A Deal with the Devil: The Transfer Agreement
and the Zionist Pact with Hitler
By Tara Douglas
Well-documented but little known research has recently revealed that an alliance between certain Zionist leaders and the Nazi party of the Third Reich began in 1933 and lasted until the outbreak of the Second Word War in 1939. This alliance was not only instrumental in the eventual creation of Israel, it also interfered with the establishment of other safe havens for Jews around the world. And, perhaps most significantly, the Zionist-Nazi agreement helped to prevent the dismantling of the Nazi regime in its earliest and most vulnerable stage. For during the pivotal year of 1933, many Jewish leaders around the world believed that in the early months of the Third Reich, the economy was Hitler’s Achilles’ heel, and they were determined to cause the Nazi downfall through an international anti-German economic boycott. However, certain Zionist leaders were even more determined to sabotage these efforts for their own gain. Both the Nazis, in the short term, and the Zionists, in the long run, were the ultimate victors.
In 1933 the Zionists were still a small minority of the German Jewish population and, indeed, of the Jewish population worldwide. Although well organized and highly vocal, the World Zionist Organization was basically a fringe movement that found support in approximately two percent of German Jews. Essentially and fundamentally, the majority of the population of Jews considered the philosophy of Zionism to be “self-segregating, ghettoizing practices converging in a core of … ‘Jewish’ nationalism.”9
Zionism had come into existence as an organized political movement in 1897, and had been formulated within an environment and during a century of intense nationalistic development in Europe. Under the auspices of Theodor Herzl, an Austrian Jew and the founder of the movement, Zionist ideology transformed Judaism from a religion into a national and political ideal. Despite a varied and heterogeneous history in the two thousand years since the Jewish Diaspora, Herzl believed that all Jews had a common past and a common destiny. Herzl postulated and promulgated the theory that Jews were a separate and distinct nation, one which could not accommodate itself, nor be accommodated, to life among other nations. Therefore, the only way to solve “the Jewish problem” was for the Jews to have a country of their own.10
Although there were always divergent opinions among Zionists about where and how to fulfill their aims, during the decades following the movement’s inception, Zionist adherents in Germany became increasingly radicalized. This extremism escalated to such a degree that many liberal and humanitarian Zionists disassociated themselves from the movement.11 Yet, in the radical views that became part of the official German Zionist Federation doctrine, assimilation was identified as the dominant enemy of the Jews, and this belief was based on the conviction that “all efforts to blend with non-Jews must lead unswervingly to deformed Jewish life.”12 At the heart of Zionist conviction lay the belief that Jews comprised a unique race, as opposed to a mere ethnicity. Although the doctrine of racial superiority was never officially adopted, German Zionists expressed a Jewish version of the Nazi doctrine of Aryan superiority, and claims of Jewish moral, spiritual, and intellectual advancement in comparison to other races formed a large part of Zionist propaganda. German Zionists also believed Jews to be a pure race, since Jewish religious leaders had always frowned upon intermarriage, which threatened racial purity. Since Jews believed themselves to be the ‘Chosen People,’ they had historically kept themselves separate and apart from other races, as well as having had separation forced upon them.13
The German Zionist philosophy also paralleled the Nazi doctrine in other respects. Zionist ideology incorporated its own version of the German volkgeist. To Zionists, Jews were a volk, both a race and a nation.14 During the early part of the twentieth century, this Jewish version of the German vision of “blood and soil” took hold. But although Jews had the “blood,” they were missing the “soil”. This lack inspired many European Zionists to adopt the views of the Russian Zionist Asher Ginzberg, who believed that Palestine, the Jewish homeland two thousand years earlier, was the true location of the Jewish nation-state that Herzl envisioned. This view culminated during the 1912 World Zionist convention in Posen, with the passing of a resolution calling for every German Zionist to plan to emigrate to Palestine and to abolish all ties with Germany, since Jews had no “roots” in Germany. The passion generated by these views provoked Polish Jew and Zionist leader, Vladimir Jabotinsky, to later exclaim at the Twelfth Zionist Congress of 1921, “In working for Palestine, I would even ally myself with the devil.”15 By 1933, despite the fact that the great majority of German Jews had no interest in going there, Palestine was the epitome of German Zionist aspirations.
