Economic and Social Changes in Morocco

To understand the significant disintegration of the Moroccan economy and administration after 1900, as well as the efforts to resist French encroachment, it is essential to relate these events to the changes Morocco experienced during the latter half of the nineteenth century. The European perception of Morocco in 1900 was that of an unchanging medieval Muslim state, akin to the governments that had ruled North Africa since the advent of Islam. However, the research of Jean-Louis Miege has shown that Morocco was undergoing substantial social, economic, and political transformations during the nineteenth century. Most historical accounts of the Moroccan crisis after 1900 overlook the nineteenth century’s heritage and instead attribute the crisis to the weaknesses and incompetence of the young Sultan Mawlay Abd al-Aziz. This explanation is insufficient as it neglects many significant questions about the origins of the crisis.

Economic and Social Changes

Early European Influence

Before 1860, Morocco experienced minimal European influence. Economic relations with the West were relatively minor and governed by the sultans' willingness to permit trade in specific commodities. The Moroccan economy was primarily focused on meeting the needs of a quasi-traditional agricultural population and a small but industrious urban bourgeoisie and artisanry. While small colonies of Moroccan merchants were present in European and Near Eastern ports like Manchester, Marseilles, and Alexandria, changes in the European textiles industry diminished the profitability of these operations. Diplomatic contacts between Morocco and European powers were limited, and the small resident European community in Morocco faced various discriminatory regulations regarding residence, land ownership, and business operations. The European presence in Morocco before the mid-nineteenth century was largely superficial and constrained. The Moroccan sultans exercised considerable control over foreign trade, permitting limited engagement with Western merchants primarily for specific commodities. The country’s economy remained largely self-sufficient, focused on fulfilling the needs of an agrarian society and a small but vibrant urban class. The scattered presence of Moroccan merchants in European and Near Eastern ports such as Manchester, Marseilles, and Alexandria hinted at an international dimension, but this was undercut by the changes in the European textiles industry which eroded their profits. Moreover, the diplomatic relationships between Morocco and European powers were sparse and, when they existed, tinged with a degree of mutual wariness. The European residents in Morocco were subject to various restrictions on residence, land ownership, and business operations, reflecting the broader Moroccan suspicion of foreign influence.

French Invasion of Algeria and Its Impact

The French invasion of Algeria in 1830 set off a series of events that eventually led to the erosion of the traditional system and the emergence of a precolonial Morocco. However, the Moroccan elite did not initially grasp the implications of the French presence in Algeria. Even the French victory at the Battle of Isly in 1844 over a Moroccan army commanded by Muhammad IV had little impact on Moroccan leaders. Since the defeat occurred on the empire's eastern frontier and France did not follow up its victory, Moroccans were not forced to recognize their military inferiority fully. Following the Battle of Isly, European commercial penetration of Morocco increased, and the first signs of the precolonial economic system appeared. European merchants and speculators became more aggressive in asserting their rights, leading to a shift in the trade balance away from Morocco and a precarious monetary and financial situation for the makhzan (the Moroccan administration). The French invasion of Algeria marked the beginning of significant changes in North Africa, setting off a chain reaction that would eventually destabilize the traditional system in Morocco. Initially, the Moroccan elite failed to fully comprehend the threat posed by the French presence next door. Even the resounding defeat of Moroccan forces at the Battle of Isly in 1844 did not immediately drive home the urgency of the situation. This defeat was perceived as an isolated event on the eastern frontier, and since the French did not press their advantage further, Moroccan leaders did not fully internalize their military vulnerability. However, the indirect consequences of this defeat were substantial. European commercial penetration of Morocco began to escalate, marking the early stages of a precolonial economic system. European merchants and speculators, emboldened by the shifting power dynamics, aggressively asserted their trading rights. This shift disrupted the established trade balance, leading to a precarious financial situation for the makhzan, the Moroccan administration.

