The Transfer Agreement (30 page)

Aware of sperrmark transfer techniques, Sam Cohen started dealing. First, find a way to generate enough foreign currency for the German Jewish emigrant to enter Palestine; this amount was
£1,000.
Then, transfer additional amounts of the emigrant's money to help develop Jewish Palestine, which would be the only allowable destination for the transferred cash.

Under Sam Cohen's plan, the money would never really leave Germany. Instead, Hanotaiah Ltd. would shift its purchases of farm equipment from Czech to German exporters. These German exporters would be paid with reichmarks from the blocked emigrant accounts. When the equipment was sold for pounds sterling in Palestine or elsewhere in the Mideast, Hanotaiah would find some way to compensate the emigrant for the sperrmarks used to pay for the equipment. This compensation would not necessarily be cash.
It
might be
value—
giving
the emigrant some orchard land, some agricultural equipment, or a farmhouse. Naturally, Hanotaiah Ltd. alone would determine the "value" of the land or equipment and how much of it equaled the
£1,000
needed to enter Palestine.
²⁰

In
summary, Sam Cohen's complicated transfer procedure called for the
German Jews' assets to be frozen in special blocked accounts of which the emigrant could convert RM 15,000 into £1,000
to gain entry to Palestine. But instead of actually receiving the RM
15,000
or
£1,000,
the emigrant would receive land or equipment that Hanotaiah Ltd. said was "worth" RM
15,000
or
£1,000.
This would technically satisfy British immigration requirements. The prospect of Hanotaiah inflating the true value of land, equipment, or farm buildings to artificially equal the RM
15,000
was obvious. Herzl had in fact predicted that Jewish wealth could be transferred by assigning an inflated value to land that had been acquired without cost or quite cheaply. Compared to Germany's standard of living, Jewish Palestine's boom was still a primitive economy where labor could be found for a few pounds daily, where simple domiciles could be erected for well under
£100.
²¹
Cohen's scheme promised massive windfalls for Hanotaiah and good business for Germany, as the emigrants' assets were divided between Zionism and the Third Reich—in the Reich's favor.

Cohen's idea seemed credible to the Germans. By linking the purchase of German goods to the settling of German Jews in Palestinian orchards and the circuitous capitalization of the Jewish national home, the anti-Nazi boycott could now be broken. The Zionist movement would
be
obliged not only to refrain from and oppose any boycott, they would be obliged to aggressively sponsor German exports. Moreover, the systematic egress of German Jews would create vast pools of blocked marks that Germany could use to pay debts. Sam Cohen's deal was more than business;
it
was brilliance. Every German pipe sold, every German chemical purchased, every pound of foreign currency earned contributed toward another dunam and another citizen for Eretz Yisrael. At the same time, every economic or diplomatic knife slash at Hitler merely lacerated the hopes for a Zionist solution. The deal carried abundant political and economic incentive for the Reich.

And the deal was good for Zionism. Once the emigrant arrived in Palestine, possibly penniless, he was essentially obliged to work the land to stay alive. Hence, middle-class German Jews would be steered to Jewish agriculture in the Promised Land.

This cashless transfer did resemble a twentieth-century update of indentured servitude, but the Zionists, needing money to purchase land and men to work it, were committed to social engineering and occupational retraining. Philosophically, they were devoted to converting the Jews from merchants and bankers in Europe into farmers and laborers in Eretz Yisrael.

This goal was also acceptable under Nazi theory, which sought German Jewry's expulsion to their own land in Palestine and their conversion to occupations detached from international commerce. In effect, the Zionist ideal and Sam Cohen's offer were exactly what the Nazis had in mind.

