THE TRANSFER AGREEMENT: THE DRAMATIC STORY OF THE PACT BETWE

"Science," the Greek word for knowledge, when appended to the word "political," creates what seems like an oxymoron. For who could claim to know politics? More complicated than any game, most people who play it become addicts and die without understanding what they were addicted to. The rest of us suffer under their malpractice as our "leaders." A truer case of the blind leading the blind could not be found. Plumb the depths of confusion here.

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25. Race for Credibility

E.S. HOOFIEN in London did everything possible to assist Landauer in supplanting Sam Cohen. On July 26, he sent a cable to Heinrich Margulies, Tel Aviv manager ofthe Anglo-Palestine Bank, instructing Margulies to convince the German consul to rescind his endorsement of Sam Cohen. [1] Even as Hoofien was cabling Margulies in Jerusalem, however, Consul Wolff was traveling to Tel Aviv to speak with Hanotaiah and others about Sam Cohen's authority, whether Hanotaiah could indeed distribute RM 3 million worth of German goods, and whether Cohen's transfer plan was cashless. The Hanotaiah people answered Wolff as honestly as possible. First, Hanotaiah had no plans to distribute merchandise. Second, they had no plans to reimburse the emigrants with much cash once they arrived in Palestine. Major deductions would be made for construction materials, land, and other charges. [2] When the transaction was complete, the emigrant would possess little more than the land, some equipment, a farmhouse, and probably some sheds. These answers -- which substantiated the criticisms against Cohen -- were going to be hard to handle in the consul's report to Schmidt-Roelke.

Hoofien's July 26 cable to Margulies reached Margulies the next morning. Margulies immediately telephoned Consul Wolff, who agreed to discuss the situation. Margulies left Tel Aviv for the consulate at once. [3]

During the ninety-minute meeting, Wolff said that in March, Berlin expected to lose the boycott battle in Palestine. Sam Cohen changed all that by presenting his anti-boycott plan. Wolff added that Cohen was the first to suggest transfer ideas. After Hanotaiah received its first permission in mid- May, competitors came to the consulate to complain. Wolff said he answered them all the same way: "Why did you come so late? Somebody has outrun you." [4]

Now that Hanotaiah possessed the monopoly, warned Wolff, Palestinian competitors must not interfere. The consul called the crosscurrents against Cohen a dangerous game. Margulies answered that he represented the Anglo- Palestine Bank, not any group for or against Hanotaiah or Sam Cohen. The bank's position was that it did not understand how it had been suddenly dragged into the arrangement since it had no relationship with Cohen or Hanotaiah, and had never authorized Cohen to speak on its behalf. [5]

Wolff assured that Cohen had not spoken in the bank's name, but that Cohen did have a letter from the Zionist Organization stating his transfer deal would be under "national supervision." Also Ussischkin, head of the Jewish National Fund, had endowed Cohen with official authority to transfer JNF monies from Berlin to Palestine. So, asked Wolff, was this sudden declaration about the illegitimacy of Sam Cohen a mere "sting" against Cohen, or was the intent to disrupt the transfer itself? [6]

Margulies denied any negative intentions regarding Cohen or the transfer. He wanted to state only that Cohen had no connection with the bank, and the bank was therefore free to choose whether to join the transfer project or not. At this Consul Wolff asked why might the Anglo-Palestine Bank not participate? Margulies answered that the bank did not want to associate its good name in so vital an enterprise when the partner was a little private company, "which after all is not exactly the Deutsche Bank." Here Margulies sensed that Wolff was trying either to persuade him or at least to discover the real fiscal reasons behind Anglo-Palestine's hesitation. So Margulies allowed himself to be nudged in that direction. [7]

Wolff did as expected, explaining that he had concluded early on that the original RM 1 million permission granted to Cohen was too small: "I said to myself that in comparison to the big sums which are being mobilized for the Jews, one million marks is cat shit, and therefore I urged the sum to be increased." But with the new 3-million-mark ceiling, and unlimited renewals, what was the bank's objection? [8]

Margulies shot the demerits off in quick succession. A: Hanotaiah's financial capability was limited. B: Hanotaiah could not even guarantee proper land purchases. C. A transfer limited to plantation investments was unacceptable, especially since recent immigrants were learning such investments were risky. D. Hanotaiah could never generate enough plantation sales even to approach the RM 3 million figure. [9] Hence, whatever immigrants would be receiving in exchange for their blocked marks would be vastly inflated. [10]

Then Margulies talked plain politics. Whoever was going to traffic in great quantities of German goods, said Margulies, was exposing himself to the worst kind of public criticism before the whole world. The outcry would be too much for anyone private company. If the arrangement were under the aegis of official Zionist bodies, that outcry might be muffled. But even still, the protests might be so strong that official entities might also retreat from the project. [11]

Margulies then carefully shifted to a gentle threat that in view of the obstacles, only Anglo-Palestine could make the transfer work. In so many words, he declared that if the bank did withdraw, leaving only the German Temple Bank and Hanotaiah, the project would indeed be doomed. Wolff's facial expression changed as he comprehended Margulies' ultimatum. The consul became a bit threatening himself and said, "Then the prospects would be very pessimistic .... The Jews would not get out of Germany." [12]

This was a moment not for diplomats but for hard bargainers. Margulies put up a good front. He nonchalantly agreed yes, "prospects really are pessimistic." With that, Margulies said it was now up to the bank's board of directors to approve or disapprove Cohen's project, and in Margulies' personal opinion, the decision would be no. He would of course stay in touch with the consulate. [13]

Margulies hurried back to his office to type a full report to Hoofien. "I am now quite positive," Margulies wrote, "... that the Consul General ... has skillfully profited from circumstances, using Sam Cohen as a 'scab' to create a fait accompli, that is, before the Zionist institutions could decide whether they would tolerate any breach of the boycott." Wolff wanted to show Berlin how fast he could conquer the boycott in Palestine. Now that all sorts of problems had developed with the consul's choices, suggested Margulies, Wolff "does not want to let his men fall and thereby exchange them for the more bothersome and much less sure partnership of the [same] institutions" he sought to avoid in the first place. [14]

"We have made a great mistake in not getting in touch with the Consul earlier," Margulies told Hoofien. But, added Margulies, "I believe I can change the Consul's stand considerably .... He is urgently interested, and in Berlin they understand that such a key situation ... is worth far more than three million marks. If we do not want to let the whole thing fall or to fight it, and if we want instead to really attain a really 'reasonable' arrangement and to participate, then two things are necessary: you [Hoofien] must begin to act on this matter in Berlin; and I must negotiate here. The negotiations here are very important ... because if we show the Consul our readiness to cooperate, he would probably abandon his exclusive pro-Hanotaiah position." [15] Margulies raced to make the airmail bag to London and then cabled a distilled version of his letter to Hoofien just in case. [16] That done, Margulies called for an immediate conference with the Conference of Institutions which had authorized Cohen a month before.

Even as Margulies was typing his letter to Hoofien, Consul Wolff was preparing his report to Berlin. This was going to be complicated. He would have to tell the painful truth, but in such a way as to not make himself look either foolish, incompetent, or worse -- in league with Mr. Sam Cohen.

Wolff's July 27 report turned out to be a confusing review calculated to protect all his prior endorsements of Cohen, while carefully qualifying them to correspond to the newly known facts. The report began: "I have no reason for changing ... what I have said in previous reports." Wolff then admitted that Hanotaiah was indeed not the only settlement firm in Palestine, but added that Cohen was the first to suggest a plan and that the plan had been endorsed in writing by the Jewish Agency and other Zionist institutions. It was not until after Cohen secured his "monopoly-like agreement" that "Hanotaiah's competitors ... realized that they too should conclude an agreement." [17]

The consul then reaffirmed the need to stand by the Hanotaiah monopoly because "it places Sam Cohen in a position of exerting a calming influence upon boycott tendencies .... For instance in London, from where yesterday he sent me a telegram 'My work is progressing satisfactorily in London also.'" [18]

It was easy to paint Hanotaiah's critics as jealous competitors. But explaining away Cohen's intentions on reimbursements and his inability to distribute merchandise would be harder. Wolff's tactic was simply to leave some questions unanswered and confuse the issues with contradictory statements. For example, he readily conceded that emigrants would not receive their money immediately, but then asked why that was even relevant since the whole idea was to convert German Jewish deposits into agricultural wares. He similarly admitted that Hanotaiah was incapable of distributing general merchandise, but then asserted that Hanotaiah never was interested in such merchandise. Wolff then simply reaffirmed unswerving support for the Hanotaiah agreement, "even if it results in a monopoly."

Perhaps Consul Wolff thought he could pretend that the question of cash reimbursements was not really a valid issue. Perhaps he thought that his open acknowledgment of Hanotaiah's inability to deal in general merchandise would imply that Cohen might organize the merchandise distribution on his own outside Hanotaiah proper. The fact that Wolff followed his candid admissions with a staunch reinforcement of the Hanotaiah agreement strongly suggested to Berlin that the problems were no real obstacle to a successful transfer.

As for the Anglo-Palestine Bank, Wolff wrote that he sensed Hoofien was orchestrating the bank's withdrawal, which would obviously "make the transaction for the Jews more difficult." The consul related his warning to Margulies that withdrawal would only result in a total "cancellation of this and similar projects." [19] In other words, Wolff was advising transfer through Hanotaiah, or no transfer at all. Wolff added that if Jewish groups propagandize against Hanotaiah, "We should stifle this by clearly letting the Jewish Agency know that by sabotaging the Hanotaiah project, it will not smooth the way for other agreements." [20] Wolff's report summed up with a warning he expected the Foreign Ministry to pass on to Hartenstein: "By sabotaging the Hanotaiah plan the Jews would only cut offtheir noses to spite their faces by making further agreements impossible." [21]

Consul General Heinrich Wolff was the Third Reich's man in Palestine. He had been handling this question from the outset. He was the closest man to the Zionist political scene. Consul Wolff had openly admitted there were problems with the project, but insisted these problems should not be allowed to impede the agreement. There was no other authority on Palestinian affairs the Foreign Ministry could turn to. Howsoever problematic his advice seemed to be, Consul Wolff was to be relied on. Schmidt-Roelke could make no other decision.

Mr. Sam Cohen and Hanotaiah Ltd. would remain in full control of the transfer.

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The April First anti-Jewish boycott (Courtesy of the National Archives)

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Jewish War Veterans picketing a store selling German goods. (Courtesy of Jewish War Veterans of the U.S.A.)

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Colonel Morris Mendelsohn (Courtesy of the Jewish War Veterans of the U.S.A.)

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Thousands turned out for the Jewish War Veterans' March 23, 1933, anti-Nazi parade, inaugurating the boycott against Hitler. (Courtesy of the Jewish War Veterans of the U.S.A.)

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Rabbi M.S. Margolies steps to the microphone to chant a prayer for God's intervention during the March 27, 1933, Madison Square Garden protest rally. The chant was broadcast around the world. (Courtesy of the National Archives)

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Stephen Wise addressing a protest rally at Battery Park, May 10, 1933. (Courtesy of the American Jewish Congress)

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Bishop Francis T. McConnell (left) and Stephen Wise (right) lead interfaith protest at Madison Square Garden rally. (Courtesy of the National Archives)

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The May 10, 1933, protest sent a clear message to the Third Reich. (Courtesy of the American Jewish Congress)

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Georg Landauer, director of the German Zionist Federation, worked for an emigration agreement between the Third Reich and the Zionist Organization. (Courtesy of the Leo Baeck Institute, New York)

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Siegfried Moses, president of the German Zionist Federation, helped Sam Cohen gain entry to negotiate a private agreement with the Reich. (Courtesy of the Leo Baeck Institute, New York)

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Historic King David Hotel luncheon held with Chaim Weizmann, Chaim Arlosorofl (front row, fourth and fifth from left), and Arab leaders, April 8, 1933. (Courtesy of the Central Zionist Archives)

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E.S. Hoofien's nervously scribbled notes from the Hotel Steiner lobby while waiting to be questioned about the Transfer Agreement before the Political Committee at the 18th Zionist Congress.

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Note passed to Hoofien during questioning before the Political Committee at the 18th Zionist Congress.

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Arthur Ruppin (middle) and Georg Landauer (right) attend a meeting of a Palestine School for recently transferred German Jewish children, circa 1935. (Courtesy of the Leo Baeck Institute, New York)

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Mr. Sam Cohen (Courtesy of Esther Aharony private collection)

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Chaim Ariosoroff (Courtesy of the Central Zionist Archives)

Late in the afternoon, July 27, 1933, as Consul Wolff was reinforcing Cohen's credibility, Heinrich Margulies was continuing his campaign to debunk Cohen once and for all. Margulies went to the Conference of Institutions. Although Landauer, the Anglo-Palestine Bank, and Yakhin had renounced Cohen, the Conference's authority was still intact. Since the Conference included all the key commercial associations plus the Organization of German Immigrants, their endorsement was still a mighty one. Its members were interested primarily in trade with Germany. And Hanotaiah and Cohen had promised to bring plenty of it under the most advantageous financial conditions. In fact, since the merchandise was actually being paid for in Germany from blocked emigrant accounts, all sorts of lenient payment forms could be arranged. However, Margulies was able to convince the businessmen that whatever commercial benefits and windfalls they hoped to realize from the transfer would be wholly endangered if the project were controlled by Hanotaiah, a private concern that was truly in competition with all the business entities present. [22]

A member of the Organization of German Immigrants, Mr. Ney, conceded that his group had been rethinking the Hanotaiah plan. A special Organization subcommittee had adopted an alternative plan, which Ney read aloud. It involved founding a tiny corporation of ambiguous purpose that, like Hanotaiah, would transfer assets by merchandise. Ney at first claimed the emigrants would be reimbursed. Not with money, though, but with some sort of nonmarketable investments in new companies. The conferees quickly saw this as just another version of Hanotaiah's plan, but instead of giving emigrants inflated property, they would be given shares in perhaps worthless companies. The undisguised pilferage was so transparent to the businessmen gathered and to Ney himself that Ney actually became embarrassed over the scheme. Ney withdrew the proposals, which Margulies termed "grotesque," just minutes after they were introduced. [23]

Ney's scandalous proposal was strong proof that only a proper trust company, supervised and controlled by the Anglo-Palestine Bank, would deliver the benefits of transfer without abusing the interests of the German Jews. Neither Mr. Sam Cohen, Hanotaiah Ltd., or any other private entity could be trusted -- only the Anglo-Palestine Bank.

Just after Margulies left the conference session, he cabled Hoofien in London: "RESOLUTION CONFERENCE ... BANK SHALL UNDER ALL CIRCUMSTANCES ACCEPT ACTING AS AGENT WITH OR WITHOUT HANOTAIAH TEMPLE BANK STOP SECONDLY ASK YOU INTERVENE BERLIN VIEW CONTINUATION ALL TRANSACTIONS WITH BANK STOP THIRDLY ASKED ME CONTINUE CONCENTRATING WITH CONSUL GENERAL STOP PLEASE INSTRUCT ME INFORM CONSUL ... ONLY CONFERENCE PLUS BANK SHALL BE AUTHORIZED NEGOTIATE." [24]

Hoofien's response was immediate. "INFORM CONFERENCE BANK PREPARED TO ACT STOP YOU MAY INFORM CONSUL ACCORDING YOUR CABLE." [25]

On July 28, Margulies also tried to bring the Jewish Agency to the anti- Cohen team. On July 17, the Conference of Institutions had cautiously approached the Jewish Agency with a copy of the Conference's resolutions on trade with Germany. The object then was to secure the Agency's sanction. But the Jewish Agency had refused at the time, undoubtedly reacting to the Conference's usurping its authority. Now Margulies was asking the Agency -- in the name of the bank that was itself owned by the Zionist Organization -- to specifically authorize the Conference of Institutions as the sole legitimate negotiator of the transfer. Margulies also wanted the Agency to notify Consul Wolff that Sam Cohen was indeed not acting on its behalf. For compelling evidence, Margulies presented copies of Landauer's original July 19 transfer memorandum, and various letters and cables illustrating that the problem almost entirely revolved around Sam Cohen. The Jewish Agency promised a quick answer. [26]

That same day, July 28, Margulies received in the mail a copy of Landauer's July 21 letter to Hoofien describing the shock he received at Hartenstein's office when he learned of Sam Cohen's new deal. The letter quoted the Hartenstein-Landauer dialogue almost verbatim. It was now clearer than ever to Margulies that the day would be won or lost on the word of Consul Wolff. Margulies sent another note to Hoofien, acknowledging receipt of the Landauer letter and indicating he could now see "that the matter is coming to a head." He told Hoofien he would go back to Consul Wolff to "emphasize more strongly the removal of Sam Cohen-Hanotaiah than I did yesterday, when I was forced to restrain myself." Margulies explained that his tactic would focus on Wolff's false or at least misunderstood endorsements of Cohen -- endorsements "he was now obligated to correct, either of his own volition or in reply to a request for confirmation which the Reich Foreign Ministry would send him." [27]

Margulies, at that moment, was unaware that Wolff had already replied to the Foreign Ministry's request for confirmation, retreating not an inch in his support for Cohen. Nonetheless, Margulies dispatched to Wolff a copy of Landauer's July 19 memorandum, with a short cover note identifying it as the "official" memorandum of the ZVtD. [28]

Then, in a longer letter to Wolff written that day, Margulies suggested that Wolff's exaggerated endorsements of Cohen were about to be unpleasantly exposed. Margulies explained how he had just received a report about the actual conversation between Hartenstein and Landauer, including Hartenstein's request that the Foreign Ministry obtain a "confirmation from the German Consul ... about the authorization of Mr. Sam Cohen." [29]

Margulies was letting Wolff know that he was aware that Berlin was doubting Wolff's original words. Margulies' July 28 letter went right to that issue: "On the basis of our talk yesterday, I was pleased to notice that Mr. Sam Cohen had not declared to you at all that he was the representative ... of our bank, or any other central national institution. It seems to me, then, that the gentlemen at the Reich Economics Ministry have misunderstood your recommendation of Mr. Sam Cohen, and after the explanations which I have received from you, and vice versa, I suppose that you yourself will initiate the correction of this misunderstanding." [30]

Margulies' July 28 letter repeatedly reminded that without the Anglo- Palestine Bank, no goods would be sold, the project would not be trusted by the people, and the entire transfer "would have such minimal chances of succeeding" that German emigrants would have to be advised not to work through Hanotaiah. [31]

Margulies hoped to be sufficiently threatening to compel-Consul Wolff to rescind his recommendation of Sam Cohen lest he endanger Germany's interest and his own credibility. But the suggestion of embarrassment to Consul Wolff, and the promise of a foreign policy and trade fiasco for Germany were all conveyed with cordial language and roundabout phrasing. No threats are taken so seriously as those spoken with a smile. Margulies was smiling in every sentence.

He ended his polite missive: "And you, my very esteemed Consul General ... understand that in this case the unexpectabilities can play a very great role. And these unexpectabilities lay not so much in the hands of those who deposit their money in Germany, but are in the hands of those who must sell the merchandise here.'" Margulies then put Wolff on notice that the Conference of Institutions would soon present a plan for a unified transfer scheme. After presentment they expected the consul to renounce the Hanotaiah plan and endorse the new group. [32]

On July 28, while Margulies was keeping up the pressure on Consul Wolff in Jerusalem, E. S. Hoofien of the Anglo-Palestine Bank in London was planning his strategy for intervening in Berlin. Hoofien was studying the problem when he received a visit from two men: Moshe Mechnes and Mr. Sam Cohen. The Hanotaiah co-owners wanted to discuss details of their transfer, which was to be funneled through an account at the Anglo-Palestine Bank. Hoofien asked them to sit down, and the conversation went right to the conflict. [33]

Wasting no words, Hoofien told them he harbored the greatest apprehensions about Hanotaiah's recent arrangement with the Reich Economics Ministry. [34]

It would have to be reversed. If Hanotaiah would not reverse it of their own accord, the Palestinian community and the Anglo-Palestine Bank would reverse it for them. The logic was simple. If Landauer's ZVtD specifically recommended against the Hanotaiah method of transfer, German Jews would never participate. German Jews wanted a safe and reliable transfer. The least hint of instability would scare them off. Of course, many Jews would prefer the financial risk of transfer via Hanotiah to the physical risk of remaining in Germany. But even these assets would not be usable by Hanotaiah. In order to extract the value of blocked assets, Hanotaiah and/or Sam Cohen would have to sell the merchandise in Palestine. This would never happen. With the Anglo-Palestine Bank, Yakhin, and the Conference of Institutions abstaining from the whole operation, Cohen's transfer would become untouchable. The goods would be boycotted either because they were of German origin or because they represented an outlawed commercial treaty. The Germans would drop the unworkable project and surely rule out any future dealings with Hanotaiah or Sam Cohen, and for that matter with Zionists altogether.

Hoofien, in essence, told Hanotaiah on July 28 that they were the proud possessors of a worthless, exclusive deal, but that there could be a compromise. He conceded that Hanotaiah had every right to conduct its plantation business, but no right to acquire a monopoly. Furthermore, Hanotaiah should not sell merchandise, nor should it be the controlling factor in the transfer with reimbursement to emigrants at its own discretion. Hoofien's compromise was this: First, the Anglo-Palestine Bank would establish a transfer account for Hanotaiah Ltd., but it would be an ordinary account, with the bank assuming no responsibility and stating so openly. Second, the funds processed through the account could pay only for land and agricultural wares -- no general merchandise. Third, Hanotaiah would get no monopoly; the bank would grant identical privileges to competitive plantation companies. Fourth, Hanotaiah must "stick to its role as a plantation company." [35]

Cohen was hearing an ultimatum and it was coming from a bank that embodied the authority of the Zionist Organization. This was a moment of hard choices. All of nothing, or part of something.

