The Transfer Agreement (44 page)

Neville Laski, president of the Deputies, and Leonard Montefiore, president of the Anglo-Jewish Association, saw Lord Melchett's coup as virtual insurrection. Indeed, the London-based
Jewish Chronicle
described the Joint Foreign Committee unheaval as a "Palace Revolution." And the New York-based
Jewish Daily Bulletin
described the confrontation as "the possible overthrow of the present leaders of British Jewry."
³⁵
The boycotters accepted these descriptions and lost no time in wielding their new power. They quickly called for the Deputies to ratify Melchett's takeover of the JFC and adopt a formal boycott resolution at the Deputies' next meeting, July
16.
³⁶

Neville Laski immediately swore in a press interview that if the Deputies passed Melchett's boycott resolution, he would resign at once.
³⁷
But conference organizers disregarded Laski's threat.
If
on July
I6
the Deputies ratified the JFC takeover and a boycott resoluton, it would segue perfectly into London's mass protest and boycott march planned for July 20
.
These
formal and popular mandates would then set the dramatic and authoritative foundation for a World Jewish Economic Conference that fall to rally the world in a coordinated boycott.

At the end of the day on July 12
,
the Reich realized that its future might indeed soon be decided by Jews—unless somehow Lord Melchett's deeds could be undone. In this climate, German officials prepared for the next day's meeting in Berlin with Mr. Sam Cohen.

W
ILHELMSTRASSE
was the name of a street, and the name of a block of German government buildings. In both senses, Wilhelmstrasse designated the seat of German government. Although built during the reign of Frederick the Great in the mid-eighteenth century, Wilhelmstrasse's exterior lacked any hint of grandeur. Its monotonous two-story length was interrupted by nothing more distinctive than a simple entrance flanked by two wrought-iron light fixtures, topped by a tiny balcony.
¹

The Wilhelmstrasse interior had been updated to suit the new Germany. Swastika emblems and flags had been hurriedly added to all the empty spaces. Anyone entering the building could not help but sense the lack of continuity between this Reich and the two before.

It was to the depths of this complex of government offices that Mr. Sam Cohen reported on July
13, 1933,
ready to discuss the final details of assuming personal custody of the fiscal and physical future of German Jewry. If all went as expected, his RM
I
million license, granted in mid-May, would be expanded to a perhaps limitless concession sufficient to transfer the assets of thousands of German Jew—those
few who wished to emigrate to Palestine, and those of the majority who frankly could not afford to rule out the option. Those German Jews who did elect to move to Palestine would find their existence essentially limited to working the citrus groves of Hanotaiah's acreage. Those depositors who would not leave Germany or who chose another destination would find their assets already transferred and invested in their name in Palestine.

Sitting atop this mammoth transaction would be Mr. Sam Cohen. For his contribution to the Zionist cause he would of course collect a suitable commission in the form of Hanotaiah's profits. Undoubtedly, these profits could then be reinvested in other worthy Zionist projects. Hence, he could derive immense personal satisfaction from his venture. But beyond simple profits, it must have been clear that as transfer agent of the German Jewish community, Cohen would become the all-powerful middleman of the Jewish nation-in-waiting. For him this was a climactic moment.

It had been a tortuous, intrigue-filled journey to this hour. He had shuttled between Jerusalem and London, Berlin and Warsaw, and many points along the way. He had outmaneuvered his critics, outdistanced his sponsors, and outlived his competition. He had been quick, clever, and undaunted as he perfected the art of selective omission, distorted appearances, and a promise for everyone. By these powers he had assumed the unquestioned role of broker for the Zionist movement and the Jewish people. He walked into the conference room, prepared to quibble about percentages of foreign currency and procedures of liquidation, but emerge one way or another with everything he wanted.