The first wave of European Jewish immigration to Palestine following the creation of the World Zionist Organization began in 1904. But it was not until the creation of the British Mandate of Palestine, established after WWI primarily as a result of the collaboration between British Zionists (under Chaim Weizmann) and the British government, that Jews living in Palestine were permitted to have their own political governing body. This governing body was known as the Jewish Agency. Although somewhat autonomous, the Jewish Agency was essentially directed and controlled from London. The Jewish Agency had evolved during the 1920s from the Zionist Commission, which had originally been created by the British in 1919, as part of their own imperialist interests in the Middle East. The British supported the Zionists for well over a decade, but the conflict between the Arabs, who had inhabited this region for hundreds of years, and the European Jewish settlers was escalating to such an extent that by the 1930s the British began to make it increasingly difficult for Jewish immigrants to come to Palestine, unless they were “capitalist” settlers in possession of $5,000 (or L1,000).32 And despite almost three decades of Zionist efforts to mobilize world Jewry to immigrate to Palestine, by 1933 there were just 200,000 Jews living in Palestine, comprising only nineteen percent of the population.33 The Zionist leaders in Palestine, therefore, believed that in order to achieve their national and political aims, it was essential to increase the Jewish population. They considered the situation a race between Arabs and Jews, and they were determined to win that race.34 And the Zionists were also determined not to be out-manoeuvred by the British.
Meanwhile, in the United States, there were two main Jewish defense organizations as of March 1933. The American Jewish Committee had been founded by wealthy German Jews in 1906, and was comprised of assimilated Jews who considered themselves superior to the Jews of Eastern Europe. Although the Committee had only 350 members, it had money and political influence. The American Jewish Congress was essentially an Eastern European Jewish organization, founded by Rabbi Stephen Wise. The Congress represented a much larger constituency and was much more politically vocal than was the Committee, but it was also much less financially viable, and therefore, less influential. However, both organizations were aware that they potentially possessed one weapon that Hitler most feared – an economic boycott.3
An international economic boycott against German goods and services would be disastrous to the newly formed Nazi government, as Hitler’s election platform was based on the promise of substantial economic improvement. The Jewish organizations had a history of successfully using the weapons of boycotts and protests to fight anti-Semitism, including a boycott against one of America’s richest men, Henry Ford.4 Even Joseph Goebbels, the Nazi Propaganda Minister, was concerned about this mounting threat, about which he wrote in his diary, “We are defenselessly exposed to the attacks of our adversaries.”5 However, this time the Committee, because of its associations with Germany and its fear of Nazi reprisals on German Jews, preferred diplomatic action. The Association of Jewish War Veterans, the Congress, and Jews around the world wanted to take a more aggressive public stand.
The protests began quickly. On March 20, Polish Jews organized a large rally. On March 23, thousands of Jews came out to take part in a boycott parade in New York City, and thousands more people cheered from the sidelines. On March 27, a huge protest took place in New York City that was coordinated with 80 other cities throughout the USA, while millions listened to live broadcasts. Anti-Nazi boycott movements were growing worldwide, and not only among Jews. Countries like Lithuania, France, Holland, Britain, and Egypt were organizing protests and displaying signs that said: “Boycott German Goods.” Steamship lines in New York cancelled bookings with German companies. Labour unions put up boycott posters all over London. The international Jewish leadership, spearheaded by Wise, began to plan a much more massive boycott.6
The Nazi reaction to this economic threat was swift. On March 23, Hitler gave a speech which focused on Germany’s desire for good international trade relations, in which he stated that “Germany needs contact with the outside world and foreign markets – otherwise we cannot regulate our foreign debt.” 7 On March 25, Hermann Goering, Minister of the Interior, summoned the leaders of several German Jewish organizations to his office for a meeting.8 No Zionist representatives were invited.