Cohen chose something. Mechnes approved. They then handed Hoofien the July 18 transfer decree and asked him to propose any amendments he felt proper. They would return to Berlin and ask the Economics Ministry to ratify the changes. [36]

Mr. Sam Cohen had finally agreed to withdraw. There was no need for recriminations, no need for explanations about all the previous reversals and intrigues. That was all past. Call it bad communications. What was important now was Cohen's pledge to withdraw -- spoken before his partner Mechnes and the head of the Anglo-Palestine Bank with no further possibilities for misunderstandings.

All that remained was for Consul Wolff to switch his recommendation to the new trust company of the Anglo-Palestine Bank and the Conference of Institutions. Margulies was doing everything possible with the consul himself. Hoofien would work on Schmidt-Roelke.

An interagency correspondence was dictated by Hoofien from Anglo- Palestine Bank's London office to Landauer at the ZVfD. This rendered the impression that the two entities regularly coordinated on projects and communicated informally. While the note was addressed to the ZVtD, it was wholly intended for the eyes of Schmidt-Roelke. [37]

Hoofien's correspondence stated, "During the last few days I have heard from you as well as from Mr. Sam Cohen that ... the Reich Economics Ministry will approve certain procedures for transfer of Jewish capital to Palestine ... in such a manner that our bank is to open an account with the Reichsbank into which funds for the credit of Hanotaiah are to be deposited. I have thereupon immediately expressed my surprise to you over ... a linkage between our bank and Hanotaiah without our bank having been consulted." [38]

The note admitted that Hoofien had asked his mangers in Palestine to check on Sam Cohen's activities, authorizations, and any accreditation he enjoyed with the German consul. "Today, I received a reply," Hoofien declared, "which stated -- similarly to the very information I received from Mr. Cohen -- that we had in no way authorized this, that furthermore, the official Jewish authorities had never authorized Mr. Cohen's actions, and that Mr. Cohen had never informed the Consulate General of either. However, the Consulate General has informed our office that it is firmly in favor of a monopoly for Hanotaiah." [39]

Rejecting Consul Wolff's warnings, the correspondence first cited Wolff's words: ''As the Consul General puts it, if we opt out, the matter will proceed without us, with only Hanotaiah and the Temple Bank participating." Hoofien then did just that -- he opted out. He explained, "Hanotaiah is a plantation company and nothing else. Nor is it the only one .... To appoint Hanotaiah as a central point for Palestinian imports from Germany ... would be ... giving it an impossible task. If we were to state that funds are deposited in our account with the Reichsbank and we were therefore participants in the transfer operation, we assume a moral obligation to the German public which we are not prepared to undertake. Will you therefore be good enough to inform the Reich Economics Ministry that we regret to be unable to participate in the arrangement described in the letter of July 18." [40]

After opting out, Hoofien pointed out, "The possibility appears to remain open that the operation be implemented without our participation, as the Consul General in Jerusalem has indicated ... but I doubt very much that it would amount to very much if the German and the Palestinian public finds out that we had seen fit to decline." [41]

As he did with Mechnes and Cohen, Hoofien gave the Reich a respectable way out. He related the entire conversation with Cohen and Mechnes that day, including his offer of working with Hanotaiah so long as they limited their involvement to plantation activities, garnered no monopoly and subordinated to the bank's trust company. Hoofien asserted that both Cohen and Mechnes "told me they are prepared to comply with our wishes in every respect" and willing to ask the Reich to adopt whatever amendments Hoofien felt correct. [42]

What would be correct? "I am prepared to establish in Palestine an agency for handling exports from Germany and to come to an appropriate agreement with the Reich Economics Ministry, if you [Landauer] tell me that the Economics Ministry desires this. I would be prepared to travel to Berlin for that purpose." Hoofien added that just as he was dictating the correspondence, he received another cable from the Conference of Institutions. The Jewish Agency had joined forces with the Conference, thus unifying Zionist support for the Anglo-Palestine Bank's efforts. [43]

Hoofien explained that the Conference "speaks with authority. It is composed of representatives of all leading Jewish authorities ... [and it] informs me it will ask the Consulate ... to consider the Conference along with our bank as the sole representatives of Jewish authorities in Palestine." [44] Hoofien's point: The Anglo-Palestine Bank, the pivotal financial institution, and the Conference of Institutions representing all the important commercial and political entities, all wanted the Hanotaiah agreement changed. Even Mr. Sam Cohen and Hanotaiah now wanted the agreement changed.

Only one man now stood in the way of doing the correct thing. That man was Consul General Heinrich Wolff. Hoofien put the burden on the consul, stating that once the Jewish delegation presented its bona fide authority, "it will of course be up to the Consulate General whether it will comply with this request." He added that if Consul Wolff truly understood the powers represented by the Conference of Institutions, "he will hardly fail to do so." [45]

Hoofien's correspondence to Landauer intended for Schmidt-Roelke was received at the ZVfD's Berlin office on July 31, 1933. Landauer promptly delivered it to Schmidt-Roelke's office with a note attached: "Herewith a copy of a letter addressed to me from London by the Director of the Anglo- Palestine Bank, Mr. S. Hoofien .... While this letter is written in the style of an interagency correspondence, it contains some important information which I do not wish to fail to bring to your attention." Landauer promised to telephone later. [46]

Schmidt-Roelke was confronted that day, July 31, with a thicket of reports, memoranda, and cables about whether Sam Cohen was the man the Third Reich thought he was. But Consul Wolff, the Reich's man on the scene, had investigated all the charges. Wolff reported simple business jealousy as the basis for the sudden criticisms. He recommended in the strongest terms that the Reich honor the Hanotaiah agreement and ignore the criticism. Whatever shortcomings were implicit in the plan would in time be overcome.

But now the head of the Anglo-Palestine Bank himself had written that Wolff had misstated the facts about Cohen. If Cohen himself agreed that the consul had misunderstood Cohen's authority, that would surely settle the matter. Without Cohen's clarification, there was virtually no way to decipher who was correct.

Clearly, the only solution was to bring Cohen and Landauer together with other interested parties to discuss the issue face to face. Schmidt-Roelke instructed one of his key subordinates, Dr. Eberl, to contact Cohen in London, apprise him of the conflicting information and Hoofien's statement that Cohen had voluntarily withdrawn from the transfer. [47] Dr. Eberl's July 31 communication to Cohen, including the full text of the July 28 Hoofien letter, arrived in London the next day.

Late on August I, Sam Cohen wrote back to clarify all questions. "My Esteemed Dr. Eberl: I am addressing this letter to you because you have conducted all negotiations with me and are fully familiar with the subject matter. I have for more than 3-1/2 months spent my entire energies, my capabilities, my intentions, and my influence preparing the groundwork for my project in Palestine. I have worked with equal intensity on the implementation of this project in Prague, Amsterdam, and London. All the influence and connections that I was able to muster and which were accessible to me have made it possible for me to bring this project to fruition despite great obstacles. [ 48]

"Without the Hanotaiah group in Palestine," he continued, "including the farmers, the cooperative societies, industrialists, and merchants, it would never have been possible to find interest for the project. All appropriate authorities in Palestine and London have approved of my project. This purely personal success is begrudged me by dirty competitors and their henchmen. The competition has used every means at its command to destroy the project. Anything they could not accomplish by countervailing arguments and objective proof they tried to do by slander." [49]

If there was any doubt in the Foreign Ministry's mind about Cohen withdrawing from the transfer, or admitting Hanotaiah's inability to execute the merchandise sales, or his willingness to subordinate to the Anglo-Palestine Bank, the next sentences settled the question. Cohen's words: "No objective arguments are possible against my project and against Hanotaiah; it is the only company in the country which can, with my help and collaboration, implement this contract. No bank is necessary for its implementation. Hanotaiah has sufficient capital to do so.... Success is absolutely guaranteed." [50]

Cohen added: "Mr. Hoofien has told me in so many words that he had no intention whatever to destroy this agreement and that he had no objection to it whatsoever. The only reason for his writing that letter [of July 28] to Dr. Landauer was the latter's statement that he could obtain a better agreement. Mr. Hoofien told me that he would assume no responsibility for a possible cancellation of this agreement and that he would charge Dr. Landauer with that responsibility." [51] These were potentially deadly words against Georg Landauer, a German Jew, a man who had stood before the Reich and promised to frustrate-in fact, defy -- economic decrees designed to stimulate employment, break the boycott, and achieve Nazi goals.

At that moment nothing was easier in Nazi Germany than denouncing a Jew for economic sabotage. Such a denunciation -- justified or not -- usually resulted in immediate detention in Dachau without trial. Many such detainees were never heard from again. It was Landauer's good fortune that Schmidt-Roelke was an old-school statesman from the Weimar days. Had Cohen's words been read by an NSDAP kommissar, they would not have been glossed over.

Cohen reminded the Reich of his transfer's central usefulness to them -- the sabotage of the anti-Nazi boycott that was threatening to crack Germany that winter. Cohen's words: "Personally, I wish to emphasize that without the Hanotaiah group and without my intensive efforts and work, it would be impossible to sell any significant amount of merchandise in Palestine during the next six months. I have made my services in their entirety available to you and to the Reich Economics Ministry for the next six months." [52]

Cohen could have hardly been more explicit. Hanotaiah's transfer bore no time limits, no financial ceilings, and indeed was structured to accommodate emigrants for years to come. But both sides knew there would not be years of fruitful transactions if the Reich could not survive the coming winter-"the next six months." As usual, Mr. Sam Cohen selected his words carefully, and emphasized them only with good reason.

Defenses, denials, and derogations recorded, Cohen, however, declined Eberl's invitation to meet with Landauer. [53] It is unclear whether Sam Cohen was actually afraid to return to Germany. He had continually assured the Foreign Ministry he would be available to come to Berlin from London during this period if questions arose. Now at this pressing moment, however, he refused to sit down with Landauer, and claimed to be preoccupied, presumably with transfer and anti-boycott business. "If it were not for the fact that I am presently engaged in negotiations in London in that matter which cannot be postponed," Cohen wrote Dr. Eberl, "I would have come to Berlin for further personal discussions." [54]

Cohen amplified slightly on these pressing London meetings. He claimed they involved Pinchas Rutenberg, who after "long and difficult negotiations" was won over "for my project .... He is the single most influential industrialist and could become one of the largest consumers [of German machinery]. Tomorrow I am to negotiate with Tel Aviv's deputy mayor and hope to enlist him in my plans also." [55] Cohen's correspondence rarely lacked the power of important names and pending breakthroughs. This correspondence was no different.

There is no way to know why Cohen refused to meet with Landauer, but Cohen did write that Moshe Mechnes would be in Berlin and could be called upon for any further meetings. [56] Hence, the decisive confrontation Schmidt- Roelke had hoped for would not materialize. Nonetheless, one more final negotiating session in Hartenstein's office would be needed to resolve somehow the question of who should take possession of the transfer and on what terms. A date was set: August 7, 1933.
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Re: THE TRANSFER AGREEMENT: THE DRAMATIC STORY OF THE PACT B

Postby admin » Fri Jun 26, 2015 6:25 am

26. The Transfer Agreement

THE AFTERNOON of August 7, 1933, the Zionist delegation arrived at 76 Wilhelmstrasse and announced their appointment to a lobby guard who was expecting them. He escorted the group to the Economics Ministry's conference room. They entered one by one: Georg Landauer, director of the German Zionist Federation; E. S. Hoofien, director of the Anglo-Palestine Bank; Arthur Ruppin, Zionist Organization emigration specialist; al1d Moshe Mechnes, co-owner of Hanotaiah Ltd. Hans Hartenstein, director of the Foreign Currency Control Office, courteously greeted the Jewish leaders and did his utmost to make them feel welcome. [1]

Undoubtedly, it wasn't until then that Mr. Sam Cohen was shown into the room. His mustache neatly trimmed, his necktie arranged in a perfect knot, Cohen was looking elegant as always, bearing up well under the circumstances. In his August I letter to Dr. Eberl, Cohen had promised not to attend this confrontation, but that was probably before he learned of Consul Wolff's July 27 report of absolute support. Wolff's report had not been rescinded by the Foreign Ministry, so as the meeting began Mr. Sam Cohen still held the power of the transfer. [2]

The Reich and the Zionist delegation talked for some time. Money. Emigration. Boycott. Regulations. Timing. Public opinion. Boycott. Foreign exchange. Exports. Boycott. [3]

Hoofien and Landauer tried their best to persuade Hartenstein that there would be no successful transfer if it was controlled by Sam Cohen and Hanotaiah. [4] Senator believed that without a viable transfer, the Reich would find no relief from the anti-Nazi boycott. [5] But Cohen's position was that his vast personal connections could accomplish what the official Zionist bodies and even the Anglo-Palestine Bank could not-break the boycott. [6] After all, they were subject to public pressure. As a private businessman, Cohen was not. Mechnes, who had promised to abide by Hoofien's London compromise, only wanted Hanotaiah to be properly included in whatever arrangement was finally approved. [7]

However, Hartenstein was unable to decide in favor of Hoofien and Landauer. He could not overrule the Foreign Ministry and was obliged to create a transfer authority with whichever Zionist group was accredited by Consul Heinrich Wolff. In the Reich's view, perhaps Wolff and Cohen were right: Perhaps public entities could not successfully wage war against the boycott; only carefully placed saboteurs such as Cohen could stop the movement. As far as Berlin knew, Cohen had been instrumental in disrupting decisive boycott activities in London, Amsterdam, and elsewhere. Therefore, even though he was probably convinced it was a mistake, Hartenstein was obligated to maintain the existing RM 3 million agreement in favor of Sam Cohen. Landauer and Hoofien refused to accept this and urged Cohen to relent. But Cohen would not. [8]

As the deadlock continued in Berlin, a corresponding scenario was taking place in Jerusalem. Margulies and a delegation from the Conference of Institutions were meeting with Consul Wolff, urging him to amend his endorsement at once in view of the decisive and final conference under way at that very moment in Berlin. [9] Wolff was unwilling. To reverse himself now would make him look incompetent if not altogether untrustworthy.

The Palestinian delegation continued to plead and pressure. They insisted that Hoofien was the only authorized negotiator, and that the Anglo- Palestine Bank's trust company could be the only transfer entity. The delegation even offered to guarantee Hanotaiah a prominent position within the trust company, if the consul would only broaden his endorsement. [10] Time was running out, but Wolff would not budge.

Thousands of miles away, the meeting in Hartenstein's office dragged on in deadlock. Cohen and Hoofien agreed that a monopoly was necessary for a successful transfer, but each man insisted his side be entrusted with that monopoly. [11] With no progress visible, Hartenstein was undoubtedly preparing to call the meeting to a close.

Meanwhile, in Jerusalem, Consul Wolff bickered stubbornly with the Zionist delegation until they finally said something that changed his mind. There is no record of what sudden convincing argument Margulies and the conference delegates raised. But Wolff was vulnerable within the new Nazi context. He had a Jewish wife and close ties with Jewish organizations in Palestine. He even had secret business dealings with Sam Cohen, including some land the consul had acquired through Hanotaiah. [12]

At exactly 1:30 P.M., Jerusalem time, Consul Wolff sent a telegram to the Foreign Ministry: "FOR REICH ECONOMICS MINISTRY FOR THIS AFTERNOON'S MEETING. IN VIEW OF GROWING OPPOSITION TO SAM COHEN AGREEMENT IN PRESENT FORM ... A COMMITTEE FORMED SOME TIME AGO TO DEAL WITH TRADE WITH GERMANY AND CONSISTING OF PLANTERS, INDUSTRIAL WORKERS, IMPORTERS AND CONSUMERS, HAS TAKEN UP THE TRANSFER MATTER UNDER LEADERSHIP OF ANGLO-PALESTINE BANK. IT BELIEVES THAT IN VIEW OF ITS BROAD REPRESENTATION IT CAN ABSOLUTELY GUARANTEE THE IMPLEMENTATION OF THE TRANSFER PLAN. A DELEGATION VISITED ME TODAY, STATING THAT HOOFIEN HAS BEEN GIVEN UNLIMITED AND SOLE AUTHORITY FOR ... THE TRANSFER PLAN. AN OVERALL UMBRELLA ORGANIZATION IS BEING FORMED. THE COMMITTEE WOULD WELCOME THE INCLUSION OF HANOTAIAH. MY IMPRESSION IS THAT IN VIEW OF THESE DEVELOPMENTS THE TRANSFER PLAN HAS CHANCES FOR SUCCEEDING ONLY ON THAT BROAD BASIS AND AM RECOMMENDING TO SAM COHEN THAT HE JOIN." [13]

At precisely ten minutes after two in the afternoon in Berlin, a messenger from Deutsche Reichspost walked into the Wilhelmstrasse offices of the Reich Foreign Ministry and handed them Consul Wolff's telegram. It was routed to the Palestine desk within the Eastern Department. [14] In another part of the Wilhelmstrasse complex, the Hartenstein conference was nearing a frustrating end. Hartenstein might then have told Hoofien and Landauer that the Economics Ministry reluctantly had no alternative but to stand by the Hanotaiah agreement. But at about that time, the officer on the Palestine desk saw that Consul Wolff's telegram was actually intended for Hartenstein's meeting. He immediately telephoned the message over to Hartenstein's office. [15]

Hoofien, Landauer, Cohen, and the others had not yet left the conference room when the news was brought in. A moment of silence passed as the telegram's contents were noted. It is unknown whether Hartenstein then read the words aloud, or whether he simply handed the handwritten note to Cohen. Whichever it was, Mr. Sam Cohen got the message. [16] He had finally run out of endorsements. Wolff's new recommendation was clear. Cohen was gracious in defeat. He agreed to relinquish his transfer to a trust company to be established by the Anglo-Palestine Bank. Hanotaiah would step back and function as just one of several participating plantation companies. [17] It was over.

Three days later, on August la, Hartenstein issued a revised decree authorizing Hoofien to create two transfer clearinghouses, one under the supervision of the ZVfD in Berlin, one under the supervision of Anglo- Palestine's trust company in Palestine. The Berlin corporation was named Palastina-Treuhandstelle zur Beratung deutscher Juden GmbH-the Palestine Trust Society for Advice to German Jews, Inc. As was the Reich vogue, an appropriate acronym was immediately invented: Paltreu. Corresponding to Paltreu was Haavara Trust and Transfer Office Ltd. in Tel Aviv. Often called Haavara Ltd. for short, this corporation was organized under the Palestinian commercial code and operated by business managers. Its stock was wholly owned by the Anglo-Palestine Bank. [18] Haavara, the Hebrew word for transfer, quickly became a synonym for transfer.

Paltreu and Haavara would each manage two separate accounts or Kontos. Konto I was for existing emigrants. They would deposit their marks into Paltreu's German-based blocked account. German exports would then be sold in Palestine, the proceeds being deposited in Haavara's balancing account. Hartenstein's decree specified that the equivalent of the blocked marks "will be paid out [by Haavara] in cash in Palestine pounds upon request." The transfer would indeed give the emigrants the cash they needed to restart their lives. [19]

Konto II was reserved for so-called potential emigrants or those wanting to invest in Palestine as a Jewish national home. German Jews could voluntarily deposit their marks into this second konto, but they could not be transferred until all the actual emigrant depositors of the first konto had been reimbursed. As such, these potential millions upon millions of frozen reichmarks represented a long-term money pool the Zionists could utilize for capital investments and development projects. Those who stayed behind would continually finance the expanding Jewish home for those who agreed to leave. [20]

Several additional letters of confirmation and procedural refinement were exchanged between Hoofien and Hartenstein in the days immediately after that August 7 meeting. Those several letters were bureaucratically attached to official Reich decree 54/33. Together they became what was to be known as the Transfer Agreement. [21]

After beseeching the supporters and allies of the Jews for decades, the Zionists realized that the moment of transfer would come not from friends but from foes, as Herzl had predicted.

Forty years of struggle to create a Jewish State had come to a sudden and spectacular turning point. For forty years there had never been enough money, never enough land, never enough men. So long as those essential factors were lacking, the Jewish State was also never to be. But in an office at Wilhelmstrasse on August 7, 1933, this all changed. A few men working with telegrams, letters of introduction, images, the power of prejudice and pretense, a few men who saw an opportunity for salvation within the abyss of Nazi injustice, those few men had simply arranged it.

Henceforth when Jews would be threatened, as Jews always were, as Jews always would be, they would have a nation of their own to come home to. A nation no Jew could enter as a refugee or a stranger, a nation all Jews would enter as full citizens.

The price of this new nation would be the abandonment of the war against Nazi Germany. Whole branches of Judaism would wither, but the trunk would survive -- Herzl's words. This one time, this crucial and unparalleled time, the emergency would be used to secure a future, not ransom a past. From this crisis of humiliation, agony, and expulsion would come sanctuary, nationhood, and a new Jew, with a new home to call his own. These few men were willing to make those decisions. Was it madness? Or was it genius?
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Re: THE TRANSFER AGREEMENT: THE DRAMATIC STORY OF THE PACT B

Postby admin » Fri Jun 26, 2015 6:25 am

Part 5: The Will of the Boycott

27. Now or Never


IT WAS one thing for the Zionists to subvert the anti-Nazi boycott. Zionism needed to transfer out the capital of German Jews, and merchandise was the only available medium. But soon Zionist leaders understood that the success of the future Jewish Palestinian economy would be inextricably bound up with the survival of the Nazi economy. So the Zionist leadership was compelled to go further. The German economy would have to be safeguarded, stabilized, and if necessary reinforced. Hence, the Nazi party and the Zionist Organization shared a common stake in the recovery of Germany. If the Hitler economy fell, both sides would be ruined.