The Hispano-Moroccan War and Economic Instability

The war of 1859-60 between Spain and Morocco is considered a watershed in nineteenth-century Moroccan history. Unlike the French victory at Isly, the defeat by a minor European power in 1860 forced the Moroccan elite to confront the evidence of Moroccan backwardness and consider the need for reforms. This period marked the beginning of an intense economic and political crisis, which by the end of the century had brought the traditional system to the brink of collapse. One significant repercussion of the Tetouan War was the worsening of an already precarious monetary and financial situation. The peace treaty with Spain required Morocco to pay an indemnity of 100 million pesetas in specie, draining the Moroccan treasury of its gold and silver reserves. A large portion of customs receipts, the principal source of foreign exchange revenue, was earmarked to pay the indemnity for twenty-five years. The Hispano-Moroccan War of 1859-60 represented a turning point in Moroccan history. The humiliating defeat at the hands of Spain, a minor European power, served as a stark wake-up call to the Moroccan elite. Unlike the earlier encounter with France, this defeat could not be dismissed or ignored. It forced Moroccan leaders to confront the realities of their country’s technological and military backwardness. The subsequent period was marked by intense economic and political turmoil, pushing the traditional system to the edge of collapse by the century's end. One of the most immediate and severe repercussions of the Tetouan War was the imposition of a crushing indemnity. The peace treaty required Morocco to pay Spain 100 million pesetas in specie, leading to a massive outflow of gold and silver reserves. This financial burden was further exacerbated by the allocation of a significant portion of customs receipts to indemnity payments for the next twenty-five years, straining the already fragile Moroccan economy.

Monetary Crisis and Inflation

The massive outflow of specie from the Moroccan treasury led to the rapid depreciation of Moroccan currency and a sharp rise in domestic prices. The relative economic stability Morocco had enjoyed up until then was destroyed in the ensuing monetary crisis. By 1860, the chief Moroccan currency, the silver dirham, was scarce, and most of those remaining were used to pay the Spanish indemnity. European coins, especially the French ecu (five-franc piece) and the Spanish douro (five-peseta piece), became the primary currencies in Morocco. All transactions with foreign merchants were settled in French or Spanish coins, which were inferior in weight to the dirham. As European trade with Morocco increased, speculators capitalized on this difference, draining the remaining good Moroccan silver. In the 1890s, Spanish coin experienced sharp inflation due to a drop in the price of silver on the world market. Sultan Mawlay al-Hasan’s attempts to remedy the situation by creating a new dirham based on the traditional model failed under pressure from the douro. Other makhzan efforts to address the complex monetary crisis, such as proclaiming artificial exchange rates, minting more dirham to stabilize inflation, and withdrawing depreciated coins, were equally unsuccessful. Parallel to the troubles with the dirham was the inflation of Moroccan bronze coin, the fils (Ar. pl. ftiis). Morocco had a bimetallism system where bronze coin possessed intrinsic value and was the most commonly used medium of exchange in internal trade. Throughout the nineteenth century, the relationship between the dirham and fils shifted to the disfavor of bronze. The efforts of speculators, counterfeiters, and the government's wholesale dumping of debased bronze further exacerbated the situation. The inflation of bronze, along with the depreciation of silver, reinforced the existing monetary crisis.

The indemnity payments had a catastrophic effect on the Moroccan economy, leading to a severe monetary crisis and rampant inflation. The rapid outflow of gold and silver drained the Moroccan treasury, leading to the depreciation of the national currency, the silver dirham, and a sharp rise in domestic prices. By 1860, the dirham was in scarce supply, with most of the remaining coins being used to settle the indemnity payments to Spain. This scarcity led to the dominance of European currencies, particularly the French ecu and the Spanish douro, in Moroccan trade. These foreign coins, which were inferior in weight to the dirham, became the primary means of transaction, allowing speculators to exploit the weight difference and further deplete Morocco's remaining silver reserves. The situation worsened in the 1890s when a global drop in the price of silver caused significant inflation in Spanish coinage. Sultan Mawlay al-Hasan attempted to counteract this by introducing a new dirham based on traditional standards, but his efforts were thwarted by the entrenched dominance of the douro. Other attempts by the makhzan to stabilize the currency, including artificial exchange rates, additional minting of dirham, and withdrawing depreciated coins, proved equally ineffective. In parallel with the dirham crisis, the inflation of the Moroccan bronze coin, the fils, compounded the economic woes. As part of a bimetallic system, the bronze fils held intrinsic value and was widely used in internal trade. Throughout the nineteenth century, the relative value between the dirham and fils shifted unfavorably for bronze, exacerbated by speculators, counterfeiters, and the government’s dumping of debased bronze coins. The combination of bronze inflation and silver depreciation entrenched and prolonged the monetary crisis, leading to further economic instability.

In conclusion, the economic and monetary crises played a critical role in reshaping Moroccan society and administration. The erosion of the traditional system, compounded by internal and external pressures, left the Moroccan elite struggling to maintain control amidst growing economic instability. The aggressive demands of European merchants and speculators further exacerbated these challenges, accelerating the disintegration of established structures and compelling a reevaluation of governance and social organization in Morocco.