When German Zionist leaders found out about the meeting with Goering, Kurt Blumenfeld, president of the German Zionist Federation, arranged to attend. Goering threatened severe reprisals unless the German Jewish community put a stop to the looming economic boycott. The Nazis had devised an anti-Jewish boycott of their own, which would begin on 1 April 1933 and would end when anti-German boycotts in New York and London also ended. Only Blumenfeld was capable of meeting with other Jewish world leaders, since the Zionists were part of an international organization whose headquarters were in London, and whose branches existed in numerous other countries. The Zionists then set about to deny the atrocities that were taking place under the Nazis, and to put a halt to the boycott.16
While the German government struggled in private over how to handle economic boycotts, the German Zionist leaders in London also schemed and plotted behind the scenes. Unable to get any support for their anti-boycott efforts from the World Zionist Organization headquarters, the German Zionists sent a false telegram to the Jewish Agency, the arm of the Zionist Organization in Palestine and an official advisory body to the British mandatory government there.20 Pretending to be the Executive Committee of the World Zionist Organization, the German Zionists told the Jewish Agency to cable Hitler and tell him that the Agency was not in favour of an anti-German boycott. The telegram was also a message to the Zionist membership in Palestine that their international leadership opposed the boycott. The Jewish Agency did as they were directed.21
What official Zionists in London also did not know was that on 16 March 1933 a meeting had taken place in Palestine that was destined to change the course of Palestine’s history. On this date four men from the Jewish Agency (including Felix Rosenbluth, a former president of the German Zionist Federation and the future state of Israel’s first Minister of Justice) met to discuss issues of finance. The world response to Jewish persecution in Germany was so vast that Jewish defense and refuge organizations were receiving huge amounts of funds. However, none of these funds were earmarked for the Zionist cause. The Agency Jews were concerned about how to prevent these donations from stabilizing German Jews or allowing Jewish immigration to other parts of the world.
Despite subsequent Zionist propaganda, many other opportunities for Jewish settlement did exist. One mass resettlement in particular was being planned for South America by the Hebrew Sheltering and Immigrant Society (HIAS) and the Zionists believed that this project was taking vast amounts of money away from the Agency. The Jewish Agency had to act because its financial situation was desperate. If circumstances continued unchanged, it would soon be facing bankruptcy. As one of the meeting’s participants complained in regard to another American agency, two million dollars in relief aid was raised, and there was not one Zionist among the trustees. To counter this situation, the Jewish Agency leaders decided to create a new refugee fund with Zionist trustees but without any outer identification with either Palestine or Zionism. They wanted Chaim Weizmann, who was no longer an official of the World Zionist Organization, to run the new fund.35
Although getting a share of the donated funds was an important issue, another problem was pressing on these men’s minds. The Zionist leaders in Palestine were also worried that German Jews with money would go to other countries, and that Jews without means would end up in Palestine. Yet wealthy middle class Jews who did want to leave Germany were hampered by a currency restriction that had been imposed on all Germans in 1931, which prevented money from leaving the country without permission. Middle class Jews had the means to pay the British entry requirements to Palestine, but they would not want to leave their assets behind in Germany.
