Jerusalem (Sep. 24)
The Palestine pound, which is based on sterling is falling together with it, particularly in the adjoining countries, Egypt and Syria, with which Palestine does most of its trade, and the attention of the entire population is now focussed on the currency movements. Wholesalers are showing hesitation in doing business on account of the fluctuating sterling quotations, and there is an increase of gold hoarding among the felaheen which is spreading also to other sections of the population. The demand for gold sovereigns instead of paper notes is sending up food and other prices by about 10 per cent.
Until 1927 the currency used in Palestine was the Egyptian pound, which is normally valued at about 21 shillings. It was in April 1924 that the Palestine Government appointed a Commission to consider and report upon the advisability of introducing a special Palestine currency. The principal reason, it was explained in an official Government statement, was that Palestine was losing a large annual sum of money, due to the fact that Egyptian bank notes being in circulation, interest on the money received on these notes accrued to the profit of the National Bank of Egypt, and not to the Palestine Government. The new currency, it was added, is not intended to rest on a merely local basis, but to be fully secured in connection with the British currency.
Some dissatisfaction at the decision to make sterling the unit of Palestine currency was expressed at the time in certain business quarters in Palestine. The Jaffa Jewish Chamber of Commerce, for instance, decided to draw the attention of the High Commissioner to the feeling which existed among its members “that the pound is too high as a unit of parity for Palestine, and to ask for a reduction in accordance with the opinion expressed by the Government Commission of Experts in its report on the currency question”.
The Palestine currency came into effect on November 1st., 1927, by an Order in Council. There is a Palestine Currency Board with its seat in London, constituted by the Colonial Secretary, to provide for and control the supply of Palestine currency, to ensure that the currency is maintained in satisfactory condition, and generally to watch over the interests of Palestine as far as currency is concerned. The Board makes all necessary arrangements for the minting of coins, the printing of currency notes and the investment of the funds of the Board. The Board also authorises the issue of currency in Palestine against prepayment in London, and arranges for the issue against currency tendered in Palestine of drafts or telegraphic transfers payable in sterling in London.
The Palestine Currency Order provides for a gold coin of one Palestine pound containing 123,27447 grains of standard gold, the equivalent of the English pound.
The Egyptian currency previously in circulation in Palestine was redeemed during the period November 1st., 1927 to March 31st., 1928 and Egyptian notes, gold, silver and nickel coins were declared by Proclamations dated February 9th. and 29th., 1928 not to be legal tender after March 31st., 1928.