About Michel Chiha

Family, Childhood, Career

About Chiha Foundation

Government Budgets

In 1926 Michel Chiha, Deputy for Beirut was put in charge of drawing up the 1927 and 1928 Government Budget

1927 BUDGET – Salient Points

“We don’t have an old structured system that dates back one hundred or even fifty years. Without the benefit of a well-established procedure to use for comparisons everything must be newly instituted which is why the effort seems overwhelming and tediously long. The priority at the moment is to devise a Land and Water policy. We need to expand our agricultural production and optimize our water resources. We need to develop and harness our natural sources of power. We are in constant need of more hotels, a better road network, and urban landscaping. We need to promote archaeological research, attract skilled labor and bring in more foreign visitors. Whether under the aegis of a government or as private initiatives, each and every citizen must not only be encouraged but galvanized into action.

In this instance, I propose the remuneration of public employees and of civil servants in particular and more generally the remuneration of teachers and unskilled workers whose salaries are so low as to be unfair if not to say pitiful…”

Members of the 1926 Chamber of Deputies and colleagues of Michel Chiha (Chibl Dammous archives)

Summary of the 1929 Budget Report to the Chamber of Deputies Presented by Mr. Michel Chiha

“The minting of silver coins is necessary for practical reasons. Firstly, because the entire region under the French Mandate is not only familiar with silver coins but is also keen to keep them, and secondly because small denomination coins, the use of which is actually in decline, require frequent and expensive replacing. Nevertheless, small change coins or ‘public’ coinage, if one might put it that way, has to be plentiful and long-lasting.

A further and equally important reason in favor of minting silver coins is the continuing survival locally of the mejidieh, a foreign currency coin which, like the Turkish Lira, is subject to the fluctuations in the price of silver bullion. In order to replace the mejidieh with a minted silver coin based on the French 10 Franc coin means it would have to contain half as much precious metal and be less dense than the mejidieh whilst possessing the same value.

In view of the large quantities of mejidieh spread throughout Lebanon but mostly throughout Syria, its replacement is bound to be problematic. As a rule, small denomination coins do not contain a significant quantity of pure silver because as loose change they are not required to represent their full nominal value. People are bound to question how two different coins, one twice as substantial as the other, can have the same value thus leading almost inevitably to a lack of confidence in the new silver coin.

In my opinion, the only solution to the problem is to simultaneously mint a gold and a silver coin with the first underwriting the second. It would be a mistake to distribute throughout the Mandate countries a coin already tainted with suspicion albeit falsely, because all things considered, we could for example mint the proposed Lebanese-Syrian 50 and 25 piaster coins in a cheap bronze or copper alloy similar to our 5 piaster tokens and they would still intrinsically be worth more than our paper notes. However, aside from the problem of counterfeiting, public perceptions must be taken into consideration.

Gentlemen, I have addressed this broad and very important topic because it is likely to have a tremendous effect on our economy, especially in view of the imminent stabilization of the French Franc and the imminent 1929 Budget review. The only possible conclusion is the following: The minting of gold and silver coins is crucial and unless gold coins are released in advance, the two coins must be issued simultaneously.

The argument that France will not be releasing new gold coins until 1932 is not of concern as ours would be a legitimate currency backed by gold. The minting of a Lebanese-Syrian gold coin can comfortably precede a French gold issue without ill effect. Moreover, even though our circumstances are different, it would be in the interests of both the Lebanese and the French to take this approach.

…“Although slightly weightier than the previous year the 1929 budget does not stand out. Like its predecessors, it is peppered with vague headings and brief summaries giving an overall impression of a fragmentary effort. The introduction is insubstantial and through a complete absence of financial details does nothing to elucidate what should come next. The Chamber simply must address the absence of any significant economic figures and even fewer relevant financial figures. It seems we are not in the habit of dealing with financial statistics which is not surprising as they are laborious and require perseverance and conscientiousness. Surely this not beyond our capabilities?

Without going into specifics it is generally understood that every government department is inherently engaged in the collecting and reporting of statistics, hence the existence of the State Archives. As a result of this lack of information throughout the entire field of government we cannot tell where we are in comparison to previous years nor do we have any accurate documentation which might help us find out.

The fact is that statistics indicate a state of progress or regression, improvement or deficit. It is strongly recommended that every year the State either publishes or helps to publish an annual statistical report on the preceding year itemizing what research has been undertaken and the relevant figures and results obtained by the various departments along with pertinent maps and graphics to support the information.

I refer to the birth rate, shifting emigration figures, agricultural acreage, cultivated or forested acreage, fallow acreage, varieties of agricultural produce, harvest figures, the importance of livestock, tax income, port tonnage, shifting imports, exports, and foreign tourism statistics, expatriate tourism statistics, overland traffic statistics, in particular with Iraq and Persia, created or upgraded industries, concession permits and research licenses, the number of schools, the number of children and pupils who attend them, and so many other key issues both abstract and concrete about which no one here knows anything! There are no official statistics or informal figures to present, not of course to the general public, but to this Chamber or even to the Government itself which explains the clear absence of cohesion or the absence of a global outlook and not even a general concept of where things stand. In these conditions how can anyone propose an appropriate budget? How can anyone be effective? How can anyone govern?

In short, we can produce a budget but not a balance sheet, or we can produce a very poor balance sheet based on an unreliable inventory. I propose that the Government use as an example the annual report submitted to the League of Nations by the Mandate Authority. Therein lies a mine of information and a guiding outline on how to produce something similar that we can adapt to our country and our country’s needs.

I apologize for this lengthy but necessary digression before quickly going over a few points in the budget…”

Michel Chiha
Published in the Le Réveil,  December  14th & 17th, 1928.


1929 BUDGET – Salient Points

“no statistical evidence or informal figures are available for submission, not to the General Public, but to the Chamber and the Government itself which explains the absence of cohesion, the absence of a global outlook, and not even a general concept of where things stand. In short, we can produce a budget but not a balance sheet, or we can produce a very poor balance sheet based on an unreliable inventory…”

…“At least three-quarters of Lebanon’s water flows directly into the sea. It is an insane extravagance for us to wastewater from our rivers and our springs when we need every drop. We have water and yet our agricultural lands are drought-ridden!
Our priority from now on is to focus on investing in production projects and nothing else. An investment of forty million francs in a public irrigation system would provide forty million francs of benefit to this country every year especially as we haven’t long progressed beyond subsistence farming. Any other project under consideration must be postponed except in the case of extreme necessity. We would be failing in our duty if we did not proceed along this course.
New industries are emerging in Lebanon, in particular, the cement industry facilitated by hydropower. This indicates a positive outlook for the future and an improvement in our economic situation. We can no longer rely on our service industry alone and must move into manufacturing. From now on the State has a duty to encourage, by all possible means, anyone willing to engage in the production industry…”

Michel Chiha’s four years in the Chamber of Deputies had endowed him with considerable constitutional and fiscal experience. He was in fact called upon to undertake fundamental assignments involving the financial infrastructure of the country and in 1941 he was involved in the creation of the Beirut Stock Exchange.