted that the people were suffering severely owing to their “wealth being tied up in these notes.” ³⁵ Claims had to be laid against the German government, but Horace Archer Byatt, the governor of the occupied territory, doubted their chance of success. He admitted that in 1916 the British authorities had “flooded” GEA with interim notes forged in Nairobi for GBP2,000,000. This could only have a bad influence on the attitude of the German government toward the Indian claims. ³⁶ In 1927, the German Clearing Office eventually wrote individually to claimants, offering to redeem 25 percent of the face value for the interim notes and 80 percent for those issued before the war. The government of Tanganyika Territory approved the offer. ³⁷ But claimants received for the notes only a fraction of their face value, and ultimately they had to bear part of the costs of the war. In addition, this increased the general mistrust of paper money in the colony.

“Our Special East African Province:” The East African Rupee Crisis and Currency in Tanganyika Territory

From 1916 to early 1919, British officials in London and GEA worked to transform the German colony into a British possession and considered what to do with the GEA currency. Byatt, the British governor from 1917 to 1924, had always regarded the rupee as “out of place” in Africa. At the same time, he realized that it would have been inexpedient to uproot the use of this currency in East Africa and replace it with the pound sterling. ³⁸ Before the outbreak of hostilities, the Colonial Office had discussed and even drafted an order in council to introduce a new rupee, the East African Rupee, thereby separating the currency of the East African protectorates from that of India. Discussions on currency during the war reached the conclusion that GEA had to adopt the same currency and become part of Britain’s “special East African province.” ³⁹ However, the idea of a new rupee was abandoned at the end of the war, owing to the “East African rupee crisis.”

The crisis was the result of the collapse of the gold standard system during the First World War. Currencies were left to float, and in the British colonies in the Indian Ocean region this meant that the fixed exchange value of the rupee with the sterling had to be abandoned. At the same time, the price of silver increased, and this determined an appreciation of the silver Indian rupee. Thus, in 1919 the Indian rupee began to appreciate against sterling, more than doubling its value in just one year (Pallaver 2019a:549). British settlers in Kenya were those most severely affected by the currency crisis, as they stored their capital in sterling but had to pay local expenses in rupees. They saw their incomes rapidly eroding and began to campaign for a currency reform. Conversely, Indian traders were favored by the increased value of the rupee, as they sold their products in India and stored their capital in rupees (Maxon 1989; Mwangi 2001; Pallaver 2019a). Responding to settlers’ claims, in April 1920 the British replaced the Indian rupee with the EA florin (Fl), at the exchange rate of 1Fl=1Rs. Beginning in January 1921, however, the value of the Indian rupee started to fall again, reverting to pre-war levels. As a result, the currency changed once again: Britain introduced the EA shilling (sh), at the rate of exchange of 2EAsh=1Rs. ⁴⁰ Debates surrounding the currency crisis intersected with those related to the establishment of a British mandate over former GEA, which had been under discussion since 1919. The transfer of GEA to Britain as a League of Nations mandate put under scrutiny the fundamentals of British colonial rule by introducing an international oversight on Britain’s policies and their respect of African interests, including the possible problems resulting from a currency change.

When the florin became legal tender in Kenya and Uganda, the GEA rupee was left to circulate at par with the florin in GEA. The intention was to introduce florin coins, but their minting required too much time. The currency instability was hampering trade in East Africa, and it was thus decided to introduce florin banknotes while the coins were being produced. The limited amounts of florin coins available were reserved for the purchase of cotton in Uganda, where local producers did not accept banknotes. ⁴¹ In 1920, GEA rupee coins began to be exchanged for florin banknotes. ⁴² No doubt, a currency change in GEA was less urgent than in Kenya, where the settlers were very vocal in their campaign for a rapid solution to the currency instability (Maxon 1989; Pallaver 2019a). For this reason, the GEA rupee and its subsidiary coins were left to circulate, as it was “highly undesirable” to “flood the country with paper exclusively,” given the general mistrust described above. ⁴³ Yet, it soon became clear that it was impossible to regulate the currency in one colony and not in the other, as currency circulated across borders despite British regulations. When the value of the Indian rupee started to fall in December 1920, rupees were smuggled in large amounts from India to the former GEA to be exchanged for florin notes. ⁴⁴ Byatt suggested the simultaneous demonetization of the rupees in the three territories in order to prevent demonetized coins from Kenya and Uganda from being used in Tanganyika. ⁴⁵ Officials agreed, however, that a valid alternative to paper banknotes had to be found before any attempt was made to demonetize the rupee. A telegram stated that failing to do so might lead to “a loss of confidence and serious unrest in minds of natives and it is essential above all that there should be no grounds for dissatisfaction under British administration.” ⁴⁶ The international overview related to the mandate necessarily required a consideration of the “material and moral well-being and social progress” of Africans (Manisty Leggett 1922:744), including in the process of currency reform.

