The New Nation - Internet Edition

John E. Young

As food prices continue to rise, threatening the livelihoods of many poor people around the world, some observers have pointed a finger at speculation as a culprit in the price run-up. What role is speculation playing in the current food crisis and how can markets be calmed?

In recent years, rising prices for basic foodstuffs have further reduced food and nutrition security for many of the world's poorest people, pushing them to the edge of starvation and spawning social unrest in many countries. Rising food prices have also strained the capacity of food aid agencies, spurred a United Nations summit, and drawn extensive worldwide press coverage.

As with previous commodity booms, many have been quick to blame speculators for food-price increases, and in fact, there is considerable evidence of recent increased speculative activity in food markets. Most notably, institutional investors have invested billions of dollars in U.S. commodity futures markets (the largest in the world), betting that food prices would continue to rise. "Even if it is difficult to gauge the real impact of this financial speculation, it has certainly played a role in influencing trading prices," says David King, Secretary-General of the International Federation of Agricultural Producers. "Take for example the fact that in a normal year, trading and movements on the wheat futures market in Chicago represent the equivalent of 20 times the annual U.S. wheat harvest. In 2007/2008, these movements represented the equivalent of more than 80 harvests."

At the same time, commodity futures markets have been plagued by serious technical problems and wildly oscillating prices, which have combined to threaten their ability to fulfill their longstanding role as a risk-management venue for producers and consumers of agricultural products. Many casual observers have fingered speculation as a primary cause of the market turmoil.

Speculative behavior such as food hoarding also has been on the upswing in other areas of the world food economy. Some governments have engaged in what amounts to international hoarding, restricting their exports of food commodities or introducing export taxes in order to fend off price increases in their domestic markets. Other countries, fearing domestic shortages, have engaged in panic buying on international markets, rushing to import food in order to build up reserves even as prices were skyrocketing.

Whether speculation is primarily a cause or a symptom of rising food prices and commodities-market dysfunction is unclear. The more crucial question about the effects of speculation on food markets is whether prices are telling the truth about supply and demand. Are producers, investors, and policymakers receiving the right signals to guide their actions? If they are not, and an agricultural price bubble is underway, the consequences could be severe for farmers and consumers around the world.

What, exactly, is speculation? Technically, it is the purchase (or sale) of something in the hope of profiting from changes in its price. In the context of food markets, two forms of speculation are the most significant:

· the purchase and/or hoarding of commodities in the hope that their price will continue to rise

· the purchase of agricultural futures and options-essentially, bets that prices will either rise or fall-purely as an investment strategy (rather than as a way to manage risk related to the sale or purchase of commodities).

An aggressive form of commodity speculation involves holding large stocks of commodities off the market in a time of shortage in order to drive prices up. Sometimes, speculators will combine hoarding with trading strategies that attempt to create or exacerbate shortages. "Cornering" a market-buying up enough of a commodity to effectively control its price-is the extreme example of such an approach. Formal commodities markets are generally subject to government regulations aimed at preventing such activities, though the effectiveness of such regulation varies widely around the world. Smaller markets are generally more susceptible to manipulation.

In many cases, only analysis after the fact will tell the difference between destructive speculation and healthy, productive investment in commodities and the agricultural sector. While some argue that the large chunks of new capital in the commodities markets have a destructive influence, others say that they simply make the markets more liquid, and thus more efficient, reducing trading costs. Low or declining food prices have long played a major role in keeping agricultural production stagnant in much of the developing world, and international development advocates have been clamoring for increased investment in agriculture for many years. Now, high prices are attracting capital to agriculture. In theory, this should be a good thing. But purely speculative investment is hardly what the development community had in mind.

At the end of March 2008, according to Citigroup, investors worldwide held an estimated $400 billion in commodity futures contracts-about $70 billion more than at the beginning of the year, and twice as much as in late 2005. These investors include commodity index funds, commodity trading advisors, hedge funds, and exchange-traded funds. Many of them are trying to assemble commodity portfolios that replicate the performance of major commodity-price indexes, such as the Standard & Poor's/Goldman Sachs Commodity Index and the Dow Jones/AIG Index. They are doing so for two reasons. One is that commodity investments generally increase in value when other classes of assets decline. The second is that many investors believe that the commodity markets are in the midst of a "super cycle"-a long-term trend that will drive prices higher for years to come.

