Banknotes and Banking in Abyssinia and Ethiopia

A Story of British and American Interests

Peter Symes

An inspection of the banknotes issued in Abyssinia[1] and Ethiopia prior to the Italian invasion in 1935 shows significant British influence, both in the institutions authorizing the issues and in the preparation of the banknotes. A similar inspection after World War II shows a complete turnaround, with American influence in the issuing authority and in the production of the banknotes. What happened to allow the dominant interests of the British to be supplanted by their trans-Atlantic allies? The answer is complex and it involves a tale of influence, occupation, war and liberation. To get to the end of this story we start at the beginning, when institutionalized banking was introduced to Ethiopia.

The Bank of Abyssinia

Prior to the twentieth century, banking was largely unknown in Ethiopia but lending was practised by individuals, often by merchants and wealthy members of society – including members of the royal family – lending money to those willing to pay the usurious rates offered. In 1905 interest rates were reported from 1.5% to 5% per month or 25% per year.[2] At the turn of the century, interest in banking was prompted by the development of Addis Ababa; with the first known approach to Emperor Menilek II[3] being from M. Delharbe, a Frenchman, who proposed establishing a state bank, which would issue banknotes. Having encountered difficulties with the French, who were building a railroad from Djibouti to Addis Ababa, Menilek was not keen to deal with the French and the proposal did not gain support.[4]

            In May 1903 Menilek requested the British provide support for the establishment of a bank. This request ultimately led Lord Cromer (then British Consul-General of Egypt) to write, in December 1904, to Sir Elwin Palmer of the National Bank of Egypt, advising Menilek wished to establish a National Bank in Abyssinia and was willing to give a 50-year concession with exclusive privileges in respect of: Banking, Coinage and the issue of notes, Bonded warehouses, Custody of all moneys belonging to the State, and a preferential right to all State loans. Cromer advised Palmer that French and Italian interests were favourable to the founding of the institution and of contributing to its establishment.

            Acting as the agent for the National Bank of Egypt, Mr. D. MacGillivray visited Abyssinia and negotiated the concession with the Emperor in return for a 20% share of the profits. The concession to establish the bank was dated 10 March 1905 and consisted of just four articles.

Article I granted the National Bank of Egypt a 50 year concession authorising it to establish a banking company to be called the Bank of Abyssinia. It laid down that the company should have a minimum capital of £500,000, of which at least £100,000 should be subscribed and paid up at the time of the constitution of the company. Shares were to be offered for public subscription in London, Paris, New York, Berlin, Rome, Vienna, Cairo and Addis Ababa, with the permission of the Governments concerned; the company was entitled to increase its capital as necessity arose. The Head office was to be in Addis Ababa, though the Bank was permitted to establish such branches as it might think advisable, both inside the country and abroad.

Article II guaranteed the company a monopoly position and eight privileges for a 50 year period beginning from the day when it was constituted:
  1. The Emperor agreed not to allow any other bank to be established in his kingdom.
  2. The Bank was given the sole right to issue bank notes, it being agreed that these notes should be legal tender in the empire and freely exchangeable against gold or silver at the institution’s head office.
  3. The government promised not to mint any coin. All minting was to be carried out by the Bank in consultation with the Government, all resulting profits to accrue to the Bank.
  4. All the Government public funds were to be deposited with the Bank and all Government payments were to be made by cheques drawn on it.
  5. The Government was to give preference to the Bank in the issue of loans.
  6. The Bank was permitted to build warehouses in which merchants could deposit their goods against loans from the institution.
  7. The Government agreed to give a free grant of unspecified amount to the Bank’s head office, agencies and warehouses.
  8. The Bank was entitled to transport its specie by rail at Government rates.

Article III specified that after expenses had been paid, 10% of the profit placed in reserve, and a 7% dividend paid to the shareholders, 20% of the remaining should accrue to the Emperor.

The final article, Article IV, laid down that the concession would become void if the Bank was not properly constituted before 1 July 1906.[5]

            The Bank of Abyssinia was established under Egyptian law by an Egyptian decree dated 30 May 1905. The men who established the private company, headquartered in both Cairo and Addis Ababa, were three Britons, Sir Elwin Palmer, F. T. Rowlatt and D. MacGillivray, three Italians, Bohor Naggar, Raphael Finzi and Humbert Ebano, and Alfred Vulliet, a German. The Governor of the National Bank of Egypt was the new bank’s ex-officio president and the Emperor of Ethiopia appointed two Ethiopians to the board of management – Ras Tasamma and Ras Walda Giyorgis.

            In support of the Emperor’s wish to involve a range of nationalities, as stated in Article 1 of the concession, the 100,000 shares in the company, constituting £500,000, were made available to various groups. First, 55,000 shares were reserved for four groups of investors who had established the institution:

Anglo-Egyptian group[6]   25,000
French group 12,500
Italian group 12,500
Board of Directors 5,000

Shares were then offered in Addis Ababa, Egypt (Cairo and Alexandria), London, Paris, Rome, Berlin, Vienna and New York. So numerous were the subscribers, that only 9.5% of subscriptions were able to take up shares. Of the 45,000 shares remaining, the allocation was:

Anglo-Egyptian group   14,000
French group 7,000
Italian group 7,000
Ethiopian subscribers 6,180
German, Austrian and
American subscribers  

            The Bank of Abyssinia was formally inaugurated on 15 February 1906 and was headquartered in the Palace of Ras Makonnen, with a branch also established at Harar (several other branches were established in ensuing years). A purpose-built headquarters was constructed by an Italian named Vaudetto from a design by a fellow countryman, Castagna, and this building was inaugurated on 1 January 1910. A simple building in the classical Greek style, in the centre of the pediment is a round feature said to be a copy of the seal of the Bank of Abyssinia. On entering the banking hall, a U-shape of teller’s desks was found and to the right were offices and storerooms.

            The Bank of Abyssinia was a commercial bank as well as acting as the government’s bank; however it was little used as a place for deposits, although many people requested loans.

            The first Governor of the Bank was Mr. MacGillivray and he was succeeded by three British governors – H. Goldie, Miles Backhouse and C. S. Collier[7]. To emphasize the British control over the bank, the assistant governors of the Bank were all British: H. Goldie (1906-7), D. Brodie (1906-24), E. Wright (1926) and E. Press (1927). However, a number of other nationalities were employed at the Bank and at one stage there were seven Italians, three Greeks and two Frenchmen working in the Bank.[8]

            Initially, banknotes were not issued by the Bank of Abyssinia, as Maria Theresa Thalers (Dollars) were universally used in Ethiopia. The silver trade coin (Figure 1) had circulated in Ethiopia for many years and was accepted because of its intrinsic value. In Amharic, the language of most Ethiopians, the Thaler was referred to as the ‘talari’ or the ‘birr’ (sometimes spelt ‘ber’ in early English sources). ‘Birr’ means ‘silver’ and referred to the metal in which the coins were minted.

            With the advent of World War I it was decided to issue a series of banknotes. Denominations of 5, 10, 50, 100 and 500 thalers (numbers 1 to 5 in the Standard Catalog of World Paper Money (SCWPM)) were prepared by the British security printers Bradbury Wilkinson and Company. The five notes are:

            The text on each note is remarkable for being prepared in three languages, each used for different text. ‘Bank of Abyssinia’ is the only English text used, whereas French and Amharic constitute the majority of the text. While the English text states the name of the bank as ‘Bank of Abyssinia’ the Amharic script renders the name as የኢትዮጵያ፡ ባንክ።, which is ‘Itiopia Bank’ in Amharic. Of interest also is the use of the word ብር (birr) on the banknotes, noting this is the word used by Ethiopians for the Maria Theresa Thalers.

            One interesting variation in the use of languages is in the printer’s imprint. On the front of each note the printer’s imprint appears in French with the text reading ‘Bradbury Wilkinson & Co. Ld. Graveurs, Londres’. However, on the back of the notes all the text is in English, reading ‘Bradbury Wilkinson & Co. Ld. Engravers, London.’