David Werner Senator made the Zionist stake in the Reich's economy clear to the Zionist Organization. On July 24, in London, even before the Transfer Agreement was consummated, Senator presented a long, complicated, and confidential memo to the Zionist Executive. His memo outlined just how big the transfer would become. It would be more than just a trust company -- it would become an actual Liquidation Bank, although Senator's memo advised "this name should of course be avoided." Such a large enterprise, Senator suggested, would have to be supervised by a combine of European and American shareholders. [1]

Most importantly, this massive Liquidation Bank would issue development bonds that "would be quoted on the international stock markets -- London, New York, Cairo ... and Jerusalem, if a stock exchange later materializes there." [2] Ultimately, an institution for transfer trading was created in Palestine. It later became the Tel Aviv Stock Exchange. [3]

The development bonds of this Liquidation Bank would provide capital for the Jewish State's infrastructure, just as Arlosoroff and Herzl had envisioned. Because these bonds would be backed up by blocked accounts, Senator raised an unforeseen issue -- the need to stabilize the German mark. Boycotts and bad economics had made the reichmark an endangered currency. The less valuable reichmarks were, the more marks it would take to equal a pound or a dollar, and hence the greater the exchange loss endured by the transferring emigrant. Therefore, to avoid emigrants receiving progressively less, the German government would have to provide a guarantee to keep transfer marks flowing at levels sufficient always to pay interest and principle on the development bonds -- no matter how badly the mark devalued. [4]

These were complicated concepts of high finance that Senator was presenting. They were hard to comprehend and might be harder still to implement. But in paragraph 16 of his memo he estimated just how much money was at stake. The bonds sold against the blocked deposits of German Jews could amount to $ 150 million in just two years. These bonds might require a mere 7 percent interest, with repayment of principle waived during the first five years. Thereafter, the principle would be paid in equal installments over two decades. [5]

The Zionists were suddenly taking charge of a massive store of frozen cash. They could use that cash to create a bank. That bank could raise capital to build the State of Israel through development bonds that would be repaid out of the Palestinian commerce created by the development. Even then, payment would occur under the most advantageous rates. The bonds would be backed up by German Jewish sperrmarks to be stabilized by some hoped-for Reich guarantee of the marks needed for bond repayments, even if the mark devalued due to the deteriorating Nazi economy. Otherwise, the value of a pool of reichmarks, say RM 1 million, could dwindle to virtually nothing.

Senator's July 24 memo admitted that "it would be possible to obtain such a transfer guarantee ... only against certain concessions on the Jewish side.... We might offer. . . certain export facilities for German goods. Such facilities are already being sought with some anxiety by the German government in view of the recent rapid decline in German exports." Here Senator was probably talking about extending exports to the entire Near East, perhaps beyond. Senator also suggested that the Liquidation Bank should actually make development loans to Germany "and thus make possible an increased employment program on the part of the German government." [6]

Senator's memo acknowledged that the Zionists knew just how desperate the Germans were. Senator's words: "From preliminary negotiations ... with the Economics Ministry, we know that special importance is attached to any measure ... to counteract the present tendency of German exports to decline. The German government knows very well from experience during the War, that a decline in exports means not only the loss of orders for a year or two, but that [trade] obstacles ... increase progressively, and that reconquering markets once lost is possible only with great difficulty and expense, and even then only partially." Acknowledging that the boycott had already battered German exports to the breaking point, Senator declared that Zionists could at least "help Germany ... avoid the almost certain rupture of commercial relations." [7]

Reflecting a keen awareness of Hitler's unemployment problem, Senator added, "We know that one of the principal aims of the German government is to provide work for the unemployed." Senator explained that the residual Jewish community in Germany would have little chance to earn a living unless overall employment improved. As such, "We shall have to ... offer the German government some help with their program for providing employment." For example, the Liquidation Bank, in addition to providing employment loans, would itself purchase shares in major German enterprises, such as the railroads. [8]

Senator's long transfer memorandum wasn't the only report the Zionist Organization Executive considered in late July. At about the same time, a second memo came through Leo Motzkin, head of the Committee of Jewish Delegations in Geneva. [9] It spoke not of high finance and long-term loans but of high crimes and long-term damage to the Jewish people of Germany. The report began, "For close on six weeks ... I have been in contact with Jews in all stations of life. Professors, doctors, solicitors, manufacturers and businessmen, young and old, from towns as far apart as Danzig and Aachen .... They one and all affirmed that they were living in a veritable Hell The actual number of cruelties and of violence perpetrated against Jews will never be known. Those reports which have penetrated abroad, are only a small fraction of what has actually occurred." [9]

After listing a series of atrocities, and confirming the utter bleakness of a Jewish future in Germany, Motzkin's report divided German Jewry into five categories. First, the "genuine Zionists," who were quickly leaving Germany without thinking of who would stay behind to organize the exodus. Second, the non-Zionist now hoping to find safety in the Zionist movement. Third, the anti-Zionists willing to go to Palestine if no other place was available, but this group's emigration would be contingent upon taking "German culture, German customs, German manners, and the German language with them." [10]

The fourth category was comprised of establishment Jewry, who "attribute the entire disaster which has befallen German Jewry to the Eastern Jews, who are all Zionists. They do not want to go to Palestine .... [They believe] the Jews in Germany should be satisfied with being considered an inferior species of humanity. The fifth category are the ... German Nationalist Jews. They are not 100 percent but 101 percent German." [11]

The point: Except for the small percent who were genuine or newly converted Zionists, almost all of Germany's established Jews still reviled the Jewish national home and the Zionist philosophy. They were desperate but seemed to prefer a German death to a Palestinian life. However, the report emphasized the "undeniable fact that young German Jewry, even from the fifth category, are turning to Jewish nationalism. What we have not been successful with during 30 years, Hitler has accomplished for us overnight." [12]

The report's conclusion: "The majority of the older generation of German Jewry cannot be moved, they are too deeply rooted in the soil of the country. A large portion does not want to leave. But the Youth are anxious to start a new life as Jews and every effort should be made to rescue them from ... utter destruction." However, the report added that while emigration would save the young, only an intensified international boycott would help the older generation survive in a hostile Reich. [13]

"The boycott of German goods in various countries is having a very material influence on German trade and the effects are undeniably being felt," the report asserted. [And it is] the only weapon which might ... [influence] the present order to restrain the violence of the rank and file." The report recommended that the "boycott be increased and extended. Concentrated action against a few more industries will intensify the already serious economic situation in Germany and will force the present order to change its tactics." [14]

The report presented through Motzkin may have seemed like a reasonable compromise. Transfer the true believers to Palestine. At the same time, continue boycotting to force Germany to curtail persecution of those remaining. Unfortunately, the Third Reich was willing to release any number of Jews for Palestine as a means of expulsion, but it was unwilling to let them remove any of their assets unless the Zionists intervened against the boycott. Unless assets preceded emigrants, there would be no real nation to emigrate to. Motzkin's boycott report was rejected. Senator's report for stabilizing the German economy was accepted. It was simply a matter of priorities.

***

What began as a purely noble task in the minds of a few German Zionists quickly diluted into a grand bazaar of business opportunities. The notion of transfer was itself steeped in business transactions with Germany. When complete, Palestine would possess the commercial-industrial framework needed to supply a population's needs, provide jobs, and qualify the Jewish State as a member among nations in world commerce. This was sensible. A true nation was more than a haven, more than a commune. It was a land whose citizens could live, work, and prosper in peace. Therefore, the transfer of industrial machinery to build factories was intrinsic to state building as surely as the transfer of hospital beds and irrigation works.

Israel's commerce was to be as diverse as any nation's. In fact, this was a special feature of Zionist self-determination. Whereas Jewish economic opportunities had historically been confined, the opportunities in Israel would be unlimited -- including the opportunity to earn one's bread by sweat and labor in fields and factories.

But in the summer of 1933, as the transfer apparatus developed, the lines between welfare and windfall blurred. What was state building, and what was pure commercialistic opportunism? Indeed, this conflict represented the critical flaw in the actions of Mr. Sam Cohen. For his flaws, Cohen was replaced with a fleet of brokers and enterprises that did enjoy the Zionist Organization's seal of approval, but were nonetheless just as commercialistic. So it soon became impossible to distinguish between the unhappy burden of doing business with the Third Reich to facilitate emigration, and the gleeful rush of entrepreneurs frantic to cash in on the captive capital of Germany's Jews.

For example, in the summer of 1933 a new publishing company was formed in London, headed by leading Palestinian publisher Shoshana Persitz. Its board included such notables as financier Robert Waley-Cohen, Hebrew University chancellor Judah Magnes, Palestinian industrialist Pinchas Rutenberg, and JNF director Menahem Ussischkin. The venture would be called the Palestine Publishing Company. Its feasibility hinged on the purchase of £80,000 ($400,000) worth of printing presses and other lithographic equipment from Germany, only half of which was to be paid in actual pounds. The remainder would be paid out of blocked marks. To complete the transfer, Palestine Publishing would deposit minority shares instead of money in the balancing account. Thus, a new industry was created for Palestine that would have been financially impossible except for the transfer. [15]

In early August, several of the original transfer conceptualizers in Jerusalem, including Felix Rosenbluth and Arthur Landsberg, formed Exim, a company to import German steel via the transfer apparatus. The first transaction called for RM 500,000 in German steel, only 40 percent of which would be paid in foreign currency. The remainder would be paid in blocked transfer marks. There was no particular public character to their enterprise, no charitable by-product of Exim sales. Although steel was vital for housing and factories, Exim was in fact just a company selling German steel products via transfer. [16]

In August another group of investors decided to establish a brewery in Palestine. The German government agreed to transfer brewery equipment valued at RM 750,000 (about $250,000), 90 percent of it paid by sperrmarks. The balance would be foreign currency supplied in part by the American Economic Committee for Palestine in New York. [17]

The Palestine Publishing Company, Exim, and the new brewery represented just a fraction of the Palestinian-German business ventures that came into play during July and August as the bonanza that lay within the transfer became known in business circles. Were these business deals little more than taking advantage of the crisis facing German Jewry? Or were they legitimate efforts to build the Jewish home by developing the Palestinian economy? All enterprise in Palestine of course expanded the Jewish national economy by providing jobs, services, products, and capital. But then again, in 1933, all nations and their citizens were struggling to recover from the Depression. Those who placed the boycott against Germany before lucrative business deals were sacrificing in the fight against Hitler. Palestinian entrepreneurs simply concluded that they could not afford to be part of that fight. A nation was being built. For now, there could be no wars. Only alliances.

An alliance with Germany based on trade quickly shifted the Zionist emphasis from the people caught in crisis to the money caught in crisis. By late July, transfer activists spoke increasingly of "saving the wealth" and "rescuing the capital" from Nazi Germany. The impact on the German Jews themselves seemed to be a subordinated issue. It was this very accusation that led to the rejection of Mr. Sam Cohen. And it was to avoid private-sector exploitation that the Zionist Executive had convinced Cohen to bring his mid-May deal under "national supervision." This meant sharing the transfer with the rival company Yakhin, operated by the Histadrut, the official labor conglomerate essentially controlled by Mapai. Yakhin and Hanotaiah had eventually signed a binder of cooperation, but Yakhin ultimately joined the Conference of Institutions.

However, at a July 31 Histadrut Executive session called to review the transfer, Histadrut leaders acknowledged that from the outset their main interest was forming a special investment combine to usurp the project from Hanotaiah. Then the Histadrut leaders unveiled a plan for a sort of mandatory loan that German emigrants would extend to a Yakhin subsidiary called Nir, which would purchase German goods for sale in Palestine using blocked funds. But instead of depositing all the proceeds in the Palestine balancing account, thus completing the transfer, Nir would essentially convert two-thirds of the transaction into a mandatory fifteen-year loan, using the money for large land purchases and housing construction. [18]

One of the leaders attending the July 31 meeting objected, "Frankly, this imposed loan has a bad smell. The Jew in Germany might claim he is being forced to loan money, while the Jew in the States is not.'? Such hesitation was brushed aside, however, as Histadrut leaders agreed that "constructive" tasks were of the highest priority. And unless a public body such as the Histradrut seized control, "it will turn to a gang of speculators." [19]

The attitude of Histradrut officials was typical of Mapai leadership and their allies, who saw the wealth of German Jews as the most precious hostage held by the Third Reich. As part of this thinking, Georg Landauer and the ZVID fought for German regulations that would prevent German Jews from saving their wealth by any means other than investing it in Palestine. On August 17, ten days after the Transfer Agreement was sealed at Wilhelmstrasse, Landauer sent a letter to Hans Hartenstein. Landauer's words: "We looked for methods to make sure that sums which flow to Palestine in the framework of the presently granted three million mark concession are indeed invested there. We are also looking for solutions to prevent people using this concession in a roundabout way to establish a sure means of livelihood in other countries." [20]

Landauer recommended that ZVID certification of emigrants be contingent upon purchasing land in Palestine, extending a loan to Nir, or participating in any approved Palestinian investment. Landauer's words: "Therefore I would like to suggest that the Emigrant Advisory Office ... receive instructions whereby emigrant applications based on contracts with Palestinian colonization companies receive priority status." Landauer reminded Hartenstein that the legal basis for such an arrangement was essentially already on the books by virtue of currency regulations that obligated the Emigrant Advisory Office to verify exactly how much cash an individual needed in order to relocate. [21]

Landauer's August 17 letter closed with a preemptive defense against the obvious criticism: "Of course we don't want to prevent the emigration of Jews into other countries. We only want to secure the application of the three million mark concession in the sense that it was granted." [22] But Landauer and his associates knew that without money, a refugee was escaping to a life of soup kitchens and near starvation, a life that almost always precluded an entire family fleeing together for simple lack of cash. Moreover, refugees were barred access to the United States and other countries unless they possessed enough money to prove they would not be public charges.

Yet without the special certification Landauer requested, the transfer might have proven a false boon. Many German Jews were desperate to leave Germany for a short time, hoping the Hitler terror might subside. German Jews were quite willing to transfer their money briefly to Palestine and then retransfer it to a desirable destination such as Holland or France. However, the awesome impact of the ZVfD certification process was that, with few exceptions, a German Jew could not save himself with any of his assets unless he did so through Palestine.

Penniless refugees were already straining the charitable resources of Europe. It had been a Zionist strategy from April 1933 to divert relief donations for constructive work in Palestine. Chaim Weizmann had delivered a number of speeches to Jewish groups in this vein, urging them to look only to Palestine and relinquish any serious effort to maintain refugees in Europe. One such speech on May 29 in Paris was printed verbatim in Jewish and Palestinian newspapers for weeks thereafter. At a time when Nazi racial scientists were accusing Jews of being or transmitting an infectious racial disease, Weizmann's choice of words was ironic: "And here I must speak frankly of a very painful and delicate subject: these refugees are themselves the germ-carriers of a new outbreak of anti-Semitism." [23]

The effect of Weizmann's Herzlian rhetoric was to make Jews in neighboring haven countries wonder if they were not importing German anti- Semitism by caring for the refugees. Weizmann's true point was made elsewhere in the speech: "It is true that thanks to generous hospitality ... some tens of thousands will find refuge in France, in Czechoslovakia, in Switzerland, or in Holland; but ... we must entertain no illusions .... The world is already full-and the countries abutting on Germany will soon become saturated .... What is going to happen to those 200,000 [German Jews] who may find themselves on the pavement tomorrow or the day after tomorrow? They are condemned to a fate which is neither life nor death." The answer was not a haven in Europe, said Weizmann. The answer was a home in Palestine. [24]

Weizmann urged Jews to fight for national rights, not civil rights. Energies were to be devoted away from combat with the Reich, and toward the creation of Israel. Otherwise, the same drama would merely act itself out in country after country due to the irrepressible character of anti-Semitism. This time, the crisis would have to create not a temporary haven but a permanent home. Weizmann's blunt and idealistic words marked the Zionist leadership as being unwilling to protect Jewish rights in Europe at the very moment when Jews most needed protection.

Focusing on Palestine as the only legitimate destination for large-scale emigration, the Zionist Organization rejected opportunities to resettle German Jews in havens or homes other than Eretz Yisrael. For example, in mid- July Australia announced a willingness to accept thousands of German Jewish families for settlement in the northern region around Darwin. [25] Longtime Jewish colonization organizations had successfully settled a thousand Jewish families in the Crimea and another thousand in the Ukraine during the first half of 1933, [26] and a proposal for an actual Jewish homeland in Manchuria had come from Japan. For years, thousands of Russian Jews and British Jews had been living in Shanghai and other Asian cities. Most had arrived after the Russian Revolution; others represented British commercial interests. Japanese leaders controlling Manchuria well remembered the help of Jewish financier Jacob Schiff in defeating the Russians during the Russo-Japanese War of 1904-1905. So they responded favorably to ideas advanced by Shanghai Zionists to convert part of Manchuria into a Jewish homeland. [27]

But the Australian, Russian, and Manchurian settlement opportunities were rejected by the Zionist Organization. Resettlement meant further dispersion and little more than another scenario for persecution, as Jews would again become guests of a host nation. A return to their own land in Palestine constituted the only end to centuries of catastrophic nomadism.

The Zionist stance made it clear: Palestine or nothing. Now or never.
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Re: THE TRANSFER AGREEMENT: THE DRAMATIC STORY OF THE PACT B

Postby admin » Fri Jun 26, 2015 6:26 am

28. The Larger Threat

As the Zionists prepared for a Palestine now-or-never operation, Hitlerism spread dramatically to almost every country where people of German heritage lived. Exploiting whatever local bias seemed most suitable, hyphenated Germans created Nazi-style parties determined to infect their host countries with Aryan ideology. By summer 1933, the Nazi menace was rapidly becoming global in nature.

AUSTRIA. Vienna, July 22: The Austrian press and cabinet are divided on whether to introduce Jewish quotas into the professions and college. Innsbruch, August 2: Anti-Semitic attacks in the provinces increase as Austrian Nazis manhandle Jews and paint the word Jude on Jewish homes. Vienna, August I4: Jewish merchants discover a silent anti-Jewish boycott is in force, spurred on by the Austrian Nazi party. [1]

MEXICO. Mexico City, July 24: An organization of Nazi ideologues known as Confia, backed by right-wing industrialists, asks the government to declare Jewish businessmen foreigners and raise their taxes 500 percent. Guadalajara, August I8: Local authorities will investigate all Jewish businessmen for commercial code violations. [2]

CZECHOSLOVAKIA. Prague, May 31: Nazi students at the University of Prague disrupt plans to appoint a Jewish professor, and urge the ouster of all Jewish teachers. [3]

HOLLAND. Amsterdam, August 20: A Dutch Nazi party creates numerous anti-Semitic incidents. The Dutch government prepares regulations forbidding brown shirts and Nazi insignia. [4]

UNITED STATES. Chicago, July 29: German-American social groups organized into Nazi cells demand the swastika flag fly over the German- American exhibit at the Century of Progress. Fair officials refuse. Springfield, New Jersey, August 9: Seven thousand members of a German choral society holding an outdoor songfest are unexpectedly "bombed" by a low-flying plane dropping leaflets urging them to turn to Hitlerism. [5]

RUMANIA. Czernowitz, June 2I: The Nazi-style Iron Guard succeeds in convincing military officials to ban a local newspaper critical of anti-Semitic activities. Bucharest, August IS: Denying an Iron Guard claim that a student quota for Jews has been instituted, education officials admit the shortage of space has necessitated limiting the number of students, but say religion is not a factor. [6]

CANADA. Hamilton, July 11: The Swastika Club erects eight-foot signs on the beaches declaring "No Jews Allowed on Shore Within 800 Feet Either Way of this Sign." Toronto, August 16: The 400 Swastika Club members disrupt a Jewish softball game by unfurling Nazi flags and chanting "Heil Hitler." The melee escalates into a citywide riot involving 8,000 people. Police patrol Jewish neighborhoods until 4:00 A.M. to prevent attacks by roving gangs. Afterward the police ban the display of the swastika in any form. [7]

HUNGARY. Debreczen, August 27: Hungarian Nazis affix anti-Jewish posters. Local Storm Troopers guard against the signs, but police finally move in, arrest the Nazis, and remove the placards. [8]

ENGLAND. London, July 20: British Fascists wearing black shirts and swastikas hold a counterdemonstration as British Jews protest Hitlerism. Special police units guard against Fascist threats of violence. London, July 30: Several leading papers, including The Daily Mail, print articles praising Hitlerism. A swastika appears prominently at the top of The Daily Mail's column, and its publisher Lord Rothermere personally endorses the Nazi movement. [9]

BRAZIL. Rio de Janerio, August 2: Brazilian Nazis, known as the Integralite party, commence a campaign to "cleanse" the nation of Jews, who "came to Brazil to rob the poor Brazilians." Integralite advocates a "Fascist Fatherland." [10]

PALESTINE. Jerusalem, April I: The Arab leadership adopts Hitlerism as the long-awaited anti-Jewish weapon. The Mufti of Jerusalem, leader of Palestine's Arab community, notifies the Reich that "Mohammedans inside and outside of Palestine welcome the new German regime and hope for an expansion of fascist and anti-democratic regimes in other countries." He adds that Mohammedans everywhere will assist any Nazi campaign designed to "damage Jewish prosperity." Haifa, June I: German Christians stage a march complete with swastika-bedecked Brownshirt uniforms. [11]

POLAND. Bendzin, August IS: Polish Brownshirts end an anti-Semitic rally after police orders to disperse, but then rampage through the streets molesting Jewish citizens. Police reinforcements finally curtail the disturbance. Czestochawa, August 21: Following random street attacks against Jews, Polish Fascists receive prison sentences, their publication is suspended, and their headquarters is closed. [12]

IRAQ. Baghdad, August 20: Nazi sympathizers accelerate a wave of persecution against the ancient Babylonian Jewish community. In one disturbance, Arabs waving black Fascist flags with anti-Jewish inscriptions march through a Jewish district. Policemen look on passively as Jews are beaten. [13]

SWEDEN. Stockholm, June 10: Government authorities discover Reich plans to spend $ 10 million to propagandize for a massive Germanic state occupying all of north central Europe. Led by Swedish Nazis of German ancestry, a first step will establish a Nazi newspaper and publishing house. Malmo, August 21: Although townsfolk throughout Skane Province resist Nazi ideology, Swedish Nazis successfully recruit among Lund University students. [14]

In late June and early July, a number of Nazi organs, especially in Rumania and Austria, called for an international Aryan convention to arrange the forced emigration of all Jews from all countries to a "Jewish National State." One convention call noted that Palestine could not hold the millions of Jews in the world. Therefore, a larger receptacle, equally remote, would be designated. Madagascar was suggested. By late June, Nazi parties in twenty-two countries agreed to participate in the movement. [15]

Those Jewish leaders who hoped Hitlerism might somehow just go away, or that somehow Hitler could be reasoned with, were finally convinced by the summer of 1933 that there would be no compromise. At the height of Germany's unemployment panic, on July 2, Hitler reassured a nationwide gathering of SA leaders that while the tactics might become more restrained, there was no thought of altering the ultimate goal of National Socialism: the speedy annihilation of Jewish existence. [16]

By summer, Hitler's words and deeds forced Jewish leaders to begin viewing German Jews as utterly doomed. For example, by late July, Stephen Wise sent a report home from Europe advising the Congress, "I have a mass of cumulative evidence which proves that the Jewish situation in Germany is hopeless." A few days later, Dr. Joseph Tenenbaum, a leading Congress boycott proponent, told Congress officials that it was no use delaying the boycott proclamation in the hope German Jewry might be saved. "This hope," said Tenenbaum, "... now seems to have gone forever." [17]

If Nazism survived, Germany's Jews would all perish. If Nazism was overturned amid economic upheaval, German Jews would suffer bloody reprisals. But the question was now larger than the 600,000 Jews in Germany. In the minds of Jewish leaders, the future of millions of Jews throughout all Europe was at stake. [18] Whatever was done now would set the example for other governments coping with the rise of Nazism.