Since the indexes mentioned above are comprised, respectively, of 12 and 30 percent agricultural products, roughly $48-120 billion of the above investment is in agricultural futures. AgResource Company estimates that index funds alone now have more than $47 billion invested in maize, soybeans, wheat, cattle, and hogs (in U.S. markets), up from $10 billion only two years ago. Combined with growing activity by traditional futures traders, this capital influx has sharply increased the overall size of the futures markets. For example, the number of open futures contracts on the Chicago Board of Trade (CBOT) has increased more than threefold for both wheat and corn in the past five years, and has doubled for soybeans.

Futures markets allow investors to bet on which way commodity prices will move over time. Each futures contract represents a commitment to sell or deliver a specified quantity of a commodity at a given price on a given date. For example, a grain elevator operator may agree in April to buy 40,000 bushels of corn (1016 metric tons) to be delivered in December, after the fall harvest, at a price based on that of the December CBOT futures contract. On the same day, that operator will sell 8 December futures contracts (a standard CBOT corn contract is for 5,000 bushels, or about 127 metric tons of grain)-agreeing to sell the grain at roughly the same price paid the farmer-in order to cover the elevator against a possible fall in the cash-market corn price between April and December. The elevator will deposit a "margin"-perhaps 8 to 10 percent of the contracts' value-with the commodity exchange, in order to cover possible changes in their value. In December, the grain elevator will usually buy another futures contract-one requiring it to purchase the same amount of grain. The two contracts cancel each other out, eliminating the need to deliver grain through the futures market. Any money gained or lost on the futures contract should be offset by gains or losses on the grain purchased from the farmer, since the futures-market price for corn should be the same as the cash-market price when the contract expires. In theory, any divergence between the two prices will be closed by arbitrageurs, who profit by buying in one market and selling in the other.

The transactions described above embody the two most critical purposes of futures markets: price discovery and hedging. Commodity transactions outside the futures markets are often based on the prices established within the markets. Hedging is the process by which those trading in physical quantities of commodities offset their price risks by buying or selling futures contracts.

Historically, most futures-market participants have been hedgers or "commercial traders," seeking to manage risks associated with buying and selling the underlying commodities (see box). Commodity speculators, or "non-commercial traders," have also been active in the markets, making limited, relatively short-term bets on price movements and employing sophisticated trading strategies to benefit from differences in prices for different delivery months. Traditional speculators move in and out of the futures markets in response to supply and demand developments. In contrast, the new, index-related investors in commodities seek to balance risks from other investments, such as stocks, bonds, and real estate. They buy futures without regard to price, until they have met their investment target, which is established in proportion to their investments in other sectors. They also bet only that commodity prices will rise.

While food prices are rising for a number of reasons, there is growing concern that supply and demand do not adequately explain the speed and severity of the price increases. Many blame the flood of speculative capital into the U.S. commodity futures markets, which attract capital from around the globe and set global benchmark prices. The Food and Agriculture Organization of the United Nations (FAO) chief Jacques Diouf has pointed to speculation by "hedge funds, index funds, and so on" as a factor in price increases. So have the head of the U.N. Environment Programme (UNEP), the U.N.'s Special Rapporteur on the Right to Food, prominent politicians in many countries, and well-placed financial analysts. Todd Kemp of the U.S. National Grain and Feed Association told Business Week, "The enormous influx of capital has resulted in the futures markets no longer reflecting supply and demand."

In the United States, prominent critics such as hedge-fund manager Michael Masters, former U.S. commodities regulator Michael Greenberger, and Goldman Sachs chief economist Jim O'Neill, argue that the large, new, index-driven investments in commodities are driving up prices out of proportion to market fundamentals. They point to a major problem that has recently affected several U.S. agricultural commodity markets: the failure of futures and cash-market prices to match up when futures contracts expire. When futures and cash prices for commodities do not converge, futures contracts do not provide an effective hedge against price risks. This problem has occurred often enough in recent years for some in the agricultural sector to describe the futures markets as "broken." It can add up to very large losses when prices move the wrong way. One Missouri grain trader told the New York Times that he lost $940,000 last fall when his futures hedge on a million bushels of soybeans did not match up with the cash market.