            The banknotes appear to be exclusively signed by C.S. Collier, although the signature used on the earlier notes differs from the later and more common signature (see Figure 4). The backs of each note are decorated with patterns created by engine work, text and numerals.

            An early 5-thaler note dated 5 Mai 1915 is numbered E/1 00135. Assuming E/1 is the first serial number prefix, this suggests the notes were issued in early 1915 and possibly as late as the beginning of May 1915. The dates on the notes were, over time, written by hand, stamped, and printed. The first notes were dated by hand and Wilhelm Eglseer has recorded the latest observed hand-written dates[10] as:

5 thaler 30 June, 1925 (E/1 01830)
10 thaler 31 May, 1926 (D/1 02360)
50 thaler 30 August, 1925 (C/1 01653)
100 thaler   none recorded
500 thaler 30 August, 1923 (A/1 0158)

On later notes the date was applied by a stamp – possibly first used between June and August 1926. Wilhelm Eglseer records 31 August, 1926 (D/1 03189) as the earliest date on a 10-thaler note with a stamped date and 16 April, 1927 (C/1 04296) for a 50-thaler note.

            The last notes issued by the Bank of Abyssinia had the date printed on the notes – 1 June (Juin), 1929[11]. In a letter dated 3 April, 1929 the Bank of Abyssinia ordered its final issue of notes from Bradbury, Wilkinson and Company; with only 38,100 notes printed for this last issue; 12,000 five-Thaler notes, 11,000 ten-Thaler notes, 7,600 fifty-Thaler notes, 7,000 one-hundred-Thaler notes and 1,500 five-hundred-Thaler notes.[12] This last issue used offset printing on a Wharfedale surface flat bed printing press; while the intaglio printing was carried out on a single plate press using copper printing plates with a chromed face; and the printing of serial numbers, signatures and dates was accomplished by using special numbering barrels and electro material. [13]

            The serial number prefixes on all notes prepared for the Bank of Abyssinia follow a simple pattern, constructed with a letter over a number. The first five letters of the Latin alphabet are used separately for each denomination, assigned as follows:

Each serial number consists of five numerals, except for the 500-thaler notes, which use four numerals.

            The notes did not circulate widely, as the Maria Theresa Dollar (MTD) coins remained the principal acceptable currency. Although $280,000 in notes was printed in 1915, only $214,765 had been issued by 1921. The banknotes were not accepted by the post office or customs and the notes were mostly used by non-Ethiopians who found carrying bags of Maria Theresa Dollars inconvenient (a sack of 500 MTD weighed at least 14 kilograms). In the early 1920s the banknotes were largely unknown outside the capital.

            The banking monopoly of the Bank of Abyssinia brought no great wealth to the National Bank of Egypt and the other shareholders. Profits were not recorded until 1914, then in 1919, 1920 and again from 1924 to 1931. While Abyssinia was pleased to have a national bank, the Abyssinian government saw drawbacks in a foreign-owned bank controlling state finances and the government was inevitably drawn to establishing its own bank. To this end the Emperor of Ethiopia – Haile Selassie (1892–1975, Figure 5) crowned in 1930 – entered into negotiations with the National Bank of Egypt, which resulted in the Bank of Abyssinia being liquidated and the government of Ethiopia paying out the shareholders of the Bank. Although the capital of the Bank of Abyssinia was £500,000, evidently only £125,000 was paid up. The Ethiopian government paid this amount and paid the National Bank of Egypt £40,000 in compensation for surrendering their right to operate the Bank of Abyssinia. Along with several smaller amounts, the total paid to the shareholders was £203,807-7-6. The full breakdown is:

    £  s.  d.
a)  A sum representing the paid up capital 125,000 0 0
b) A sum representing the surplus over the amount provided for 18,694 0 3
c) A sum representing the difference between the market value of the moveable and immoveable property of the bank and the value appearing in the books 15,835 0 1
d) A sum as compensation for the ending of the concession 40,000 0 0
e) A sum as interest on the credit of the bank from 31.12.1930 to 16.7.1931 4,228 7 2
    £203,807 7 6

            The Ethiopian government established the Bank of Ethiopia by decree on 29 August 1931 and the Bank of Abyssinia was formally liquidated by an Imperial Decree on the same date.[14] The liquidators of the Bank were initially Sir Bertram Hornsby[15], C.S. Collier and J.C. Sidley; with the latter two replaced by John Crawford on their resignations. Liquidation was completed on 10 October 1931. It is not known when the banknotes issued by the Bank of Abyssinia ceased to circulate, or even when they ceased to be issued.

The Bank of Ethiopia

When the Bank of Ethiopia was established, the expertise belonging to the Bank of Abyssinia was transferred to the new bank. The last manager of the Bank of Abyssinia, Mr. C.S. Collier, became the first governor of the Bank of Ethiopia. Mr. Collier also retained many of the staff previously employed by the Bank of Abyssinia. Bradbury Wilkinson and Company was retained to produce the Bank of Ethiopia’s banknotes.

            Although the Bank of Ethiopia maintained links to the British (through the administration led by Collier), the government of Ethiopia owned sixty percent of the new bank and control of the bank was ultimately with the Ethiopians. The Minister of Finance had authority to check all transactions made by the bank and the majority of the Board of Directors was Ethiopian. Blatengeta Walda-Maryam Ayalaw was the president of the board and five of the eight directors were Ethiopians – Blatengeta Heruy Walda Sellassie, Blatengeta Sahlé Sadalu, Bajerond Feqra Sellassie Katama, and Fitawrari Taffasa Habta Mikael. The vice-president was Mr. C.S. Collier[16] and the three remaining directors were Everett Andrew Colson, Alfred Abel and Matig Kevorkoff. The Ethiopian government, while recognizing their lack of expertise in many areas, carefully selected their advisors from numerous countries, so there was no dominance by any nation within Ethiopia particularly by colonial administrators, such as Great Britain.[17] While the nationality of Alfred Abel is unknown, Matig Kevorkoff was an Armenian businessman based in Addis Ababa and Mr. E. A. Colson was an American financial advisor to the emperor. Mr. Colson gained the confidence of the Emperor and later became financial advisor and foreign affairs advisor to the Emperor. Apparently selected from the U.S. State Department, he worked for many years with the Emperor and joined him in exile during the Italian occupation. The experience of an American financial advisor at this stage of Ethiopia’s development established influence which was to manifest itself after the liberation of Ethiopia.

            One of Mr. Colson’s tasks as financial advisor was to reform the Ethiopian currency. The reform devised by Colson called for the removal of Maria Theresa Dollars and their replacement with a currency backed by gold. Colson’s plans were upset when Great Britain went off the gold standard in September 1931, after which it was decided any new currency would be backed by sterling. The first tentative steps in achieving the monetary reform were the introduction of a commemorative coin and the decree, on 24 September 1931, that 16 piastres, mahalek or gersh, and 32 besa were legal tender for the new Ethiopian dollar.

            On 1 May 1932 Colson’s reforms continued with the Bank of Ethiopia releasing new banknotes, with designs based on the notes issued earlier by the Bank of Abyssinia. Almost identical to the issues of its predecessors only the text on the notes was altered to indicate the issuer was the Bank of Ethiopia rather than the Bank of Abyssinia (see Figure 6, Figure 7 and Figure 8). Interestingly, the Amharic characters for the name of the Bank do not change; they remain የኢትዮጵያ፡ ባንክ። (Itiopia Bank).

            Other differences between the notes of the Bank of Abyssinia and the notes of the Bank of Ethiopia are minor. There are subtle changes to the arrangement of some French and Amharic text on the notes. For example, a clause in French on the Bank of Abyssinia notes reads Payables á Adis-Ababa au porteur, while on the Bank of Ethiopia notes this is changed to Payables sur demande au porteur conformément á la loi (compare Figure 2 and Figure 7).

            Similarly, on the notes of the Bank of Abyssinia, the place of issue is spelled as ‘Adis Ababa’ but on the notes issued by the Bank of Ethiopia it is spelled as ‘Addis Ababa’. The Amharic text on banknotes of both issues is constant as: በአዲስ፡ አበባ። The change of spelling was not due to an error, but rather to the change in convention of spelling ‘Addis’ from ‘Adis’ over a period of time.