When Zionist leaders of the Mapai camp looked at this global threat to Jewish survival, it only reinforced their determination to force the crisis to yield a Jewish State. Could Jews be successfully resettled in Eastern Europe, in Latin America, in Western Europe, even in the United States? Traditional anti-Semitism and the new Nazism thrived in all lands. Some of those Nazi and anti-Semitic movements would flourish, others would recede. But the threat would always remain -- whatever color shirt, under whatever color flag. A Jew outside his homeland was a Jew waiting for the next pogrom.

Some of the most effective fighters are those who use their adversaries' own weight and power against them. This was the Mapai Zionist defense. Out of the attempts to destroy would emerge the final impetus to attain victory for the Jewish cause: a State.

But the overwhelming majority of Jews and Zionists had not given up on Jewish existence in the Diaspora. They were not willing to pay the price of Mapai's defense strategy. They could not stand still and suffer Hitler's blows in the hope that those blows could be converted to victory strokes. These Jews could not stand by and witness the disintegration of Jewish communities in Europe. They had seen all reasonable efforts to stymie the Hitler plan fail. Moral persuasion, diplomatic pressure, economic warning shots -- all of it had failed. Defense-minded Jews saw only one solution: boycott, rigorous and comprehensive, until Germany cracked wide open. Germany would have to be crushed, not merely punished.

Here was the tearing dilemma: Should Jews transplant to their own nation in Israel, abandoning existence in a world that in Jewish terms could be judged only by the degrees of Jewish hatred found from one place to another, from one era to the next? Or should Jews stand their ground and defend their right to exist anywhere in the world? It was a choice. Plain and simple. A choice.
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Re: THE TRANSFER AGREEMENT: THE DRAMATIC STORY OF THE PACT B

Postby admin » Fri Jun 26, 2015 6:26 am

29. Near the Cracking Point

THOSE who chose to fight Hitler had every reason to be encouraged during the summer of 1933. German industry was crumbling in an increasingly publicized chain reaction of crises.

Shipping and transatlantic passenger travel had been a strategic foreign-currency earner for the Reich. But anti-Nazi boycotting had virtually bankrupted the entire industry. In late July, at the Hamburg-American Line's annual stockholder meeting, chairman Dr. Max von Schinkel and all board directors announced their resignations with this statement: "The disaffection in the world toward Germany and the boycott movement are making themselves strongly felt. This has severely hurt the Hamburg-American's business and is continuing to hurt ... German shipping generally." [1] The Philadelphia Record, in commenting on the shipping bankruptcies, editorialized: "In a civilized world, the Nazis cannot hound 600,000 fellow Germans out of existence because they happen to be Jews without arousing international indignation. Resentment makes itself felt- -- nd rightly -- in a widespread refusal to buy goods or travel on the ships of a great nation lapsed into ugly barbarism." [2]

At about the same time, the Solingen Chamber of Commerce, in the heart of Germany's ironmaking region, was predicting the same fate for the iron industry, given the "tremendous decrease of export possibilities." Heavy machinery exports alone were only half their profitable 1930 level. [3] The medical industry, was also reeling. Berlin, once renowned as the medical capital of Europe, was suffering a 50 percent decline in its lucrative foreign patient market. German educational institutions received an even more damaging blow. Foreign endowments, vital to Germany's academic funding, diminished by over 95 percent. [4]

The declining German export surplus -- down 68 percent from May to June -- continued dropping during July and early August. The export surplus over imports was the traditional measuring stick of overindustrialized Germany's ability to pay for the raw materials needed to keep its factories running and pay its monthly debt service of RM 50 million. But by summer, Germany's trade balance was so decayed that the export surplus was becoming outmoded as a true indicator of the Reich's decline. So little foreign currency had been earned that Germany could not purchase many vital raw materials. And German industry had reduced normal imports of raw materials because chain-reaction shortages had halted or slowed certain manufacturing processes. The trade-balance ratio was further moderated by canceling nonessential imports. For instance, the rubber used in sport shoes was simply eliminated. So the total export figure -- without regard to surplus ratios--was by summer becoming the more valid measure. Overall exports to its European neighbors had dipped at least 23 percent in the first half of 1933, compared to the previous year, according to the Reich's own figures. Total exports were reported down to RM 385 million. [5] The true losses were probably far greater, since statistical falsification was official Nazi policy. But even these admissions were ominous to a nation absolutely dependent on abundant exports.

Added to boycott damage was the worsening domestic economic dislocation caused by Jewish pauperization. In those businesses where Jews were well entrenched, the result was calamity. Germany's vast wine industry was a perfect example. Prohibiting Jews from growing grapes or manufacturing and selling wine threatened to wipe out large sectors of the German wine industry. Non-Jewish vintners, including many active Nazis, pleaded with the government to stay the exclusion. One Palatinate Nazi publication, Landauer Anzeiger, openly admitted that without the Jews, the region's wine business would be utterly wrecked, adding that if "the Jews' share in the wine trade heretofore amounted to 80 percent, one comes to the conclusion that even under the most favorable conditions, wine growers will only sell half the amount of wine this fall that they ... must sell. In view of the growers' great indebtedness, there rises the danger of a ruinous price catastrophe." [6]

A companion move to exclude all Jews from the Palatinate tobacco industry could not be implemented because there was simply no one to replace them. [7]

An analogous situation occurred in the metallurgical field. In mid-July, Nazi kommissars demanded the ouster of the six Jewish members of the industry's trade organization. The six were the most knowledgeable experts in the field. Almost as soon as the Aryan substitutes were installed, however, the organization realized no one else could do the job. So the six ousted Jews were immediately rehired as "consultants." [8]

Equally damaging to the German economy was the wholesale departure of foreign business. Prior to 1933, hundreds of European and American companies maintained sizable operations in Germany. But by summer 1933, Germany was witnessing mass corporate flight. Each foreign firm that withdrew from German soil left a wake of unemployed Germans and lost opportunities for other, interacting German businesses. The German government often tried to suppress news of such departures, but the banks knew the truth: defaulted loans, diminished deposits, and a virtual cessation of normal lending.

Desperate directors of Germany's prestigious Dresden Bank hoped to call upon the international banking fraternity for help. In a dramatic written appeal sent in mid-July to a major French bank, the Societe Generale, Dresden Bank frantically declared, "The atrocity propaganda . . . harmful to German trade ... is based on lies and distortions of fact. Complete tranquility reigns in Germany, and any non-Party person on the spot can convince himself that no one is hindered in the lawful pursuit of his private and professional affairs. We would be glad if, in the interests of international trade relations, you would spread the truth and do your utmost to bring about a speedy end of the boycott of German goods." [9]

The highly unusual plea provoked an equally unusual response from Societe Generale, which had for decades enjoyed cordial professional relations with Dresden Bank. Societe Generale's response, which ultimately reached the world's newspapers, answered that "on opening our mail we find an amazing circular from your esteemed bank. We beg to draw your attention to the fact that a French business would never presume to send propaganda material in business correspondence. We are thus compelled to assume that the tactlessness of your letter arises from an inborn lack of taste. As for the systematic persecution of Jews by your government, we know what to believe. We know ... doctors have been driven from hospitals, lawyers struck off, and shops closed down .... Every nation is a master in its own home, and so it is not our business to interfere .... Nevertheless, we are free to turn our business sympathies to our friends and not to a nation which aims at destroying individual liberty. We assure you, gentlemen, that we will continue to esteem your bank, but we cannot extend our sympathy to Germany in general, for we cannot hide our belief that the National Socialist Party will extend its lust for power to other countries at the first opportunity. Youask us to pass on this circular. Rest assured we will do so, and our answer with it. Yours truly, Societe Generale, Paris." [10]

The continuing deterioration of the Nazi economy in the summer of 1933 triggered yet another sequence of time-buying tricks. The first was a series of special multimillion-reichmark industrial subsidies. But the regime was running out of reichmarks. The government turned to the Reichsbank, but it, too, lacked sufficient resources to help. So the Reichsbank itself applied for a loan.

Sometime around the end of July, German go-betweens approached London brokers for an embarrassingly small loan of RM 40 million, or slightly more than £3 million. Once known, the request caused a round of derisive laughter in the London financial community. The Investor's Review broke the news with a mocking tidbit in its August 5 issue: "We have seen a letter written by a financial broker in Berlin ... [that] throws a lurid light on the dreadful condition to which Hitlerism has reduced Germany .... The writer states that he has been asked by the German Reichsbank itself to negotiate for it a loan ... of 40 to 50 million marks! That the Reichsbank, formerly perhaps the greatest financial institution on the Continent, should have come begging to London for ... a paltry sum is ... alarming .... So it is not surprising to hear that authoritative opinion is that Hitlerism will come to a sanguinary end before the New Year." [11]

With London a forfeit market, Germany turned to New York to help finance one of the department store subsidies, this one for Kaufhaus des Westens. An even smaller sum was requested, this time just RM 14.5 million, or about $5 million. Chase National said no. Germany then approached the lesser financial markets of Europe. One after another, each said no. Many refused even to consider the loan. The Hitler regime finally turned inward and demanded that the Dresden Bank extend the RM 14.5 million. Dresden had already suffered department ,store defaults and was extremely reluctant to advance further funds. But the Reichsbank insisted, backing up the arrangement with an amorphous "guarantee." [12]

In reporting on the RM 14.5 million loan fiasco, American Consul General in Berlin George Messersmith confirmed that the loan begging was done at the behest of Hjalmar Schacht. The dismal failures, reported Messersmith, made it crystal clear to Schacht that "foreign banks irrespective of nationality are for the present avoiding to increase in any way their commitments in Germany." The Wizard had publicly admitted as much to the Berlin correspondent of a Dutch financial newspaper, Algemeen Handelsblad. Answering a question about the economic consequences of the Reich's anti-Semitic campaign, Schacht declared, "Germany does not reckon in any way further upon international financial assistance." [13]

In a second interview shortly thereafter, published by the German paper Deutsche Allgemeine Zeitung using an Amsterdam dateline, Schacht warned if the world would not buy German products, then Germany would simply not pay her debts, or do so with such financial instruments such as scrip, a form of I.O.U. Schacht declared that in the face of declining foreign trade, Germany's creditors could take such paper guarantees or get nothing. [14] Even Schacht could no longer deny that Nazi Germany had become diplomatically and economically isolated. The economic recovery the Nazis so fervently sought was becoming more and more a mirage.

More time-buying tricks would be needed. To keep shipping industry employees working just a little longer, stringent rules enacted in mid-August required German businesses to ship their goods via German vessels. Companion regulations prohibited currency payments to foreign shipping companies, thus forcing almost all travelers passing through Germany to sail on German vessels. But the ill-conceived assistance actually robbed German lines of an important profit center -- bookings and transshipping on foreign vessels. [15]

An equally self-destructive rescue was imposed upon the textile industry, where unemployment in some places reached 50 percent. Recovery had been blocked at every turn by the boycott. So the Nazis slightly changed the design and color of regulation uniforms. Idled looms switched on and mill payrolls increased as textile companies scurried to produce materials for the new uniforms. But an impoverished public could not produce enough demand, and much of the new goods was dumped at great loss on foreign markets. Thus, sales revenues slumped in the face of increased production. [16]

Another trick was the outright bribery of foreign officials and cash incentives to special-interest groups purchasing German goods. For example, in August, I. G. Farben, one of Germany's largest employers, negotiated with the Rumanian government to lift their quasi-official ban on German merchandise, which was protectionist in origin but regularly flamed by anti-Nazi boycott groups. Via the German legation in Bucharest, with the full endorsement of the Foreign Ministry, Farben offered Rumania a complex but irresistible bargain.

First, Farben would purchase RM 17 million worth of Rumanian grain, about half of which would actually be imported into Germany to compete with German produce. The remaining RM 9 million would be sold by Farben to other countries. Second, Farben would broker 100,000 tons of Rumanian wheat to the world market, and even pay a 10 percent price support, in effect subsidizing Rumanian wheat farmers. [17]

Third, of the foreign currency received by Germany in selling Rumanian products, the equivalent of RM 2.5 million would be handed to the Rumanian National Bank. What's more, roughly 25 percent of the sales within Germany would be converted into foreign currency and also handed to the Rumanian National Bank. Fourth, much of the worldwide grain shipments would be shipped aboard Rumanian vessels, in direct competition with German lines. All this was in exchange for Bucharest's granting permits for RM 13.6 million worth of I. G. Farben products to be sold in Rumania. [18]

Despite the lopsided arrangement, Farben was forced to grease the deal further with a bribe of RM 250,000 to high Rumanian government officials for "party purposes." An additional RM 125,000 went to the National Socialists of Rumania, presumably to guarantee their consumer support for Farben's products. To quiet public opposition to trading with Germany, Farben earmarked a RM 125,000 slush fund "for exerting influence on the press and on [key] persons." [19]

But after all the bribes had been paid and the commercial favors and foreign-currency concessions granted, I. G. Farben could continue employing its assembly-line workers just a little longer. And Germany would retain about RM 10 million in badly needed foreign currency. Beyond the short-term benefits, the complex arrangement dramatized a bitter reality: The anti- Nazi boycott had made it easier and more profitable for Germany to sell another nation's products on the world market than to sell her own.

***

There seemed no way for the Nazi leadership to counteract the boycott successfully other than hope that the transfer would prompt world Jewry to call off its economic war. But despite actions by the Zionist leadership to scuttle the boycott, popular Jewish momentum would not subside. In early August, a frustrated Adolf Hitler held a meeting at Obersalzberg with two Americans influential within New York's National City Bank organization. One was Henry Mann, a vice-president representing the bank's German operations. The second was Col. Sosthenes Behn, who was both a bank director and the chairman of International Telephone and Telegraph (ITT). The two Americans reviewed for Hitler the U.S. mood against Germany. Behn then questioned just how safe foreign investments were in Nazi Germany. Hitler reassured Behn that foreign capital such as General Motors' was safe if used according to regulations. Hitler remonstrated that the sordid picture of a violent Germany hostile to foreign business was just another figment of atrocity propaganda. That led to talk about the anti-Nazi boycott. And here Hitler became visibly excited. "These senseless measures are not only harmful to Germany," ranted an enraged Fuhrer, "but, by weakening German purchasing power on world markets, to other nations as well." Hitler vehemently insisted that the boycott would "eventually collapse all by itself." Therefore, said Hitler, it would be best to say and do as little as possible. [20]

In early August, Goebbels was showing equal distress about the boycott. Speaking to a festival at Stuttgart, Goebbels admitted he looked forward to the day when the Reich "will have burst the iron boycott with which the world has encircled US." [21] Shortly thereafter, Goebbels felt unable to abide by der Fuhrer's advice to pretend the boycott didn't exist. Addressing the annual NSDAP Congress at Nuremberg, Goebbels confessed, "We still feel ourselves handcuffed and threatened by this cleverly thought-out plot .... This boycott is causing us much concern, for it hangs over us like a cloud." [22]

The regime tried to delude the grumbling population with manipulated unemployment statistics. For example, the number of jobless was artificially decreased by subtracting Jews, Marxists, and pacifists. Additionally, German males aged sixteen to twenty-five were removed en masse from their jobs to make way for older family men. The young Aryans were then steered to voluntary labor camps, where they could keep some unemployment payments and yet be removed from the jobless rolls. Those who refused voluntary labor were deprived of their unemployment benefits and taken off the rolls anyway. [23]

Women were also being fired in great numbers, under the Nazi notion that good Aryan women should make way for men in the job market. Many of these women were relocated as domestics, receiving little more than room and board. Others were instructed to have children and keep house. In either case, essentially jobless women were excluded from the unemployment figures. Thousands of male German family heads were likewise excised from the jobless ranks, either by engaging them in meaningless public-works programs, where they earned virtual pittances, or by resettlement onto farms. [24]

More tangible illusions were created by coercing employers to overstaff. By mid-August, Ruhr mining firms were employing 30,000 more than market demand justified. Some of this was accomplished through a shorter work week, which robbed those who did have a job of the full wage they normally received. And no one was allowed a second job. Such "black labor" was strictly verboten. [25]

Indeed, the jingoism of the Nazi economy had by August 1933 become a mere symbol of disappointment to millions of Germans. The July unemployment panic had receded somewhat after dissident Storm Troopers were rounded up. However, the laissez-faire business climate espoused in the July Schmitt-Hitler covenant, and the prohibition against violent anti-Semitic activity, were by August cast aside as unenforceable rhetoric.

