The Transfer Agreement (53 page)

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 off their 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.

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 Land-auer'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 ZVfD.
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 playa 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 ZVfD 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 andlor 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 were—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."
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