Establishment of Bait-ul-Maal
In the time of Umar things changed. With the extension in conquests money came in larger quantities, Umar also allowed salaries to men fighting in the army. Abu Huraira who was the Governor of Bahrain sent a revenue of five hundred thousand dirhams. Umar summoned a meeting of his Consultative Assembly and sought the opinion of the Companions about the disposal of the money. Uthman ibn Affan advised that the amount should be kept for future needs. Walid bin Hisham suggested that like the Byzantines separate departments of Treasury and Accounts should be set up.
After consulting the Companions Umar decided to establish the Central Treasury at Madinah. Abdullah bin Arqam was appointed as the Treasury Officer. He was assisted by Abdur Rahman bin Awf and Muiqib. A separate Accounts Department was also set up and it was required to maintain record of all that was spent. Later provincial treasuries were set up in the provinces. After meeting the local expenditure the provincial treasuries were required to remit the surplus amount to the central treasury at Madinah. According to Yaqubi the salaries and stipends charged to the central treasury amounted to over 30 million dirhams.
A separate building was constructed for the royal treasury by the name bait ul maal, which in large cities was guarded by as many as 400 guards. In most of the historical accounts, it states that among the Rashidun caliphs, Uthman ibn Affan was first to struck the coins, some accounts however states that Umar was first to do so. When Persia was conquered three types of coins were current in the conquered territories, namely Baghli of 8 dang; Tabari of 4 dang; and Maghribi of 3 dang. Umar ( according to some accounts Uthman ) made an innovation and struck an Islamic dirham of 6 dang.
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“The essence of belief is the establishment of a habit; and different beliefs are distinguished by the different modes of action to which they give rise.”
—Charles Sanders Peirce (18391914)