The moving spirit of the Hashimite Hijāzī Arab delegation was Colonel T. E. Lawrence, and, when he was on his delegation’s official business, he used to make a point of wearing the highly distinctive uniform of an officer of the Hijāzī Army. One day, in a corridor of the Hotel Majestic, the present writer had the good fortune to see this picturesque and animated figure run into a weary-looking official of the British Treasury. In a flash, Lawrence had whipped out from under the folds of his robe a magnificent dagger with a head of chased gold, and was holding it under the Treasury official’s nose, saying: “Do you know what that is made of?” “No, I don’t,” said the Treasury official rather testily. “A hundred and fifty of your sovereigns,” Colonel Lawrence retorted; and the intended shock was duly registered by his victim.
Which is like a scene from the David Lean film, except that that stopped before Versailles. The Treasury had called in British gold sovereigns and half sovereigns during the war, substituting paper money (which had never existed in a denomination lower than £5). They were hoarded in Bank of England vaults and never seen again. But the Allies and the Central Powers were vying to hire Albanian and Arab mercenaries, who insisted on continuing to be paid in advance in gold (and were in reality more interested in fighting each other),
not because they foresaw a coming catastrophic depreciation of paper money with a prescience denied to the wily financiers of Lombard Street and Wall Street, but for the simpler reason that [they weren’t used to notes]. [...] During the antecedent hostilities, while Colonel Lawrence had been having the fun of carrying bags of “sovereigns” on camel-back and dispensing them to the Hijāzī allies of His Britannic Majesty’s Government, the Treasury official had been saddled with the vexatious task of trying in vain to induce these Arab recipients of “sovereigns” to part with them again in exchange for Indian piece goods [textiles], which he had dangled, like carrots, before a knowingly irresponsive donkey’s nose. The Arabs had found a better use for British sovereigns than that. So long as the gold remained in the form of minted coin, it might (they felt) slip through their fingers; so they had converted it into dagger handles, which were not only more beautiful but more secure, since they could be carried more snugly on the person and were riveted to an automatic caretaker in the shape of a formidable steel blade.
The manner of the story’s lugubrious retelling in Acquaintances, OUP, 1967 (not quoted here) suggests that he found the version here patronising to the Arabs.
Toynbee and Young Indiana Jones, post here about Toynbee and Lawrence at Versailles
A Study of History, Vol VII, OUP, 1954 (footnote)