            There is no difference to the artwork on the banknotes and almost no change to the colours used on the notes. An exception is the back of the 500-thaler note, which has differing colour schemes. On the back of the note issued by the Bank of Abyssinia, there is a vertical band of orange, with bands of purple either side, and the purple bands are flanked by grey. On the notes issued by the Bank of Ethiopia, the colours are reversed, so the central band is grey with purple bands to either side and these are flanked by orange.

            The new notes were issued in denominations of 5, 10, 50, 100 and 500 dollars (SCWPM Nos. 7 to 11) and initially prepared in the following quantities:

$5 20,000
$10 15,000
$50 11,000
$100   10,000
$500 2,400

The serial numbers for each denomination were again assigned a fractional prefix, with each denomination assigned a letter of the alphabet. Unlike the notes of the Bank of Abyssinia, the order of the letters has been reversed, so the assigned letters are:

All notes were payable on demand and backed in full by gold reserves, foreign currency, money held in foreign banks, and a range of bills and drafts.

            On 1 June 1933 a 2-dollar note (SCWPM No. 6) was introduced[18], bearing the double effigy of Emperor Haile Selaisse and the Empress Menen Asfaw[19] (Figure 9). It is not known how many of these notes were initially prepared, but the serial number prefix is always F/1 and the highest recorded serial number[20] suggests 50,000 were issued. Of interest is the change in spelling of Addis Ababa in Amharic on this note. The modern spelling of አዲስ፡ አበባ፡ is used, with the left-most character of the old spelling (በ) no longer used.

            Despite the monetary reform, the banknotes of the Bank of Ethiopia received little use; just as the notes of the Bank of Abyssinia had made little impression in the economy. Presumably used by merchants and traders, the notes circulated mainly in Addis Ababa, Gondar and Harar. By the 1930s the acceptance of paper money by the Ethiopian people had improved, compared to ten years earlier. By November 1931, shortly after the Bank of Ethiopia was established, the issue of banknotes had reached $1,740,000 but apart from their use in Addis Ababa and on the railway, they had not greatly penetrated the rest of the country. Evelyn Waugh, the English writer, reported the Bank’s office at Dire Dawa took a 3% discount for cashing the notes.[21] However, for people who preferred to use the notes of the Bank of Ethiopia for large transactions, they no longer had to hire men and donkeys to carry loads of Maria Theresa Dollars.

            Interestingly the construction of the railway from Djibouti to Addis Ababa during the late nineteenth century and the early twentieth century saw the introduction of French coins from French Somaliland, which became accepted in the region through which the railway ran. These coins disappeared during World War I, but were replaced by banknotes issued by the Banque de l’Indochine, which apparently remained in use until the Italian invasion in 1935.[22]

            A new issue of coins, in nickel and bronze, was placed into circulation on 12 July 1933 but they had less success than the banknotes. By the mid 1930s these coins were still disdained by the population. Despite the intention to remove Maria Theresa Dollars from Ethiopia’s economy, the trade coins remained in circulation to the greater detriment of the new coins and to the lesser detriment of the banknotes. While merchants, businessmen and traders might be convinced to use the new currency, villagers and townsfolk generally did not accept the instruments of the monetary reform.

            In identifying reasons why banknotes might not have been popular with the villagers, John Spencer relates the tale of itinerant traders who visited Addis Ababa with produce from the interior.[23] Arriving with donkeys loaded with produce, they sometimes returned to their villages with the proceeds of their sales in banknotes wrapped in their garments. During the rainy season the natives waterproofed their garments with butter and the banknotes stored in their garments absorbed the rancid butter on the journey home. On return to their village the notes were often stored out of sight, but not out of reach of inquisitive and hungry rodents, eager for the butter-soaked banknotes.

Italian Occupation

In 1935 Italy invaded Ethiopia and in 1936 annexed the country. Shortly after, Italy established Italian East Africa, by incorporating their colonies of Eritrea and Italian Somaliland with Ethiopia. Initially, the Italians replaced the note issues of the Bank of Ethiopia, and all notes circulating in Italian East Africa, with the metropolitan lira of Italy; this being mandated by Royal Decree Law No. 1371 of 2 July 1936 and coming into effect on 15 July 1936.[24] Under this decree, Maria Theresa Dollars were no longer legal tender and were to be withdrawn and replaced by the metropolitan lira. Although no exchange facilities were established for Maria Theresa Dollars, because of the intrinsic value of the Maria Theresa Dollars a black market was established to exchange the silver coins for Italian lira; although illegal, the rate is reported to have been 1 Maria Theresa Dollar to 10 lira.

            The Italians later re-introduced the MTD after trade diminished following the introduction of the Italian lira. Not only was the MTD elevated to legal tender status, the Italians also began minting the coins from dies they purchased in Vienna in 1932.[25]

            The Bank of Ethiopia was shut down very soon after the Italians occupied Addis Ababa. Initially, the banknotes and coins issued by the Ethiopians remained in circulation without interference by the Italians. Later, an Italian law dated 10 August 1936 (published in the occasional newspaper Giornale di Addis Abeba) declared the Ethiopian small-change coins would remain valid until 31 December 1936 and the banknotes issued by the Bank of Ethiopia would circulate only until 15 October 1936. After the nominated dates only the Bank of Italy could accept Ethiopian banknotes and coins. [26]

            A later decree published around 25 October in Giornale di Addis Abeba, stated the law had been amended and the Ethiopian nickel coins were to lose their legal tender status on 31 October. Thus a rush to exchange the coins commenced, but the limited time to exchange the coins was exacerbated by an Italian public holiday falling on 28 October and because the Ethiopian coins (and notes) could only be exchanged at the Bank of Italy in Addis Ababa – nowhere else in Ethiopia. This resulted in many Ethiopian banknotes and coins being available on the collector market for years afterward.

            As an indication of the Bank of Ethiopia notes being available on the collector market, nine notes of one bundle of 500-thaler notes have been recorded at various sales and transactions over a number of years. Always graded in UNC or aUNC, the notes fall in the serial number range of 1511 to 1538. Other denominations in EF to UNC have appeared regularly over time[27], although perhaps their appearance in auctions and sales is now less common.

            While the metropolitan lira initially circulated in Ethiopia, Italy later decided to introduce a series of notes specifically for use in Italian East Africa. Notes were prepared with the same design as the notes of the regular Italian issue, but colours were changed and imprints added to the margins. Dated 1938 and 1939 the notes were prepared in the denominations of 50 (Figure 10), 100, 500 and 1000 lire and slowly introduced into Italian East Africa during the late 1930s. The new notes circulated with the Italian notes previously issued but the new issue had become a small percent of the total notes in circulation by the time the British occupied the territory in 1941.[28] A large proportion of the notes prepared for Italian East Africa were never issued in Africa[29].

            While the Italian bank notes were an occupation issue, which circulated after the conquest of Ethiopia, it is what happened after the Italian occupation which is of interest in this study; for, in the turmoil of the war, above the cut and thrust of military movements, a different stratagem was being played out for the control of influence in Ethiopia. While the British and the Americans were allies against common foes during the Second World War, both sought to exercise influence in the post-war environment. As the War moved towards its conclusion, the interests of each ally came into conflict as each nation undertook to gain the dominant influence in Ethiopia.

British Occupation

As the British forces moved into Ethiopia in 1941 they brought with them a supply of notes issued by the East African Currency Board (Figure 11). These notes were intended to purchase supplies for the armed forces and to pay army personnel. With the British occupation also came Barclays Bank (Dominion, Colonial, and Overseas), which provided banking services to the army. The bank opened in Addis Ababa on 1 July 1941, taking over the premises previously used by the ‘Fascist Banca del Lavoro’.[30] While Barclays Bank also provided banking services to the commercial interests in Addis Ababa, the British bank was not used by the Ethiopian government.