It was then that the Agency’s Felix Rosenbluth made the crucial suggestion: perhaps the Zionists should try to negotiate with the German government for special concessions for wealthier Jews who would emigrate to Palestine. The Jewish Agency needed these Jews and their money. A few days later, Sam Cohen, an influential German Jewish businessman who was also a non-Zionist, was commissioned by the Agency to undertake the secret negotiations between the Zionists and the Nazis.36
Thus, in late March, Sam Cohen began to negotiate the first stages of what was to become known as the Haavrara or Transfer Agreement.37 After arranging meetings with two German government officials, Cohen asked for special currency exemptions for Jews who wanted to emigrate to Palestine. Terms were agreed upon which were weighted heavily in favour of the German government. Middle class Jews would liquidate their assets and then give all their money to the government, in the form of taxes or in frozen bank accounts, with the exception of the $5,000 needed for entrance to Palestine. In exchange, the Zionist movement would actively block the anti-German boycott and would also promote German exports, thereby increasing foreign currency in Germany.38 The agreement did not satisfy George Landauer, a director of the German Zionist Federation and one of the few people who knew about the arrangement.39 He wanted more money for Palestinian Zionists. And although the German government was initially supportive, in a few short weeks the agreement fell apart.
Pressure on the arrangement began as soon as the 1 April anti-Jewish rally took place as planned. Throughout April, the Nazis also put legal measures in place that took rights and work away from German Jews.40 These actions inflamed an international Jewish demand for economic reprisals against Germany. Despite the anti-boycott stance of the Zionist leaders in Palestine, the Jewish population there had refused to follow their leaders’ instructions and actively supported the boycott. These Jews cancelled orders for German agricultural equipment and other German exports, and did everything they could to damage all German economic activities. By mid April the German government cancelled the exemption agreement because the Agency Zionists who had concocted this plan had not kept their side of the bargain. The boycott momentum was growing, not diminishing.41
In early May, Cohen met with the same government officials, pretending to represent the official Zionist Leadership. He hired Siegrfried Moses, head of the German Zionist Federation, to accompany him, in order to lend credence to his ruse. This time Cohen offered the Nazis an even better arrangement, based on the use of his own company, Hanotaiah Ltd.42 Wealthy and middle class Jewish emigrants would swap their accounts with other foreign currency buyers, less the required taxes. Palestine Zionists would control a share of the funds, and they would then buy farm equipment, pipes, chemicals, and other German goods with the money from these blocked accounts, through Cohen’s company. The new Palestinian immigrants would be given land (bought cheaply from Arab landowners) and farm equipment, in exchange for giving up their money. Thus all the Jewish assets would be divided between Palestine and the Third Reich, in Germany’s favour. The agreement appealed to the German government. The Nazis would get Jewish money; increased trade (since emigration was linked to the purchase of goods); a doorway into the expanding Middle Eastern market; increased domestic employment; and the removal of Jews, all in one fell swoop. The Jewish immigrants would be forced to work the land and develop Palestine, in what would amount to indentured servitude, since they would have no money. To the Zionists, that would be a small matter, since labourers were needed in Palestine, not merchants.43
A short time after the Transfer Agreement was arranged, the operation of the arrangement was taken over by Agency and German Zionist leaders and the Anglo-Palestine Bank, which agreed to front for the Zionists. At the Eighteenth World Zionist Congress, held in August of 1933, a surprised Zionist membership was asked to vote on and pass the Transfer Agreement, and work to establish a state of Israel in Palestine, which would adopt the Zionist symbol as its new flag. With the Agency’s success with the Agreement, all efforts would now be directed at getting German Jews to immigrate to Palestine and to develop Israel. However, the majority of German Jews were anti-Zionist, had no interest in Palestine, and wanted to fight for their rights in Germany. But the Transfer Agreement was not a rescue or relief project for the Jews in Germany, and the Zionists had little concern for the agreement’s impact on the Jews there. The Zionist leaders were unwilling to protect Jewish rights in Europe just at the time when that course of action was most needed. They wanted money and labour to build up Palestine, and their main concern was for the German Jews who did want to emigrate there.44