And there, sitting in the conference room, waiting for the meeting to commence was Georg Landauer, director of the Zionist Federation of Germany. With him was David Werner Senator of the Jewish Agency Executive.
²
Those first moments were undoubtedly tense as Sam Cohen greeted the men whose authority he had cleverly usurped and misrepresented. Landauer could have easily denounced Cohen then and there as a fraud who had engineered a massive international conspiracy to corrupt Reich currency regulations. But would Landauer be believed? By the same token, Cohen, the man the German government had come to trust as their anti-boycott champion, could have denounced Landauer and Senator as rebellious elements within the Zionist movement who refused to go along with the sanctioned policy of cooperation with Germany. But would Cohen be believed?

On the other hand, why should either side become accusatory and forfeit a crucial meeting with Reich officials to arrange the all-important transfer? The resulting fiasco could eradicate any chance of negotiating on any formal and congenial basis as "partners" in good faith. So Cohen and Landauer remained cool with no sign of hostility or rivalry. They would both negotiate as Zionists for the best transfer arrangement Germany would grant them.

When Currency Control director Hans Hartenstein and his assistants, as well as Foreign Ministry experts and a Reichsbank director
³
joined the Zionists, they were totally unaware that Cohen and Landauer were not part of the same team. Almost a month before, on June
20,
Landauer had made his first formal entreaty to Hartenstein by delivering a memo asking to broaden the transfer concession beyond that originally granted to Hanotaiah in mid-May. That same day, Hartenstein received a copy of Consul Wolff's request to expand Cohen's agreement. There was no reason to believe that these two requests were not the same. When Landauer somehow learned of Cohen's July
13
meeting to discuss the wider permission, Landauer contacted Hartenstein and asked to be included. Hartenstein of course agreed.
⁴
Proceeding under this mistaken impression, Hartenstein and his colleagues commenced the July
13
meeting as though both Cohen and Landauer were partners. Neither Cohen nor Landauer disturbed the illusion.

The most pressing issue for Hartenstein was foreign currency. Consul Wolff's letter on behalf of Cohen had offered more than half the merchandise price in actual foreign currency. This startled Landauer. The more foreign currency the Reich received, the less the emigrants received. To deliver foreign currency would not be a transfer as much as a discount purchasing plan. The Germans turned to Cohen and asked about Consul Wolff's original foreign-currency promise.
⁵
The Foreign Ministry aides almost certainly carried copies of Consul Wolff's letters. The Reichsbank director would be anxious to report an influx of needed foreign exchange to Hjalmar Schacht. And Hartenstein could only justify setting aside the
£I ,000
Palestine entry money in actual sterling if some larger sum of foreign currency flowed into Germany. But with no extra foreign exchange coming in, how could the cash-desperate Reich participate in this transfer scheme at all?

The Reich negotiators were told that initially the transfer must confine itself to blocked marks, with no foreign currency involved. The Zionists undoubtedly offered a rationale they would later use to deny breaking the boycott, namely that the absence of foreign currency deprived the Reich of the basic benefit of a true merchandise sale—foreign exchange. Without foreign exchange, the transaction was precisely the noble endeavor the Zionists claimed it was—a transfer.
⁶

The Reich negotiators provisionally accepted the arguments of the Zionists and agreed to extend a low limit of transfer without foreign currency—a few million, the precise figure would be worked out later. However, after this first stage, some percentage of foreign currency would be required, just as Wolff had promised several weeks earlier.
⁷

The rest of the meeting concentrated on transfer procedures. Landauer's concept called for two clearinghouses. Landauer explained that the first would be headquartered in or affiliated with a major German bank to convey the reliability needed if German Jews in great numbers were to participate. Emigrants would deposit their money in numbered blocked accounts. A corresponding clearinghouse would be established in Palestine, comprised of leading merchandise importers. This second clearinghouse would actually import the German wares and then instruct the German clearinghouse to remit merchandise payments from the blocked accounts. At that point, the German exporter was satisfied.
⁸

When the Palestinian importer sold the merchandise for sterling, that money would be deposited in a corresponding numbered Palestinian bank account. Upon arrival in Palestine, the emigrant would take over the Palestinian account, thereby transferring part of his assets in cash
⁹
He was then able to start a new life.

