The Transfer Agreement (28 page)

But Hull understood completely. Five billion dollars in debts would be defaulted on,
$2
billion of which was held by Americans. And he understood the timing. Coming just before the World Economic Conference in London, and arising out of a conversation with the president, the German move would certainly seem like some bizarre fiscal connivance to prop up the Hitler regime at the expense of America and her allies. Now Hull was outraged. The countless brutalities against Jews and the escalating campaign of legalized Jewish dispossession in Germany did not ruffle the secretary of state. But tinkering with Hull's emerging economic order was a capital offense that excited him to a fighting stance.
²²

Hull summoned Schacht to his office the next day. The secretary had been able to explain the ramifications to Roosevelt and secure the president's condemnation. When Schacht arrived, Hull deliberately began searching through papers on his desk, pretending Schacht was not standing in the doorway. Only after several minutes did Hull finally acknowledge Schacht's presence with the words "I am to give you this from the president." He handed Schacht an envelope. Wary of what was happening, Schacht asked if he should read the contents at once. Hull said yes. Schacht carefully pulled the short note from the envelope and read it silently.
It
was in fact a message from Hull, reading, "The President has directed me to say to you in regard to ... the decision of the German Government to stop [payments] ... on obligations externally sold or externally payable, that he is profoundly shocked." Schacht replaced the note in its envelope, said nothing, but sat down at Hull's desk.
²³

Schacht was barely seated when Hull exploded. "I was never so deeply
surprised as I was yesterday afternoon by your announcement. My government is exercising every ounce of its power to bring [our] ... nation out of the depths of awful panic conditions, back in the direction of normal prosperity. Just as real progress is being made, you come over here and, after sitting in confidential conferences with our officials ... suddenly let it be given out from our doorstep that Germany suspended these payments ....
It
is greatly calculated to check and undermine American efforts to restore domestic business conditions."
²⁴

Schacht apologized, claiming he had not foreseen the implications of his statement. Not true. Schacht was trying to coerce America and the world away from the boycott movement and into continued economic support of the Hitler regime. Emerging as it did from a White House conversation, it indeed appeared as though the president understood and agreed to Germany's reneging on its debts so long as a boycott was making it impossible for her to pay. Hull refused to accept Schacht's excuses, and scowled, "Any person ought to realize the serious possibilities of such steps."
²⁵
But scowls were unimportant. The Wizard had begun to work his magic.

In the days before the May
10
march, Stephen Wise continued to walk a tightrope between Jewish powers. On the one side was the great mass of American Jewry, eager to declare an official boycott. On the other side was the tiny faction of mostly German-American Jews represented by the Committee and allies in B'nai B'rith. In a May 9 letter to Albert Einstein, Rabbi Wise complained, "In America, I am sorry to say, there is
no
unity of opinion and action. Things are made infinitely more difficult for us by American Jews of German descent who believe they owe it to their German past to disbelieve the stories of Hitlerish barbarism and brutality.... The result is that, what with the [coming] London Economic Conference and the lack of pressure on the part of the rich German [American] Jews, the Administration has found it simpler not to act."
²⁶

Hjalmar Schacht, surrounded by America's anti-Hitler tumult, understood that on May
10,
hundreds of thousands of American citizens would assemble to denounce the Reich. Schacht knew that the newspapers would continue to print anti-Nazi news, one article giving rise to another, fueling the boycott.

Indeed, some columns addressed Schacht directly. One
New York Times
article just before the May
10
parade capsulized the intended drama. Headlined
"HEAD OF REICHSBANK, HERE FOR WHITE HOUSE TALKS, FACES OPPORTUNITY TO GAUGE CRITICISM OF NAZIS,"
the article wished Schacht "all good luck" in his efforts to rehabilitate Germany's battered economy. However, the article predicted, all his efforts would hinge on ending the Reich's anti-Semitic campaign, which carried with it constant economic retaliation by the rest of the world. Noting that "it is said that his word is law in all that pertains to finance and economics in Berlin, it is fortunate that it is upon the ears of Dr. Schacht himself that will fall" the voices of anti-Nazi protest. The article warned Schacht to listen and face the facts: The anti-Nazi boycott was killing the German economy.
²⁷

And now Samuel Untermyer, one of America's most prestigious and forceful Jewish leaders, was filling Stephen Wise's leadership vacuum. In a speech that made headlines just before the May
10
parade, Untermyer urged all Americans to ban all German products and services. Untermyer called the simple act of boycotting the "obvious remedy."
²⁸
The masses were now demanding unity against Hitler.

At noon on May
10,
Jewish commerce in New York stopped as promised. Employees, customers, and owners alike took their leave to return home and prepare for the afternoon's event. This spectacle would dwarf even the March 27 rally. Indeed, the parade swelled to
100,000
strong.
²⁹

They marched under Jewish banners, Zionist flags, anti-Nazi placards, and military pennants. They wore dapper business suits, dirty smocks and work shirts, army uniforms, rabbinical robes, white collars, and habits.
³⁰
Shoulder to shoulder they marched in the face of Nazi threats to retaliate, in defiance of the forces of fear among their own people. In this moment they were united.

Chanting anti-Nazi slogans and vowing to resist Hitler, the crowds, fifteen deep on either side of the street, urged the protesters to escalate the fight.
If
there was any question of leadership, it was settled now. Roars of applause and volcanic cheers greeted a hat-waving Stephen Wise at every corner. For hours, Wise,
100,000
behind him, marched south toward Battery Park.
Along the way, cheering people in windows showered the parade with ticker tape and confetti. At Seventeenth Street, thousands of assembled labor unionists, their ranks extending to the East River, flowed into the mainstream. At City Hall, Mayor O'Brien and other dignitaries stood on the steps of a reviewing stand.
It
took more than four hours for the protesters to pass.
³¹

Despite the late hour, the throng gathered at Battery Park. There, the speakers condemned Hitler and his Reich. The cries for resistance were silenced only when the rally was officially closed by the playing of "The Star Spangled Banner" and the anthem of Jewish resistance,
"Hatikva."
Similar rallies were held in other cities, including Chicago, where
50,000
braved the
rain. Those too old, too young, or too weak to walk joined the caravan of
500
cars and trucks that brought up the rear.
³²

The American people had a message. They were speaking in unison. And the most important man listening could not help but hear their warning.

