The Transfer Agreement (80 page)

The indefatigable work of Untermyer and the other champions of boycott kept recovery out of Hitler's reach.
It
forced the Third Reich to vigilantly restrain anti-Jewish violence in Germany, since each incident helped intensify the anti-Nazi movement. In its first years, the boycott also helped prevent Hitler from carrying out his vow to conquer Europe. Plagued by boycott and antagonistic trade barriers, and continually denied foreign exchange, the
Reich was for years unable to acquire the raw materials needed to rebuild its
war machine. Hitler was repeatedly forced to push back his war timetables. Hjalmar Schacht, charged with creating the war economy, devised the only alternative. It was the so-called New Plan, begun in late 1934, whereby Germany would withdraw from Western commerce, execute bilateral barter agreements with Eastern and underdeveloped countries rich in raw materials, and achieve a high level of economic self-sufficiency. In this way, the war machine could be built despite the scarcity of foreign currency.

In the meantime, Jewish existence in Germany underwent a rapid dismantling. Jewish communities in many provincial districts and towns essentially disappeared. The Jewish niche in many economic sectors vanished as industries and professions cleansed themselves of Jewish participation. Jewish cultural contributions were banned. Jewish scholarship in universities ended almost entirely, with few opportunities for Jewish youth to advance beyond secondary school.

The more repressive conditions in the provinces forced Jews to migrate to the large cities, such as Berlin, Hamburg, Frankfurt, and Munich, where Jewish communities were allowed—in condensed form—to maintain a special subculture of religious, cultural, and athletic activities, a revival of Hebrew, and a rapid integration with the Zionist movement. The Nazis delighted in the Jewish subculture and demanded that it thrive. Indeed, every Jewish gathering was approved and attended by the Gestapo. For Aryans, an active Jewish subculture provided reinforcement that Jews were an alien people who had no place in Germany. In
1935,
Jewish existence continued to contract as fewer Jewish people could even survive in the Reich. Getting out was the only alternative to inevitable starvation.

As Jewish existence was dismantling in Germany, however, it was reconstructing in Jewish Palestine. The Haavara brought in many of the fundamentals: coal, iron, cement, fertilizer, seed, hammers, saws, and cultivators. Haavara also brought in the capital: cash, loans, mortgages, deposits, and credits. All this produced an economic explosion in Jewish Palestine, requiring companies to be formed, investments to be made, and most of all, jobs to be filled.

Palestine's economic absorptiveness tripled, perhaps quadrupled, within a year or so of the Transfer Agreement. Economic opportunity translated into a dramatic increase in immigration certificates under the twice-yearly "worker quota." Most of these certificates were awarded to Mapai's halutzim, the young pioneers eager to plant the seed, dig the ditches, and trowel the cement. As more buildings were erected, more kibbutzim established, and more small factories founded, ever more job openings were created for halutzim. The spiral of economic expansion increased the flow of worker immigrants from just a few thousand yearly before the Transfer Agreement to more than
50,000
during the two years following. Most were Mapai
halutzim, and only about
20
percent of them were from Germany.

Jewish Palestine's rapidly expanding economy brought more than worker and commercial opportunities. There also developed a need for more doctors, lawyers, engineers, teachers, hoteliers, restaurateurs, and entrepreneurs. Many of these niches were filled by the several thousand German Jews who came over on unlimited capitalist certificates by virtue of Haavara.

By
1935,
Palestine's need to sell German merchandise to offset Jewish deposits in transfer accounts became greater than anyone expected. The Palestinian market was becoming saturated. So the Zionist Organization established another transfer corporation, this one called the Near and Middle East Commercial Corporation, assigned the acronym
NEMICO. NEMICO
operated a regional sales network in Iraq, Egypt, Syria, Cyprus, and elsewhere in the region, coordinating mainly through Bank Zilkha of Beirut. Mideast markets were opened for a vast array of key German exports, from Volkswagens to municipal bridgeworks. This worked in tandem with Hjalmar Schacht's New Plan of exchanging German goods for the raw materials of underdeveloped nations.