Landauer stressed that the second clearinghouse in Palestine must also be in a reputable financial institution and suggested the Anglo-Palestine Bank. He intended to cut Sam Cohen out of his caretaker role by reducing Hanotaiah to just one of the many importers, none of whom would be entrusted with actual disbursements of money. That job, asserted Landauer, was unalterably the province of a bank, not a real estate company.
¹⁰

Landauer added that the certainty and speed of the emigrant receiving his money once in Palestine would be the key to convincing Germans to emigrate.
¹¹
None would want to move penniless to a new land. They would prefer to hang on indefinitely in Germany waiting for conditions to improve.

Landauer's insistence on quick payment and bank supervision must have certainly hit Sam Cohen as a threat to his entire plan. Cohen had never intended to turn much cash over to the emigrants. He had intended to reimburse them mainly with a parcel of land, cheap farm structures, or perhaps some agricultural equipment, all at a value he himself would set.
¹²
In this way, Hanotaiah and Cohen would reap the windfall profits that would justify battling the Jewish world by breaking the boycott. Moreover, Hanotaiah expected to control all the transactions through its own bank accounts, reimbursing emigrants' transfers at its own rate.

But Landauer understood that German Jews would never accept destitution in Palestine over destitution in Germany. The transfer plan had to
be
attractive. Families could not arrive in Palestine only to
be
shocked by the loss of their transferred assets and the virtual necessity of settling on the sandy acreage designated by Hanotaiah. The word would quickly filter back: Go anywhere but Palestine. The transfer would be a short-lived get-rich-quick scheme for Cohen. But the dream of bringing the Jewish people of Germany to Palestine would be dissolved.

Cohen's reaction to Landauer's presentation
is
unknown. He probably knew enough to say little and go into action later. But however he reacted, there was no hint to the Germans that Hanotaiah and the ZVfD were not in perfect coordination. The illusion was sustained. As the meeting ended, Hartenstein asked Landauer to crystallize all transfer questions into a brief memo.
¹³
At the same time, Reich bureaus would consider the foreign-currency disappointment.

Although the Reich's decisions were not finalized at that moment, it seemed clear that Germany would agree to a multimillion-reichmark arrangement encompassing a gamut of merchandise, and they would forgo foreign-currency benefits for the time being. Hitler's Reich had too much to gain from the transfer under almost any format. First, the Reich and the Zionists knew that the transfer and the boycott could not coexist. Merchandise could not
be
used as the medium of transfer if it could not be sold somewhere. The Zionists would
be
forced to sabotage the boycott if they expected to sell German merchandise.

Second, export orders meant jobs in Germany. This was as important as breaking the boycott. Hitler was desperately striving to rehabilitate Germany's work force. With exports already drastically reduced, the merchandise could be
dumped,
let alone transferred at market value, and the government would be satisfied, because German men and women would continue working.

Third, once commenced, the transfer benefits would escalate. Foreign currency would quickly become a demandable part of the bargain. Furthermore, the purchase of German machinery, cars, and equipment carried the promise of German spare parts and service technicians to keep them in good working order for years to come.

Fourth, Hitler's Reich craved a Germany without Jews. On a political agenda dedicated to economic recovery, the elimination of the Jews was nonetheless paramount. Transfer was Germany's hope for a Jewish exodus. The need to promote emigration became ever more compelling in mid-July as German Jewish refugees actually began returning to Germany. With capital punishment facing the dispenser of so-called atrocity stories, with Germany doing all it could to inhibit foreign journalists from reporting all but the most concretely verifiable incidents, many German Jews had wrongly presumed that the period of anti-Semitic violence in Nazi Germany had passed. The Reich interned most of these first returnees in a concentration camp. But when the repatriation began to reach into the hundreds, Germany feared she might actually regain many ofthe
30,000
Jews already frightened away.
¹⁴