BANK OF ENGLAND, 27th January 1954. Dear Serpeli, I have now seen a copy of Burrows' despatch of the 21st December 1955, giving some of his reflections on the subject of a Persian Gulf currency. For my part I have a few general observations to make supporting the arguments in favour of a Gulf currency: (a) The present physical condition of rupee notes in circulation in Kuwait is becoming progressively worse and there is in operation no satisfactory system to ensure the replenishment of existing currency by new notes - I enclose a few notes which I brought back with me as a representative sample. (Please return them undamaged.) This kind of problem inevitably arises when the monetary authority is far away and has no direct responsibility for the currency circulation. (There is already an active market in torn rupee notes at a discount and out of a recent consignment of rupee notes sent to India by the British Bank 8.7% weze refused payment because of the condition of the notes.) The British Government and the British Bank of the Middle East are blamed for the existing dirty notes. This state of affairs might well encourage the National Bank to think of issuing their own notes or it might even lead to Iraq suggesting that they would be willing to help in Kuwait's currency difficulties by supplying dinars for circulation. But, apart from that, how can we afford any thing so publicly derogatory in what is bound to be regarded as a matter of prestige? (b) Nationalism ia Kuwait is showing signs of dev on this ground alone some plans for the introduction of a currency (perhaps not to our liking) may be expeeted in spite of the opposition to a change by the gold dealers. (c) Colonel Crichton has nothing fresh to report but feels that the situation cannot be allowed to drift indefinitely. The longer it is delayed the more difficult will be a change. The Gulf Shaikhdoms
