The Transfer Agreement (29 page)

But the
Yishuv—
that
is, the Jewish population of Palestine—was not following the direction of the Zionist Organization leadership. Despite official Zionist calls to abstain from anti-Nazi activities so as not to jeopardize Zionism's commercial and political ties with Germany, the rank and file said no. As early as February
1933,
Jewish newspapers in Palestine began urging a boycott, and merchants in great numbers complied. On March 27, the Revisionist newspaper
Doar HaYom
expressed the popular sentiment in a defiant editorial: "Listen Hitler," the Jews of Palestine will not display "criminal apathy." World Jewry, the paper predicted, would rise up "as one man" to boycott Germany. Palestine would set the example: "No German machines, no German textiles, no German films, no German medicines, no German books and newspapers will be bought."
⁶

Official Zionist rejection of the anti-Nazi movement, which became public just before the April First action in Germany, changed the nature of the boycott in Palestine.
It
quickly became a grass-roots trend spreading
in spite
of
Zionist leadership. Hence, it was no different from the boycott in America and many other countries. People wanted to boycott and fight. Leaders refused. Thus, in the days after April First, many Palestinian newspaper editorials—heavily influenced by Zionist institutions—became stunningly silent about the German situation. No longer was boycott advocated. Tel Aviv's Chamber of Commerce tried to keep its merchants in line by resolving against any boycott, insisting that world trade was too valuable to the continuing Palestine boom.
⁷

Since mainstream Zionist officials refused to confront Hitler and insisted on continuing mutual trade, it was only logical that the Revisionists would assume the vanguard of protest. Revisionists—the followers of Vladimir Jabotinsky—rejected the Zionist Organization, advocated paramilitary Jewish self-defense, and pursued a maximalist territorial claim in Palestine. Their ranks were composed largely of East European Jews, especially Polish Jews. What Revisionists did around the world was often a direct reflection of Jewish activism in Poland. Naturally, Revisionists in Palestine agitated for an emotional, often violent, boycott of anything German.

In fact, in late March
1933,
as the Zionist leadership's stance toward Hitler crowned a constellation of other Revisionist political grievances, Jabotinsky advocated an open break with the Zionist Organization. Since
1925,
his Revisionist Union had enjoyed special dissenter status within the Zionist Organization. But now Jabotinsky was determined to lead his Revisionist Union toward an actual takeover at the coming Eighteenth Zionist Congress in Prague, scheduled for August
I933.
However, when the Revisionist hierarchy gathered in Kattowice, Poland, in the last week of March, they could not agree on tactics; nor could they bring themselves, in the face of the Hitler
threat, to abandon the Zionist Organization. Jabotinsky knew that the rank and file was with him. So, in an action that stunned the movement, Jabotinsky dissolved the entire Revisionist leadership structure, declaring he would lead by personal fiat.
⁸
In his fight to evict the existing Zionist leadership, the anti-Nazi boycott would be the single most visible arena of confrontation.

Doar HaYom
,
the Revisionist newspaper in Palestine, and Betar, the paramilitary Revisionist youth corps, were relentless. Tactics included public humiliation of businessmen trafficking in German goods, mass recruitment of boycott pledges from merchants, picket lines, disruptive demonstrations, and incessant editorials condemning those who traded with Hitler. Many thousands of dollars' worth of German orders were canceled in Tel Aviv and Jerusalem in the first days of April alone.
⁹

Berlin clearly understood that much of Palestinian Jewry was in the forefront of the anti-Nazi boycott. By mid-April, Consul Heinrich Wolff was dismally reporting that the boycott was seriously damaging all German economic interests in the area. Many German businessmen in Palestine desperately sought to issue oaths repudiating Hitler's crusade; such oaths were useless. By May
1
933,
Consul Wolff informed Berlin that the boycott movement had made the crucial transition from a merchant-based protest to a consumer protest. The results: Agfa film sales, very poor. Of
626
physicians in Palestine, 452 were Jewish and no longer prescribing German medicines; German pharmaceutical houses were in ruin. No more German films were being screened; Ufa film distributors were devastated. Buying loyalties were abruptly transferred to Belgium, Holland, France, and Sweden, even when those products were more costly.
¹⁰

The Zionist rank and file in Palestine were waging economic war against Hitler—with or without their leaders' permission.

