The Bank Notes of the National Bank of Iraq

Peter Symes

From 1931 until 1949, the authority responsible for issuing currency in Iraq was the Iraq Currency Board^[1]. Article 24 of Law No. 44 of 1931, which created the Iraq Currency Board, stipulated the Currency Board was to remain the authority responsible for issuing currency in Iraq until a National Bank could be established. Authorities in Iraq had never been particularly comfortable with the concept of a Currency Board, which demanded the administration of the nation’s currency be based in London and administered by predominantly British personnel. Therefore, the desire to create the proposed National Bank was pre-eminent in the ambitions of many Iraqis.

            The desire for a National Bank led to the introduction of the ‘Law for the Government’s Participation in the Formation of A National Bank – No.27 of 1939’. Passed on the 24th of July, 1939, Article one of the law stated:

The Minister of Finance may participate in the formation of a National Bank to an extent not less than one-fifth of the capital of the Company which shall be formed for this purpose, subject to the following conditions:–

1. The capital of the Company shall be 500,000 Dinars, of which 250,000 Dinars are payable on the formation of the Company.
2. The Minister of Finance shall approve the Memorandum and Articles of Association of the Company.
3. The General Manager of the Bank shall be appointed with the approval of the Minister of Finance
4. The majority of share of the Bank shall be held by Iraqis.

However, this promising legislation proved of little effect, as Iraq, and the rest of the world, became embroiled in the Second World War within months of the law being passed.

The National Bank is Established

The creation of an institution to replace the Currency Board became a reality on 20 July 1947 with the founding of the National Bank of Iraq by the ‘Law of the Iraqi National Bank No. 43 of 20th July 1947’. Law No.42 of 1947 (passed on the same day) amended the Currency Act of 1931 so all matters relating to currency referenced the new National Bank. These laws were passed in preparation for their implementation at a date to be determined.

            Royal Irada No.665 of 8th November 1947 instructed the minister of Finance to enforce the parts of the Law No. 43 referring to the control of foreign exchange and to the issuance and administration of currency, duties entailed under international agreements (particularly the Bretton Woods Agreement). In accordance with Article 14 of the National Bank of Iraq Law, i.e. Law No. 43 of 1947, Royal Irada No.666 of the 9th of November enforced the Law; and so it is understood this is the day on which the National Bank began to operate.

            What effect this had on the operations of the Bank is uncertain. It appears Irada No.666 of the 9th of November invoked the Bank to commence operations, but it was evidently not to undertake the full operations of the Bank. Some seven months later, on 11th July 1948^[2], the internal regulations of the Board of Administration of the National Bank were promulgated. However, due to a various delays, the nature of which is unknown, the National Bank did not commence operating until 1st July 1949. On 31st March 1949 Royal Irada No.197 enforced Article 10 of the Law No.42 of 1947, which transferred the functions of the Iraq Currency Board to the National Bank, with effect of 1st July 1947.^[3]

            The Iraqi Government had been quite concerned about appointing someone to the position of Governor and had petitioned the British for a suitable candidate. The Iraqis suggested Lord Kennet, the former head of the Iraq Currency Board, as a suitable candidate and so representations were made to enlist his services. However, Lord Kennet, now seventy years of age, declined to accept the position, although he wrote:

‘… for old sake’s sake I will do anything they want that can be done by a Londoner; and could visit them at times. But not I’m afraid by a Bagdadi.’^[4]

Lord Kennet nominated Dudley Ward as a possible candidate, but the British promoted Mr. G. C. Deeks as their candidate for the position. The Iraqis appear to have been concerned the position of Governor should be held by a person with some stature and not just a good administrator. Consequently, Albdul Ilah, the Regent to the Iraqi throne, was appointed Governor General.^[5] It is interesting to note the title adopted by the Regent, as the title below his signature appears as Governor General, not simply as ‘Governor’. Mr. Deeks became the Chief Cashier of the Bank^[6] and, it is assumed, he was responsible for the day-to-day activities of the Bank. Other appointments included Mr. Kenneth Malcolm Clark as ‘Deputy Manager for the administration of currency affairs’.^[7]

            The National Bank of Iraq was a true central bank. Apart from issuing currency, it was responsible for regulating banking within the country, monitoring Iraq’s responsibilities under international agreements, controlling foreign exchange, and maintaining the government’s finances.

            Under Law No. 42 of 1947, the Iraqi Dinar continued to be the unit of currency, but under this law the Dinar was no longer linked to the pound sterling. The Iraqi Dinar was now linked to the gold standard and initially set at 3.58134 grams of pure gold. Following the devaluation of the pound sterling in September 1949, the value of the Dinar was set at 2.48828 grams of gold under Ordinance No. 3 of 1949.

The Fifth Issue

In recognition of the role of the National Bank of Iraq as the issuer of the nation’s currency, a new series of banknotes was prepared and ultimately issued. Reference to ‘The New Currency’ was made in the first Annual Report of The National Bank of Iraq:

‘The old notes bore the name of the Iraq Currency Board and the signatures of its members; thus any new issue should be so designed as to carry the name of the National Bank of Iraq. Moreover, the amendments to the Law covering the issue required certain of the wording of the notes to be changed. ‘The bank was authorised to issue notes of the denominations of 10 Dinars, 5 Dinars, 1 Dinar, ½ Dinar and ¼ Dinar. But provision was also made that the notes of the Iraq Currency Board should continue to be legal tender. Notes of the denomination of one dinar were issued on 17th September 1950, of the denominations of 5 and 10 Dinars on the 2nd November 1950 and the ½ and ¼ Dinar notes on the 4th November in that year.’^[8]

            The five notes of the first issue of The National Bank of Iraq are illustrated in Figures 1 to 5. A new portrait of young King Faisal II is used on the first issue of The National Bank. Faisal was fifteen years old in 1950 but the portrait was probably taken a year or two earlier.

