The Transfer Agreement (55 page)

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 1
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 Wolff's report had not been rescinded by the Foreign Ministry, so as the meeting began Mr.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.
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Senator believed that without a viable transfer, the Reich would find no relief from the anti-Nazi boycott.
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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.
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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.
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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.
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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.
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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.
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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 TRANFER 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."
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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.
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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.
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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.
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It was over.

Three days later, on August 10,
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 approporate 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 ofthe 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.
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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 reich-marks 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.
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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.
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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 unparelleled 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?

I
T
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.
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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."
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Ultimately, an institution for transfer trading was cre
ated in Palestine. It later became the Tel Aviv Stock Exchange.
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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.
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