Time was running out for Germany. Winter was approaching. Construction, farming, public works, and voluntary labor camps were all wholly dependent upon outdoor activity and good weather. With no part-time or off-season work available, it would be a winter of desperation and dissatisfaction. [26]

Goebbels could plead "the handcuffs" of the Jewish-led anti-Nazi boycott, but such excuses only encouraged dissident factions to assert their own authority as they had during the July unemployment panic. Realizing that the regime would stand or fall with the popular mood that winter, the Reich leadership anxiously made preparations. The Ministry of Finance and party groups established "voluntary" appeals for the unemployed whereby contributions were automatically deducted from a wage earner's pay. [27]

A second campaign urged farmers, especially those in East Prussia, to store unthreshed crops in their barns. Then, instead of farm employment ending with the harvest, it would continue through the winter months as the harvest hands threshed the grain. But by mid-August, the campaign had proved unsuccessful, as cash-hungry farmers sold their crops early. In droves, harvest help was already returning to the city awaiting the next bit of relief from the Third Reich. [28]

A brilliant solution to the entire unemployment scene was finally conceived by Chancellor Hitler himself. His idea: Compel 200,000 working women to marry and quit their jobs, thus making room for 200,000 men to support families. The 200,000 newly married women would have babies and set up new households requiring furniture, appliances, and other household products, which would create the demand for another 200,000 men who could then marry a second group of 200,000 women who would once again create households demanding products for a third 200,000. This process would continue until all eligible women were retired from the work force and firmly planted in households making babies, thus creating ever-increasing consumer demand. [29]

In the fervor of the times, mass marriages were certainly possible. But a marriage without money could not generate instant demand for furniture and appliances. The 200,000-marriages plan was typical of the Nazi approach to economic recovery, and among diplomats the proposal became a laughable example. [30]

"Bread and wurst for all" was the Nazi slogan sung in Berlin. But in the provinces far from Berlin, where Nazi factions ruled, the people wanted results. In the lead story of the August 21 New York Times, correspondent Frederick Birchall, upon returning to Berlin from covering the Amsterdam boycott conference, speculated on the question: "The prospect for the winter therefore is far from promising. But how far the economic crisis can affect the Nazis' hold upon Germany is extremely doubtful. 'Bread and wurst for all' was their promise. But if they cannot fulfill it, who is to put them out? And with whom can they be replaced?" [31]

A few days later, a follow-up article appeared in the Times, datelined Berlin but without a byline. After explaining the duplicity of the most recent unemployment statistics, the article warned, "Both the statistical and the propagandistic efforts of the National Socialist regime are tokens of its realization that it stands or falls with its solution of the unemployment problem. The entire country is watching these efforts with both hope and skepticism. The labor situation during the coming winter is expected to determine the fate of Hitlerism itself. Indicative of the mood of a large section of the population is this doggerel which your correspondent has heard repeatedly during my travels throughout Germany:

If Hitler doesn't give us bread,
We'll see to it he'll soon be dead." [32]


On August 24, 1933, Chicago Daily News correspondent John Gunther reported from Vienna: "Dr. Hjalmar Schacht ... narrowly escaped assassination by disaffected Storm Troopers, it is said today in the Prague newspaper Sozial Demokraten, copies of which were received here. According to reports, 'Dr. Schacht noted some days ago that he was being followed by mysterious individuals and appealed to the secret police [Gestapo] for protection.' Yesterday, three Storm Troopers were arrested and five others fled, it is said, when Dr. Schacht was followed by police officers to trap the alleged assailants. A search ... revealed a plan of assassination. Dr. Schacht was thought to be too conservative in his policies and hotheads wanted to make the Nazi revolution more socialistic." Gunther added that the report was unconfirmed. [33]

The anti-Nazi movement watched the signs of Germany's crumbling economic and political house and drew encouragement. The boycotters believed that to save Europe from Nazism, the example would have to be set in Germany. The price of war against the Jews would have to be commercial isolation and economic ruin. And so the boycotters took their slogan seriously: Germany was to crack that winter.
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Re: THE TRANSFER AGREEMENT: THE DRAMATIC STORY OF THE PACT B

Postby admin » Fri Jun 26, 2015 6:27 am

30. Untermyer Takes Command

THE FUTURE of the anti-Nazi boycott and its hoped-for winter victory was ultimately dependent upon one factor and one factor alone: organization. Because the major Jewish bodies had spurned boycott, the movement resided in the basements, front parlors, and spare rooms of such devoted leaders as Samuel Untermyer, Captain Joseph Webber, and thousands of nameless workers around the world. Ad hoc boycott organizations, while enjoying massive popular support, also lacked money. Untermyer personally donated most of the money involved in his activities. [1] The funds supporting the Captain Webber Organization undoubtedly came out of Captain Webber's own pocket. Working with such meager resources, boycott leaders tried to fight both Adolph Hitler and established Jewish organizations whose comparatively superior assets were devoted either to sabotaging the boycott or to remaining harmfully neutral.

The crisis of organization had become clear when Untermyer convened his Amsterdam conference. After the headlines had run and battle strategies were plotted, the resulting World Jewish Economic Federation was an organization without an infrastructure. They hoped Lord Melchett could maneuver British Jewish organizations into joining the Federation, but that hope was shattered by Anglo-Jewish leaders, the Zionist hierarchy, and Stephen Wise, each for their own reason.

Shortly after Amsterdam, Lord Melchett quietly disassociated himself from the Federation. Melchett's uncle, Sir Robert Mond, took his place, but Sir Robert's involvement was more symbolic than functional. By early August, Melchett had dropped out of the boycott movement altogether. The longtime Zionist had decided that the best way to beat Hitlerism was to use it to establish the Jewish State. The value of Melchett's shift from the boycott solution to the Zionist solution was readily apparent. By early August, Zionist groups in London were talking publicly about nominating Melchett for president of the Zionist Organization at the coming eighteenth Zionist Congress. The London Jewish Chronicle even editorialized in favor of his election. [2] By August 1933, Lord Melchett had completely turned the other way.

Untermyer's World Jewish Economic Federation at this point had no address, no telephone number, no field offices, no real structure, but Untermyer did enjoy one powerful resource: the people. In just a few months he had displaced Stephen Wise from the vanguard of Jewish defense. To mil- !ions of Jews and non-Jews alike, Untermyer was the hero of the hour, standing alone against Hitler where all other Jewish leaders had feared to tread. Untermyer intended to use his popular support to pressure the boycott- leaning, but still boycott-reluctant American Jewish Congress to abandon Wise and immediately join the movement. This would avoid the delay of waiting for Wise's Second World Jewish Conference, to be held in September. [3]

As Untermyer wrestled with the boycott's organizational problem, he also realized just how crucial American participation was. At the Amsterdam conference, Untermyer learned that although devoid of formal organization, the boycott was working well in Europe and the Mediterranean region. Holland, Czechoslovakia, and Poland, for example, were nations with well-entrenched, highly effective boycotts. Egypt was enforcing a virtually hermetic trade blockade. [4]

Untermyer understood the reasons for initial boycott successes in Europe and the Mediterranean even in the absence of a true organization. First, the countries were all smaller, less populous, and less ethnically diverse than the United States. A smaller group of leaders could rally a greater portion of the national population. Second, the lines of commerce in Europe were not as diversified as in America. Choking off a number of strategic commercial channels in many European countries was enough to smother German exports. Third, the boycotts enjoyed the official support of labor organizations, East European Jewish religious bodies, and, to a certain extent, the national governments themselves. So greater resources were available, thus injecting the understaffed movements with an unexpected stamina. [5]

On the other hand, the boycott in America was lagging behind badly. German imports to the United States for the first six months of 1933 had dropped at least 22 percent below the 1932 level. [6] But imports would have to quickly dip to 50, to 70 percent of their 1932 level, as they had in European markets, if Germany was to crack. Untermyer knew that to achieve that effectiveness, he would need what he didn't have: a well-financed organization capable of covering the vast territory of the United States. [7]

On July 31, Samuel Untermyer sailed from Plymouth, England, in triumph. During a press conference just before the ship departed for New York, Untermyer asserted that his Amsterdam conference was a total success, especially given the short notice. He insisted that the boycott, with just a little more intensification, would win. "The spontaneous outpourings by non- Jews as well as Jews," Untermyer proclaimed, "confirms the view that it [the boycott] may be regarded as a worldwide uprising of civilization ... regardless of race and creed, against the most incredible crime of many centuries." [8] In a week, Untermyer would arrive in New York, the new Jewish champion. He would then call the Jewish population of America to his side. He hoped the Congress leadership would follow.

***

August 3, 1933, 8:15 P.M., in a conference room at the New Yorker Hotel, American Jewish Congress president Bernard Deutsch convened a special meeting of the Administrative Committee. Under Congress bylaws, the Administrative Committee decided policy; the Executive Committee implemented the decisions. As soon as the Administrative session was called to order, Deutsch explained the crisis: First, Samuel Untermyer was sailing back to New York. Second, the Amsterdam conference had "received wide publicity here." Third, upon his return, Untermyer would "be met with a great deal of acclaim by welcoming committees." Deutsch was forced to concede that Untermyer had singlehandedly overshadowed the Congress. He had proclaimed the global boycott while the Congress had not made a decision. The Congress' reluctance to join the boycott movement was now a "storm raised on all sides by various branches of the Congress demanding a determined stand." [9]

Deutsch explained that the Congress was still awaiting the signal from Dr. Wise, at that time in Europe. Wise had been cabled for his "latest views" and for instructions, since the boycott decision was due to be announced at the August 6 Executive Committee meeting. This decision had already been delayed innumerable times. Then Deutsch related Wise's answer: Joining the boycott now "would be undesirable and dangerous .... It is now absolutely necessary to postpone any decision" until the Second World Jewish Conference preparatory meeting in Prague, August 18. [10]

The world was demanding action. Wise was counseling delay. What was to be the August 6 Executive announcement, boycott or no boycott? [11]

The members argued back and forth. The reluctant ones weren't exactly sure why they opposed the boycott: Maybe it wouldn't work .... Maybe it would offend a fragile joint consultative agreement recently worked out with the American Jewish Committee and B'nai B'rith -- this to make some feeble effort at unity.... Maybe Wise would look bad if the boycott were declared in his absence and against his specific advice.... Maybe a Jewish-led boycott would alienate the Christian community -- and the old fear, boycott might provoke German reprisals against the Jews. [12]

Dr. Joseph Tenenbaum, a staunch boycott proponent from the start, chastised his fellow leaders: "If the American Jewish Congress does or does not decide to declare the boycott, the conditions of the Jews in Germany could not be made more serious .... Now is the time for action, because in the last six weeks, an unparalleled rabid anti-Semitism has broken out .... Hitler has declared that 'there is going to be no mitigation of the Jewish question.' ... The boycott is being carried on without the Congress ... because the Congress did not have the courage or the conviction to come out ... with a stand." [13]

Tenenbaum predicted that the American Federation of Labor would follow the example of England's Trades Union Congress and openly declare for the boycott. He pointed out that in Europe, especially France and Poland, the boycott was extremely effective, and America's contribution could make the difference. The moment was late, Tenenbaum admitted, but if the Congress did not proclaim its support for the boycott at the August 6 Executive session, it would be too late. Citing the demands by Congress leaders all over the country, Tenenbaum formally proposed instructing the Executive Committee to proclaim the boycott at their August 6 meeting and to "concentrate all efforts" to make it work. [14]

Mr. Leo Wolfson followed Tenenbaum's emotional plea by suggesting the August 6 meeting be postponed until Stephen Wise returned from Europe. Mr. Isidore Teitelbaum went further and recommended that the whole boycott notion be abandoned as a bad idea; he preferred to fight Germany "diplomatically and by appealing to the sense of justice and American fairplay to help the Jews in Germany." [15]

Wolfson's and Teitelbaum's suggestions sparked immediate rebuttals by boycott advocates. Mr. Morris Margulies declared, "We have all the information on this problem that we can ever have. . . . We should not wait for Dr. Wise for further action." He emphasized that Samuel Untermyer and only Samuel Untermyer had brought about an effective boycott, and the Congress should immediately back his boycott group. Mr. Herman Speier chimed in that the Congress could not "declare" a boycott if it wanted to, because the boycott was already under way. The best the come-lately Congress could hope to do was "endorse" the existing movement. But this was urgent, if only to help Untermyer. [16]

As the conflict focused on Stephen Wise's leadership failure, Mr. Zelig Tygel urged his colleagues to decide for the boycott and simply cable the news to Wise in Europe. [17] Dr. Samuel Margoshes, an early boycott proponent, reminded them that Samuel Untermyer was sailing back to America with the power of Amsterdam behind him. Everyone knew that Untermyer would build a "great and important boycott movement throughout the U.S. . . . We should join forces with him now, setting up an organization which includes the American Jewish Congress." Margoshes deplored Wise's strategy of delay: "The time to act is now . . . not a delay for two or three months." [18]

It was near midnight. The Congress men were weary of debate. Votes were called for Wolfson's motion to postpone the August 6 meeting. Just before the votes were cast, Tenenbaum reiterated his plea against delay. [19] Twenty-two of the twenty-five assembled men cast votes. Ten to endorse the boycott on August 6. Twelve for postponement. The new date for a decision would be August 20, 1933. [20]

***

Late in the morning on August 6, 1933, the French liner Paris sailed past the Statue of Liberty. Samuel Untermyer was aboard, triumphantly returning to America as the foremost adversary of Adolf Hitler. Awaiting him was a Jewish community eager to follow and a non-Jewish community ready to join. As the Paris neared the city, it was met by chartered boats bedecked with huge placards proclaiming Untermyer "Our Leader" and congratulating him for a great achievement in Amsterdam. A band aboard one boat struck up welcome music as it followed the Paris into dock. As soon as the gangplank was lowered onto Pier 15, two dozen representatives of Jewish and civic organizations along with a gaggle of reporters scampered up to Untermyer's cabin for a hearty round of congratulations and an impromptu press conference. [21]

Untermyer told of the great gains made against Nazi economic survival, but declared America must now catch up to other countries. "It is not a fight of Jews, but of humanity," Untermyer said. "We are embattled for every liberty-loving citizen of whatever race or creed." [22]

Waiting on the pier itself when Untermyer descended the gangplank were 5,000 cheering supporters: Jewish War Veterans and American Legionnaires in full uniform, members of the Zionist Organization of America, Hadassah, and numerous other Jewish and non-Jewish groups. They had been waiting for hours. As the feisty seventy-five-year-old crusader was helped through the crowd, he stopped to address a shipside reception committee. As he finally reached the street, 10,000 more supporters were waiting for him to pass. [23] The cheers for Untermyer were cheers for the boycott. The American Jews who had lagged so long behind their compatriots in other countries were now grateful that someone would lead.

Untermyer was ushered to a waiting car. From West Fifteenth Street, he was whisked by police motorcycle escort uptown to the American Broadcasting Company, where a national radio hookup was waiting. [24] From WABC studios, Untermyer sought to rally the nation and force the existing Jewish organizations, especially the Congress, to join the boycott fight. His words were addressed to both Jews and non-Jews: "My Friends: What a joy and relief and sense of security to be once more on American soil! The nightmares ... through which I have passed in those two weeks in Europe, listening to the heartbreaking tales of refugee victims ... beggar description. I deeply appreciate your enthusiastic greeting on my arrival today, which I quite understand is addressed not to me personally but to the holy war in the cause of humanity in which we are embarked." [25]

He quickly turned to the boycott's biggest obstacle -- Jewish leaders. First, the American Jewish Committee: "A mere handful in number, but powerful in influence, of our own thoughtless but doubtless well-intentioned Jews seem obsessed and frightened at the bare mention of the word boycott. It signifies and conjures up to them images of force and illegality, such as have on occasions in the past characterized struggles between labor unions and their employers. As these timid souls are capitalists and employers, the word and all that it implies is hateful to their ears. [26]

"These gentlemen do not know what they are talking or thinking about. Instead of surrendering to their vague fears and half-baked ideas, our first duty is to educate them ... [that] the boycott is our only really effective weapon .... What then have these amiable gentlemen accomplished or expect to accomplish ... by their 'feather-duster' methods. You cannot put out a fire. . . by just looking on until the mad flames, fanned by the wind of hate, have destroyed everything. What we are proposing and have already gone far toward doing, is to prosecute a purely defensive economic boycott that will undermine the Hitler regime ... by destroying their export trade on which their very existence depends." [27]

Untermyer then turned to the Congress and Stephen Wise: "I purposely refrain from including the American Jewish Congress in this appeal because I am satisfied that ninety-five percent of their members are already with us and that they are being misrepresented by two or three men now abroad .... I ask that prior to the [World Jewish Conference preparatory] meeting to be held this month in Prague ... they instruct these false leaders in no uncertain terms as to the stand they must take ... or resign their offices. One of them, generally recognized as the kingpin of mischief-makers, is junketing around the Continent engaged in his favorite pastime of spreading discord, asserting at one time and place that he favors and supports the boycott, and at another that he is opposed or indifferent to it, all dependent on the audience he is addressing ." [28]

With the nation listening; Untermyer explained how the whole world had already made "surprising and gratifying progress" in the economic war against Nazism. It was the United States and England that were the most "inadequately organized." He admitted, "With us in America, the delay has been in part due to lack of funds and the vast territory to be covered, but it is hoped that this condition will soon be corrected. The object lesson we are determined to teach is so priceless to all humanity that we dare not fail. [29]

"Each of you, Jew and gentile alike, who has not already enlisted in the sacred war should do so now.... It is not sufficient that you buy no goods made in Germany. You must refuse to deal with any merchant or shopkeeper who sells any German-made goods or who patronizes German ships .... To our shame ... there are a few Jews among us, but fortunately only a few, so wanting in dignity and self-respect that they . . . travel on German ships where they are despised .... Their names should be heralded far and wide. They are traitors to their race. [30]

"In conclusion ... with your support and that of our millions of non-Jewish friends, we will drive the last nail in the coffin of bigotry and fanaticism that has dared raise its ugly head to disgrace twentieth-century civilization." [31] In his sermon from the studio, Samuel Untermyer rightly expected the Jews of America to cast off their old leadership and join his defiant crusade.

***

The next morning, August 7, Untermyer received a phone call from an indignant Bernard Deutsch, president of the American Jewish Congress. Deutsch explicitly condemned the radio speech as a vicious attack against Wise. Exactly how Untermyer answered is unknown, but the spunky boycott leader must have certainly prevailed. That afternoon, a special four-man Congress delegation conferred with Untermyer about joining his movement. [32]

Untermyer varied little from his broadcast. He welcomed their cooperation. A Congress fund-raising campaign must be launched in concert with the American League for the Defense of Jewish Rights, which was the American alter ego of the World Jewish Economic Federation. These funds were desperately needed to spread the boycott to the American interior, where it was strong but far from complete. Untermyer was unyielding that Wise be instructed without further delay to announce the Congress in favor of the boycott. [33]

Immediately after the Congress delegation left Untermyer, they cabled Wise in Europe urging him, in view of enormous public pressure, finally to declare himself in favor. The cablegram also made clear that the Congress intended to join forces with Untermyer's group. The decision would be ratified on August 17 and announced to the public in an Executive Committee session on August 20. [34]

That morning, August 7, Congress leaders and Samuel Untermyer in New York had every reason to believe a successful boycott alliance was soon to be consummated that would bring down the German economy. They had no way of knowing that even as they were solidifying their plans, a group of Zionist leaders and Mr. Sam Cohen were meeting in Berlin with the German government to seal the Transfer Agreement, thus creating not an economic boycott but an economic bond between Germany and Palestine.

***

Stephen Wise was not pleased when he received the Congress' August 7 cablegram. He had worked political miracles to achieve his moment in Geneva, but the Amsterdam gathering had obviated the need for any World Jewish Congress meeting to plan or declare a global boycott. Untermyer had already done it.

And now, while Wise was still in Europe, his power base in America was on the brink of merging with Untermyer's essentially nonexistent organization. This was a threat to everything. In Wise's view, Untermyer's Federation would not only dilute anti-Nazi boycott resources, it would create the worldwide entity Wise himself was hoping to establish.

The Congress' cable heralded nothing less than the triumph of Samuel Untermyer and the dethroning of Stephen Wise. Wise wired back: UNANIMOUS DECISION GENEVA CONFERENCE SEPTEMBER FIFTH ESSENTIAL ... DECISION ALMOST CERTAIN FAVOR PUBLIC BOYCOTT BUT MUST [BE] SOLEMNLY ... PROCLAIMED INTERNATIONAL JEWISH AUSPICES GENEVA STOP SUGGEST YOUR RESOLUTION [AUGUST] 17 AUTHORIZE YOUR REPRESENTATIVES GENEVA PROPOSE BOYCOTT RESOLUTION ... UNTERMYER AMSTERDAM FIASCO EVERYWHERE DISCREDITED MELCHETT DECLINED CHAIRMANSHIP URGE POSTPONE DECISION CONCERNING COOPERATION TILL GENEVA. [35]

His message: a boycott resolution now would undermine the Second World Jewish Conference. Joining forces with Untermyer, who represented no one and was not worthy to lead the boycott, would also undermine the Conference. In other words, continue doing nothing.

Wise saw no value in helping Untermyer in the struggle against Hitler. The show would have to go on in Geneva. And as far as Wise was concerned, it would have to be a one-man show.

***

Stephen Wise was now careful to retain the support of the American Jewish Congress. On August 14, a few days after receiving the demand to declare for the boycott, Rabbi Wise did just that. In a speech to the Prague Jewish Community, Wise stated publicly, "Decent, self-respecting Jews cannot deal with Germany in any way, buy or sell or maintain ... commerce with Germany or travel on German boats." And he promised that a preparatory commission meeting the next day would make vital decisions to be implemented at the Second World Jewish Conference in Geneva on September 5. [36]

When word reached New York of Rabbi Wise's boycott declaration, reporters contacted Untermyer for comment. With restraint aimed at a strategic union with Wise's forces, Untermyer issued a one-sentence statement: "I am pleased to learn that at last Rabbi Wise has definitely come out in favor of the boycott." [37]

The next day, August 15, the World Jewish Congress' preparatory commission met in Prague. Wise told the commission that the Second World Jewish Conference would almost certainly make the global boycott official. [38] Whereas Untermyer's World Jewish Economic Federation envisioned grandiose plans for rerouting commerce around Germany, it lacked the branch offices, the postage, the telegraph accounts, the mimeographs, the phones, the sheer manpower possessed by the member organizations of the emerging World Jewish Congress. Only Wise's boycott machinery could wield the global network needed to cripple the Third Reich.

Responding to enormous public pressure, American Jewish Congress officers felt compelled to ignore Stephen Wise's request not to pass a boycott resolution. At the Congress' August 17 Administrative meeting, many members felt unable to remain publicly silent any longer. After a long, discordant debate, Dr. Samuel Margoshes proffered a compromise resolution authorizing Stephen Wise to vote at Geneva in favor of boycott. But it also directed the Congress' Executive Committee to announce on August 20 that it was finally ready "to cooperate with all Jewish agencies now engaged in ... the boycott movement, [so] ... a consolidated boycott organization may ... enlist the support of the Jewish as well as the non-Jewish population of Amenca." [39] A majority voted for Margoshes' resolution. [40]

After consideration, Untermyer agreed to the compromise, subordinating to Wise's World Jewish Congress. Untermyer's movement, imbued with fight but devoid of organization, would now have to wait until early September, when the Geneva Conference would declare a worldwide boycott. It would be Wise's way. Yet Untermyer, even though surpassed, had succeeded. He had forced the American Jewish Congress to commit to a boycott without further delay. Of course, each day was precious if a winter triumph was to be won, but Untermyer knew he could not create his own national and worldwide infrastructure during the few weeks he would wait to join his movement to the Stephen Wise-built organization.