As
NEMICO
was opening new markets to German commerce, so too was the Palestinian citrus industry. Year after year, growers were increasingly compelled to become purveyors of German goods to guarantee vital Reich purchases of orange and grapefruit crops. Most of Palestine's commercial relationships with Nazi Germany remained a secret from the Jewish world, but several deals came to light. Trade statistics published by the British could not hide the unparalleled increase in German exports to Palestine. The Third World Jewish Conference held in Geneva in 1934 finally passed a resolution condemning Palestinian-German trade and demanding the Zionist Organization terminate all such contacts. Pressure within the Zionist world to disavow the Transfer Agreement and its complex of collateral undertakings became so intense by mid-1935 that the Anglo-Palestine Bank announced it was no longer willing to front for the Zionist Organization.

The question of abandoning the Haavara was debated during a period of escalated anti-Jewish persecution. The Third Reich was unhappy with the slow pace of Jewish exits from Germany. Life was therefore made progressively more unbearable. The list of Jewish prohibitions became more and more all-encompassing. Jews were not even allowed to enter many towns. The announcement in mid-1935 that racial laws would be decreed at the NSDAP's fall convention in Nuremberg presaged a turning point in the Reich's anti-Semitic campaign. The laws would deprive all Jews of their German citizenship and almost all legal rights. Moreover, the Nuremberg Laws would define exactly who was "Jewish," and were expected to include anyone with Jewish grandparents. This would extend the political pogrom to tens of thousands of German Jews who had previously felt somewhat safe in their niche on the periphery of the Jewish community.

As Nazi persecutions heightened in 1935, the world, saturated with approximately 100,000 penniless refugees, began closing its doors. Palestine was becoming the only haven available. As many Jews as possible had to be brought over from Germany as fast as possible—not to save their culture, not to save their wealth, but to save their lives.

A showdown over the Transfer Agreement occurred in late 1935 during the Nineteenth Zionist Congress held in Lucerne, Switzerland. The German Zionists were this time allowed to attend, with Adolf Eichmann monitoring from afar the delegation's every move. Mindful of Eichmann's distant scrutiny, the German delegates were the principal opponents of any boycott attempts. After great debate, the Congress finally declared that the Zionist Organization would openly take control of the Transfer Agreement from the Anglo-Palestine Bank. The bank complied by transferring its stock in Haavara Ltd. to the Jewish Agency. Just days later, the promised Nuremberg laws were published. The place for Jews in Germany was officially dissolved. The place for Jews in Palestine was all that was left.

Just two years before, Palestine had been a sparsely populated, mostly barren region inhabited by 800,000 Arabs, some in villages and towns, but most in rocky rural settings. These Arabs coexisted uneasily with approximately 200,000 religious Jews and Zionist pioneers, 80,000 of whom were in Jerusalem, the remainder living in a collection of unconnected settlement enclaves. From January to December of 1935, more than 53,000 European Jews, including almost 9,000 Germans, entered Palestine through worker and capitalist schedules, most of them by virtue of the new economy created by Haavara. By 1936, the Jewish population had doubled and those enclaves had begun growing and connecting. Town settlements and kibutzim had been planted up and down the coastal plain along the Mediterranean Sea between Tel Aviv and Haifa. The town of Haifa had itself grown into a bustling German immigrant city. More kibbutzim were appearing throughout the western Galilee. Palestine was on its way to a Jewish majority, on its way to Jewish statehood.

The Arabs revolted. Led by the virulently anti-Semitic pro-Nazi Mufti of Jerusalem, Arab activists in April 1936 began a six-month campaign of bombings, assassinations, ambushes, sabotage, and general strikes. Their target was all that was Jewish or British in Palestine, from synagogues to post offices. Only a rigorous crackdown by Great Britain restored a façade of order. However, Arab violence prompted the British to now talk openly of a permanent political solution in Palestine, creating two sovereign mini-states, one Arab, one Jewish. For the first time, the international community was seriously discussing establishing not a Jewish colony, not a Jewish home-land, not an autonomous Jewish canton, but a sovereign Jewish State. The Nazis were shocked.

For years Nazi leaders had cooperated with the Zionists, not out of sympathy with Jewish nationalism, but to effect the removal of Jews from Germany and to break the anti-Hitler boycott. Throughout it all, leading Nazis would regularly declare the need for a Jewish State. But Aryan concepts of Jewish inferiority never permitted them to really believe that the Jews could actually assemble a state. Yet in mid-1937, a British government commission formalized the recommendation: Disputed Palestine should be divided into sovereign Arab and Jewish states.

