BEFORE his 1979 overthrow, the late Shah Reza Palavi of Iran bought and installed in the Tehran Mint the same kind of presses that his American patrons used to print the US greenback.
Some members of Congress and independent experts now believe that the Islamic radicals who ousted the shah might have turned those presses into a weapon against their sworn foe, using them to produce the best phony $100 bills ever seen by the US Treasury Department.
''They [Iran] had the presses, they had the expertise, and they probably had the plates from the East Germans,'' says Rep. Spencer Bachus III (R) of Alabama, chairman of a subcommittee of the House Banking Committee that has begun investigating the counterfeiting problem.
The so-called Supernote is the king among reams of foreign-made phony US currency that have been growing in size and sophistication. It is being spurred by advances in printing technology, the post-cold-war expansion of global banking, and the spread of organized crime and terrorism.
Even Mr. Bachus believes that Iran is not acting alone in printing and circulating the Supernote. ''I think it's being printed in several locations. I'm convinced that they are only one of many countries that are involved,'' he says.
Those who follow the counterfeiting problem worry it will worsen, possibly endangering confidence in the US currency.
''We often forget that confidence is the life blood of the economy,'' says House Banking Committee chairman Jim Leach (R) of Iowa, who notes that up to 70 percent of the $390 billion in circulation is held outside the US.
White House officials say they are also deeply concerned.
In a statement to Bachus's panel on Tuesday, Secret Service director Eljay Bowron said 37 percent of the $14 million in phony bills detected in the US in 1990 was printed abroad. The figure rose to 69 percent of $32.4 million last year. During the three-year period beginning in October 1990, an average of $31.2 million in forged US bills was seized or passed outside the US. By 1995, the total was $231.3 billion.
Despite the increase in foreign-made counterfeits, Mr. Bowron asserted there is no threat as yet to the US economy because the amount ''is an extremely small fraction of ... legitimate currency in circulation.''
Other experts are not so confident. They say an accurate assessment is impossible because of a shortage of Secret Service agents overseas, spotty detection efforts by foreign banks and governments, and other problems.
US officials ''don't have enough information to really conclude what the extent of counterfeiting really is,'' asserted JayEtta Hecker, director of foreign trade issues for the Government Accounting Office (GAO), a congressional investigative agency.
Mrs. Hecker presented to Bachus's committee a new GAO report on foreign counterfeiting of US currency. It warned that ''certain foreign counterfeiters are becoming extremely sophisticated and are producing very high-quality counterfeit notes that are more difficult to detect than any previous counterfeits.''
Hecker said that with time, counterfeiters should even be able to defeat the security measures being incorporated in a new $100 bill that will go into circulation later this year.
The Supernote was first detected by a bank clerk in the Philippines in late 1989. The Clinton administration declines comment on allegations of Iranian involvement in its production, but the Secret Service began coordinating a multi-agency effort to eradicate the forgeries in 1992.
The report quoted a State Department official as saying that as part of the effort, the administration had asked unnamed Middle Eastern governments ''to provide a show of good faith in improving relations'' by locating the printing plants and individuals who were producing the bills. While these governments were not specifically implicated, ''at a minimum, they were believed to be tolerating this illegal activity within their borders,'' the official said.
Bachus says the unnamed governments failed to satisfy the US request and that President Clinton personally had threatened to impose sanctions against them.
''There have been conferences, there have been international meetings [in which] the president of the United States has threatened ... to retaliate,'' he says.