There would now be no turning back. In a little more than forty-eight hours, the American Jewish Congress, the world's largest Jewish confederation, representing hundreds of thousands of American Jews, speaking for 25 percent of all the Jews in the world, comprising hundreds of Jewish men's clubs, sisterhoods, neighborhood groups, labor associations, and synagogue congregations, would finally join the economic war against Adolf Hitler.

***

Almost none of the reporters who showed up Sunday morning, August 20, knew why the Congress Executive had called an emergency session. Dr. Joseph Tenenbaum, chairman of the Executive Committee, had announced the meeting in a press release the night before, but carefully avoided any reference to boycott, [41] Nevertheless, the conference room at the New Yorker Hotel was crowded with reporters and Congress leaders.

Bernard Deutsch began almost routinely, calling for an emergency program to assist German Jews. But then Deutsch shocked the audience by declaring that the last element of the program would be full implementation of the anti-Nazi boycott in America. [42]

Congress officials explained that they had waited this long clinging to hopes that President Roosevelt would publicly condemn Nazism, as the leaders of other nations had. Deutsch and Wise had used every private channel to induce Roosevelt to speak out, but the president would do nothing to help. He would not even lift artificially tightened procedures that were each day denying visas to desperate German Jews applying at the U.S. consulates in Germany. These visa refusals were occurring even as other nations had opened their arms to thousands of refugees. The result was a miserable and overcrowded refugee situation in Europe that the United States refused to help alleviate. [43]

"The American public may rightfully ask," said a frustrated Deutsch, "why the United States government continues to maintain diplomatic silence in relation to a country whose treatment of its nationals betrays every humane instinct, and where Americans are repeatedly assaulted, arrested, and forcibly detained; where American firms are ordered to dismiss their Jewish employees; ... and whose government has the temerity to send paid political propagandists into the United States to spread racial hatred and bigotry." [44]

It was incomprehensible, Deutsch said, that the United States had long ago severed commercial relations with Russia and had still not granted the Soviet Union diplomatic recognition -- this to protest Russia's abuse of her citizens and her refusal to abide by international accords. Yet economic and political relations continued to thrive with Germany. Why, demanded Deutsch forcefully, were communist agitators being deported from the United States when "every steamer arriving from Germany brings new propagandists, Nazi cells." [45]

When Dr. Tenenbaum took over the podium, he continued the theme. "We do not know," said Tenenbaum, "who bears the responsibility for persuading the president ... to yield his native impulse of magnanimity and sense of justice .... While the people, the leaders of thought and science in this country, and the leaders of the Senate and the House of Representatives have allied themselves in protest against the atrocities and inhumanities ... the administration has singly failed in its duty." [46]

Tenenbaum, who had researched the legality of international boycott action, defended the anti-Nazi campaign as an obligation of civilization inherent in the League of Nations charter. "Every people," Tenenbaum declared, "has a right, nay a duty, to refuse to support the economic structure of a country which threatens its life and property -- there can be no greater moral justification for taking such an extreme step." [47]

Reciting statistics testifying to the bleakness of Germany's trade, and explaining how Germany's overindustrialized society was dependent upon commercial prosperity, Tenenbaum predicted, "If Nazi Germany can be encompassed by a cordon of economic quarantine, ... a well-organized boycott, there is no doubt that the so-called 'second revolution' which Hitler dreads will soon come to pass." [48]

Turning to the losses American investors would suffer if Germany's commerce and bond-repaying ability collapsed entirely, Tenenbaum stated, "There are times when material benefits fade into insignificance in comparison with the moral obligations incumbent upon humanity. If Germany is permitted to continue on the steep road leading to utter disintegration of all that civilization stands for, [toward] war and moral pestilence, [then] the sacrifices which humanity will be forced to offer . . . to rid itself of this gigantic menace will exceed everything imaginable in ... material goods." [49]

Tenenbaum then introduced the Congress' boycott consultant, Dr. Max Winkler, economics professor at City College of New York. Winkler explained how Nazified statistics hid the true economic hardship in Germany and how German industrial dependency made the boycott the one anti-Hitler weapon that could triumph. [50]

There were more noble statements about the need to fight Hitler, the value of the boycott, the justification, and the devastating effects the boycott would inflict. As the speeches continued, however, many listening began to understand that this was rhetoric. The local leaders at the meeting knew that the time for talk and expectations had passed. Americans needed concrete organization, a plan. A speaker was making a theoretical point when the group suddenly became unruly. A man in the audience yelled out, "Get on with really doing something about the situation!" Another cried, "Instead of leading the masses ... Mr. Deutsch and Dr. Wise obstructed the boycott movement and did not fulfill their duty to the Jewish people!" A rabbi shouted, "We must throw a cherem [an excommunication or curse] upon Jews who handle or import German goods!" Others bitterly protested that so much time had been wasted. [51]

Then Joseph Schlossberg, secretary-treasurer of the Amalgamated Tailors' Union, stood up and advised against any boycott, anti-Nazi or otherwise. Schlossberg charged that boycotts were mere propagandistic devices designed to "pour gas on the fires of the working world." They were bad for labor. [52]

That statement led to chaos as delegates angrily denounced Schlossberg's comments. Dr. Tenenbaum could barely gavel the group back to order. One prominent labor lawyer rose and declared that Schlossberg stood alone, that all the labor unions -- Jewish and non-Jewish -- were "in favor of the boycott of Hitler and his gang." [53]

Amid the tumult a rabbi stood to speak. His name was Rabbi Jacob Sunderling. Months before, he had risen to speak of the indescribable horrors confronting Jews in Germany at an emergency conference chaired by members of the American Jewish Committee. Then he had been silenced. But since that dramatic moment in early April, Rabbi Sundering had become a leading figure in anti-Nazi circles.

No longer a man to be swept aside at a public meeting, Rabbi Sunderling spoke and the crowd listened: "I rise, as a German Jew. I rise as a man whose kith and kin at present are suffering from all these things you have heard and we know. And if I deplore one thing, I deplore that even" a discussion is taking place as to the necessity of the boycott. I am in favor one thousand percent of a boycott -- in spite of the fact that I know my own people will suffer." [54]

He then explained in his humble way, and in the simplest words possible, what every Jew in the world needed to grasp if European Jewry was to survive: "Ladies and gentlemen, don't you understand. We still believe that ... a diplomatic manner at certain places in Europe or here will finally bring results. [It] will not. For one reason -- we are left alone. We have to fight our own battle. We have to die our own death. If we are not going to help, nobody is going to help. They will register facts. They will deplore things. But they will not do things unless the Jew takes the step that he is going to do things. [55]

"Where do you belong? With whom do you want to be reckoned? Are your ours -- or are you our enemy!" He made it clear that there could be no middle ground for any reason. "And if you are not with us, you are against us. That is the boycott!" [56]

Many in the audience wept openly. Others tried to hide their tears. Action was needed. A plan, or at least a leader. That was clear to everyone at the conference. They called out for Samuel Untermyer. So in a unanimous resolution, the Executive Committee voted to summon the boycott crusader from his home to give whatever guidance he could. [57]

When Untermyer's elderly figure appeared at the door, the entire meeting -- pro-boycott and against -- rose to their feet in spontaneous cheering. Untermeyer could offer the crowd no more specifics than Tenenbaum or Max Winkler because they were all awaiting the organizational structure to be formed at Geneva under Stephen Wise. Nonetheless, Untermyer gave them hope. His words were brief: "'I want to thank you for having invited me. And I congratulate you upon ... the resolution for boycott. It was what I had been hoping and wishing for, and I know that so many of your people were in favor of it.... You may remember the effect of the Jewish boycott on Henry Ford .... Well, what we did there on a small scale, we can accomplish on a large scale [Germany] cannot stand the economic strain that is being put on her [but] this is not a subject for oratory. This is a subject for work. Good, hard, practical work." The leader of the world boycott exhorted them, "I hope you will go forth from here and everyone of you do his share. If you do, Germany will crack this winter!" [58]

Every person in the room was aware of the calendar. Precious few days remained to push the Third Reich into upheaval. In this moment of potential triumph, it was essential that all Jews unite throughout the world. At least for a few months, until victory over Hitler had been achieved. They were also aware that the next day, August 21, the most organized Jewish entity in the world was to gather in Prague. On August 22, the Zionist movement -- all its factions and wings, it parties and coalitions -- would convene the Eighteenth Zionist Congress.

Untermyer told the audience he had just cabled Zionist leaders at Prague urging them to join the boycott movement. And it was well known that the Revisionist Zionists were intent on making Prague a battleground to dethrone Mapai and lead Zionism to total war with Germany. If in the presence of their own collective consciences as Jews and Zionists, the Eighteenth Zionist Congress would follow the Revisionist and rank-and-file demand to devote the Zionist movement to the boycott, the Hitler regime would crack.

All eyes now turned to Prague.
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Part 6: The Battle for Prague

31. Pre-Congress Maneuvers


IN ZIONISM'S great moment of challenge, the movement was a confusing and contradictory patchwork. The Zionist Organization was a government without a land. Under its authority existed territorial federations from every country, religious and philosophical unions, political parties, factions, and splinter groups. Each was embroiled in ideological and personality struggles pitting faction against faction, creating bizarre, often transient alliances. Frequently there were separate alliances for separate issues. One faction might join its philosophical nemesis on a religious issue, and then oppose that same temporary ally on an immigration question. As such, Zionism resembled any democracy, which is after all little more than a civilized method of constant disagreement.

It would be an oversimplification to characterize the clash between Mapai and Revisionism solely as a dispute over the Hitler crisis. Broad issues divided these two camps: labor policy, immigration attitudes, economic philosophy, religious identity, and sovereignty questions. But as the Eighteenth Zionist Congress approached, the constellation of conflicts between Mapai and Revisionism focused most spectacularly on the Zionist response to Nazism.

The Mapai-Revisionist clash was hardly the only rift in Zionist politics. For example, the movement was divided over whether Chaim Weizmann should resume the presidency of the Zionist Organization. In July 1933, Weizmann had actually journeyed to the American Zionist convention in Chicago in part hoping to commit U.S. delegates to support him for reelection at Prague. Stormy Chicago convention scenes cut the American Zionist community into equal halves, with Stephen Wise leading the half staunchly opposed to Weizmann's return. [1]

Adding to the rift was a Weizmann precondition for resuming the presidency: the total expulsion of all Revisionists from the Zionist movement. Therefore, a vote for Weizmann was a vote to expel Jabotinsky and his supporters. That drove Stephen Wise of the General Zionist party even further into the Revisionist corner, because a vote for the Revisionists was not only a vote for the boycott, it was a vote against Chaim Weizmann.

Another major conflict pitted the religious Mizrachi Zionists against the Zionist Organization itself. This struggle, essentially revolving around questions of religious predomination in Jewish Palestine, was as important as the Weizmann issue because Mizrachi held a decisive swing vote. So at Prague, Mizrachi support for the Revisionists would be, in large part, an effort to force religious planks on the more secular mainstream Zionists.

Despite assumed alliances, the question of whether Revisionists or Mapai would prevail was indeed unanswerable. Mapai tried to ensure their success by continually comparing Revisionism to Nazism, and by spotlighting the Arlosoroff assassination as proof that Revisionists were terrorists who had no place in the Zionist movement. [2]

Just before the worldwide elections for delegates to the Zionist Congress, the Revisionists themselves succumbed to a party squabble and actually split into separate majority and minority parties. The majority followed Vladimir Jabotinsky personally. The minority, led by Meir Grossman, called themselves alternately Grossman Revisionists or Democratic Revisionists. The split was essentially internecine; the two factions still acted in concert on vital issues. But this temporal split allowed Mapai-influenced Zionist election boards to disqualify the majority Jabotinsky candidate lists in many locales, based on technicalities. [3]

In mid-July, Congress election bureaus opened in virtually every country on every continent-from traditional Zionist strongholds such as Poland and Canada to scant Zionist communities in Uruguay and New Zealand. Depending upon the Zionist rules in any given country, voters could cast their votes for any party strong enough to qualify for the local ballot. The parties in turn sent delegates to the Congress based on electoral strength. Any Jew paying the token biblical shekel (about twenty-five cents) could vote.

It took days to count the votes -- more than half a million worldwide. Charges and countercharges of terrorism at the polls and vote fraud led to numerous post-election disallowances and recounts. But when it was all over, Mapai had garnered 44 percent of the delegates, up from its approximate third achieved in the previous election two years before. The two Revisionist parties attracted about 20 percent of the vote, down from the approximate one-fourth captured two years earlier. [4]

The defeat dashed Jabotinsky's dream of leading a worldwide voter revolt against the Zionist establishment. Whereas Revisionism with alliances had previously held a tenuous half-control over the movement, the Revisionists were now the third most powerful. Moreover, with Mapai able to wield an alliance of the second-ranked General Zionists and the tiny Radical Zionists, Revisionism became an isolated minority within the movement. [5] The power of Mapai's accusations and the Arlosoroff murder backlash was overshadowing the Revisionist stance on Hitler. The only way Jabotinsky could now save his movement, and force Zionism to join the anti-Nazi campaign, was through a floor fight at the Eighteenth Zionist Congress itself. Jabotinsky was convinced that with the world watching, he could rouse the hearts and consciences of delegates, regardless of party.

Mapai was equally determined that its 44 percent control be used to expel the entire Revisionist community -- about one-fifth of the Zionist movement -- and then to transform the whole Zionist Organization into a mere extension of Mapai itself. To achieve this, Mapai would have to block any public debate of the Hitler threat that could sway the other delegates into a sudden emotional coalition with the Revisionists. [6]

A strong minority of Zionists were motivated by religion, but the others were motivated by a history of anti-Semitism. The overwhelming majority were common people: cobblers, teachers, doctors, journalists, clerks. They had held the hands of tortured refugees, and had read smuggled letters from those still within the Reich. Like all other Jews, Zionists were enraged. The strongest boycott movements were in heavily Zionist communities in Palestine, Poland, Egypt, and France. This anti-Hitler devotion cut across all party lines -- Mapai, Revisionist, Mizrachi, General Zionist, Radical Zionist.

But the cobblers and shopkeepers of the Zionist movement followed leaders. In many instances, these leaders, particularly the Revisionists and the religious Mizrachi, had concluded that Zionism was obligated to join with Jews throughout the world and combat Nazism. But the leaders of Mapai and their allied factions had concluded that Zionism's only realistic response was to work with the German regime and save Jewish wealth for the future of the Jewish nation, so Palestine could quickly become strong enough to commence the true in-gathering. These Mapai leaders were implementing a painful decision in the face of monumental popular resistance. Mapai was in fact leading a war of salvation. They would do what was necessary with the same vigor and ruthlessness as anyone fighting a war of bullets, bombs, and boycotts. This ruthlessness would include silencing the opposition.

At Prague it became obvious that silencing the widespread opposition would be a major challenge. The dominant Zionist community in America- New York -- had sent a definitive demand that the Prague Congress publicly endorse and join Samuel Untermyer's boycott movement. [7] Similar sentiments were pouring in from local Zionist bodies around the world. In many ways, the Zionist Organization was facing the identical crisis the American Jewish Congress was facing. In both cases, rank-and-file membership and local leaders demanded boycott; in both cases key influential leaders stymied and frustrated the decision.

***

From the beginning, the Third Reich had seen the Eighteenth Zionist Congress as the dramatic moment when the international Jewish conspiracy, all according to established Nazi myth, would consolidate and finalize the economic demise of Germany. A prime Reich motivation in cooperating with the German Zionists and the Zionist hierarchy was to divide the movement, bribe it into submission, and rob it of this moment of consolidation. The Amsterdam Conference had been explained away by Zionists and establishment Jewish leaders as an unauthorized and meaningless meeting of dissidents without power. Stephen Wise's upcoming Geneva conference was being dismissed in the same vein. Zionist leaders assured the Reich that the Prague Congress was the pivotal Jewish meeting, the only conference with the power to declare and implement Jewish policy -- and that policy would reject boycott in favor of transfer cooperation.

But the Nazi mind had always visualized Zionist congresses as the birthplace of Jewish conspiracies. Consul Wolff had appealed to this fear in early July when he promised Berlin that Mr. Sam Cohen and associates were doing all possible to cancel the Congress "because they expect the speeches and resolutions ... will cause increased hostility and anti-German boycott." [8] And indeed, since spring, the German Zionists had been pressuring the Zionist Executive in London to cancel or postpone the event. Their final attempt, a collective petition written from Strassburg on August 4, warned: "It is absolutely clear to us, that today no Zionist Congress will convene without raising a sharp protest against the German government. The German government in turn ... will be forced to react to this protest by prohibiting the Zionist organizations ... and organized aliyah ... and by making it impossible to free Jewish capital from Germany; it should also not be ignored that this reaction could mean considerable danger for body and life of a large part of the German Zionists .... We demand that you ... postpone the Congress .... We beg of you that this last warning, which comes from responsible people of the movement in Germany, be taken into serious consideration." [9]

Much as the Zionist Executive in London sympathized with the plight of German Zionists and accepted their rationales, the Executive could not stop the Congress. Any attempt to do so would demonstrate a clear capitulation to Hitler's threats. If the Executive did not convene the Congress, someone else would, no doubt the Revisionists, who would then have the working proof that the Zionist Organization was no longer serving the interests of Jews. London insisted the Congress be held. [10]

Unable to postpone the Prague Congress through pressure on German Zionists, the Nazis gambled that the Transfer Agreement, sealed on August 7, would force the Zionist movement to silence the rank and file. Hans Hartenstein expressed as much in an August 10 letter to Schmidt-Roelke, explaining the Transfer Agreement: "It seems to me that this way really affords the best guarantee of the strongest possible effect on Jewish boycott measures." [11]

However, Nazi hopes of an innocuous Eighteenth Zionist Congress soon dissolved. The very day the Transfer Agreement was sealed, August 7, Samuel Untermyer returned to America to rally Jews, non-Jews, and loyal Zionists to boycott. On August 11, German charge d'affaires in Washington Rudolf Leitner brought Cordell Hull a New York Times transcript of Untermyer's national "call to boycott" broadcast, and protested in the sternest terms. Hull was himself a strong advocate, perhaps the architect, of FDR's noninterference policy. But by now even Hull had been caught up in the national outrage and answered Leitner with a rather unrestrained castigation of Nazism. He recited a litany of German atrocities, asking what Leitner realistically expected anyone to do. "The best remedy," Hull said, "will be for the German people or the German government or both to stop whatever may be their activities against the Jews. [Only] This will enable us to make suitable appeals to discontinue the boycott." [12]

Convinced the Prague Congress would not be canceled, the Reich began a sequence of highly visible warning shots to convince it to abstain from the anti-German crusade. Pressure on the German Zionists escalated. Leaders were suddenly arrested, meetings were inexplicably broken up, and ZVfD records were arbitrarily confiscated. On August 16, in a public appeal, the ZVfD's newspaper Juedische Rundschau declared, "It is not the duty of the Congress to declare war, but in a Zionist spirit, through practical measures to bring about spiritual encouragement and relief in the situation .... This is why German Zionists urged that the present Congress should not be held . . . . Since, however, the Congress was not postponed, it is the duty of the ... [Zionist] Executive to establish a spirit of creative responsibility ... to enable mass Jewish emigration from Germany to Palestine." [13]

Of course, no one even tried to organize Zionist elections in Germany. When it became obvious that the Congress might declare war against Hitler, German Zionists decided against sending an appointive delegation. Even German Zionists wholly unconnected with the Congress were beseeched to leave Prague prior to the opening session to avoid any mistake. Although newspaper accounts around the world repeatedly emphasized the German Zionist nonpresence, in truth, Martin Rosenbluth would secretly attend as the ZVfD observer and do his best to curtail boycott activities. [14]

The ZVfD's highly visible disassociation from Prague did not matter to the Nazis. On August 17, Hitler's personal newspaper, Volkischer Beobachter, published its lead article on the Eighteenth Zionist Congress, written by Alfred Rosenberg, Hitler's philosopher and the NSDAP's chief foreign policy official. Insisting that the boycott was coordinated by "Zionists," Rosenberg promised retribution against all those "guilty of conspiracies and against all their accomplices" -- a clear reference to German Zionists. The fact that Lord Melchett had assumed a renewed leadership position in the Zionist movement and was expected to playa major role at Prague was proof to Rosenberg that "the London castle of the Zionist leader, Melchett, is actually the center of world Jewry for the anti-German boycott." In an unmistakable warning, Rosenberg wrote, "Germany will watch Congress developments closely in the conviction that while the real intentions will not be disclosed in the public speeches, secret resolutions will be adopted along the lines laid down by The Protocols of the Elders of Zion .... Actual decisions will result from secret discussions between gentlemen from New York, Amsterdam, Paris, and London." [15]

Germania, the Catholic newspaper controlled by Deputy Chancellor Franz von Papen, similarly warned, "We shall have to follow the dealings of this Congress closely, for international Jewry, as we have often experienced in the past, will not itself openly join battle, but will make other forces work for it." [16]

New York Times correspondent Hugh Jedell summed up German apprehension in a report filed from Berlin on August 18: "The Zionist Congress ... is probably of more lively interest to the new Germany than was the World Economic Conference." Jedell explained that the Prague convention held the power to stimulate the anti-Nazi boycott. [17] What would be decided by the Zionists in Prague would probably have more impact upon Germany's economic recovery than all the trade accords the Reich could negotiate. And Germans knew it.