An anti-Hitler Yishuv violently hostile to German merchandise was the accurate Nazi perception in Berlin when Chaim Arlosoroff arrived in early May—and when Mr. Sam Cohen arrived shortly thereafter. Acting separately, both men discovered that the precious Zionist currency exemption had been abrogated by the Germans. When the first German Jews approached Reich authorities seeking their special allotment of foreign currency—about RM
15,000
worth of British sterling—they were sent on bureaucratic runarounds, or told they could obtain only RM 10,000
a third shy of the
equivalent needed to enter Palestine. Many who took what they could were nonetheless turned back at the border by Reich guards.
¹¹

Foreign exchange was essentially exhausted, and the Reich was about to suspend most of its external obligations. Currency Control director Hans Hartenstein had only granted the exemption on the promise of extra foreign currency flowing into Germany as a result of boosted German exports. Since
the Jews had failed to keep their side of the bargain, the exemption was stricken.

Arlosoroff must have certainly been discouraged. After spending weeks to secure the cloak of authority for his visit to Germany, the deal was dead. Just as he feared, too much time had been wasted.

Actually, the deal was never really very alive. Georg Landauer, director of the ZVfD, knew as early as mid-April that the growth ofthe Jewish-led anti-Hitler movement had prompted the Reich to renege on the exemption. In an undated letter, sent sometime between April 14 and April 17, Landauer cautiously complained to Professor Brodetsky of the Zionist Organization in London that German Jews were receiving only two-thirds of the
£1,000 needed to enter Palestine.If emigrants could not obtain "the minimum in accordance with Palestine immigration law," the currency exemption would not be workable, wrote Landauer. He asked Brodetsky to confirm again via the British whether the exemption was still formally in place.
¹²

The British now found themselves being dragged in as the medium of negotiation—a role they did not want. And Brodetsky's overly thankful letter of April
I3, I933,
to A.C.C. Parkinson, falsely identified the British as having won the exemption. Two days after receiving Brodetsky's letter, which also asked to publicize the exemption as a British deal, Parkinson telephoned the Foreign Office and explained the situation. A Foreign Office functionary commented, "Professor Brodetsky needs careful watching, as he is only too anxious to maneuver His Majesty's Government into acting or appearing to act as the protectors of the Jews in general in foreign countries and not merely of those Jews who possess British or Palestinian nationality." Parkinson drafted a response explictly denying that the British were involved in the currency concession. He added that since Nazis were paranoid about foreign interference, "from the point of view of the Jews in Germany, it would seem wiser not to suggest that a concession had been made as the result of representations from abroad."
¹³

But just after Brodetsky received Parkinson's denial, Landauer's new request came in. So Parkinson was asked to verify again whether the currency exemption was formally in place. In view of the crisis, Parkinson reluctantly agreed to once more ask the British embassy in Berlin to make inquiries.
¹⁴
But at this stage, inquiries were useless. The one common ground between Germans and Jews—emigration to Palestine-had become off-limits because the boycott of German goods had dried up the essential lubricant of any deal: money.

Only money could reopen the dialogue between Zionists and Nazis. Here Arlosoroff, the planner, could only fail. But Mr. Sam Cohen, the doer, could possibly succeed. While Arlosoroff slowly struggled to conceive a legally valid plan, Sam Cohen quickly presented the Reich with a marks and pfennigs proposal Germany would find irresistible.