The Nazi hierarchy broke into two distinct schools of thought. The first wanted to expand the Haavara to concentrate as many Jews as possible in distant Palestine. The Jews would then be isolated from Germany's enemies, such as France and Great Britain. Later, when Germany was ready, perhaps it could still tackle the "Jewish menace" while Jews were concentrated and prone in one remote setting. The second school of thought, led by Eichmann, believed the Jews could and would create a state, that the Third Reich had been duped through Haavara into supplying the men and materials, and that once established, that state would become a "Jewish Vatican" devoted to Germany's destruction. Eichmann's answer was mass dispersion of utterly destitute Jews throughout the remote regions of South America and Africa, where local populations would rise up against them and wipe them out.

In the fall of 1937, after several months of uncertainty, der Führer finally decided in favor of Haavara; the government added its insistence that Jews be expelled not only from Germany but from all of Europe. Hitler's final attempt to prepare for war—the so-called Four Year Plan—was already under way. He wholly expected to begin his conquest of Europe in late
1939.
Germany did not want yet another Jewish problem waiting when the Reich took over neighboring lands.

By 1937, Germany was no longer a powerless aggressor in Europe. The Nazi regime was partially armed and fully dangerous. No one in Europe wanted to provoke Germany by maintaining a Jewish presence. Since Palestine was the only open door for ousted Jews, Germany's neighbors began concluding transfer agreements with the Jewish Agency.

The first was Poland, which in late 1937 authorized a transfer company named Halifin Ltd. What Haavara had done for German Jewry and their assets, Halifin (Hebrew for "exchange") began doing for Polish Jewry and their assets, although on a far smaller scale.

The building of Palestine and the emigration of Jews literally became a matter of life or death. Every acre, every certificate, every seat on a ship bound for Haifa was yet another Jew saved from extinction in Germany. As the whole world knew, the rest of Europe was not far behind. Hitler's surrogates throughout Europe had successfully legitimized the persecution and expulsion of Jews. By the end of 1937, violent Nazi factions and their allies throughout Central and Eastern Europe were tired of waiting. Four years had passed since Hitler had assumed power, and the Jews had not yet been eradicated. Local pogroms became commonplace, not only in Germany but in Poland, Hungary, Rumania, Yugoslavia, Lithuania, and Austria.

Time was running out. Yet Palestine was far from ready to receive the hundreds of thousands needing to flee Europe. At the same time, British authorities had virtually closed Palestine to Jewish refugees in order to placate Arab opposition. Worker immigration quotas previously geared to economic absorptiveness were artificially stunted, allowing just several hundred desperate Jews into Palestine each month. The only way to continue the transfer and rescue was to bring over large groups of so-called capitalist emigrants possessing
£1,000
each. Capitalist emigrants could bypass the quota system. But the impoverished German Jewish community was now almost out of assets to deposit and transfer, and the cash-strapped Reichsbank would no longer provide the required foreign currency.

It was now up to Haavara to acquire the foreign currency needed to bring Jews to safety. Working with the Reich Economics Ministry and the international consortium of creditor banks known as the Standstill Committee, which governed various aspects of Germany's foreign exchange, yet another
transfer company was formed. This one was called the International Trade and Investment Agency Ltd., assigned the acronym
INTRIA. INTRIA
was permitted to intercept all relief donations intended for German Jews and divert them to Palestine. A special "relief mark" was introduced by the Reich and sold at banks around the world. By purchasing these relief marks, people in America or France could send charity dollars to their destitute loved ones still in Germany. An American donor, for example, would purchase $100 in relief marks from the American Express office in New York. American Express would credit the
INTRIA
account in London.
INTRIA,
however, would not send the money to the intended recipient in Germany. Instead, the money would be credited to a Zionist bureau in Palestine.
INTRIA
would then send a notice to Haavara's Berlin office, instructing it to pay the German recipient the
equivalent
of $100 in reichmarks from the blocked pool of Jewish deposits that had still not been transferred. In this way 71,000 donations from around the world, totaling almost $900,000, were diverted to Palestine and infused into the effort to build the Jewish home. Once in Palestine, the money was rewoven into various financial instruments and provided to desperate emigrants, enabling them to enter Palestine.