            The British had not anticipated the need for an occupation currency in Ethiopia, which it later recognized as a necessity in other occupied territories; but an occupation currency was needed. There was no possibility of maintaining the Italian lira in Ethiopia, as the easy availability of this currency in the international markets meant a black market could easily be established in Ethiopia should the British adopt the lira. Further, at the time the British occupied Ethiopia, Italian currency was circulating only in northern Ethiopia, where Italian influence existed to the greatest extent, and in Italian military camps; not in other parts of Ethiopia.[31] Importantly, the British did not have reserves of the lira to support it as an occupation currency.

            During the war against the Italians the British had paid Ethiopian guerrillas in Maria Theresa Dollars, which were minted at the Royal Mint and later in India.[32] However, the rapid conquest of the Italian-held territories meant that many of the Maria Theresa Dollars minted for this purpose were not used and thus the coins became available for use in occupied Ethiopia. The British decided to re-establish the Maria Theresa Dollar in Ethiopia until such time as a new currency could be established.

            In lieu of a specific occupation currency, arguments were put forward by the military administration for the introduction of the East African shilling as the occupation currency; but authorities in London initially opposed its use in Ethiopia.[33] However, given limited options and its ready availability, the shilling was ultimately introduced into Ethiopia and other occupied Italian territories at the urging of General Cunningham and Sir Phillip Mitchell.[34] The British, aware of the preference in Ethiopia for Maria Theresa Dollars, were surprised at how well the East African shilling was accepted in Ethiopia. Acceptance of the currency was accelerated by the British permitting full convertibility between the shilling and the Maria Theresa Dollars, which were both made legal tender. While people initially converted the banknotes of the East African Currency Board to the trade coins, they soon preferred to carry the less bulky banknotes once they became confident in their convertibility. Although East African banknotes were plentiful, there was a lack of small denomination coins, so the British resolved to retain Italian lire as small change in Ethiopia.

            As Italian currency was not allowed to be used to pay taxes or purchase supplies, the Italian notes soon traded at a discount. This situation changed when the British permitted the Italians to deposit their money in the Italian banks, which were still operating in Ethiopia[35], or with the Custodian of Enemy Property prior to their removal to internment camps. The Italian banks had previously been instructed by Italian authorities to destroy all banknotes in their vaults in excess of 15 per cent of their deposits in the event of occupation by the allies. While this was done in many locations, it was not universally achieved. With some notes destroyed and others deposited with banks and the military authority, Italian currency soon diminished in circulation.

            While tacit approval had been given to the circulation of the metropolitan lira in Ethiopia, the notes prepared for Italian East Africa were shunned by the Italians who remained in Ethiopia. As the notes were not legal tender in Italy, there was no benefit for Italian expatriates to acquire them and the notes soon became a source of embarrassment to the Italians who remained in Ethiopia.[36]

            After operating under British approval for some months, it was decided to close the Italian banks in Ethiopia. This decision was apparently driven by the Ethiopians who wished to remove remnants of the Italian occupation. However, the British were reluctant to close the banks because of the number of Italians still in the region, so they decided to move the banks. Depositors were given the opportunity to remove their deposits by 31 December 1941 or identify themselves as account holders to the British. Accounts which were not identified were placed under the control of the Custodian of Enemy Property at Asmara in Eritrea. The banks were closed in Ethiopia on 14 February 1942 and by 25 March 1942 all ledgers, accounts, cash, and staff had been transported to Asmara. Thus, the Italian banks were removed from Ethiopia to Eritrea where the lingering influence of the Italians was of less concern to the local population.

            The British had liberated Ethiopia but continued to fight the war in many theatres. Believing they should maintain a military administration in Ethiopia while the war continued, they soon faced international condemnation for failing to hand back power to the government of Ethiopia, one of the first countries to be freed from Italian occupation. Subsequently, Britain announced it would welcome the reappearance of an independent Ethiopian state. To this objective, an Agreement and a Military Convention was signed between the British and the Ethiopians on 31 January 1942, which gave limited powers to the Ethiopians and wide powers to the British.

            Under the Anglo-Ethiopian Agreement, the British maintained control of the ‘Reserved Areas’ and the Haud district, which were adjacent to British Somaliland, and the rest of the Ogaden (of which the reserved areas and the Haud were a part). The British claimed war-time necessity required their continued administration by the British military. However, like the Italians before them[37], the British believed the Ogaden should be a part of Somalia, having a predominantly Somali population. The British appear to have sliced off the Reserve Areas and the Haud from the Ogaden because these were used as the winter grazing grounds of the Somalis of British Somaliland. The implication was the British would withhold these territories from Ethiopia in future negotiations, later incorporating the Reserved Areas and the Haud in British Somaliland and incorporating the rest of the Ogaden with Italian Somaliland[38] to create a ‘Greater Somalia’. As the future of an independent Ethiopia grew more certain, the British offered to give Ethiopia part of Eritrea in exchange for the Haud and Ogaden, in order the British might create Greater Somalia and expand British Somaliland, but this offer was rejected by Haile Selassie. The creation of Greater Somalia was never achieved, but elements of the British fought for this concept for twenty years, alienating the Ethiopians who opposed the objective.

            Great Britain’s relationship with Ethiopia was complex, due to varied opinions on Ethiopia amongst British officials, government departments and politicians. There was a strong camp of British opinion which had opposed the return of Haile Selassie to Ethiopia as Emperor.[39] Many who supported this view belonged to the military administering Ethiopia after its liberation. This camp was aligned with those who saw Britain maintaining influence in the Horn of Africa, extending its tutelage from East Africa to Egypt. At the end of World War II, the British controlled Tanganyika, Kenya, Uganda, Italian Somaliland, British Somaliland, Eritrea, Ethiopia, Sudan and Egypt. Some British politicians believed all these countries might remain part of the British Empire in the post-war era. Others, including Clement Atlee[40], believed the days of the Empire were numbered and they sought a different future for these nations.

            The British promulgated separate regulations for the Reserved Areas, including financial administration. While the Ethiopians insisted on setting a fixed parity between the Maria Theresa Dollar and the pound sterling in Ethiopia, in the Reserved Areas the British removed the parity in June 1942 and on 30 June 1942 Egyptian currency and the Indian Rupee ceased to be legal tender[41]. From this date the East African shilling became the sole legal tender in the Reserved Areas.[42]

            On 31 October 1942 several proclamations were issued in order to stabilize the war-time currency of Ethiopia. These proclamations appear to have been issued by the Ethiopian government under direction of the British, as they enforced existing British policy introduced during the military occupation. Proclamation No. 31 of 1942 sought to limit the transfer of foreign currency or valuables out of Ethiopia, by limiting such transactions to ‘authorised dealers’. In this decree, the foreign currencies are identified as Maria Theresa Dollars, East African and Italian currency.[43] However, in ‘A Proclamation to Define Legal Tender’[44], only the Maria Theresa Dollars and East African Shillings were nominated as legal tender for the payment of any amount.[45] Legal Notice No. 10 of 1942, issued on the same date[46], decreed ‘One Maria Theresa Dollar shall be equal to 1.875 East African Shillings’. The Proclamation to Define Legal Tender allowed for the dealing of Italian currency at fixed rates, with one Maria Theresa Dollar equal to forty-five Italian lire and one East African shilling equal to twenty-four Italian lire. Restriction was imposed on the Italian lira under the Proclamation to Define Legal Tender. Nobody could demand payment in lire and the Italian currency could not be used ‘in payment of any tax or due’ after three months of the proclamation, except for amounts of ten lire or less.

            While the Emperor paid lip service to the arrangements wrought between his government and the British, he did not follow the regulations he promulgated or his agreement with the British to convert his government’s accounting to East African shillings. The Emperor continued to pay out Maria Theresa Dollars rather than East African shillings and all his accounts remained in Maria Theresa Dollars. Although the Emperor forbade the exportation of local currencies and severely restricted imports, the slow leak of Maria Theresa Dollars outside the country limited the number of Maria Theresa Dollars available for circulation. Ultimately, the Ethiopian troops had to be paid in East African shillings, due to a lack of the large silver coins.[47]

            The attitude of the Emperor to financial matters frustrated the British, although he in turn appeared frustrated through not understanding financial matters and by not receiving adequate instruction from his own advisers. Despite the British requirement to maintain the Italian lira as coins for small change, the Emperor insisted on withdrawing the Italian currency from circulation. As he didn’t understand the British financial policy, he accused the British of undermining him or of not making funds available.

