The Palestine pound (Arabic: جُنَيْه فِلَسْطَينِيّ, junyah filastini; Hebrew: פֿוּנְט פַּלֶשְׂתִינָאִי א"י), funt palestina'i (eretz-yisra'eli), also Hebrew: לירה א"י lira eretz-yisra'elit) was the currency of the British Mandate of Palestine from 1927 to May 14, 1948, and of the State of Israel between May 15, 1948, and August 1948, when it was replaced with the Israeli lira. It was divided into 1000 mils (Arabic: Arabic: مِل, Hebrew: Hebrew: מִיל). The Palestine pound was also the currency of Transjordan until 1949 and remained in usage in the West Bank portion of Palestine until 1950.
In September, 1923, the formal start of the British Mandate for Palestine went into effect. At that time, there was no stable economic system. There were a great number of coins and currencies used from different countries: Turkish, American, numerous European, Russian and Indian. Stamps were sometimes used. Barter was common. Something had to be done. On July 24, 1922, in London, the League of Nations formalized the Palestine Mandate, by issuing a covenant that had 28 articles. Article 22 was concerned with the economy. It read: "English, Arabic and Hebrew shall be the official languages of Palestine. Any statement in Arabic on stamps or money in Palestine shall be repeated in Hebrew and any statement or inscription in Hebrew shall be repeated in Arabic."
With the adoption of this covenant, the basis for the monetary system was formalized. This led the British to create the Palestine Currency board to develop and design the coins and currency for Palestine.
Possessing the international authority, the British began the process of creating a new monetary system for the Palestine Mandate. The legal framework governing the creation of coinage for the Mandate was initiated by the 1927 Palestine Currency Order. The Order specified that the standard of currency would be the Palestine Pound, which would be divided by 1,000 mils. One Palestine pound was equal in value to one pound sterling.
The system was derived from a proposal made in 1855, by William Brown, a member of the United Kingdom parliament, that the United Kingdom pound should be decimalised by being divided into one-thousand parts, each called a mil. Although this system was never adopted in the United Kingdom, it was used by the British colonial authorities first in Hong Kong from 1863 to 1866, and then in the British Palestine Mandate from 1926 until 1948. It was also adopted in Cyprus in 1955, where the Palestinian pound had briefly been introduced as legal tender, following a currency shortage in 1943.
Starting on the eve of the 10th anniversary of the Balfour Declaration (November 1, 1927), the coins were minted, as needed, to meet public demands. They would be used until the early 1950's. Selecting the design was a major challenge as religious symbols were strictly forbidden and all three official languages of the region (English, Hebrew, and Arabic) had to appear on the coins. The design emphasized agriculture, with the olive chosen as the national symbol. A total of seven different mils denominations were minted: 1, 2, 5, 10, 20, 50, and 100. On the obverse side of the 1, 2, 50 and 100 mils coins, the design consisted of a sprig of an olive branch standing upright in the center of the unbroken coin. The remaining three denominations, the 5, 10, and 20 Mils, had a hole punched out of the center with an olive wreath wrapped around.
To conform to the Balfour Declaration, two additional Hebrew letters were added in parentheses next to the Hebrew script on the coins. These letters, the aleph and yod, were an abbreviation for Eretz Yisra'el, "The Land of Israel." This infuriated the Arab citizens who rioted in protest. Orthodox Jews were also displeased with the text as they believed only the Messiah from the house of David could reestablish the historical Kingdom of Israel. These conflicts still rage on today.
The British established a committee in June, 1926, to design the Palestine coinage. The original drawings and designs for the coins were made by Austen St. Barbe Harrison, the architect of the Palestine Public Works Department. They were subsequently reviewed by the advisory committee of the Royal Mint at the Tower Hill in London (the site where the coins would eventually be minted). The Hebrew and Arabic legends were prepared in Palestine then reviewed by expert authorities in England. As a final course, a specimen set of the coins was submitted and approved by King George V.
The Palestine pound was also declared legal tender in the Transjordan Emirate, which was technically a part of the British Mandate, though having an autonomous local administration.
In 1927 coins were introduced in denominations of 1, 2, 5, 10, 20, 50 and 100 mils. The 1 and 2 mils were struck in bronze, whilst the 5, 10 and 20 mils were holed, cupro-nickel coins, except for during World War II, when they were also minted in bronze. The 50 and 100 mils coins were struck in .720 silver.
The last coins were issued for circulation in 1946, with almost all 1947 dated coins being melted down (a very small number survive, mostly in the collection of the British Museum).
On 1 November 1927, banknotes were introduced by the Palestine Currency Board in denominations of 500 mils, 1, 5, 10, 50 and 100 pounds. Notes were issued with dates as late as 15 August 1945.
The body which governed the issue of the currency was the Palestine Currency Board, which was subject to the British Colonial Office. The Currency Board was dissolved in May 1948, as the British Mandate ended. The area in which the Palestine pound circulated was divided into several political entities: the State of Israel, the Hashemite Kingdom of Transjordan, the Jordanian-occupied West Bank and the Egyptian-occupied Gaza Strip.
Israel demonetized the coins on September 15, 1948. On June 9, 1951, Egypt declared the Palestine money no longer legal tender in Gaza. A few weeks later, on June 30, 1951, Jordan followed suit. In the years and decades that followed, the vast majority of the Palestine coins were melted down. Only a mere fraction survived the crucible.
The Palestine Mandate coins and currency became footnotes in history books while the few remaining coins were eagerly sought out by collectors. With the British gone, a new monetary system was developed by the Israeli government. The name given to this new legal tender was adapted from the currency mentioned in Torah: the Shekel.