            The first issue of bank notes by the National Bank of Iraq was the fifth Iraqi issue. Printed by Bradbury Wilkinson and Company, who had printed the notes issued by the Currency Board, this issue introduced designs which are notable for including illustrations on the back of the notes, as opposed to the previous designs of the Currency Board, where the backs consisted of ornamental line work.

            The common features of the notes in this series are a vignette containing the portrait of King Faisal II at the right, a pale patterned area to the left holding the watermark, and Arabic text on the front of the note. The watermark of King Faisal II is the same as the portrait on the notes, but while the portrait in the watermark faces to the right, the portrait in the vignette faces to the left. The text on the front of the 10-dinar note reads:

The notes are signed by the Governor General of the Bank, His Excellency Abdul Ilah Hafidh. The back of each note has the name of the issuing authority and the denomination written in English.

Authorised by Royal Decree No. 533 of 29th August 1950, and issued between 17 September and 4 November 1950, the specific details of each banknote in the Fifth Issue are:

The Sixth Issue

The banknotes of the second issue of the National Bank of Iraq, which constitute the sixth issue of Iraqi banknotes, were introduced into circulation from 20 March 1953.^[9] Although it cannot be confirmed, it is suspected these notes were slowly introduced as needed to meet the requirements of notes in circulation, rather than introduced as a specific new issue.

            These notes are identical to the notes of the fifth issue, except the portrait depicts a more mature King Faisal II.^[10] While the portrait on the notes has been updated, the watermark used for the notes of this issue remains unchanged from the notes of the previous issue. An example of a note from the sixth issue is the 1-dinar note at Figure 6. Observe the new portrait, which can also be seen in Figure 8.

            Of interest in this series is the 5-dinar note. While many of the notes issued by The National Bank of Iraq are difficult to obtain, the 5-dinar note of this series is one of the hardest in the entire Iraqi series for the collector to acquire. The brief details of all denominations are:

The Seventh Issue

The process of updating the portrait of the King on the banknotes was repeated two years later. From 12th May 1955^[11] notes of the seventh issue began to circulate. These notes remained, for the most part, unaltered from the notes of the sixth issue, except for the new vignette of the King.^[12] An example of a note from this series is the ¼-dinar note at Figure 7 and the change in the vignettes for the three issues can also be seen at Figure 8.

            However, with the exception of the ¼-dinar note, there are two varieties of each denomination due to a change in watermark which occurred during the period this issue was in circulation (see Figure 9). The notes of this issue were originally issued with the same watermark as the previous two issues, but they were later issued with a watermark emulating the new portrait of King Faisal II. The first watermark is commonly referred to as the ‘small head watermark’ while the second watermark is commonly known as the ‘large head watermark’. The ¼-dinar note was issued only with the second watermark. The ½-dinar note adopted the new watermark of the King from 18th July 1957.^[13]

The End of the National Bank

In 1958 the banknotes of the National Bank of Iraq were still circulating in Iraq. This was despite the fact the ‘Law of the Central Bank of Iraq No.72/1956’, creating the Central Bank of Iraq, was gazetted on 1st of July 1956. This law effectively changed the powers and the name of Iraq’s central bank, from the ‘National Bank of Iraq’ to the ‘Central Bank of Iraq’. However, the Iraqi revolution of 1958 was to see a monumental change in the rule and administration of Iraq, which would lead to significant changes in the banknotes circulating in Iraq.

            Although the change in title of the central bank did take place, it occurred with less speed than might have been expected. The change in name from the ‘National Bank of Iraq’ to the ‘Central Bank of Iraq’ had occurred in July 1956 during the period of the monarchy, but the first notes of the Central Bank were not issued until some months after the monarchy had been overthrown in 1958. The first banknotes issued by the Central Bank of Iraq were released into circulation on 5 February 1959 and constitute the eighth series of banknotes issued in Iraq. For the story of the introduction of the first banknotes of the Central Bank of Iraq, see ‘The First Bank Notes of Republican Iraq’ in IBNS Journal Volume 44 Number 4, pages 33 to 39.

References

• Central Bank of Iraq Iraqi Currency, Development Stages Baghdad 1997.
• National Bank of Iraq The Annual Report of The National Bank of Iraq, July 1949 – December 1950 Directorate of Statistics and Research, Baghdad 1951.

End Notes

• [1] For a history of the Iraq Currency Board, see ‘The Bank Notes of the Iraq Currency Board’ by Peter Symes, Murray Hanewich and Layth Al-Muderis in IBNS Journal Volume 40 Number 3, page 29.
• [2] An announcement in the Iraqi Gazette dated 11th July 1948 promulgated the Internal Regulations.
• [3] Royal Irada 197 dated 31st March, 1949.
• [4] Letter from Lord Kennet to ‘Wright’ in the Foreign Office, dated 17th March 1949. (FO 371/75161)
• [5] Abdul Ilah Hafidh was appointed Governor General of the National Bank of Iraq under Royal Irada Number 154, dated 17th March, 1949.
• [6] Mr Deeks was appointed Chief Cashier by Royal Irada No.446 of 9 November 1949 (although the announcement in the Iraqi Gazette named him as ‘Mr. G.C. Dex’).
• [7] Royal Irada 680 dated 23rd November 1949.
• [8] The Annual Report of the National Bank of Iraq, July 1949 – December 1950, page 8.
• [9] Iraqi Currency, Development Stages page 46.
• [10] In 1953 Faisal was 18 years old.
• [11] Iraqi Currency, Development Stages page 46.
• [12] In 1955 Faisal was 20 years old.
• [13] Iraqi Currency, Development Stages page 46.

This article was completed in February 2014
© Peter Symes

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