In response to the accusatory columns of Alfred Rosenberg and other Nazi spokesmen, Juedische Rundschau published an uncommonly defiant editorial denying that the Prague conference would join the boycott but explaining why those same conferences would almost certainly denounce the Nazi ethic. "Surely not even the Nazis expect us to agree that the Jews are an inferior race," Juedische Rundschau declared. The Nazis promptly suspended Juedische Rundschau for six months. [18] This was yet another warning shot. The Zionist privilege in Germany could be rescinded with the scrawl of a pen.

***

The constitution of the Zionist Organization called for its General Council to convene just before each Congress. This council, commonly called the Actions Committee, was comprised of several dozen officials, proportionately drawn from the various parties. The Actions Committee's duty was to decide all policy, including the management of the Congress itself.

If the Revisionists were allowed their minority rights on the Actions Committee, they would demand that the Congress debate the German crisis and vote on the boycott. And they would block Mapai's supremacy on other issues. Mapai could count on the support of substantial elements of the General Zionist and Radical Zionist parties. But other groups, particularly the religious Mizrachi, could be expected to align with the Revisionists to stymie Mapai intentions. So Mapai knew it was imperative to exclude the Revisionists from their rightful place on the Actions Committee. [19]

The Actions Committee's first session was scheduled for late on August 15. That same day, while en route to Prague, Vladimir Jabotinsky received notice that he would not be granted a visa to enter Czechoslovakia. The alleged reason: Jabotinsky did not request his visa through the Eighteenth Zionist Congress Bureau, which automatically issued them. Instead, in a deliberate act of disassociation, Jabotinsky applied through normal consular channels. It was refused, allegedly as an oversight. In truth, the Czech Home Office feared Jabotinsky's presence might lead to violence. [20] Consequently, Jabotinsky could neither assume his place on the Actions Committee nor lead his supporters through the political obstacle course Mapai was planning.

Jabotinsky's supporters quickly demanded their seats on the Actions Committee nonetheless and began pressuring the Czech Foreign Ministry to grant the visa. [21] Mapai countered by trying to cancel the Actions Committee altogether through their coalition majority. At the last minute, Leo Motzkin, chairman of the Actions Committee, was forced to announce a postponement of the opening meeting. The General Zionists, however, broke with Mapai on the issue, reasoning that Mapai's hegemony could eventually extend to other parties as well. [22] The General Zionists, controlling almost 25 percent of the delegates, could have teamed up with the Revisionists and Mizrachi to overwhelm Mapai's unilateral move. So Mapai backed down.

On August 17, at 4:30 P.M., the Actions Committee finally met. Chaim Weizmann, a General Zionist, boycotted the session and requested his name be removed from the Congress speaker list altogether because the Revisionists had been allowed to participate. [23] After two hours of preliminaries, Revisionist Joseph Schechtman demanded that the Congress concentrate on the German Jewish crisis, emphasizing that "the Congress must not remain silent on the boycott." [24]

Nahum Goldmann, Radical Zionist and Geneva conference organizer, agreed that the German Jewish crisis would have to be raised, probably in a special session, but that the boycott itself should not be mentioned. [25] Goldmann, like Wise, wanted the worldwide declaration to be pronounced at Geneva and nowhere else.

Dr. Arthur Ruppin, one of the principal transfer negotiators, insisted that "at this Congress we cannot confine ourselves to reproaching the German government for its sins against the German Jews. Our criticism must be coupled with a constructive scheme [for developing Palestine]. The relation between the two must be well balanced. We must not forget that the execution of any constructive plan presupposes goodwill on the part of the German government .... If we fail to find the right solution, the German government will solve the Jewish problem in its own one-sided way." [26]

The Actions Committee finally decided to discuss the issue of German Jewry at a special session. But any specific plans or resolutions would be made by a special "German Commission," which would make a decision/or the Congress. [27] The Revisionists accepted this because under the rules, if they disagreed with the commission majority, they could submit a minority report and insist upon a floor vote to see which was acceptable. This was the best method of ensuring that Revisionist boycott demands would finally confront the delegates.

The decisions to discuss the German question openly and appoint a commission were preliminary victories for the effort to mobilize the Zionist movement against Nazi Germany. But Mapai leaders at the August 17 Actions Committee session felt the most urgent question was not Hitler; it was Jabotinsky. They wanted to quash all discussion and action against the Nazis and instead devote all energies to combating Revisionism. This in mind, Mapai leader David Ben-Gurion recited a list of Jewish Palestinian "acts of terror" and demanded a second special commission on the assassination of Arlosoroff -- even before the murder trial in Jerusalem concluded. Stephen Wise, representing the American Zionists on the Actions Committee, needed Revisionists to enforce the boycott within the Zionist movement; and, of course, so long as the Revisionists remained in the Zionist power structure, Weizmann would not accept the presidency. So Wise counseled against any such investigative commission. Recriminations, said Wise, had no business at a Congress with such important matters to decide. [28] Nazism was the crisis, not Revisionism.

Then Berl Katznelson, one of Ben-Gurion's closest associates, asked to be recognized for an urgent motion. "I regret not taking part in the discussion about the situation of German Jews," said Katznelson. "I felt, however, that 1 could not participate in a discussion about German Jewry before delivering the message which my friends from Palestine have entrusted to me." Katznelson then read a prepared statement: "The murder of Arolosoroff has revealed to us the terrible abyss that confronts the Zionist Organization. Thorough investigation has confirmed our fears.... Within one of the parties which belong to the Zionist Organization, within the Revisionist party, there exist terrorist groups. 1 emphasize: groups, not a group. [29]

"The very existence of such groups is a heavy blow to the Zionist movement, to its moral character, and to its political driving power. The existence of this impurity in our midst is a national disgrace, a betrayal of the culture of our generations .... It is the foremost duty of the Zionist movement ... to extirpate this evil from our midst before it begins to destroy our hopes." [30]

Hours of vicious and accusatory debate ensued, but the decision to appoint an anti-Revisionist commission was postponed. [31] The Revisionists had survived, and their anti-Hitler program still had a chance in a floor fight.

But Mapai might yet prevent that floor fight if only somehow the Revisionists could be excluded from the Congress presidium. The presidium was the ruling coalition panel created by the Actions Committee. Seated at the front of the Congress hall, it was empowered to decide parliamentary points, recognize speakers, and rule on agenda questions. Normally, the presidium was constituted according to relative party strength.

So a renewed smear campaign against Revisionism was waged by Mapai leaders in the anterooms and newspapers of Prague. The hope was to sway delegates to support Mapai's demand that the Revisionists be excluded from the presidium. Ben-Gurion told reporters that Revisionism was nothing more than "Hitlerite pseudo-Zionism" and that Labor's struggle against it was "a fight for life and death in the strongest sense of the word." [32]

The public denigrations were picked up by wire services and printed in the newspapers of the world. The Jew-vs.-Jew antagonism disheartened Jews and sympathetic non-Jews alike. Many around the world had looked to the Zionist Congress as a major event in the war against the Third Reich, only to now witness a spectacle of recriminations. [33] Zionist priorities became self-evident. And only Germany took pleasure in the display, since the war against Revisionism was for all intents and purposes a surrogate war against the anti-Nazi boycott.

***

To balance the public perceptions of the Congress as a convention of squabbles devoid of concrete action, Mapai decided to present openly its proposals to help German Jewry. Mapai's plan was a synthesis of noble long-range hopes and immediate short-term realities attainable through the still secret Transfer Agreement. It called for the salvation of approximately 250,000 German Jews over the next ten years. This figure represented about half the Jews still in Germany. The presumption was that half of German Jewry had already lost all means of economic survival with no hope of regaining a livelihood.

The plan worked this way: Approximately a thousand Jewish families could be settled in Palestine at once. The rest of the quarter million would quickly emigrate to other countries, especially the United States, which for years had enjoyed a virtually unused German immigration quota. As more land was purchased and developed in Palestine, a percentage of the Jews who had emigrated to other countries would emigrate again, this time to their final destination, Eretz Yisrael. This long-term, two-stage emigration to Palestine would take place over the next decade and ultimately account for between 60,000 and 100,000 of the quarter million emigrants envisioned. The remainder -- 60 to 75 percent-would assimilate into the first-stage receiver nations. [34]

Mapai's plan, formulated by Dr. Arthur Ruppin with the Transfer Agreement in mind, was a sudden open admission that Palestine simply could not solve the entire German Jewish crisis. The most it could do was absorb a thousand families at once, and unspecified thousands more over a period of years. Of course, the unmentioned aspect of the Mapai program was that Ruppin's plan would actively help only those German Jews willing to commit themselves to Palestine as a final destination. [35]

While dressed up with huge numbers, Mapai's plan was seen by many as little more than an amorphous rescue notion. It added almost nothing to the thousand emergency immigration certificates granted by the British government that spring. And the Mapai plan was not particularly fulfilling in a Zionist sense because the protracted two-stage immigration scheme could be expected to fail as European-cultured German Jews simply restarted their lives in first-stage countries and forgot about any commitment to Palestine five or ten years later. However, Ruppin knew that all German Jewish emigrant deposits in the proposed Liquidation Bank were to be reimbursed only at the moment of ultimate arrival in Palestine. If out of a quarter million German Jews, only 1,000 families arrived in Palestine immediately to collect reimbursements, and no more than 50,000 to 100,000 carne to collect over the span of a decade, the transfer would carry immeasurable added significance to Palestinian development. Ruppin's plan meant that few transferred assets would be repaid, and what was repaid would be stretched over many years.

The Revisionists immediately rejected Mapai's concept as too little for too few over too long a period of time. Revisionists instead called for all-out political and economic isolation of the Hitler regime until either it rescinded its anti-Semitic terror -- which was unlikely -- or Jews were allowed to depart for Palestine with all of their belongings and possessions so they could properly rebuild their lives. [36] The Revisionist plan was militant and defensive, yet Palestine-oriented. In fact, it was simply the common man's plan spoken of throughout the world by Zionist and non-Zionist, Jew and non-Jew: combatting Hitlerism with all political and economic weapons while at the same time bringing the persecuted Jews to Palestine.

On Friday, August 18, when the Actions Committee met to reconsider the presidium question, the rival parties were again deadlocked, primarily because Mizrachi continued to support the Revisionists' right to participate in the movement. But before the Friday session was over, Mapai forces had succeeded in creating the special Commission on Palestinian Terrorism. The new commission was designed to indict the Revisionist party wholesale for Arlosorotrs murder and sentence the party's hundred thousand worldwide members to an ultimatum: renunciation of Revisionism or permanent expulsion from the Zionist movement. [37] Dusk brought the sabbath and prevented further debate on the presidium.

But during the Sunday session, August 20, the presidium question was again fiercely contested. The Revisionist role had by then become underscored. Late that day the Actions Committee learned of the American Jewish Congress decision to formally join Untermyer's boycott movement. A cable sent by Untermyer to Louis Lipsky, American leader of the General Zionist party, specifically called upon officials to read a "boycott manifesto" to the Prague delegates and urge a resolution joining the economic war. [38]

The "boycott manifesto" received by Lipsky was specifically phrased to appeal to the General Zionist delegates because they had the potential of teaming up with the Revisionists, the Mizrachi, and the Radical Zionists to defeat Mapai's staunch anti-boycott policy. The manifesto contained profuse praise for General Zionist chief Chaim Weizmann as "the greatest statesmanly Jewish leader of our generation, and eloquent reminders that "the present Congress is amongst the most important in Palestine's history." Untermyer's manifesto assured that "Germany is being kept uninformed about world opinion. Boycott is the only language they understand. Only an economic collapse will open the eyes of the German people." Most importantly, Untermyer stressed that boycott and Palestine-oriented rescue were not mutually exclusive: "The boycott logically goes hand in hand with the movement that I heartily support: to settle in Palestine as many Jews as the limited possibilities and the territory of the land can absorb." [39]

Untermyer ended with a reminder: "If world Jewry and the civilized world will in the meanwhile not stop, and [instead] tolerate Germany's medieval crusade, then global anti-Semitism will be encouraged, ... then your only chance of helping your persecuted brothers will be lost. [40] Whether this manifesto, which essentially advocated the Revisionist strategy, would be read aloud to the Congress delegates and its message then voted on was a decision for the presidium.

The Sunday Actions Committee lasted well past midnight. Mapai would not agree to seat any Revisionists. The Revisionists used their minority power to block the formation' of any presidium without them. Finally, the deadlocked session simply broke up. The argument-weary Actions Committee members returned to their hotel rooms to catch a few hours of sleep before the Congress officially opened Monday evening-for the first time in its history, without a presidium. [41] As the leaders of the Zionist movement fell asleep, just before dawn Monday, no one could predict what would happen.
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Re: THE TRANSFER AGREEMENT: THE DRAMATIC STORY OF THE PACT B

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32. The Eighteenth Zionist Congress Opens

SEVEN HILLS inhabited by Gothic cathedrals, Romanesque monuments, and regal halls have made Prague "the city of a hundred spires." A network of bridges spanning the Vltana River link the city's left and right banks. On the left, the medieval Hradcany Castle, towering above a vast complex of gardens, parks, and gray-brown churches. On the right, the congested "old city," with its narrow streets, clock towers, and art galleries.

Jews had always represented a major cultural and economic segment of Bohemia. Prague's Althneuschul, the oldest existing synagogue in Europe, was completed in 1270. The synagogue's narrow interior, graced by rib· vaulted ceilings and high windows, boasted a large, ornate banner of friend· ship bestowed in 1648 by the German monarch Frederick III. A Jewish Town Hall was erected in Prague's Jewish district during the sixteenth century; a large clock featuring Hebrew numerals was added in 1754. Split between Czech and German identities, the Prague Jewish community was known for its illustrious rabbis, scholars, and artists. [1]

By 1930, Prague, with its Jewish population of 40,000, was respected as a bastion of Jewish rights and Zionist activism. Czechoslovakia's first president, a Catholic named Thomas Masaryk, felt it his Christian duty to help obliterate anti-Semitism. He enjoyed close contacts within the American Zionist movement, including Justice Louis Brandeis and Stephen Wise. Under Masaryk, Czechoslovakia had opened its arms to fleeing German Jews. [2]

The Congress was not the only Zionist event in Prague during late August. The Jewish athletic contest, the Maccabi Games, headed by Lord Melchett, was to be held in Prague, as was the Women's International Zionist Organization convention, the General Zionist party convention, and the Jewish Agency General Council assembly. The streets of Prague were bedecked with pennants and flags emblazoned with the Star of David. Blue and white bunting was everywhere. Large signs along major thoroughfares welcomed over 10,000 Zionist visitors in six languages -- with Prague's traditional German conspicuously absent. [3] As the sun came up on "the city of a hundred spires" on August 21, 1933, it was the most logical, hospitable place in Europe for a decisive international Zionist uprising against the Third Reich.

All afternoon, spectators and participants filed into Prague's massive Lucerno Concert Hall. Undercover police guarded against threatened Nazi disruption. As spectators entered the great hall, they saw a huge portrait of Theodor Herzl hanging above the stage, framed by Czechoslovakian and Zionist flags. Beneath Herzl's portrait, just next to the speaker's podium, an empty chair draped in black signified the loss of Chaim Ariosorotf. By 8:00 P.M., about 5,000 people had entered, with more thousands outside unable to squeeze in. All seats, and even aisle standing space, were occupied. [4]

The atmosphere was tense; the expected clash between Mapai and Revisionism was the topic of conversation throughout the audience. Shortly after 8:00 P.M., Actions Committee chairman Leo Motzkin appeared. To a round of applause, Motzkin led members of the Actions Committee, all in tuxedos, to their seats on stage. Then David Ben-Gurion, now representing the greatest power in the Zionist movement, led his Mapai delegation to their chairs. As they walked, they enjoyed a long ovation from Labor's vast supporters in the hall. [5]

Other VIPs were about to walk onstage when suddenly a cheering was heard from outside the hall. The audience turned around to see. It was Jabotinsky. His supporters had successfully pressured the Foreign Ministry, and his visa was finally issued. Jabotinsky took his seat, buoyed by the hearty cheers of Revisionist supporters throughout the hall. [6]

When the tumult subsided, the inaugural ceremony continued. The audience rose as Zionist Organization president Nahum Sokolow led a diplomatic corps, which included Masaryk's personal representative, the Polish ambassador in Prague, a British embassy official on behalf of Britain's Mandate, and Greek and Spanish diplomats representing the League of Nations. The Zionist Organization, having been accorded quasi-governmental status by the League of Nations, was not just an association of activists; it was the officially recognized Jewish-government-in-waiting. In fact, virtually the entire future Jewish government was at that moment waiting in Lucerno Hall. Applause continued until the diplomatic corps had all taken their seats onstage. [7]

Sokolow then gaveled three times, bringing an immediate hush to the hall. He declared the Eighteenth Zionist Congress officially called to order. This brought a resounding cheer from the delegates. Sokolow then nodded to the choral director, who led a choir of refugees, formerly of the Berlin Opera House, in a short program of Hebew songs followed by Handel's Hallelujah Chorus. Each diplomat then offered a brief greeting, followed by a special statement of solidarity from Neville Laski of the Board of Deputies. His remarks provoked a long ovation. [8] If the traditionally anti-Zionist forces Laski represented were dropping their opposition, it was indeed a new era for Zionism.

Preliminary ceremony out of the way, Dr. Sokolow returned to the podium for his keynote address. To avoid German, the traditional Congress language, Dr. Sokolow alternated between English, French, Hebrew, and occasionally Yiddish. When he mentioned Chaim Arlosoroff, the entire assemblage spontaneously rose in a short tribute of silence. [9] However, the real power of his message was a crystallization of the historic choice facing the world.

"We come together on this occasion in a time of tribulation and suffering," Dr. Sokolow began. "Emancipation has been shaken at its foundations, ... thrown into confusion as by an earthquake. We are suddenly faced with the ruins of Jewish emancipation in one of the greatest countries in Europe." [10]

His voice shaking in emphasis, Dr. Sokolow continued: "The falsehood of assimilation and mimicry endeavored to make our people believe that anti- Semitism was a passing episode which would be quickly overcome, a bogey to frighten children .... It is a bitter irony that the assimilationist movement should have been strongest in Germany." He suddenly stopped and exclaimed in English, "Germany of Goethe, Schiller, and Lessing, where are you now!" [11]

Speaking more to the Jews of the world than to the Zionists in the hall, the elderly Sokolow then asked a dramatic question: "Jewish people! How long can we go on like this? Time presses, the ground gives way beneath our feet. Whatever it is not too late to save must now be saved.... Zionism must in these days become the concern of the entire Jewish people and of the human race .... The maintenance of the status quo has become impossible . . . . How do you picture safeguarding the future existence of the Jewish people, which is now at the mercy of the ax? And to the civilized world, I ask, shall this nation ever and forever be in vagabondage, shall our people ever and forever shift about, . . . yearning to find rest, and never find it? Is this not a situation which mocks the most elementary conceptions of humanity and civilization?" [12]

"What then is to be done?" he demanded. "If it is impossible to restore the refugees to their country, or to receive them into another country, then the country of their ancestors must be given to them. Nothing is more straightforward or more just. That is the problem which faces the international political world." Emotionally answering his own question, Sokolow exclaimed, "The idea of Zionism as the solution of the Jewish question must now again rise before the world like a new daylight!" [13]

He conceded that a grand scale of action was now needed. "Two ways are open for the solution of this problem, one easy and one difficult. The easier way is to get excited, to protest and argue. The more arduous way is that of increasing tenfold the work of the Palestine Foundation Fund and the Jewish National Fund." He then stood down from the podium to a thunderous standing ovation. [14]

Mapai leader Berl Katznelson closed the inaugural session with a stirring eulogy of Arlosoroff, calling him the "young and gifted leader upon whom the entire Zionist movement laid its hopes .... The entire Congress must mourn him. . .. The bullet which wounded Ariosoroff also wounded the heart of the entire movement." [15]

The delegates had been moved by Nahum Sokolow, crying out for a solution of the German tragedy and its implications for Palestine. But Mapai wanted the delegates to know they had an equally pressing crisis to consider -- the implications of Ariosoroff's murder for the Zionist movement. As the ceremonial opening of the Congress ended, the delegates still did not know which of those two issues would predominate. That question would be answered during the next days at the working sessions, when Mapai and Revisionist forces would vie for which crisis was the most important.
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33. The First Leak

THE POMP and passion of the Eighteenth Zionist Congress' opening session belied its internecine undercurrents. On August 21, prior to Dr. Sokolow's opening gavel, the Mapai and Revisionist camps had each gathered to review tactics.

