The Transfer Agreement (52 page)

To retain his own credibility, Ellern disparaged Cohen carefully: "I don't know Mr. Cohen personally and have no reason to doubt his veracity, but
I
have gained the impression that a transaction of this magnitude, if it were to be conducted solely by Hanotaiah, would not be greeted with universal trust and confidence. This also conforms to various opinions which I have heard about Hanotaiah in Palestine."
²⁹

Realizing his assertions went against everything Schmidt-Roelke had been told, Ellern explained, "Mr. Cohen is a very clever businessman and his sweeping powers of attorney and letters of recommendation may be based on the fact that the situation in Germany is not well known there [in Palestine1 and that every idea is welcomed which could conceivably lead to a transfer of capital ... by emigrants, thus facilitating the establishment of a new existence for these emigrants in Palestine, as well as to again make the Palestine market accessible to Germany."
³⁰
This last comment was a clear reminder
that the boycott in Palestine could be stilled only by the Zionist authorities there.

Expanding on the issue of official Zionist approval, Ellern asserted that Yakhin and Palestinian workers "who are a key element, will have no part of it if Hanotaiah is put in sole charge." Ellern added the manufacturers, importers, and Jewish consumers of Palestine to the list of "will nots." Summing up, Ellern wrote that such widespread opposition "would of course damage the main objective: the stimulation of German exports. All these dangers would be obviated if the leadership role in this matter were to be entrusted to the Anglo-Palestine Bank rather than Hanotaiah.... Under no circumstances should the name Hanotaiah be used in the designation of the account." In conclusion, he urged Schmidt-Roelke to accept Landauer's transfer memorandum.
³¹

Ellern's letter would reach Schmidt-Roelke by Monday, July
24.
At the
same time, Schmidt-Roelke would receive a letter from Hartenstein following
the revelations of the Landauer meeting.

Dated July 22, Hartenstein's letter explained how Landauer had urged the Hanotaiah transfer decree be set aside in favor of a bank-supervised transfer. "He [Landauer] indicated ... that in view of news he had received from Palestine during the last few days, he had serious doubts whether Mr. Sam Cohen and Hanotaiah could be considered legitimate.... Hanotaiah, he said, is just one of several plantation companies, which would now have an undesirable monopoly. He [Landauer] doubted that Mr. Cohen would be successful in selling, without loss, the merchandise valued at RM 3 million which Hanotaiah plans to buy. Under these circumstances, he [Landauer] and his friends could hardly assume the responsibility of recommending to Jewish emigrants to make deposits ... to the account of Hanotaiah because they have reason to fear that the equivalent funds would not ... be paid back to depositors."
³²

Here was the point. Either the emigrants received their money in Palestine and could reconstruct their lives there—or they did not. Clearly, the Jews would not give up Germany to live a life of poverty in Palestine.

Hartenstein's July 22 letter continued, "I do not have sufficient information about conditions in Palestine and about the attitude of the various organizations to be able to react to Dr. Landauer's misgivings. Nor am I in a position to examine Mr. Cohen's legitimacy, and have in this respect fully relied on your point of view, which is based on the reports of the Consulate General in Jerusalem, some of which I have seen." Prudence dictated, wrote Hartenstein, that he stay Hanotaiah's permission and "request the Consulate General in Jerusalem to provide a statement whether the proposed procedure ... guarantees for the emigrants the receipt of their money immediately upon arriving in Palestine, or whether the agreement with Hanotaiah should be put on a broader basis by including the appropriate national Jewish organizations." He urged Schmidt-Roelke to speak with Landauer directly and take the other steps necessary to determine once and for all who represented Zionism: its official institutions, or an enterprising gentleman named Mr. Sam Cohen.
³³

Monday morning, July 24, Schmidt-Roelke read letters from Hartenstein, Ellern, and others suggesting that Sam Cohen was a fraud, that he was incapable of selling the merchandise except at a great loss, and that German emigrants would never receive much if any of their transferred assets. A message was dispatched to Consul Wolff: "After negotiations with Cohen, Hanotaiah has obtained authority to transfer a total of RM
3
million via exports to Palestine. After conclusion of negotiations, Zionist Federation and the Jewish Agency expressed doubt as to Cohen's authority to negotiate for Palestine authorities. They declare Hanotaiah monopoly to be undesirable and doubt that RM
3
million worth of goods can be transferred without loss. . . . Doubts expressed also on whether emigrants would receive their money immediately and without loss. Local Jewish organizations therefore had misgivings about authorizing payments to Hanotaiah. Request info on whether misgivings are justified, especially whether it is true that Hanotaiah does not have support of appropriate authorities in Palestine, which is the exact opposite of what Cohen indicates."
³⁴

Schmidt-Roelke and Hartenstein would have summoned Cohen himself to clarify the questions. But Cohen was not in Germany. He had gone back to London to coordinate with the Zionist Organization and do what he could to quash the chances for a unified world boycott.

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 of the 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, Hano
taiah 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
I
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 infiated.
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 any one 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.