Hitler and von Neurath were waiting at the Wilhelmstrasse government
complex the morning of May
11, 1933.
In walked Britain's Ambassador Sir Horace Rumbold. Rumbold tried to defuse the urgent atmosphere by explaining his request for an audience as a formality with each new chancellor. Hitler brushed aside this explanation, declaring that statesmen outside Germany could not understand what was happening inside the Third Reich. The Poland situation was a bad problem, said Hitler, a problem created by the Versailles Peace Conference. Hitler wanted the Polish Corridor moved east so Germany could absorb the territory now occupied by the Corridor. Otherwise, tension between Poland and Germany would remain.
²²

Hitler abruptly turned to Germany's massive unemployment. He vowed he would not allow the Aryan work force to become deteriorated and demoralized. Labor conscription—drafting an essentially unpaid work force to engage in great public works—was the only solution. Suddenly, switching topics again, Hitler identified Marxism as the party's great target. Marxism would be destroyed. Der Führer did not directly refer to Marxism as a Jewish movement, but there was no doubt in Rumbold's mind whom he meant.
²³

Rumbold kept trying to get a word in during Hitler's ramblings. Finally, the ambassador was able to speak, and he brought up the treatment of Jews under National Socialism. No sooner had Rumbold uttered the words than Hitler became excited, working up to a trancelike state. Der Führer stood up as though addressing thousands in a stadium. "I will never agree," he shouted with sweeping oratorial gestures, "to the existence of two kinds of law for German nationals. There is an immense amount of unemployment in Germany, lind I have ... to turn away youths of pure German stock from the high schools. There are not enough posts for purebred Germans, and the Jews must suffer with the rest!"
²⁴

Hitler warned the world in the presence of his imaginary throng,
"If
the Jews engineer a boycott of German goods from abroad, I will take care that this hits the Jews in Germany!"
²⁵
It
was as though the moment were filled with cries of mass adulation, as though the swelling fury of the crowd itself were fueling Hitler's verbal violence, as though he could see the scores of thousands with their white palms exposed in a rhythmic Nazi salute, producing ear-splitting roars of "
Seig Heil, Seig Heil
."
²⁶

But the room was empty. Except for Hitler, von Neurath, and Rumbold. When suddenly the imaginary crowd seemed to dematerialize before Hitler's eyes, and not before, a frightened Rumbold tried to calm the chancellor by claiming that the anti-German boycott placards had probably already been removed from the store windows of London's East End. Rumbold wanted to mention that foreign boycott or not, German Jews were German nationals as much as anyone else, and entitled to the full protection of law. But he was afraid to rekindle Hitler's maniacal flame.
²⁷

In a somewhat milder manner, Hitler then unexpectedly brought up Palestine. He zeroed in on Jewish immigration policy, telling Rumbold that
he understood that Jews wishing to settle there could not gain entry unless in possession of £1,000. Hitler thought this was a good idea.
If
Germany had required such a financial test for the East European Jews who had settled in Germany since the Great War, there would now be no Jewish question facing the Reich. But without such a requirement, Hitler declared, lower-class, impoverished Eastern Jews had brought in every form of disease and caused rampant demoralization.
²⁸

Hitler, now totally calmed down, told Rumbold that Germany knew how valuable a good relationship with England was. Rumbold answered cautiously—and Hitler did not seem provoked—that no country, especially a great country, could live in today's world "in isolation surrounded by a Chinese wall." Hitler agreed. Rumbold cautiously continued, explaining that the economic, trade, and even internal policy of one country necessarily caused reactions in other nations. Still no flare-up. Rumbold, still cautious, acknowledged that the treatment of German Jews might be described as "internal affairs" by Germany. But the reactions to that policy—no matter how Germany described them—were clear. In England, Germany was forfeiting the sympathy gained during recent years.
²⁹

As Rumbold took his leave, Adolf Hitler seemed more reasonable. Rumbold couldn't help thinking that although he was speaking to a fanatic beyond the reach of reason, the meeting had ended on pleasant terms.
³⁰
Rumbold did not know it, but the spontaneous comments of this interview would echo for seven years as Hitler's policy toward Palestine.

On May 11,
other Reich leaders were equally worried about the international economic backlash. Economics Minister Alfred Hugenberg, one of the non-Nazi cabinet members still in power, issued a "Decree for the Protection of the Retail Trade," exempting Jewish retailers and certain others from recent sweeping anti-Semitic regulations. Hence, any international boycott of German merchandise would also affect Jewish businessmen. And, in desperation, many German export corporations were actually dismissing their Christian employees stationed abroad and replacing them with Jews.
³¹
The hope was that somehow world Jewry might then lessen its campaign.