Price volatility has also been a major problem in agricultural commodity futures markets. In the first few months of 2008, volatility in several key agricultural futures markets was very high-triple the historical monthly averages for wheat and soybeans, and double for corn. High volatility means that those who trade in futures have to put more money down in order to maintain their hedges. If they do not have the cash-or an adequate source of credit-the commodity exchange will cancel their contracts and seize the funds they already have on deposit. Many market participants have found it increasingly difficult to obtain enough credit since global credit markets tightened in response to the U.S. sub-prime mortgage collapse.

The combination of price convergence problems and high volatility has made the commodity exchanges less reliable gauges of future prices, and has lessened their usefulness as risk-management venues for agricultural producers and consumers.

Many economists argue that speculation cannot be blamed for such problems, pointing instead to technical concerns regarding futures contracts, such as where grain is to be delivered, and whether there is adequate storage available for those who would like to make money on price differences between cash and futures markets. They are also skeptical of a link between futures-market speculation and rising food prices. In a recent Wall Street Journal survey of economic forecasters, only 11 percent of respondents pointed to speculation as the most important factor in food-price increases. Furthermore, Princeton University economist Paul Krugman has argued that futures-market speculation cannot be exerting upward pressure on cash prices for commodities, unless high futures prices are leading to hoarding, and he finds no evidence in official statistics on stocks of agricultural commodities that such hoarding is occurring. The chairman of CME Group-the operator of the Chicago futures markets-Terry Duffy told Reuters that "to say that the speculator or the hedge funds or other participants are the root of the problem is really misguided."

However, political scientist Robert Paarlberg counters that hidden hoarding may well be a significant factor in the global agricultural economy. He says that small behaviors-such as household hoarding of rice in Asia, or importers who buy half a year's supplies in a panic in January or February, instead of spacing their purchases over six months-can add up to very significant numbers when multiplied by millions of families or thousands of firms. He cautions that it is simply too early to know whether hoarding is a significant factor, especially given the time lag involved in most statistics.

Some hoarding is definitely occurring. Expatriate Filipinos in Canada are sending 40-pound bags of rice to family members in the Philippines. Even American consumers have stocked up on some commodities-especially rice-in response to limited availability. In addition, governments around the world have been cracking down on grain hoarders. Peru's prime minister "declared war" on food-price speculators in March. In India, large rice warehouses in New Delhi and Mumbai have been raided by police. In the Philippines, criminal syndicates have been caught reselling large quantities of grain originally intended for subsidized sale by the government to the poor.

Ironically, it is national governments themselves that may be the biggest hoarders. Export bans are the most significant way in which food stocks are kept off international markets. At least 29 countries recently have put sharp limits on their food exports, in order to build up reserve stocks and keep prices low in their domestic markets. These include 14 countries that have put limits on rice trade, and more than a dozen that have limited corn exports. Several major producers have also curbed wheat exports. In response to this, Rajat Nag, the managing director of the Asian Development Bank, declared "[The] banning of exports is no different from hoarding at a national level."

Strong, sustained commodity market movements virtually always attract speculation. Noted investor Warren Buffett has observed that fundamentals start most major market trends, and then speculation takes over. Policymakers now face the challenge of limiting speculation that distorts markets without discouraging healthy investments in agriculture. Their key goals will be to promote transparency and reduce opportunities for market manipulation at all levels of the world's food markets, from local to global.

Reforming commodity markets is an important first step. In the United States, where the world's largest markets set global benchmark prices, domestic regulatory decisions have worldwide implications. A federal task force led by the Commodity Futures Trading Commission is considering possible reforms to the futures markets. Some of the most likely initiatives include:

· implementing technical reforms-especially those related to commodity delivery-in order to tighten links with cash-market prices

· requiring more comprehensive and detailed reporting of transactions, in order to make it easier to determine how speculation is affecting markets

· re-examining limits on the size of speculative positions, especially for index-fund investors

· revising margin requirements (requiring investors to provide larger "down payments" on futures contracts)

· reforming the laws governing pension funds and limiting their ability to invest in commodity futures

Reforms to improve transparency are crucial because they should enhance understanding of how and when markets are affected by speculation. However, reforms that could take some traders out of the futures markets are more controversial. A recent University of Illinois study concluded that increasing margins, for example, "may well be counter-productive in terms of price levels or market volatility." Fewer traders can mean less liquidity, which can make a market less efficient.

