From Nobody’s Money to a Currency for All

Like most stories about Israel’s coming of age, the development of the nation’s currency is a tale filled with unlikely twists.

By David Lazarus |
Photo: Public domain

Most countries use banknotes as a platform to give honor to the people, places and events they hold in high esteem. But the extraordinary circumstances surrounding the rebirth of Israel made it tricky to give any national significance to its first currency. At the time, there was no printing house sophisticated enough to produce bills with protections against counterfeiting. Nor was there a publisher willing to print money for a people group that might never actually become a nation. And, of course, the early Zionist leaders were forever arguing over what to call the new country – what name would be ordered for the print job?

In the end, the chairman of the Anglo-Palestine Bank, which was owned by the Jewish Agency, persuaded the New York American Banknote Co. to print bills even before the establishment of the state in 1948. However, “Israel,” the country’s new name, did not even appear on its first banknotes. Nor was the cash marked as “legal tender,” but instead bore the camouflaged Hebrew abbreviation “E.I. Pounds,” meaning Eretz (land of) Israel. The bills were called “Palestine Pounds,” and were issued in Tel Aviv! Consider that against the backdrop of today’s politics.

The American printers used whatever decorative printing blocks they had for the new nation’s curious currency, which, it turns out, were the same designs they had used previously for China’s yuan. The clandestine banknotes needed to be smuggled into Mandatory Palestine, where the Knesset gave them its seal of approval on August 17, 1948. The next day, they entered circulation. No coins were minted for smaller amounts, so there was no way to make change. Thus the phrase “no change from one pound” became a part of Israel’s monetary quirks.

Bank Leumi (the National Bank of Israel) took over the Anglo-Palestine Bank in 1951, and a year later replaced all British Mandate currency with Israeli banknotes called the “Israeli Lira.” Bills with nationalistic motifs began circulating only after the Israel government established the Bank of Israel (similar to the US Federal Reserve) in 1954.

It wasn’t until 1955 that the first properly designed notes were issued, decorated as they were with Israeli landscapes. These were followed by illustrations of various Israeli walks of life, and by portraits of almost exclusively male Zionist leaders (Golda Meir was a notable exception). As such, the latest bills released this year in commemoration of the State of Israel’s 70th anniversary are a breath of fresh air in that they highlight two female Hebrew poets: Rachel Bluwstein graces the new 20 shekel note, and Leah Goldberg the hundred. The 50 shekel and 200 shekels notes are adorned by male poets Shaul Tchernihovsky and Nathan Alterman, respectively. Today, the Israeli New Shekel is considered one of the world’s strongest currencies.

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