Although the continued prosperity of Palestine resulted in the accumulation of a $25,000,000 surplus by the Palestine Government at the end of 1935, the Government invested less than $50,000 in Palestine securities out of some $17,000,000 of the surplus invested.
This was revealed by the Palestine Government in its report to the League of Nations on the administration of the country and drew criticism from members of the Mandates Commission.
M. Rappard, member of the Commission, pointed out in an analysis of the report during the Commission’s sessions that the Palestine Government received a much lower rate of interest on its investments than it paid on the Palestine loan and asked whether the Government could not convert some of its holdings.
Attorney General H. H. Trusted, who represented the Mandatory Power for Palestine at the sessions, admitted that the Palestine loan was now considerably above par and a premium would have to be paid in conversion operations.
Despite the attractiveness of the Palestine issue, he declared that there was no possibility of investing Government surpluses in Palestine itself.
It was of benefit to Palestine, he said, to possess certain outside securities. Money could, of course, be spent in the country, but if it were to be invested, the Administration felt it was better to obtain the widest measure of security possible.
According to the financial report of the Palestine Government, available balances and loan funds are invested in British Guiana, Ceylon, Jamaica, Kenya, Natal, Nigeria, Northern Rhodesia, Straits Settlements, Trinidad, Uganda, Australia, Canada, India, Newfoundland, New South Wales, New Zealand, Queensland, South Australia, Ulster, Victoria, West Australia, British municipals, and Federated Malay States issues.
Most of these pay from 2Â½ to 4 per cent, although a few issues pay as high as 5 per cent. The Palestine loan issue pays five per cent.