While futures markets are often disparaged as venues for speculative activity, countries with limited or nonexistent formal markets for agricultural products should not discount their potential benefits. Small farmers in developing countries desperately need real investments not only in agriculture itself, but also in the institutions and infrastructure that underpin healthy agricultural economies. Unpredictable prices are among the farmer's greatest enemies. As International Monetary Fund chief Dominique Strauss-Kahn argues, "We t need a new approach to risk mitigation and insurance at the level of both individual farmers and countries," including "robust futures markets." Freer agricultural markets offer the promise of greater potential rewards for producers, and, in turn, greater food supplies, but the increased output only comes when farmers invest more labor and capital, and thus risk more. Futures markets-and free, transparent cash markets, on which they must be founded-can be a key component of a suite of institutions and products that can help agricultural producers and consumers manage production and price risks.

While politicians tend to highlight criminal prosecutions of hoarders-or high-profile shutdowns of commodity markets-quieter, often slower efforts to establish, and more effectively oversee, formal markets may be more important ways to reduce the influence of speculation on domestic agricultural markets. The recent opening of the Ethiopian Commodities Exchange, led by IFPRI researcher Eleni Gabre-Madhin, is a good example. One Ethiopian grower told the Wall Street Journal that if his country had had such an exchange in 2003, "maybe we wouldn't have had the famine," since greater access to markets might have led to more consistent planting and harvests. Strong oversight is also important. While the Indian (and Chinese) government's recent temporary suspension of futures trading in some agricultural commodities has received considerable attention, it is not clear that it will do much to reduce food-price inflation. It may be more important for Indian authorities to focus on reforms that improve market transparency, argues Indian business journalist G. Chandrashekhar.

As IFPRI director general Joachim von Braun points out, real shortages in the world food markets are the fundamental problem, but excessive speculation is now a cause for concern, because "without properly functioning markets the incentives for investment will not translate into stimulating production and the poor are hurt by any increased price volatility." The small-farm producers in the developing world are often the ones who end up suffering the most from market instability.

The complex problem of speculation needs a set of complex solutions. In the long run, investment in agricultural production is key for reducing the incentive for speculation. Another important route to reducing the influence of speculative behavior on food prices is international trade reform. Export restrictions and other forms of hoarding can affect food markets as much as any other speculative activity. Moreover, the current low levels of grain reserves need to be addressed. A recent report by von Braun and Maximo Torero, director of IFPRI's Markets, Trade, and Institutions Division, proposes that a "virtual grain reserve" be established to help calm markets through the futures market. It is an innovative approach to creating a global reserve that would solve the problem countries face of insuring against abrupt price increases and supply disruptions without building up physical stocks of food-actions that can, by themselves, drive up prices.

(Source: IFPRI supported by the Consultative Group on International Agricultural Research (CGIAR)

It was on one of those days when Muhammad of Najd and I had become very intimate friends that I received a message from London ordering me to leave for the cities of Karbala and Najaf, the two most popular Shiite centres of knowledge and spirituality. So I had to put an end to my company with Muhammad of Najd and leave Basra. Yet I was happy because I was sure that this ignorant and morally depraved man was going to establish a new sect, which in turn would demolish Islam from within, and that I was the composer of the heretical tenets of this new sect.

'Ali, the fourth Khalifa of the Sunnites, and the first one according to the Shiites, was buried in Najaf. The city of Kufa, which was a distance of one fersah (league), i.e., an hour's walk from Najaf, was the capital of 'Ali's caliphate. When 'Ali was killed, his sons Hasan and Husain buried him outside Kufa at a place called Najaf today. In the course of time, Najaf began to grow, while Kufa gradually fell into decay. The Shi'ite men of religion came together in Najaf. Houses, markets, madrasas (Islamic schools and universities) were built.

The Khalifa in Istanbul was kind and generous to them for the following reasons:

1- The Shi'ite administration in Iran was supporting the Shi'ites. The Khalifa's interfering with them would cause tension between the states, which in turn could lead to warfare.

2- The inhabitants of Najaf included a number of armed tribes supporting the Shi'ites. Although they did not have much significance in terms of weaponry and organization, it would be unwise for the Khalifa to run the risk of getting into trouble with them.

3- The Shi'ites in Najaf had authority over the Shi'ites all over the world, particularly those in Africa and India. If the Khalifa disturbed them, all the Shi'ites would rise against him.