Meanwhile, this wait-and-see attitude in the settlement of the currency question seriously hampered trade in Tanganyika. ⁴⁷ Locally, the high cost of imported articles along with the scarcity of cash was causing widespread discontent among the population. ⁴⁸ In international trade, the problem was that even if GEA rupees could be used within the territory, they could not be remitted outside it. Thus, when goods were imported in Tanganyika and sold there, the cash proceeds became “frozen” within the country and could not be remitted to Britain. This situation prompted complaints by the British commercial companies operating in Tanganyika. ⁴⁹ These complaints, together with the general popular discontent, persuaded the colonial government to make the existing temporary and provisional arrangements more permanent. By mid-1922, the EA shilling was also introduced in Tanganyika, and people were required to exchange old coins for new ones. ⁵⁰ An official notice of June 9, 1922, stated that the British government had decided to create one single currency for Kenya, Uganda, and Tanganyika. The announcement clearly explained the denominations and the exchange rates between the different currencies in circulation, and also stated that the new shilling was accepted in Uganda and Kenya. People were encouraged to “go to the Bank or the Boma [fort] and […] get [their] German money changed.” In the initial stages, only German rupees could be exchanged, but later also copper-bronze coins, “so that before long the country will have British money only.” ⁵¹ Unlike in Kenya and Uganda, where rupees were rapidly demonetized, the change in Tanganyika was gradual. GEA rupees were left to circulate alongside florin notes until the rupees could be fully replaced with EA shillings. ⁵² Initially, only one shilling coins and fifty-cent coins plus banknotes of various denominations circulated. For this reason, heller coins were not exchanged, as the new EA cents were not yet available (Pallaver 2019a). From December 1, 1922, hellers could be exchanged for EA cents at the rate of one heller for two cents. Given that Africans were the main users of small coins and to avoid that they would “suffer by the change of currency,” the period granted for the redemption of the hellers was longer than for other coins. ⁵³ During the East African rupee crisis, in Kenya and Uganda the British had attempted to mark down the existing cents from florin cents to shilling cents, in this way reducing their value by half. ⁵⁴ This operation, known as the “shilling swindle,” was significantly proposed only for Uganda and Kenya, but was not taken into consideration for Tanganyika, as the mandate required Britain to consider the rights and interests of the African population.

However, the currency transition was complicated by the lack of coins that needed to be supplied to all the three territories. This hampered trade and caused an increase in the price of many imported goods. ⁵⁵ According to a letter sent to the Dar es Salaam Times, in April 1923 the price of oil in Tabora had doubled, the price of a box of matches had increased from 6 to 8 cents, and that of a cigarette box from 24 to 40 cents. ⁵⁶ Shillings and EA cents were gradually accepted as currency, but paper money continued to be unpopular. An official report later stated that people regarded “with suspicion the validity of this form of currency of which their experience in the past has not been fortunate.” ⁵⁷ The reference was clearly to the interim notes of the war period.

Conclusion

This article has addressed how matters of colonial monetization and currency use, including the details of currency denominations, were interlocked with local, interregional, and imperial-colonial economic relationships, and constituted an essential part of the story of economy formation in the colonial context. The monetary geography of East Africa was redefined and delineated in relation to local and regional conditions, creating an economic space whose borders were determined first by the circulation of the rupee and later redefined by the interests of Great Britain to create a common currency area for its East African colonies. Beginning in the 1860s, the rupee of British India had become the main means of exchange in Zanzibar and along the East African coast. In the early period of colonial rule, the centrality of Zanzibar in East African trade relationships defined economic and currency policy. Accordingly, the colonies of Britain, Germany, and Italy in East Africa all adopted rupees in various forms. Moreover, local conditions, and often colonial assumptions regarding preferences by local money users, influenced the choice of specific denominations and the designs of the coins. Yet, with the creation of different rupees, the monetary geography of East Africa also began to reflect territorially delineated colonial currencies associated with competing European nation-states, namely by distinguishing the GEA rupee from the British Indian rupee and the subsidiary coinage of GEA and the EAP.

The First World War brought about the usual disruptions of wartime, with coin shortages and temporary currency coupons. However, the war also aggravated the grievances of specific money users. Emergency measures burdened Indian retailers with forms of currency they could not put to economic use in trade. After the war, changes in the exchange rate between the rupee and the pound sterling, which initially disadvantaged the white settler community and benefited Indian retail traders, prompted the move from rupees to EA shillings. In the new currency environment, Indian commerce suffered not only due to the disconnection of the currency from the rupee but also because Indians received insufficient compensation for losses related to wartime currency policies. Meanwhile, policymakers preparing the mandate administration for Tanganyika evaluated the possible impact of currency arrangements on African money users more cautiously, even if the mandate soon began to resemble British colonial rule (Callahan 1993:453–77). Currency use and policies of colonial monetization not only mirrored economies, but to some extent also formed them. As economies differentiated increasingly in relation to the communities of Africans, Indians, and European settlers, currency policy affected those using the money in different ways as well.