British Mandate: A Survey of Palestine: Supplement - Page 107

(a) The cost-of-living index of Palestine, which relates to the expenditure of working class families, stood at 275 in December, 1946 compared with 100 in the period immediately preceding the outbreak of war, an increase of 175 per cent. The Ministry of Labour cost-of-living index, which is the most comparable measure, has in the same period increased by 32 per cent. On this basis the purchasing power of the Palestine pound would amount to only 36 per cent. of its pre-war purchasing power while that of the pound sterling would amount to 76 per cent., with the result that the Palestine pound's purchasing power would be just under half that of the pound sterling (48.0 per cent.).

(b) The Palestine wholesale price index in December, 1946 stood at 361 compared with 100 in August, 1939. The corresponding figures for the U .IC were 183 compared with 100. Thus measured, the purchasing power of the Palestine pound in December, 1946, was 28 per cent. of its pre-war value while that of sterling was 55 per cent. of its pre-war value. On this basis, therefore, the purchasing power of the Palestine pound would again amount to about half that of the pound sterling (50. 7 per cent.).

(c) The average daily earnings in manufacturing enterprises in Palestine increased from 350 mils in 1939 to 1,280 mils in September, 1946, an increase of 265 per cent. In the same period Professor Bowlev's wages index for the U .JC rose by 67 per cent. On the assumption that the standard of living of wage-earners has either not changed or has changed in the same measure and direction in both countries, then the relative change in wage rates would indicate a corresponding change in the purchasing power of the two currencies such that the purchasing power of the Palestine pound would be equivalent to 45.8 per cent. of that of the pound sterling in September, 194.6. The similarity between the result reached by this method and the result reached by the comparison of cost-of-living indices is in large measure due to the fact that industrial wage rates in Palestine are closely linked to the official cost of living index.

(d) Data other than the quantity of currency in circulation and the total of bank deposits are not available in Palestine for assessment of the expansion of the means of payment in the two countries since 1939. In August, 1939, the currency circulation of Palestine amounted to £P.9.8 million while the total of all bank deposits amounted to £P.17.3 million. (In Palestine even time deposits are withdrawable on demand). The corresponding U .K. figures were £.519 million in respect of the circulation in August, 1939 and £.1,239 million in respect of current accounts

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