Husain bin 'Ali, the Prophet's grandson, i.e., his daughter Fatima's son, was martyred in Karbala. The people of Iraq had sent for Husain in Medina and invited him to Iraq to elect him their Khalifa. Husain and his family were in the territory called Karbala when the Iraqis gave up their former intention and, acting upon the order given by Yazid bin Muawiya, the Umayyad Khalifa living in Damascus, set out with the intention of arresting him. Husain and his family put up a heroic last-ditch fight against the Iraqi army. The battle ended in their death, so the Iraqi army was the winning side. Since that day, the Shiites have accepted Karbala as their spiritual centre, so that Shi'ites from all over the world come here and form such a huge crowd that our religion of Christianity does not have a likeness to it.

Karbala, a Shi'ite city, contains Shi'ite madrasas. This city and Najaf support each other. Upon receiving the order to go to these two cities, I left Basra for Baghdad, and thence to a city named 'Hulla' situated alongside the Euphrates.

The Tigris and Euphrates come from Turkey, cut through Iraq, and flow into the Persian Gulf. Iraq's agriculture and welfare are due to these two rivers.

When I was back in London, I proposed to the Ministry of Colonies that a project could be drawn up to change the beds of these two rivers in order to make Iraq accept our proposals . When the water was cut off, Iraq would have to satisfy our demands.

From Hulla to Najaf I traveled in the guise of an Azarbaijani tradesman. Establishing close friendships with Shi'ite men of religion, I began to mislead them. I joined their circles of religious instruction. I saw that they did not study science like the Sunnites, nor did they have the beautiful moral qualities possessed by the Sunnites. For example:

1- They were extremely inimical towards the Ottoman State. For they were Sh'iites and the Turks were Sunnites. They said that the Sunnites were disbelievers.

2- The Shi'ite scholars were entirely absorbed in religious teachings and had very little interest in worldly knowledge, as was the case with priests during the period of standstill in our history.

3- They were quite unaware of Islam's inner essence and sublime character, nor did they have the smallest notion of the time's scientific and technical improvements.

I said to myself: What a wretched sort of people these Shi'ites are. They are sound asleep when the whole world is awake. One day a flood will come and take them all away.

Several times I attempted to entice them to revolt against the Khalifa. Unfortunately, no one would even listen to me. Some of them laughed at me as though I had told them to destroy the earth. For they looked on the Khalifa as a fortress impossible to capture. According to them, they would get rid of the caliphate with the advent of the promised Mahdi.

According to them, Mahdi was their twelfth imam, who was a descendant of Islam's Prophet and who disappeared in the Hijri year 255. They believed he was still alive and would one day reappear and rescue the world from this state of utter cruelty and injustice, filling it with justice.

It is consternating! How come these Shi'ite people believe in these superstitions! It was like the superstitious doctrine, "Jesus Christ will come back and fill the world with justice," held by our Christians.

One day I said to one of them: "Isn't it fard for you to prevent injustice like the Islamic Prophet did?" His reply was: "He managed to prevent injustice because Allah helped him." When I said, "It is written in the Qur'an, If you help Allah's religion, He will help you in return (25).' "If you revolt against the torture of your shahs, Allah will help you" He answered, "You are a tradesman. These are scientific matters. You cannot understand this."

The mausoleum of Ali the Amir-ul-Muminin was profusely decorated. It had a splendid yard, a gold-covered dome, and two tall minarets. Every day great numbers of Shi'ites visited this mausoleum. They performed namaz in jamaat in it. Every visitor first stooped in front of the threshold, kissed it, and then greeted the grave. They asked for permission and then entered. The mausoleum had a vast yard, which contained numerous rooms for men of religion and visitors.

There were two mausoleums similar to that of 'Ali's in Karbala. One of them belonged to Husain and the other belonged his brother Abbas, who had been martyred with him in Karbala. In Karbala the Shiites repeated the same practices as they did in Najaf. The climate of Karbala was better than that of Najaf. It was surrounded with graceful orchards and lovely brooks.

During my mission to Iraq I met with a scene that gave relief to my heart. Some events heralded the end of the Ottoman Empire. For one thing, the governor appointed by the administration in Istanbul was an uneducated and cruel person. He acted as he wished. The people did not like him. The Sunnites were uneasy because the governor restricted their freedom and did not value them, and the Shi'ites felt indignant over being governed by a Turk while among them there were Sayyids (26) and Sharifs (27), the Prophet's descendants, who would have been a much better choice for governorship.