But boycott organizations only continued to gain strength and support. The newly founded American League for the Defense of Jewish Rights and the Jewish War Veterans had finally begun large-scale organizing. And boycott groups in Poland, France, and England were making plans to create a common international front.
³²

By mid-April, the effects were dramatic. England had already supplanted Germany as the single largest exporter to Denmark and Norway, two of Germany's leading customers. Reich sales to Finland were drastically down. Many U.S. stores found merchandise labeled "Made in Germany" virtually unsalable. American retailers urgently sought alternative suppliers in Japan,
Czechoslovakia, and England, especially for glassware, toys, china, and sausage. Competitor countries happily rushed in to reap the boycott's benefits.
³³

Total Reich exports were down
10
percent in April. That initial decline was limited because of many unexpired contracts. Reich economic sources were convinced the May figures would be calamitous. With roughly half the German workforce employed by just 2
percent of the companies in Germany, the successful boycotting of even a limited number of cartel industries would be disastrous. Food prices in Berlin were already reflecting the concern, bread and other items escalating 4 percent weekly.
³⁴

Meanwhile, Germany's border crisis grew hour by hour. Poland's proinvasion military hawks found widespread support among a population inflamed by Jewish boycott committees. Czechoslovakia's known pro-Zionist stance and her readiness to join a preemptive strike only intensified German nervousness about her eastern border.
³⁵
By May
11,
the invasion threat had doubled, because France was consumed by what Reich officials called "war fever," fueled by boycott committees and the press.
³⁶

Events were culminating. The destruction of Hitler's tenuous regime—from without or within—loomed as the crisis of the hour in Berlin. German officials and corporate leaders had been dispatched to the cities of Europe and America to try to blunt the attack. Their efforts were unsuccessful. Government clarifications, token protective decrees and threats of unrestrained retaliation against German Jews were also unsuccessful.

Hitler had sworn never to compromise with the enemy. But with bankruptcy and invasion at the door, the discussions with Sam Cohen intensified. Hjalmar Schacht was in America at the time. So the contact point was the Foreign Currency Control Office headed by Hans Hartenstein.

The struggling Reich believed that developing Palestine as a springboard for crucial trade with the Middle East was a desirable thing, as was the organized emigration of Germany's Jews. But desirable as those things were, all of them might somehow be achieved without Sam Cohen and the Zionists—or at least they could be achieved on Germany's own timetable. However, if the boycott continued much longer, there might be no future for National Socialism. The main question was whether the Zionists could really intervene, not only in the boycott, but also in the anti-Nazi protest movement that was flaming a war fever among Germany's neighbors.

Perhaps so. Even though the Nazis and the Zionists were enemies, the two now needed each other.

On May
I2,
Sam Cohen was
already
in the Polish industrial town of
Lodz, where he was born and raised, and where he had commercial and political connections among mainstream Zionists, Revisionists, and other Jewish circles.
³⁷
While Cohen was in Poland, the German Zionist Federation found itself in a complicated position. Landauer and his colleagues had originally conceived the transfer concept in mid-March. That was when they
called upon the services of Cohen to negotiate the original currency exemption. The exemption procedures were to be worked out secretly as a
fait accompli
by Chaim Arlosoroff on behalf of an ad hoc Zionist combine led by German Zionists. But in April it had become painfully clear to Landauer and his ally in Jerusalem, David Werner Senator, that Arlosoroff, working officially, could not engineer the mammoth task entrusted to him—the organized transfer of an entire society. So they turned once more to Sam Cohen to travel to Berlin and negotiate, as though he were the representative of the international Zionist movement.
In
fact he was representing no more than Landauer's ad hoc faction. The authentic envoy, Arlosoroff, was also in Berlin, believing he would arrange the transfer. He was unaware, however, that the German Zionists had decided to consummate the agreement via Cohen.