In order to boost immigration, new strategies were needed. Chaim Weizmann started a new organization, the Central Bureau for the Settlement of German Jews. This organization, which worked out of London, coordinated efforts between Palestine and the German government, and made all life and death rescue decisions for the following fifteen years. Palestine needed young, strong, healthy workers. This need became a primary factor in determining which Jews were accepted, and which were rejected as settlers in Palestine.45 In her book, Eichmann in Jerusalem, Hannah Arendt verified the intimate connection between the Nazis and the Zionist leaders, who were the only Jews in the early months of the Hitler regime to associate with the German authorities and who used their position to discredit anti-Zionist and non-Zionist Jews. According to Arendt, the German Zionists urged the adoption of the slogan, “Wear the yellow star with pride” to end Jewish assimilation and to encourage the Nazis to send the Jews to Palestine.46
And although at that time many countries were willing to take Jewish refugees, Zionist propaganda successfully convinced many German and European Jews that there were no other places to go Countries as disparate as Australia, Crimea, Ukraine, and Manchuria, as well as South American and African countries offered to accept refugees. The World Zionist Organization rejected them all. The Zionist leadership even fought for German regulations to prevent German Jews from saving their wealth in any other way than through investing in Palestine. As the amounts of transferred funds grew, it was not long before what began as a “noble” ideal of building Palestine into a Jewish homeland disintegrated into a situation of commercial and business opportunities, with a rush of entrepreneurs anxious to control the capital of captive German Jews. All the while, Hitler was growing stronger and Nazi evil was spreading.46
The alliance with Germany, based on trade, shifted Zionist priorities from a people caught in a crisis to money caught in a crisis. The Zionists knew that the success of the Agreement was dependent upon the survival of the Nazi economy. The economy needed to be stabilized and safeguarded, because if the Nazis fell, the Zionists would be ruined. As well as investing in Palestine, the Zionists invested the transferred funds in major German companies and in enterprises like the railways. And Zionist leaders in London, New York and Germany worked very hard to prevent the economic boycott from happening. Cohen devised a system of safeguarding, in his bank accounts, money belonging to Jews who wanted to emigrate later on, and he used the money to break boycott support in other areas. As well, pro-Palestine propaganda developed in full force. Penniless refuges in Europe were straining the resources of other countries’ charitable organizations, such as those in France, Holland, and Czechoslovakia, since, with the help of Chaim Weizmann, money had been successfully diverted from other relief organizations into Zionist hands. Now Jews in these and other countries were being told by Weizmann that caring for German Jewish refuges was tantamount to importing anti-Semitism into their countries. He even mimicked Hitler’s rhetoric and called the refugees “germ carriers of a new outbreak of anti-Semitism.” Of course, there was only one answer to this problem: Palestine.47
Meanwhile, although international support had been amassing all summer, Rabbi Wise of the American Jewish Congress, one of the boycott leaders, had dithered and delayed about announcing the huge boycott, caught under opposing pressure from boycott supporters on one hand, and the Zionists and the American Jewish Committee on the other. Finally, the international Jewish leadership, which had been planning and organizing for the boycott for months and had wanted to announce the boycott’s inauguration, at the very latest during the Second World Jewish Congress in Geneva in September, were instead directed to turn over all political affairs to the Paris-based Committee of Jewish Delegations, a Zionist group. With this decision, the leadership of the worldwide boycott was handed over to the Zionists. Wise had caved in to the Zionist pressure.48
When a boycott did occur over the winter, it was haphazardly funded and organized by a few die-hards. But it was too little, too late, to really affect the German economy or to lessen Hitler’s hold on the reigns of power. However, thanks to the Transfer Agreement, the Jewish population in Palestine tripled in three short years and Jewish Palestine began to flourish with young German émigrés, and the reconstruction that their capital contributed. By 1939, ten percent of German Jews had moved to Palestine and 140 million RM had been transferred.49 Towns and settlements had grown up along the coastal plain of the Mediterranean, and Haifa was a bustling German immigrant city. Palestine was on its way to becoming a Jewish state. The Transfer Agreement was renewed in February of 1934, and, due to the great success of their enterprise, the Zionists created another company, the Near and Middle East Commercial Corporation (NEMICO) which opened German expansion throughout the Middle East.50 But, by the end of the decade, circumstances had changed. For the Nazis, the exodus of the Jews from Germany was taking place too slowly. And the rest of the world, now seemingly saturated with 100,000 penniless Jewish refugees, began to close its doors.
