FROM SCUDO TO STERLING FOREWORD The purpose of all historiography is the knowledge of the past as a means of meeting the challenges of the present and forging viable policies for the future. History, as the critical conscience of past and present, is an indispensable premise to all political, civil and cultural actions at all times. The necessity of reviewing, through the original sources, the tortuous, far-reaching roots of today’s problems, of recapturing the past with all its idiosyncracies, contradictions and struggles, and of reconstructing it as an essential instrument for the transformation of society and for the solution of today’s problem is therefore seen to be of fundamental importance. The key economic problems that Malta has to face today have their roots buried deep in the early colonial days of the nineteenth century. The purpose of the present work is to probe one particular aspect of these problems, namely currency, while presenting a review and analysis of its trends during the turbulent transitional period between the last days of the Order of St John and the last decades of the nineteenth century. It was a period characterized by frequent monetary changes and by the simultaneous use of a multiplicity of coins not all of which were legal tender. This was the intervening period between the end of the centuries-old monetary stability dominated by the Order’s Scudo and the eventual steady state attained by Sterling, which finally emerged as the sole legal tender. The unsettled state of the currency at this time reflected both a changing international political climate as well as the related economic vicissitudes through which the Maltese Islands lived at the time and the concomitant social, political and civil transformations that ushered in the twentieth century. While giving a masterly rendering of how Malta’s monetary system evolved, Chevalier Joseph Sammut, a leading numismatist, breaks new ground by shedding light on a period that has hitherto been largely ignored. His thorough acquaintance with the relevant sources and his feel for the subject come through clearly in this well-researched work. Not only does From Scudo to Sterling give an organic synthesis of what has been written on the subject, it also brings to light new, unpublished material from both public and private, both local and foreign archives. In spite of the artificial economic boom prevalent during the first decade and a half after 1800, this was a time of particular hardship and suffering for Malta, rife with rumblings of war aggravated by penury, pestilence and political uncertainty. The British were unsure of the benefits they could reap from the newly-hatched colony they found in their lap and were consequently reluctant to be saddled with the responsibility of the island-group. But Malta soon began to prove its strategic worth. When in 1809, as a result of Napoleon’s Continental System, the British goods distribution points in Leghorn, Naples and Palermo had to be closed down, it became very convenient for British interests to retract these positions to Malta which was found to be an efficient bunker for the smuggling of British goods into Europe. This shilly-shallying on the part of Britain vis-à-vis Malta is reflected not only in the Island’s demographic changes that occurred at the time but also in the conflicting attitudes of the people at large and of the mercantile community in particular to the currency, evident in the hoarding of local coins contrasting with the circulation of Spanish and Sicilian money. A hackneyed, but none of the less true, assertion is that Malta prospered in time of war but sagged woefully in time of peace. Sammut’s book presents a great deal of supporting evidence for this thesis from the particular aspect of the currency. The stagnation after the boom of the Napoleonic wars and the relative peace in the Mediterranean after 1815 were responsible in no small way for Malta’s economic decline, the disappearance of the Spanish gold and silver coins from the local market, and the highly unsatisfactory state of the currency system which led to the strong representations to the British Government by the mercantile community in 1823. It did not take too long to dawn on the British that Malta was not a gift-horse to be looked in the mouth and the Melitensium Amor formula was soon concocted to camouflage their real intentions of turning the Island into a strong, strategically-placed fortress for the defence of their Mediterranean interests. Substantial amounts of British money – declared legally current in Malta in 1825 – were channeled into the fortifications and the establishment of an efficient and modern dockyard, inaugurated in 1848. In spite of this and in view of the centuries-old trading patterns of the Island, the Spanish and Sicilian Dollars remained the more popular means of exchange so that the British Treasury was induced to withhold silver consignments of specie to Malta, a policy that came in for harsh criticism on the Island as well as in England itself. The situation was further complicated by the introduction in 1833 of South American Dollars which were conveniently available to the Imperial Treasury in large quantities at economical rates. It transpired that these coins were of very irregular weights and otherwise defective, prompting complaints and criticism from all quarters. Within the decade the Treasury in London decided to do something about the resulting chaotic situation. The suggested four-per-cent devaluation drove the Island to panic, on which the anti-British faction readily capitalized. Towards the middle of the century Malta underwent a second boom as the thunder of war rumbled from distant Crimea; Malta proved to be a very convenient rear hospital and a strategic advanced depot. The Island’s worth was further underlined when Britain ceded the Ionian Islands to Greece in 1864 and Malta’s lucky star remained clearly in the ascendant as the Suez Canal was opened in 1869. By this time Malta had become indispensable to Britain as it constituted a vital l link in the chain of bases connecting the heart of the Empire to the Middle East and India. A flourishing entrepot trade developed which brought prosperity to many. These commercial activities were dependent on the ability of the Maltese to buy and sell overseas products through the foreign exchange earned by providing services to Britain. The wheel had turned full circle from the times of the Order when Malta had lived off the incomes largely derived from the rich Commanderies in Europe. Throughout this time Sicilian currency remained by far the most popular medium and although the need had long been felt to establish Sterling more firmly, not least to alleviate the relative hardship of servicemen and other payees in that currency who were in a disadvantaged position, the final decision was motivated, paradoxically, not by Britain but by Italy. After the unification of Italy in 1861, the Sicilian Dollar was demonetized, after which albeit by the usual time-lag that Maltese events are wont to follow European antecedents, it died a natural death in Malta as well. Sterling thus remained the sole legal tender. In relating this story, Chevalier Sammut deftly slips in many a sidelight of interest to the social historian. The role of the Church and the need of their intervention to get through to the people at a time of crisis, the exploitation of events in different ways by diverse political factions, the contrasting interests of the mercantile community and of the man-in-the-street, are al highlighted. The key personages that most influenced financial matters are introduced as events develop. Top merchants like Samuel Christian and Sir Agostino Portelli, bankers like Biagio Tagliaferro and Count Giovanni Messina, the philanthropist and merchant Giovanni Di Niccolo Pappaffy, and the jurist who had a say in anything that mattered in his time, Sir Adriano Dingli, are all seen to form part of an intriguingly intricate mosaic. The reader becomes a witness to the birth of infrastructural financial institutions such as the Anglo-Maltese Bank (1809), the Banco di Malta (1812), the Government Savings Bank (1833), the Chamber of Commerce (1848), and La Borsa (1854-57). These and several other tantalizing details are interwoven into the rich fabric that makes the book a valuable contribution to our understanding of Malta’s socio-economic history. Stanley Fiorini University of Malta 23 November 1991