Cohen started by retaining attorney Siegfried Moses. Moses was experienced in government as the postwar food controller of Danzig. He was active in Jewish communal affairs as director of the Jewish Workers Aid Society in Berlin until
1923.
And he was attuned to business as the former manager of the prominent Schocken department store in Zwickau. Moses had one other important credential. He was president of the German Zionist Federation.
¹⁵

So while Chaim Arlosoroff was in Berlin on behalf of the Jewish Agency, Sam Cohen would be able to pose as the official emissary of Zionism. And who in the Third Reich would doubt him when Siegfried Moses, president of the ZVID, stood at Cohen's side? This kind of window dressing was exactly why Cohen hired Moses.
¹⁶

The ZVfD leadership—Landauer and Moses—"allowed" Cohen to usurp the negotiations, believing that the official international Zionist bodies were politically inert. German Zionism needed a pragmatic, resourceful person who could quickly, without consulting anyone, consummate a deal with the Reich; someone who could speak the language of the Reich—a language now dominated by the nouns of commerce. The Reich, unaware of the charade, would believe they were dealing with the official Zionist movement. But they would in fact be negotiating bilateral trade and emigration with a single man.

In early May
I933,
that man, Sam Cohen, returned to the two senior bureaucrats who had originally granted him the currency exemption in late March: Foreign Currency Control director Hans Hartenstein, and Hans Schmidt-Roelke of the Foreign Ministry's Eastern desk. In his new meetings, Cohen told them about Hanotaiah Ltd., which bought land from Arabs and sold it to Jewish settlement groups for orchard development. Cohen explained his company's impressive activities, which included vast imports of pipes, fertilizers, and other agricultural items—all traditionally purchased from Czechoslovakia, with eager sources in Yugoslavia and Italy bidding for the business.
¹⁷

Then there were the key issues of liquidation and emigration. Any emigrant, Aryan or Jewish, was subject to several currency regulations. Once a German emigrant liquidated his assets—stocks, bonds, property—those reichmarks were frozen as sperrmarks in a blocked bank account. The émigré would then automatically forfeit
25
percent of the account to the Reich Flight Tax, the standard government claim on the assets of any German emigrant. This left 75 percent of the emigrant's assets intact.
Of
this 75 percent sum, the Emigrant Advisory Office would recommend how much could be removed and/or converted into foreign currency to satisfy a receiver nation's entry requirements. This allowance was generally
200
to
500
reich-marks—under
$200
.
The remainder of his holdings were left behind, still frozen in a German bank as sperrmarks.
¹⁸

But there were ways to transfer the value of these sperrmarks out of Germany. It was a bit convoluted, but very much in practice by emigrants and foreign businesses. Essentially, the owner of blocked marks would
swap his sperrmarks for someone else's foreign currency in another country. The swap was always at a loss to the owner of the sperrmarks. Potential swappers or buyers were usually foreign businesses in Germany wanting cheap reichmarks. International manufacturing companies, oil firms, and banks were typical foreign buyers. But whoever bought sperrmarks could pay for them only outside Germany, usually with foreign currency reposing in a bank in Amsterdam, London, or Paris. German banks regularly sold sperrmarks by this method. No merchandise transactions were necessary because the prospect of a cheap reichmark was inducement enough.
¹⁹

In practice, then, if a German citizen decided to emigrate, he would sell off all his assets, realizing, say, RM
I00,000,
equal to
$33,000.
That entire
RM
100,000
would be deposited in a blocked account, and automatically
suffer a
25
percent Flight Tax. Of the RM
75,000
that remained, the emigrant would be allowed to take with him only a few hundred reichmarks, which would be converted to francs, dollars, or whatever currency was needed to satisfy immigrant entry requirements. The emigrant would then own just under RM
75,000
in a blocked German account he could no longer
spend. Before departing Germany, he would go to a bank and offer to sell his sperrmarks to the highest bidder. A foreign buyer would be found, offering perhaps RM
60,000
for the
75,000
sperrmarks, paying with the equivalent
in foreign currency from a foreign bank account.
If
agreed, the two would simply swap bank accounts. Thus, the foreign buyer would purchase RM
75,000
marks for the foreign equivalent of RM
60,000
.
And the emigrant would have successfully transferred his money out of Germany, albeit at a loss of about
20
percent after discounts to the buyer and bank commissions. After delays of perhaps months, the transaction would be complete.