The Shi'ites were in an utterly woebegone situation. They lived in squalid and dilapidated environments. The roads were not safe. Highwaymen always awaited caravans, and attacked whenever they saw that there were no soldiers escorting them. For this reason, convoys would not set out unless the government would appoint a detachment to escort them.

The Shi'ite tribes were mostly warlike with one another. They killed and plundered one another daily. Ignorance and illiteracy were dreadfully widespread. This state of the Shi'ites reminded me of the time when Europe had been under an ecclesiastical invasion. With the exclusion of the religious leaders living in Najaf and Karbala and a small minority, who were their votaries, not even one out of every thousand Shi'ites knew how to read or write.

The economy had collapsed entirely, and the people were suffering utter poverty. The administrative system was quite out of order The Shi'ites committed treasons against the government.

The State and the people viewed each other with suspicion. As a result, there was no mutual aid between them. The Shiite religious leaders, totally given to vituperating the Sunnites, had already relinquished knowledge; business, religious and worldly alike.

I stayed in Karbala and in Najaf for four months. I suffered a very serious illness in Najaf. I felt so bad that I completely gave up hope of recovery. My illness lasted three weeks. I went to a doctor. He gave me a prescription. Using the medicine, I began to recover. Throughout my illness I stayed in an underground room. Because I was ill, my host prepared my medicine and food in return for an insignificant sum of money and expected great thawab for serving me. For I was, so to speak, a visitor of 'Ali the Amir-ul-Muminin. The doctor advised me to have only chicken broth during the first few days. Later on he permitted me to eat chicken as well. The third week I had rice soup. After becoming well again I left for Baghdad. I prepared a report of one hundred pages on my observations in Najaf, Hulla, and Baghdad and while on the way. I submitted the report to the Baghdad representative of the Ministry of Colonies. I waited for the Ministry's order on whether I should remain in Iraq or return to London.

I wished to go back to London. For I had been abroad for a long time. I missed my homeland and my family. Especially, I wanted to see my son Rasputin, who had been born after my departure. For this reason, I appended to my report a petition for permission to return to London for a short time at least. I wanted to give an oral report of impressions about my three years' mission in Iraq and to get some rest in the meantime.

The Iraq representative of the Ministry advised me not to call on him often lest I should arouse suspicion. He also advised to rent a room in one of the inns alongside the Tigris River, and said, "I shall inform you of the Ministry's answer when we receive the mail from London." During my stay in Baghdad I observed the spiritual distance between Istanbul, the capital of the caliphate, and Baghdad.

When I left Basra for Karbala and Najaf, I was very much anxious that Muhammad of Najd would swerve from the direction I had led him. For he was an extremely unstable and nervous person. I feared that the aims I had built upon him might be spoilt.

As I left him he was thinking of going to Istanbul. I did my best to dissuade him from the notion. I said, "I am very anxious that when you go there you may make a statement whereby they will pronounce you a heretic and kill you."

My apprehension was quite the other way round. I was anxious that upon going there he should meet profound scholars capable of setting his fallacies right and converting him to the Sunni creed and thus all my dreams should come to naught. For there was knowledge and Islam's beautiful morality in Istanbul.

Confessions of a British spy - VII

When I found out that Muhammad of Najd did not want to stay in Basra, I recommended that he go to Isfahan and Shiraz. For these two cities were lovely. And their inhabitants were Shi'ites. And Shi'ites, in their turn, could not possibly influence Muhammad of Najd. For Shi'ites were inefficient in knowledge and ethics. Thus I made it certain that he would not change the course I had charted for him.

As we parted I said to him, "Do you believe in Taqiyya?" "Yes, I do," he replied. "The unbelievers arrested one of the Sahaba and tormented him and killed his parents. Upon this he made Taqiyya, that is, he said openly that he was a polytheist. (When he came back and said what had happened), the Prophet did not reproach him at all." I advised him, "When you live among the Shi'ites, make Taqiyya; do not tell them that you are Sunni lest they become a nuisance for you. Utilize their country and scholars! Learn their customs and traditions. For they are ignorant and stubborn people."

As I left, I gave him some money as zakat. Zakat is an Islamic tax collected in order to be dealt out to the needy people. In addition, I gave him a saddled animal as a present. So we parted.

After my departure I lost contact with him. This made me utterly uneasy. When we parted we decided that both of us were to return to Basra and whichever party was back first and did not find the other party was to write a letter and leave it with Abd-ur-Rida.

(Source: Waqf Ikhlas, Istanbul)