            Part of the problem in establishing financial and currency controls was a lack of an educated Ethiopian middle class which might supply personnel to organize the financial system in Ethiopia. The lack of skilled personnel is illustrated in the following passage from a report by Colonel Babington Smith to the War Office:

Mr. Press of the National Bank of Egypt recently gave me the names of two clerks whom he had employed in Ethiopia who might be useful to the financial adviser for office work. I forwarded these names to Stafford, who answered that while he would be glad to employ them this was not possible since one was now a Deputy Governor and the other Chief Treasurer and Accountant to the Government.[48]

The lack of understanding of the advice given to them by the British meant the Ethiopians soon perceived the British as exploiters who only served their own interests, rather than regarding them as capable administrators[49]

Dissatisfaction with the British

The dissatisfaction Haile Selassie and his government had with the British was generated for many reasons over a long period of time. The British had recognized the Italian occupation of Ethiopia in 1936 and while they had given the Emperor refuge in Britain, he was not recognized or accorded the position of a head of state in exile.

            On the liberation of Ethiopia the British had not wanted him to return to government and many British politicians and military advisers sought to undermine his authority[50]. The British then assumed a military occupation of Ethiopia and initially sought little consultation with the Emperor. When the emperor appointed his first cabinet, the British refused to recognize it as a government, recognizing the ministers only as advisers. The British appropriated or dismantled much of the infrastructure established by the Italians, including some factories, thus weakening the economy on which the Ethiopians expected to rely. White South African soldiers were posted in Addis Ababa and they sought to maintain a colour bar introduced by the Italians.

            While claiming they had no intention of establishing a British protectorate in Ethiopia, the British ensured the Ethiopians could make few decisions without having them authorized by British occupation authorities. The failure of the British to give the Ethiopians their independence brought a rebuke from the Americans in June 1941, who claimed the British were seeking to establish a protectorate in Ethiopia.

            Even after the Agreement and Military convention signed in January 1942 the Ethiopians had limited control of their own destiny. However, while on one hand they complained about the lack of control, they were keen to maintain the flow of money the British were providing as a subsidy to the Ethiopians. The subsidy was worth millions of pounds a year.

Search for a New Currency

Under the Anglo-Ethiopian Agreement, Ethiopia had to consult the British on all matters relating to currency and this clause became extremely important in the ensuing years. The clause read:

Article IV (d) In order to facilitate the absorption into Ethiopian economy of the funds to be provided … and to promote the early resumption of trade between Ethiopia and the surrounding territories, His Majesty the Emperor agrees that in all matters relating to currency in Ethiopia the Government of the United Kingdom shall be consulted and that arrangements concerning it shall be made only with the concurrence of that Government.

            At the time the Anglo-Ethiopian Agreement was being signed, the Controller of Finance and Accounts (in the British military administration) discussed with the Emperor of Ethiopia a proposal for a currency board to issue a new currency and the proposal was accepted in principle by the Emperor.[51] In February 1942 the Controller Finance East Africa Command reported on several interviews with Haile Selassie. The Emperor expressed satisfaction with British assistance to date and raised the matter of a future currency in Ethiopia. The Finance Controller expressed the view that nothing could have been done to date, due to difficulties in the physical creation of the currency and issues on administrative matters. The Emperor asked that work commence on a new currency, in light of the long delays anticipated in the introduction of a new currency.

            The Emperor and Finance Controller agreed a new currency should not be tied to the silver dollar and the Finance Controller suggested the introduction of an Ethiopian pound linked to the East African pound. Some discussion ensued on how the pound should be divided, with the suggestion the sub unit be equal to a shilling. The Emperor opined the pound should be divided into one-thousand units, as opposed to the two-thousand units of the East African pound.

            When the Emperor asked how the issue of currency might be managed, the Finance Controller referred to the proposed currency board and the emperor concurred without reference to the creation of a State Bank or a bank of issue. When pushed on the matter of the location of the currency board, the Finance Controller stated the location was of less importance than the composition of the Board, although London was suggested as the location.

            The sub-committee in London, investigating the Ethiopian currency board and associated financial matters, was chaired by Sir Bertram Hornsby. The Emperor took particular interest in Sir Bertram and was pleased he was involved with the sub-committee. The Finance Controller recommended Sir Bertram be on a currency board and suggested to his London counterparts that activity commence with the establishment of the currency board while the Emperor was amenable to the suggestion[52]

            With the early agreement of the currency board proposal, the British began planning for its implementation. In a transition stage the board would accept East African or other sterling currencies, but not MTD or lire. It was suggested to the Ethiopians that notes be produced in denominations of ¼, ½, 1, 5, 10 and 50 pounds, utilizing the plates manufactured for the former Bank of Ethiopia notes, with suitable changes to the text on the notes. If this was not suitable, suggested designs should be forwarded by the Emperor and specimen designs returned.

            However, no sooner had the Emperor agreed to a currency board, than rumors arose of the Emperor establishing a central bank under the control of Mr. Collier. Having previously described the founding of the, now defunct, Bank of Ethiopia as one of his greatest achievements[53], the Emperor decided he would establish a new Ethiopian national bank in liberated Ethiopia. The British saw this suggestion as misdirected, as Ethiopia’s economy was so underdeveloped that a central bank would be of little use.

            Lord Rennell[54], noting the keenness of the Emperor to introduce his own currency and Ethiopia’s dependence on the MTD, suggested the Emperor should be encouraged to support the East African currency as its use would wean the people from the MTD and pave the way for his own currency at a later date. He should also support the East African currency because the British might decide to sell their stock of MTD and the Emperor would then be paid only in East African currency.[55]

            Political jousting was clearly underway, with the Ethiopians seeking to introduce their own currency at the earliest possible time, but the British, while in agreement, appeared none too active in getting the project underway. Yilma Deressa[56] wrote to Colonel Stafford[57] on 9 March 1942 noting Lord Rennell had agreed to the introduction of the new currency and the currency board, but the Ethiopians would like to receive notification of progress.[58] The committee under the chairmanship of Sir Bertram Hornsby had been examining the matter of the proposed currency board and on 31 March the proposal was sent to British authorities in Ethiopia. A summary of the proposal stated:

            The War Office approached the matters of an Ethiopian state bank and a new currency separately. They saw little reason to establish a bank while Barclays (Dominion, Colonial and Overseas) continued to provide banking needs. However, they saw the need for a new currency, as maintaining the MTD was undesirable and useless for external trade[60]; supporting the use of the Egyptian pound meant there would be problems in small change; the East African Currency Board had limited reserves (although probably enough to support circulation in Italian Somaliland); supply of sterling was possible but was fraught with complications; and the Indian rupee was a real option. The War Office was keen to introduce a currency denominated in lira (although this would probably lead the metropolitan lira to trade at a discount). [61]

            The Emperor acknowledged the monetary situation in Ethiopia was unsatisfactory and Ethiopia urgently needed a stable currency. The Maria Theresa Dollar remained the only currency accepted by the farmers and local traders; while British personnel and Ethiopian officials were paid in East African shillings. In order to acquire basic foodstuffs and services, the shillings had to be changed into Maria Theresa Dollars. The demand for Dollars led to the depreciation of the shilling. Once worth 1.875 shillings to the Dollar, the Dollar soon traded at 3 shillings and where the pound once purchased 10 Dollars, it later bought only seven Maria Theresa Dollars.[62]

            The Emperor found it unsatisfactory the proposed currency board and the signatories of the notes were to reside in London and the Ethiopian on the Board (the Minister in London) would not be an expert in financial matters. The Ethiopians wanted the body controlling their currency to be based in Ethiopia, although they accepted in the immediate war-time conditions this might not be possible and the matter addressed later. As to the proposal there be three members of the Board (two British and one Ethiopian representative) this should be raised to five members of which the additional two would be a representative appointed by the Governor of the State Bank of Ethiopia (yet to be established) and one by a suitable independent authority, such as the American Ambassador in London (with both representatives agreed by the British Government).[63]

            The Emperor also objected to the replacement of the MTD entirely, stating it should circulate alongside the new currency. Five years of Fascist occupation had not shaken the rural population’s faith in the currency and it was unlikely a new currency would see it easily replaced. In light of the desire to maintain the MTD, objection was also given to the section of the law which stated the currency board would ‘control currency in Ethiopia’, with the Ethiopians asking this be changed to: ‘control currency issued by them in Ethiopia’.