The Revisionist strategy counterposed a nine-point plan for Palestine addressing a range of Zionist issues. [1] But Vladimir Jabotinsky himself understood that political triumph in the days ahead was impossible. So at the Revisionist strategy conference, Jabotinsky told his followers to look beyond the Prague convention. He fully expected Mapai to successfully isolate Revisionism. But, he predicted, after two years of Mapai-dominated leadership, the Zionist movement would be utterly frustrated. "The Congress of 1933," he declared, "is paving the way for a Revisionist victory [at the next Congress] in 1935." For this reason, Jabotinsky commanded his followers to refrain from any emotional outbursts during the proceedings -- unless the Laborites tried to convert the Congress into a kangaroo court for indicting and expelling the Revisionists for Arlosoroff's assassination. [2]

While the Revisionists expected little immediate success for their Zionist goals, they did demand immediate action on the Hitler crisis. In a moving speech, Jabotinsky insisted that all energies be expended to force the Congress to join the boycott movement. Nothing less than a "merciless fight" would be acceptable, cried Jabotinsky. "The present Congress is duty bound to put the Jewish problem in Germany before the entire world .... We are conducting a war with murderers .... [We must] destroy, destroy, destroy them-not only with the boycott, but politically, supporting all existing forces against them to isolate Germany from the civilized world." [3]

That same afternoon, as Jabotinsky was exhorting his followers to postpone their political grievances in favor of the war against Nazism, Labor leader David Ben-Gurion, speaking to the Mapai strategy conference, demanded that his supporters do the opposite. The most important task of the moment, Ben-Gurion declared, was to cleanse the movement of Revisionism and extend Mapai's political borders to cover the entire Zionist Organization. The Labor party, controlling 44 percent of the delegates, was the movement, Ben-Gurion said. This new reality, Mapai leaders explained, required a new constitution to enable the Zionist Executive to expel "undisciplined" groups and/or deprive them of their rightful share of immigration certificates. Ben- Gurion proposed giving Revisionists the Inquisitional choice of pledging allegiance to the new Mapai-dominated organization or leaving the movement altogether. [4]

After their strategy conferences, Revisionists and Mapai attended the inaugural Congress session. But the peril dramatized by the words of Dr. Sokolow did not mitigate their factional conflict. No sooner had the ceremony concluded then the Actions Committee huddled for another emergency session to form a presidium. Committee members bickered all night, with the Revisionists refusing to allow a debate on the Arlosoroff assassination, insisting instead on debating the German crisis. This only redoubled Mapai's unwillingness to allow the Revisionists a place on the presidium, which would ultimately decide such questions. The Actions Committee's all-night meeting again ended without a decision. The deadlock meant that the Congress would have to function without a ruling coalition. [5]

Several hours after the Actions Committee again broke up in frustration, the Tuesday-morning August 22 session of the Congress convened. Working sessions would be held in Prague's City Council chamber. Weizmann again refused to attend because the Revisionists still had not been purged. And when Dr. Sokolow gaveled the Tuesday-morning session to order, the delegates could plainly see that no presidium had been formed. For want of a better solution, Sokolow ran the session. [6]

Without a presidium, agenda questions could not be decided, so the most pressing issues were not discussed. Instead, the session's main feature was a speech by Professor Selig Brodetsky, a General Zionist and the Zionist Organization's liaison man to the British government. Brodetsky pleaded for Palestine's gates to be opened, asserting that hundreds of thousands of Jews could and should be absorbed into Palestine during the coming few years. Thereafter, within a decade, millions of Jews could live and thrive in Israel. [7]

The whole subject of "how many, how fast" was quite controversial among the delegates. Brodetsky's notion of "hundreds of thousands" as opposed to Mapai's "one thousand family plan" put Mapai on notice that their two-stage protracted emigration plan was insufficient. The crowd cheered Brodetsky's words, which resembled the Revisionist point of view. But to avoid any hint of General Zionist sympathy for the Revisionists, Brodetsky added a eulogy for Arlosoroff. And the eulogy led to a reprimand. "This Congress," warned Brodetsky, "must once and for all settle the problem of unity of Zionist efforts. Unity of Zionist efforts does not mean that all Zionists shall think alike, but it can mean and must mean that all Zionists act alike." Here Brodetsky alluded to the coming Mapai move to force Revisionists to renounce Revisionism or suffer banishment from the movement. In a telling defense, Professor Brodetsky declared, "It is not an Inquisition, but discipline for which I ask." [8]

Following Professor Brodetsky's speech, the Actions Committee went into yet another session, this one to discuss the ultimate recommendations of the special Commission on German Jews. As expected, disagreements dominated. By late that Tuesday morning, the special Commission on German Jews joined the other Zionist deliberative bodies and declared a deadlock. The Revisionists would be allowed to present their minority position to the full Congress for a vote. [9] The commission's conflicting recommendations were to be presented at the Congress session that Tuesday afternoon, but with no presidium to rule on agenda questions, the scheduled German debate was postponed. [10]

The Tuesday-afternoon session was confined to more public speechmaking and more closed-door political haggling over the formation of a presidium. Despite pleas by peacemakers and intermediaries, all compromises were rejected. Yet unless the presidium deadlock was broken soon, the question would be forced to the floor. [11]

While virtually all important Congress functions on August 22 had been frozen by factional conflict, the editors of Vossische Zeitung in Berlin were reviewing an extraordinary piece of information. Their Eighteenth Zionist Congress coverage featured a wrap-up of developments, but added to the Prague summary was a leaked report that a trust company organized in Berlin had successfully negotiated a transfer of Jewish assets to Palestine. According to the report, the agreement would allow Jews to purchase up to RM 3 million of German machinery and receive credit for the sales in Palestinian accounts. Furthermore, emigrating German Zionists could transfer an additional RM 3 million capital to Palestine in cash. [12]

Vossische Zeitung's transfer item, however, was slightly incorrect. It was unlikely that any authoritative Reich governmental or ZVID source leaked the news because the item confused machinery purchases and emigration assets as separate matters. It is more likely that the news was leaked by unofficial Nazi sources in Germany or dissident Zionists in Prague. In either case, the delegates would soon have to decide one way or the other: boycott Germany, or purchase Nazi merchandise to facilitate emigration and an assets transfer. The Vossische Zeitung article would appear in the next day's editions.

***

The Wednesday-afternoon August 23 session was as embroiled as any other. No presidium was available to decide agenda questions, especially the burning issue of whether the Arlosoroff assassination or the Hitler menace would be the focal point of debate. In frustration, the religious Mizrachi party introduced a motion for a floor vote to bypass the Actions Committee deadlock, allowing delegates to directly elect a presidium with equal representation for all parties. This motion was blocked by Mapai as being irregular. Mizrachi refused to accept Mapai's veto, forcing a vote on the very question of voting. This maneuver Mapai could not block. The vote on the question to vote would resolve the presidium fiasco once and for all. [13]

As the vote was getting under way in Prague, news of the Transfer Agreement had spread all over Germany, and most major German papers were carrying the item. [14] But those newspapers had not arrived in Prague by the afternoon vote. So the Transfer Agreement was not yet a factor. The vote on the presidium question would be a contest strictly on the issue of Revisionist isolation versus Mapai domination.

All Mapai delegates of course voted to defeat Mizrachi's motion. Mizrachi and Revisionist delegates voted in favor. The General Zionists and Radical Zionist delegates, however, were divided along intra party lines. A tense Congress waited as the 300 delegate votes were counted one by one. Not until the last moment was the outcome clear: 149 votes for the Mizrachi-Revisionist motion, 151 against. The motion to vote was defeated by two votes. [15]

Immediately thereafter, Mapai forces nominated Leo Motzkin to become Congress president and oversee personally the formation of a presidium. Mizrachi and the Revisionists immediately declared they would not participate. And that afternoon, Motzkin and Mapai leaders formed a presidium mostly of Labor Zionists, with token General Zionist and Radical Zionist representation. [16] The Eighteenth Zionist Congress would henceforth be run by Mapai.

News of the Transfer Agreement had not yet reached the eyes and ears of delegates in Prague. But the ZVfD in Berlin was quite aware that within hours the news would become common knowledge around the world. To help shape the thrust of the revelation, the ZVfD issued its own press release during the afternoon of August 23. The release confirmed that an agreement had indeed been reached between the ZVfD and Economics Minister Kurt Schmitt allowing transfer to Palestine of RM 3 million in Jewish assets via merchandise sales. The ZVfD hoped its announcement would be hailed as an important breakthrough. [17]

At the same time in Prague, Dr. Arthur Ruppin told reporters that he would present the Congress delegates with an explanation of the agreement reached with the Third Reich. He would say little more than that it did in fact provide for the transfer of RM 3 million -- about $1 million -- through the purchase of German goods via the Anglo-Palestine Bank. Between the German papers arriving in Prague, news of the ZVfD's statement, and Dr. Ruppin's announcement, the entire Congress was by nightfall blazing with speculation about the possibilities and ramifications of a Reich-Zionist transfer agreement. [18]

***

Although the Transfer Agreement was sealed on August 7, 1933, with verbal commitments, the fine technical points weren't completed until August 22, even as the Congress was in session. By the morning of August 24, the news had reached the newspapers of all Europe, America, and Palestine. [19] Zionist delegates in Prague entered the Thursday, August 24 morning session of the Congress anxious to know more. Each had his own notion of whether the agreement represented a betrayal of the Jewish people or a daring move to save the German Jews and create a national wellspring for Eretz Yisrael.

With a Mapai-controlled presidium now in place, the twice-delayed session on the Hitler crisis could now take place. Three major agenda items were scheduled. First, a report by Sokolow summarizing "the state of the Jewish people" around the world -- a traditional address that had been postponed over the question of how vocally to condemn German persecution. The second presentation would explain Ruppin's proposed two-stage immigration scheme and the Transfer Agreement. The day would end with a Congress decision on commission resolutions committing the Zionist movement either to fight Hitler, or work with him. The Revisionists pinned their hopes on this final event; if somehow they could present their minority report and force a debate on the merits, they believed they could sway the consciences of the delegates.

This was also the day the Nazis were listening with keenest attention. Nazi officials had unmistakably warned: The sterility of the Congress' German resolution, the uncompromising suppression of any boycott or protest mandates, and the complete absence of any hostile demonstrations against Germany -- these would be the prerequisites for future cooperation.

So in his speech, Sokolow did his best to sound defiant yet avoid affronting the Reich. His references to Germany were oblique: "The tragedy of the Jewish Diaspora has been revealed in Germany in a manner that is without precedent for centuries .... Not only German Jewry, but the whole of the Jewish people is attacked when one speaks of the inferiority of the Jewish race, and when Jewish honor is degraded in so extreme a fashion.... It is impossible for us to let anti-Semitism display its fury without our energetic, emphatic protest." [20]

However, Sokolow quickly added, "It is not our task to influence or criticize the internal developments of the German people, which have gravely suffered through the war and its consequences. We are not gathered here to criticize anyone nation or anyone state. It is not part of the program ... of the Zionist Organization to break its [shepherd's] staff over this or that state organization, this or that economic system. Our duty is to speak the truth." [21]

On the other hand, Sokolow, using the words of Justice Brandeis, cried out to a cheering throng, "The Jews will never forget and never forgive Germany's insult .... Jews will respect ancient Spain more than present Germany because it is better to have a complete exodus of Jews than be degraded in this manner." The cheers continued as Sokolow ended with the rousing but empty warning, "There is now no capitulation, no surrender, no yielding words!" [22]

Such oratory walked a tightrope between the expectant Jewish world and the attentive Third Reich. But if the delegates had any delusions, the next speech, the anxiously awaited report of Dr. Ruppin, changed their minds. Dr. Ruppin's first words were these: "My address on the adaptation of German Jews to Palestinian life, and their settlement therein, will lead you down from the high peaks of political debate into the low valleys of economic problems." [23]

A procession of economic statistics followed. Ruppin detailed the numbers of persecuted German Jews out of work, profession by profession, and explained why they held no hope for any other livelihood under the Nazi regime. He then outlined the emigration plan. Two hundred thousand Jews would leave Germany for a variety of nations. Because of water shortages and economic unreadiness, Palestine could accept only 1,000 families now -- about 4,000 persons. Only 50,000 to 100,000 more could come over the next decade. [24] "I am afraid I must disappoint all those," said Dr. Ruppin, "who had hoped to say that Palestine would absorb just so many German immigrants in just so much time .... The number of German Jews who can be taken into Palestine depends on the capital which they bring with them and on the sums which are contributed to that end by world Jewry. It is very difficult at the present moment to say anything about these factors." [25]

It was all sounding very fiscal for an exodus. And, of course, Dr. Ruppin was not mentioning that German Jewish assets would not be reimbursed unless the German Jews actually reached Palestine's shore. Yet he did make one point eminently clear: "We shall of course help only those Jews who want to go to Palestine. Emigrants choosing some other country are of course perfectly free to do so." [26]

The burning question of the Transfer Agreement was then summed up in barely a sentence or two. He merely explained that the question of German Jewish capital held great promise because an emigration agreement had been reached with the Reich. Who had arranged .the agreement? "A few months ago," Dr. Ruppin said, "Mr. Sam Cohen had the wisdom to conduct with great care and diligence negotiations with the appropriate authorities in Germany ... enabling Jews who wish to emigrate to Palestine to take with them part of their capital in the form of currency and merchandise. You will later on be informed of some of the details in this matter by the German Commission. On the basis of these negotiations, I feel ... there will be no obstacles to an organized immigration of Jews from Germany along with permission to take a part of their property." [27]

Sam Cohen, attending the Congress as the alternate delegate from Luxembourg, did not hesitate to grant press interviews immediately afterward. Cohen confirmed that it was he who had convinced the Reich Economics Ministry during more than two months of negotiations to transfer German Jewish assets to Palestine. [28]

As the Thursday-morning session closed, things were still rather unclear. The newspaper items about the Transfer Agreement had been short and indistinct. Dr. Ruppin's "presentation" amounted to a fleeting, ambiguous mention, treating the issue as a proud achievement. And the entire arrangement had been successfully placed on the shoulders of none other than Mr. Sam Cohen. If a backlash occurred, Cohen would receive it. For his part, Cohen was willing to risk such a backlash. In exchange for providing the official Zionist institutions with deniability, Cohen was getting his hard-earned glory. Ironically, shortly thereafter, Dr. Ruppin saw to it that most drafts of his speech not already printed deleted any reference to the Transfer Agreement or Mr. Sam Cohen. [29] Dr. Ruppin apparently preferred history to believe he had never even mentioned the subject.
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Re: THE TRANSFER AGREEMENT: THE DRAMATIC STORY OF THE PACT B

Postby admin » Fri Jun 26, 2015 6:28 am

34. Showdown on Nazism

THURSDAY EVENING, August 24, brought the showdown on Nazi Germany. The Congress reconvened just a few hours after Dr. Ruppin's parenthetical transfer disclosure. The agreement's full import had not yet been realized. On first hearing, it sounded like a noble project. German Jewish emigrants would be allowed to take part of their assets to Palestine. Who could argue with such an arrangement? But the maze of provisos and special conditions attached to Haavara were as yet unknown. The magnitude of merchandise traffic, the cooperative economic ventures between the Reich and Palestinian sources, the planned Liquidation Bank, the facts about mandatory loans, the actual mechanism of transfer, and the financial dangers to the German Jews -- these were all unknowns.

Besides, there wasn't time to delve into the serpentine issue of transfer. The big issue now facing the delegates was the ultimate resolution on Germany. The German Commission had formulated two majority resolutions, reciting the particular grievances and vested interests of Labor, General Zionists, Radical Zionists, and the Mizrachi. But these contradictory, taped-together resolutions were so devoid of affrontive language toward Germany, so transparently submissive, [1] and so disallowing of the anti-Nazi boycott that the Revisionists flatly rejected them. By blocking the unanimous approval required to adopt a resolution, the Revisionists forced their own boycott-mandating minority resolution to a floor debate and vote.

This was the moment Revisionists had waited for. If famed orator Vladimir Jabotinsky could evoke the passions of the delegates to vote for the minority resolution, that single moment of delegate disobedience would determine the fate of the Jewish war against Hitler. The anti-Nazi boycott was truly desired in the hearts of almost all Zionists; only the marshaling demands of a small group of Mapai-aligned leaders was staying a formal worldwide Zionist commitment to boycott. A Congress resolution would be the justification any Zionist body from Paris to Hong Kong needed to devote its resources to the fight. Of course, leading that worldwide act of Jewish self-defense would be Jabotinsky. This would reestablish the leadership of Revisionism within the movement.

Shortly after the session was gaveled to order, presidium chairman Leo Motzkin told the delegates that the Actions Committee had created a special Commission on German Jews to study the problem and prepare binding resolutions for the Congress. [2] The secretary then read the Mapai-backed majority resolution: "The Eighteenth Zionist Congress ... considers it to be its duty to give expression ... to its consternation at the tragic fate of the German Jews, and its indignation at the discrimination and degradation inflicted upon them. After a century of Jewish emancipation, ... developments in present-day Germany have gone so far that half a million Jews have been deprived of their elementary human rights, [so far] that through the official sanctioning of racial prejudice the dignity and honor of the Jewish people are insulted, and [so far] that a policy and legislation are enacted whose fundamental principles must destroy the bases of existence of the Jewish people." [3]

Words of "consternation" characterized the remainder of the resolution. Soft nouns and verbs together with lofty introductory clauses were present throughout. When the resolution mentioned the "suppression of the rights of the Jews by all the powers of the State, unique in its scope and inconceivable in the twentieth century," it called the persecution a vindication "of the century-old Jewish question as depicted by ... Theodor Herzl." [4]

The resolution ended with the sentence "In conjunction with our protests ... the determined will of the Jewish people to rebuild its National Home ... will represent the strongest proof of our national solidarity with the Jews of Germany." [5]

In other words, Hitler would be fought and the rights of the Jewish people would be preserved by one means and one means only: a Jewish State.

On the other hand, the Revisionists' minority resolution was nothing less than a boycott declaration, even though it cleverly avoided using the actual word boycott and even abstained from mentioning Germany by name. If the Revisionists had wanted a mere symbolic protest, they would have injected far more inflammatory language, but they earnestly wanted their resolution to win. They deliberately avoided trigger words that would make the resolution unacceptable to the average delegate, even the delegates of Mapai. Yet the phrasing conveyed the essence of an unmistakable commitment to economic war.

The Revisionist resolution stated: "The Congress welcomes the decision by the Jewish masses in all countries to use their purchasing power and their economic influence . . . as a factor of world trade for the benefit of the products of only those states which constitutionally recognize the principle of full equality for their Jewish citizens. The Congress is resolved to actively and energetically support the Zionist movement in extending and organizing every serious attempt to implement this just protective measure of the Jewish masses." [6]

But the Revisionist argument would never be heard. Motzkin announced that after the resolutions were presented, there would be no debate, this by decision of the Mapai-dominated presidium. Revisionist delegate M. Hoffman, founder of Betar, stood and objected. The Revisionists had a minority resolution, and according to the rules, this had to be openly discussed. Radical Zionist Nahum Goldmann answered against debate, asserting that the Commission on German Jews had already debated these resolutions back and forth for days without any progress. He urged that the Congress show unity by considering only the Mapai-based resolution. [7] For Goldmann, avoiding the Revisionist boycott declaration also preserved the illusory world boycott premiere that Wise's World Jewish Congress coveted.

Loud protest broke out as the Revisionists demanded a proper debate for their minority resolution. Amid the tumult, Jabotinsky was finally allowed to make a brief statement, actually a plea: Nazism was endangering the "securest foundations of the existence of all Jews the world over.... It must be regarded and treated as the affair not only of German Jews but of the entire Jewish people. It is therefore the duty of world Jewry to react with all means of just defense ... against this attempt to destroy the Jewish people." [8] Beyond those few words, no other remarks were allowed.

Motzkin then read the Mapai resolution once more. His elocution was so stilted and so artificially exalted that Jabotinsky openly mocked him by caricaturing the words even as Motzkin spoke. At one point, in an exaggerated inflection, Jabotinsky recited a famous Latin quotation: "Quousque tandem, Catliina, abutere patientia nostra?" The quotation referred to Cicero's complaint against a noisome speech in the Senate by Roman archcriminal and conspirator CatiIine -- "Oh, please, Catiline, tell me how long you will continue to abuse our patience!" [9]

Motzkin ignored Jabotinsky's ridicule, completed his reading, and then ordered the assembly to vote. The Revisionists demonstratively refused to participate. In the uproar, perhaps just to achieve some sort of decision, all the weary non-Revisionist delegates -- including Mizrachi -- voted for the majority resolution -- 265 votes. Because the Revisionists refused to vote, no nays were registered. [10]

When the Revisionists then demanded that their minority resolution at least be put to vote, Motzkin and the presidium denied that motion as well. [11] This crushed the last Revisionist hope that perhaps both the innocuous majority resolution and the minority boycott resolution might both be adopted. At this the Congress lapsed into utter pandemonium.

The Revisionists in a group began a disruptive walkout. Threats and insults were shouted as the Mapai and Revisionist forces faced off. Ushers trying to intervene were themselves manhandled by angry Betarim. Jabotin sky and his wife were suddenly surrounded by a band of Mapai ruffians. One jostled Mrs. Jabotinsky, which brought a cadre of Betarim running. The battle was on, with shouts of scorn and praise for Jabotinsky flying as fast as punches and jabs. Only a squadron of police could separate the combatants. Both sides were ousted from the hall, and the doors locked. Jabotinsky was invited to press charges, but declined. [12]

In that hour of supreme opportunity, neither fist nor voice was raised to Hitler. It was so much easier to fight each other. And so the moment of consolidation slipped past.

The Zionist Organization had failed. But the question remained: Would the Zionist movement -- the men and women around the world who believed in the righteousness of both the Jewish nation and Jewish defense -- would these people accept that failure? There was a time to be a Zionist, and there was a time to be a Jew. Only one issue could make any of them understand the difference. That issue was the recently revealed, but little understood, Transfer Agreement.
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