Based on what is now known, it can be argued, although it is certainly not a popular argument to make, that if the world’s Jews had organized and united, they might have had an excellent chance of containing, if not toppling, Hitler’s regime in early 1933. The economy was a critical issue in Germany at that time, and American companies controlled much of German industry. If the German economic depression had deepened, Hitler would most likely have been blamed and another coalition government would have been forced to form. The retribution on German Jews would most likely have been extreme. But it would have been visible, with greater likelihood of international intervention. And it would hardly have compared to the slaughter that the German and other European Jews ultimately experienced. But the Zionists, in their subterfuge, were successful in opposing the boycott and the window of opportunity, which could have been seized, was quickly closed. After September 1933, it was too late.
However, what actually occurred was that the Zionists were successful in fulfilling their own ambitions for Palestine. The Transfer Agreement and the Zionists’ economic relationship with the Nazi regime, with all its ramifications, was an indispensable factor in the creation of Israel. Through the Transfer Agreement, the Zionists were able to build up Palestine’s Jewish population and infrastructure. They were able to focus world attention on the viability of Palestine as a homeland for the Jews. They skilfully inculcated the belief, among Jews and Gentiles alike, that there were no other options and that a return to Palestine was something all Jews had longed for, for the previous two thousand years. When the atrocities of the Holocaust were revealed, the Zionists were ready to take advantage of this opportunity, and they again presented Palestine to the world as the only viable alternative for Jews.
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Boston: McGraw Hill, 2002
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The Royal Institute of International Affairs. Great Britain and Palestine 1915-1945.
Elmer Berger, Judaism or Jewish
Nationalism, The Alternative to Zionism (
Associates, 1957) pp 17
10 Berger, Judaism, pp 13
Donald Niewyk, The
12 Neiyk, The Jews in
13 Neiyk, The Jews in
14 Neiyk, The Jews in
15 Black, Transfer Agreement, pp 77
32 Avraham Barkai, From Boycott to Annihilation- The Economic Struggle of German Jews, 1933-1943
(Hanover:University Press of New England, 1989) pp 52
34 Yehoyada haim, Abandonment of Illusions – Zionist Political Attitudes Toward Palestinian Arab
Nationalism, 1936-39 (Boulder: Westview Press, 1983) pp 6
3 Black, Transfer Agreement, pp 5
4 Black, Transfer Agreement, pp 28
5 Black, Transfer Agreement, pp 13
6 Black, Transfer Agreement, pp 15- 20, 33
7 Black, Transfer Agreement, pp 34
8 Black, Transfer Agreement, pp 34-35
16 Black, Transfer Agreement, pp 35-36
20 Neiyk, The Jews in
21 Black, Transfer Agreement, pp 81
35 Black, Transfer Agreement, pp 83-85, 90
36 Black, Transfer Agreement, pp 83, 84
37 Eliahu Ben-Elissar, La Diplomatie du III Reich et Les Juifs, 1933-1939 (Geneve: Julliard, 1969) pp 89
38 Black, Transfer Agreement, pp 85-86
39 Black, Transfer Agreement, pp 88
The American Jewish Committee, Jews in
41 Black, Transfer Agreement, pp 122-24
42 Ben-Elissar, La Diplomatie, pp 92-93
43 Black, Transfer Agreement, pp 125, 134
44 Ben-Elissar, La Diplomatie, pp 94-95
45 Black, Transfer Agreement, pp 258-259
Hannah Ardent, Eichmann in
46 Black, Transfer Agreement, pp 249-250, 258
47 Black, Transfer Agreement, pp 259-260
48 Black, Transfer Agreement, pp 361
49 Barkai, From Boycott, pp 53
50 Ben-Elissar, La Diplomatie, pp 95