            The Emperor declared his desire the new currency be called ‘Yethiopie pound’, the quarter unit as ‘roub pound’ and the half unit as ‘ekkel pound’. The word ‘milleem’ will be introduced into the national language to describe the one-thousandth sub unit of the pound. The desired currency units were:

Iron 1 mil, 5 mils (not 2), and 10 mils
Aluminium-Bronze  25 mils, 50 mils
Notes ¼ pound, ½ pound, one pound, £.Eth.5, £.Eth.10 (not 50), £.Eth.100, £.Eth.500

            The Ethiopian government wished to submit suggestions regarding the design for the notes and coins, and it was requested entirely new designs for the notes be prepared and existing plates for the Bank of Ethiopia not be utilized.[64] An interesting counter opinion to the naming of the currencies was reported several years later, in March 1945. When the Ethiopian Vice Minister of Finance confirmed to a British official the proposal for new Ethiopian currency was for a paper dollar to be called ‘Ya Ethiopia Birr’ valued at 2 shillings and divided into ‘Alada’ silver token half dollars supplied and minted under lease lend.[65] (Ethiopian banknotes issued from 1976 were denominated in ‘Birr’ in English.)

            The Bank of England supported most of the Emperor’s suggestions, but they balked at nominating a representative from the state bank to sit on the board (as the state bank had yet to be established and therefore could not be referred to in law) and at nominating an American. In lieu of an American, the Bank of England suggested the British could nominate a fifth person to be approved by the Emperor.[66]

            After initial support for the proposed currency board, in October 1942 the Emperor recanted. When the Emperor was pressed for a resolution about the currency law, a response was received stating the proposed law setting up the creation of a currency board was not acceptable to the Emperor’s Council of Ministers. A revised proposal was presented by the Ethiopians whereby the currency board would be set up in Addis Ababa, with the Emperor to appoint its members and approve its regulations. The board would establish a committee in London to advise and to perform such work as striking and printing of currency. The State Bank was to be the agent of the currency board and to establish an issue department.[67] Communicating this advice to London, it was also noted designs for the new currency had been presented by the Ethiopian government and were being forwarded to London.

            While negotiations with the British had been progressing at a slow pace, the Ethiopians had been developing other plans. The long-desired establishing of a state bank had been progressing and by October 1942 Mr. C.S. Collier[68] had been appointed Director-designate of the State Bank of Ethiopia. He prepared a draft charter for the new bank, which embodied many of the powers and facilities of the former Bank of Ethiopia. Under the draft proclamation which appeared in the Ethiopian gazette, the capital of the new bank was to be $1,000,000 but will only be drawn on when required for business. While the draft proclamation provided for the formation of a government bank, the rules for its operation were to be determined by the Ethiopian Ministry of Finance. The former Banca d’Italia building was prepared for the new bank.[69] The first meeting of the directors of the State Bank was held in December 1942 but by the end of the year there were still no statutes under which the Bank was to operate.[70] The State Bank of Ethiopia ultimately opened for business on 15 April 1943 and on the same day Barclays Bank (Dominion, Colonial and Overseas) closed their offices. Barclays held a policy of operating only in British territories and evidently decided in December 1942 the Addis Ababa operation contravened this policy[71]; but they allowed the operation to continue until the State Bank opened its doors.

            The Emperor continued to joust with the British over the development of financial frameworks in Ethiopia. The British saw the Ethiopian situation as a mess, which the Ethiopians were doing little to address. One year after the liberation, the Ethiopians had yet to create a budget. Stafford reported Ethiopia’s yearly revenue was £2 million, but they were hoping to spend £23 million just on the military. When challenged as to the financial wisdom of this, the Emperor countered by stating the Italians had spent £15 million on the military. The British were also concerned about the ability of the Ethiopians to manage the investment of funds held by the State Bank, should it become established; reinforcing their desire for a currency board.

            The Emperor, as well as wishing to establish a monetary authority reflective of an independent nation, was also chasing funds from the British. In explaining the benefits of a currency board, the British had held up the Iraq Currency Board as an example of what a currency board could achieve. When the emperor asked how much money the British had given to the Iraq Currency Board when it was established, he was surprised to learn the British had contributed nothing.[72]

            While negotiating with the British on the matter of the currency board, the Emperor continued nurturing other plans; with the British oblivious to the reasons for the many delays orchestrated by the Emperor in establishing the currency board. Having decided against the currency board and determining the British were unlikely to accommodate their aspirations for a national currency, the Ethiopians turned to the Americans. As the United States was not a colonial power in Africa, the Emperor believed the Americans would not follow a colonial agenda and the Emperor’s positive experience with Everett Colson must have carried some weight in his decision to approach Britain’s ally. Although Haile Selassie wished to pursue contact with the Americans, he was thwarted by the British, who not only claimed precedence under the 1942 Agreement, but who also controlled communications in Ethiopia. Despite these limitations, the Ethiopians made contact with the Americans without the knowledge of the British.

            In May 1943 Yilma Deressa, Vice Minister of Finance, attended the World Food Conference in Virginia and he managed to hold meetings with the U.S. Departments of State and Treasury and later with President Roosevelt. During these discussions the Ethiopian desire to implement their own currency and to replace Mr. Collier with an American as the head of the State Bank were canvassed. This initial contact led to negotiations which were ultimately successful, with George A. Blowers being nominated to take on the role of governor of the State Bank of Ethiopia[73] and it was agreed a new currency would be introduced with the assistance of the Americans.

            In July 1943 the British Embassy in Washington reported the engagement of a US banker as the General Manager of the State Bank of Ethiopia.[74] An investigation by the British in Addis Ababa found Collier knew nothing of this development and the British expressed doubt as to the validity of the claim, as Collier had previously made known he wanted no Americans on his staff. It was also doubted the Emperor would go against the wishes of Collier.[75]

            Blowers arrived in Addis Ababa on 24 September 1943 while Collier was in Aden on business, and Blowers was unwilling to take up his post until Collier returned.[76] By early October Stafford (British Financial Advisor to the Emperor) had learned of Blower’s appointment and advised his counterparts that Blowers had previously been the manager of the Firestone Bank in Monrovia[77], but Stafford believed Blowers was relieved of the position because he was unable to get on with the natives.[78] A report from the British Embassy in Washington stated Blowers had been the advisor to the Liberian delegation at the Food Conference in Hot Springs, Virginia, where the Abyssinians had approached him with an offer to run the State Bank of Ethiopia, which he accepted. The British delegation at the Conference found him friendly.

            Collier returned to Addis Ababa on 23 November and was immediately asked to stand down from his position at the head of the Bank of Ethiopia and become Ethiopia’s Auditor General.[79] With Blowers now in charge, the British began to learn of other developments. First, the British were asked by the Ethiopians whether they would object to the US providing silver on a lease lend[80] agreement; this request being made due to the provisions of the Anglo-Ethiopian Agreement of 1942 (clause 4) whereby the British had to be consulted on matters relating to currency. In querying why the Ethiopians wished to obtain silver, they learnt of the advanced plans of the Ethiopians and the Americans to introduce a new currency.