From Washington, Schacht contacted an old friend, David Sarnoff, the president of RCA, and accepted an invitation to a May
12
private dinner party at SarnoiPs home. The Wizard knew that about a dozen Jewish leaders
had also been invited-including Stephen Wise. Both the Reich and influential American Jews had been seeking a private parley to see if some ceasefire could be arranged.
³³
The dinner seemed to be a perfect opportunity.

But when Justice Brandeis learned that the much-debated dinner was actually to take place, he counseled Stephen Wise against the meeting. Brandeis was privy to rumors in official circles that Hitler might soon back down due to international economic pressure. Any symbolic gesture to Schacht now would be the wrong signal. Wise agreed with Brandeis, but decided to attend the Sarnoff dinner if only to counterbalance the voice of American Jewish Committee leaders who had been invited.
³⁴

As expected, the dinner was a complete failure. After the meal, Schacht warned the Jewish representatives that outside interference "would only make matters worse." No one cared to comment, and Schacht took his leave.
³⁵

The next day, May
13,
Schacht received an urgent call from James Mac-Donald of the Foreign Policy Association. Having just conferred with Roosevelt, MacDonald insisted on meeting with Schacht. Schacht was scheduled to leave aboard an ocean liner later that night, but he rearranged his remaining hours for the urgent meeting. That afternoon the two men met. Mac-Donald's message: Time was running out for Germany. According to Macdonald, the mood in France was suddenly turning uglier. There was talk about "partitioning Germany and making up for what was left undone in Versailles."
³⁶

He pleaded with Schacht to convince Hitler to do
something—xactly
what, MacDonald did not know—but
something
to avoid the possible dismemberment of Germany. Schacht thanked MacDonald for the concern, but warned that such a dismemberment would not be accomplished as easily under Hitler as it was following Germany's war defeat. The Wizard tried to feign a facade of strength and courage, but as he boarded the vessel for the return trip to Europe, he had indeed concluded that the Jewish question was destroying Germany's interests in America. Only after intervening days of transatlantic solitude did Schacht compose an urgent cable to Chancellor Hitler informing him of the unsuccessful dinner with Jewish leaders and MacDonald's dire warning that France and others were entertaining the notion of dismantling Germany forever.
³⁷

G
ERMANY'S
destitute foreign-currency situation, aggravated so severely by the Jewish-led boycott, had a swift impact on the Zionist currency
exemption. The exemption had been approved to defuse the boycott, increase
German exports, and generate more foreign currency for the Reich. But the anti-Hitler boycott was as virulent as ever and expanding daily. Palestine itself, which stood to gain a windfall from the exemption, was as active in the boycott as any nation. Ironically, despite Nazi hatred for Jews, Jewish Palestine was vital to the German economic strategy.

At the turn of the century, when the Zionist movement was headquartered in Germany and its official language was German, Herzl and his circle looked to Kaiser Wilhelm as the logical sponsor of the Jewish State in Palestine. Herzl promised Imperial Germany a perpetual commercial and military outpost, as well as a colony of German culture in the Holy Land. From Jewish Palestine, the German Empire could anchor a highly desired sphere of influence in an undeveloped Mideast ripe with commodities and cheap labor, and equally in need of German merchandise. Jewish Palestine would be to Germany what India and Hong Kong were to England. In return, Kaiser Wilhelm was to persuade his ally, the Turkish sultan, to make Jewish Palestine a German protectorate. Although Herzl and the kaiser met twice in
1898
to consummate the arrangement, the kaiser ultimately withdrew his support.
¹

Although colonial status had not been arranged, Zionists continued to look to Germany for commercial, cultural, and political support. During the Great War, Britain enunciated the Balfour Declaration and similar pledges to various Arab potentates, intending to create local rebellions in the Turkish Mideast. Only the German government's intervention saved the Jewish population in Palestine from annihilation at the hands of the Turks, who suspected Zionists and Jews in general of favoring the Allied cause against Turkey.
²
(The same Turkish regime systematically slaughtered 1.5 million Armenians during the same years for many of the same political reasons.
³
)

After Palestine was mandated to the British, Zionists switched allegiance to the United Kingdom. But extensive ties to Germany remained. In fact, during the postwar years, German leaders fashionably showed their support for Jewish nationalism through Germany's Pro Palestine Committee. A leading plank of this support pointed to Palestine's reliable place in German commercial and diplomatic recovery. This view prevailed right up to the Hitler ascendancy.
⁴

Yet Palestine's importance to Germany was more vital after Hitler than before. In the decade since the Jewish Agency had been established, Jewish Palestine had flourished, even amid a worldwide Depression. While this tiny corner of the Mideast by
1933
accounted for only
0.1
percent of Germany's overall exports, it was a disproportionally important customer for certain vital Reich industries such as fertilizer, farm equipment, and irrigation pipes.
⁵
Far beyond its own consumption, however, Palestine was now the crucial gateway to expanding German exports throughout the emerging Mideast market: Egypt, Iraq, Lebanon, Syria, North Africa. This market was
deemed essential by the Reich if certain strategic raw materials Hitler craved for war were to be acquired via bilateral trade agreements.