            In addition to 5,430,000 ounces of silver which were to be minted into half dollar coins, notes in the following denominations were being printed:

500 dollars 8,000
100 dollars 10,000
50 dollars 100,000
10 dollars 2 million
1 dollar 10 million

There were also copper coins being minted, expressed in cents of a dollar to be minted in the following quantities:

25 cents   10 million
10 cents 25 million
5 cents 16 million
1 cent 15 million

            Only silver 50 cent coinage was to be supplied and minted under lease lend. The cost of engraving and printing the banknotes, amounting to $200,000, was to be paid from the British Treasury allotment to Ethiopia of 350,000 US dollars. The need to pay for this printing and the reluctance of the Ethiopians to reveal their plans was thought to be a factor in Ethiopia’s decision to buy no textiles from the United States (for which the money was allocated by the British), thereby releasing US dollars for purchase of currency which would otherwise be earmarked for cotton textiles.

            The British understood the banknotes were being printed under the direction of the National City Bank of New York, when they were in fact being printed by the Security Bank Note Company. How this arrangement came about is unclear. According to Spencer[81], Yilma Deressa negotiated with the US Treasury for the preparation of the dies and minting of the coins at the US Mint in Philadelphia, and the preparation of the lithographic plates for printing the banknotes. Undoubtedly Blowers was being consulted in these matters and it is likely he introduced Yilma Deressa to officials of the Treasury. Possibly, Blowers’ links with the National City Bank of New York (see footnote [77]) had caused the British to suspect this channel was being utilized in the production of the bank notes.

            While it is possible a tender was opened for the production of the banknotes for the State Bank of Ethiopia, it is more likely the Security Bank Note Company won this contract through the contacts of Bill Hunt[82], the larger-than-life director who had dragged the company from obscurity to become a major player in the world of security printing. Hunt had a number of significant contacts in the U.S. government[83] and it is probable these contacts served him well in securing the contract for these notes.

            It is apparent the Security Bank Note Company had been actively seeking a commission for the production of Ethiopian banknotes for some time. Within the archives of the American Bank Note Company (successors to the Security Bank Note Company) there were examples of artwork (Figure 12 and Figure 13) developed by the Security Bank Note Company for notes to be issued by the Ethiopian currency board.[84] That the Security Bank Note Company went to some effort to prepare designs for currency board issues, which were proposed some time before plans for the State Bank were considered, suggests they had some involvement with Ethiopian officials for a period prior to Yilma Deressa’s visit to the USA. It is also possible the designs bearing ‘Imperial Ethiopian Government Currency Board’, prepared by the Security Bank Note Company, were always intended for the State Bank, but were prepared with this title so the British would believe they were being prepared for the proposed currency board. The designs submitted to the British by the Ethiopians in October 1942, and sent to London, might well have been prepared by the Security Bank Note Company. (Although this predates the visit of Yilma Deressa to the USA in May 1943, when he engaged Blowers, the Security Bank Note Company may well have been seeking work, prior to this date, once the currency board was first proposed.)

            Stafford (British Financial Advisor to the Emperor) discussed the Ethiopian proposal for lease lend silver with Caldwell, the US Minister, and Blowers. Stafford believed neither of them knew about the silver business, but Blowers told Stafford that Yilma Deressa informed the US State Department the British Advisers had approved the scheme. The Ethiopians had accompanied their claim for the silver with a draft note stating Ethiopia had no currency of its own and wished to introduce the silver fifty cent coins to replace the MTD, East African currency and Italian lira. The only silver on hand, it was stated was 2 million dollars. The draft, as analyzed by Stafford and Howe, was nonsense and could not have been written by anyone with knowledge of the currency position in Ethiopia. Howe was at a loss to understand how the US State Department accepted the draft note prepared by the Ethiopians. [85]

            The stand taken by US authorities is incredulous and by not discussing the matter with their British allies in the midst of a war, they appear duplicitous. The American attitude might be summed up in an excerpt from a report by Secretary Hull to President Roosevelt following a meeting between Yilma Deressa and officials of the US State Department[86]:

It is true, as stated by Mr. Deressa that following the occupation of Addis Ababa by British forces in April 1941, Ethiopia was administered by the British as enemy occupied territory… (On) the face of available evidence the British during this period administered the affairs of the country with a heavy hand…

After adding the situation had deteriorated, not so much due to the harsh treatment, but more by the low quality of officials appointed by the British, Hull continued:

The Ethiopians are therefore determined, as the Emperor and several cabinet officials made abundantly clear to our consul in Asmara… to rid the country as soon as possible of British personnel.

            By May 1944 the minting of coins was underway and the engraving of the banknote plates had begun. The new currency was expected to be delivered in April or May 1945 and the backing of the currency was understood to be at 75 per cent. The intrinsic value of the silver in the fifty-cent coins was intended to assist with the acceptance of the new banknotes, which were prepared in the denominations of 1, 5, 10, 50, 100, and 500 dollars. It was also reported the State Bank had been exporting MTD to Aden, suggesting they planned to issue token paper dollars at 2 shillings backed by sterling.[87] While waiting for the new currency to be delivered, Blowers and the American advisers[88] to the Ethiopian government commenced writing the legislation for the new monetary system.

            The notes and coins arrived in Ethiopia in April 1945 and Blowers was prepared to issue the new currency in May, with notes and coins distributed to the various branches by the end of the month, but the Council of Ministers had not prepared the proclamation for the introduction of the new currency. Blowers, talking to the British administrators in Addis Ababa during mid 1945, said he was unaware of the details of the proclamation, but he stated all deposits held in banks would be converted from East African shillings to Ethiopian dollars at the rate of two East African shillings to the new Ethiopian dollar. Blowers also believed the East African shilling would remain legal tender until advised otherwise by the Minister of Finance. The MTD would remain an additional currency and it would remain undisturbed for some years.[89]

            Blowers’ information proved accurate. The new notes and coins were ultimately introduced on 23 July 1945, which was the birthday of Emperor Haile Selassie. Released apparently without warning, the proclamation introducing the notes was dated 29 May 1945. Under the proclamation, the East African shilling was to remain legal tender for six months or until otherwise announced and the MTD was to be treated as silver bullion.[90]

            The first banknotes of the State Bank of Ethiopia consisted of six denominations. The notes had common design features, with black intaglio printing dominating the front of each note – a portrait in profile of Emperor Haile Selassie is at the left; Amharic text at the top of the notes indicates the issuing authority and the denomination, as well as numerals indicating the value of the note; and at the bottom the text is in English, also identifying the issuing authority. Each banknote has a vignette in the centre and a different coloured underprint. The back of each note carries a vignette of the Lion of Judah and the colour of each back differs from note to note.

            The new currency was well received and circulation of the notes and coins was successful. In issuing the new Ethiopian dollars, East African shillings were withdrawn and the banknotes flown to Nairobi where they were accepted by the East African Currency Board[92]. The redemption of the notes and coins, some twenty-two million shillings, led to a sterling credit held in London. This credit accounted for about sixty percent of the backing for the new Ethiopian currency.

The Wheel Almost Turns a Full Circle

With the issue of the new currency, the role of the British in the financial affairs of Ethiopia had been supplanted by the Americans – the banknotes were printed in America, the coins were minted in America, and the governor of the State Bank was an American. George Blowers remained governor of the State Bank of Ethiopia until July 1949 when he was replaced with another American, Jack Bennett. Bennett remained governor until late 1952, after which there is a gap of about one year before Walter H. Rozell Jr. took over in December 1953. Rozell appears to have left before a successor was announced, as the bank was run for some time by the Managers, I. Menezes and A.G. Nasser. The replacement governor, appointed in December 1956 was George Peters Rea, who remained for just under three years, leaving the Bank on 15 November 1959. Ato Manasse Lemma was appointed Acting Governor on 20 November 1959 and later became governor. The first series of banknotes issued by the State Bank of Ethiopia initially carried the signature of George Blowers and later carried the signatures of Jack Bennett and Walter H. Rozell Jr. (see Figure 17).

            To indicate the number of notes issued with each signature, the following range of serial number prefixes have been recorded, with each serial number prefix believed to represent one million notes.[93] (The missing prefixes are certain to exist; it is simply not known to which signatory they belong.)

  Blowers Bennett Rozell

The 50, 100 and 500 E$ all used prefixes of only AA. High and low serial number prefixes recorded by Wilhelm Eglseer are:

  Blowers Bennett Rozell
50 E$  000,001 to 027,000 unknown unknown to 531,182
100 E$ 000,001 to 069,756 125,169 to 224,588 282,946 to 508,667
500 E$ 000,001 to 031,538 038,667 to 082,556 086,340 to 132,300

            Interestingly, the notes of the second series, issued in 1961 (and not covered in this study), carry the signature of George Peters Rea even though he had left the bank some two years earlier; thus indicating the notes were under preparation some years before their release. Only the 100-dollar note of the second issue carries the signature of Ato Manasse Lemma, signing as ‘Acting Governor’.

            With the departure of George Peters Rea and the introduction of the State Bank of Ethiopia’s second issue, the dominance of America passed. There was, however, one lingering aspect of American influence. On 18 September 1949 the British pound was devalued and the question arose as to whether the Ethiopian dollar should remain linked to the British pound – now in a weakened state – or linked to the US dollar. Jack Bennett decided it was better for the Ethiopian dollar to be tied to the US dollar and the change was made.

            Apart from the link to the US dollar, little was left of the American influence at the State Bank. After Rea left the Bank, the new governor was an Ethiopian and the new banknotes were printed by a British firm – Bradbury Wilkinson and Company of New Malden, Surrey. Perhaps the British had been forgiven their past sins by this contract being awarded to the British firm responsible for the earlier banknote issues; perhaps the Americans had not been as disinterested as the Ethiopians had hoped; or perhaps the Ethiopians were just being pragmatic. Although the British company were once again printing Ethiopian banknotes, the wheel had not come a full circle, in that the principal bank in Ethiopia was not run by the British, as it was before the Americans exerted their influence – now it was being run by Ethiopians.

            In closing this study there is an interesting story to relate on the tender for the notes of the second series of the State Bank of Ethiopia, which was won by Bradbury Wilkinson. These excerpts are from letters written by an Assistant Commercial Officer in the British Embassy to the Commercial Relations and Exports Department at the British Board of Trade in January and February 1958.[94]

I had hoped by this time to have been able to give you and Export Services Branch the result of the tender for new Ethiopian banknotes… The decision has still not been announced. It is imminent of course – but it has according to our information been imminent for many weeks! From what follows you will see why I think it wise to send you this report on the proceedings as far as they have gone…

The value of the first printing will be approximately £150,000, and the business is expected to bring in an income of many hundreds of thousands more to the successful contractor, since a contract of this kind involves a note-issuing authority in recurring expenditure over a number of years. The present rotes are printed by the Security Banknote Company of the United States.

The battle – for that is what it virtually became – has been hard fought, and is still on. Pretty near every legitimate and quite often near-illegitimate tactic has been brought into play. The matter became almost frighteningly embarrassing recently since it was the three British contestants (Waterlow, Bradbury Wilkinson and De la Rue) who were, from all we have observed and were told, the most deeply involved in the quite unsavoury squabble. There has been intrigue allegedly involving Ethiopian Imperial Court circles, the manufacture of rumours affecting the reputation of the firms concerned and altogether too much back-door activity. Information about the respective bid prices and other details “leaked” at an early stage. From then on Assistant Minister of Finance, Menassa Lemma, and probably other members at the selection committee (although we think Mr Rea, the American Governor of the State Bank should be excepted) have relentlessly played the bidders one against the other, until the original bid prices no longer supply the basis for the adjudication.

Waterlow’s representative, Mr. R.W.S. Morrison, who has had much experience in banknote contract negotiations and appears to be one who would normally be capable of restraint, said at one stage that if Bradbury Wilkinson were to get the contract he would ensure that what he described as their despicable methods received full publicity in the United Kingdom press. He also intended to give a “full report” to the Board of Trade.

Bradbury Wilkinson were reported to have “slid in” at an advanced stage in the proceedings an alternate bid which greatly reduced their original tender, and put them back in the running.

De la Rue’s representative, a Mr. Peter Luypit, who also has much experience, has spent many months and much money in Addis Ababa. We have seen a great deal of him and he has involved us and anyone else he could find in his frantic efforts to assure the selection committee and the highest circles that his principals were in every way reliable despite all that he said was being viciously circulated about them. He decided, so we understand, to emulate the Bradbury Wilkinson manoeuvre. Although he was thought to have “put his foot in it” at least in the way he went about it, his new figure was nevertheless considered by the committee.

All the others were in due course approached behind the scenes with the suggestion that they might wish to consider doing likewise. It appears that most of them, including the supposedly discredited Security Banknote Company, have “toed the line” and are still in the race. Waterlows, however, according to Mr. Morrison, steadfastly declined to take part in this odd line of bargaining on a deal that set out to be a competitive tender on recognised lines. They might, he told us, have been ready to reconsider their prices if completely new bids had been called for in a proper manner from all concerned.

This comparatively “correct” behaviour of Waterlows typifies their overt attitude in the struggle; but it is fairly clear that they were involved in the spreading of scurrilous propaganda which sought to make capital out of De la Rue’s apparently lax security controls. (You will know that some hundred thousand or so of their East African 20 Shilling notes were stolen from De la Rues and put into spurious circulation, some of them in this territory).

Another unfortunate incident, which was probably an outcome of the strains of these high-powered negotiations, was that the manager at Mr. Morrison’s hotel lodged complaints with Her Majesty’s Consul about Mr. Morrison’s ill-tempered behaviour in the public rooms. He is alleged to have been most abusive to the hotel staff. Mr. Morrison shortly afterwards announced his intention to return home. He said he would look in before leaving, but failed to do so. We were unable therefore to assess the final state of his mind in this matter on his departure.

The present position is one of anti-climax. It was being put about that the decision would be made known immediately following the Ethiopian Christmas holiday (January 7), and that Bradbury Wilkinson (having been asked to reconsider their price yet again) had strong reasons to be confident of success. But that has now passed. We have even heard it mentioned in authoritative quarters that the committee will probably decide to share the honours more or less equally! We now hear that the country is running so short of stocks of currency that they will need to ask the Security Banknote Company to continue printing and carry on as before. And so it goes on!

It has been a campaign in which British business may we think even yet benefit substantially, but there is no doubt that British interests in a wider and deeper sense have been in danger of being harmed. We shall be glad to see the end of it.

Would you please refer to my letter… of January 10 about the tenders for new Ethiopian banknotes.

I was informed this morning by the Governor of the State Bank that it has been decided “to negotiate a contract with” Messrs. Bradbury, Wilkinson and Company Ltd. It seems from a later conversation I had with a responsible Bank official that there may be significance in this form of words, since the terms are to some extent conditional. The general opinion is, however, that Bradbury, Wilkinsons have got the job.

My chief reason for sending you my letter under reference when I did was to give you warning about the declared intention of Mr. R. M. S. Morrison of Waterlows to denounce Bradbury, Wilkinsons in the United Kingdom press and give a “full report” to the Board of Trade, if Bradbury Wilkinsons got the contract. (Please see the last paragraph on the first page of my letter.)

Since January 10 there has been an almost complete lull, with all the United Kingdom representatives back in London. Mr. Peter Loopuyt of De la Rue returned here recently; but Mr. Morrison has not been back, and I do not know whether he will now carry out his threats.

I agree with you that the evidence is probably too nebulous to justify a protest to the firms concerned. It would be best I think to let sleeping dogs lie, if Mr. Morrison does.

The official with whom I spoke later today did, incidentally, volunteer the view that Bradbury Wilkinsons’ methods were far from being praiseworthy; and also that Waterlows’ behaviour had been the best of the bunch.

I am sending a copy of this letter to Export Services Branch, African Department of the Foreign Office, and also to Her Majesty’s Treasury, for their information. P.S. The local agent of Bradbury Wilkinsons now confirms that the terms have been settled.


I am thankful for the valuable review of this study in its later stages by Michael Walker (IBNS Member 3331). I am deeply indebted to the detailed information, research and repeated reviews of this article over several months by Wilhelm R. Eglseer (IBNS Member 5472); whose input has made this article so much the richer.



This article was completed in November 2013
© Peter Symes