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The Holocaust: Could We Have Stopped Hitler?

by Edwin Black

In the enormous shadow of guilt that seized American Jewry after the Holocaust, the answer all too often has been, "We didn't do enough." We are quick to shoulder the onus of self-blame for having been timid citizens, afraid to stir the waters in uncertain prewar times. But this version of history is untrue. Immediately after Hitler's rise to power, American Jews mounted a formidable economic war to topple the Nazi regime.

Just weeks after Hitler assumed power on January 30, 1933, a patchwork of competing Jewish forces, led by American Jewish Congress president Rabbi Stephen Wise, civil rights crusader Louis Untermeyer, and the combative Jewish War Veterans, initiated a highly effective boycott of German goods and services. Each advanced the boycott in its own way, but sought to build a united anti-Nazi coalition that could deliver an economic deathblow to the Nazi party, which had based its political ascent almost entirely on promises to rebuild the strapped German economy.

The boycotters were encouraged by the early successes of their loud, boisterous campaign, complete with nationwide protest meetings, picket signs, and open threats to destroy Germany's economy if the Reich's anti-Jewish actions persisted. Skilled organizing from unions, political groups, and commercial trade associations carried the boycott's message to every facet of American society and abroad. Depression-wracked nations around the world quickly began to shift their buying habits from the entrenched German market to less expensive, alternative goods.

*         *         *

The anti-Hitler protest movement culminated in a gigantic rally at Madison Square Garden on March 27, 1933, organized by Rabbi Wise and the American Jewish Congress. More than 55,000 protesters crammed into the Garden and surrounding streets. Simultaneous rallies were held in 70 other metropolitan areas in the U.S. and in Europe. Radio hookups broadcast the New York event to hundreds of cities throughout the world.

The boycott unnerved the Nazis, who believed that Jews wielded supernatural international economic power. They knew that in the past Jews had used boycotts effectively against Russian Czar Nicholas II to combat his persecution of Jews, and automaker Henry Ford to halt his anti-Semitic campaign. Whether or not this new boycott actually possessed the punishing power to crush the Reich economy was irrelevant; what mattered was that Germany perceived the Jewish-led boycott as the greatest threat to its survival--and reacted accordingly.

Relentless in exploiting the Nazis' vulnerability, Rabbi Wise and the other boycott leaders were determined to form one cohesive international movement under the banner "Starve Germany into submission this winter." But Hitler succeeded in averting this scenario by exploiting divisions within world Jewry.

The Nazi counteroffensive was launched at a secret meeting in Berlin, just six months after the Nazis took power and at the height of the anti-German boycott.

*         *         *

On August 7, 1933, an official delegation of four German and Palestinian Zionists and one independent Palestinian Jewish businessman were ushered into a conference room at the Economics Ministry in Berlin. The Jewish negotiators were greeted courteously by Hans Hartenstein, director of the German Foreign Currency Control Office. They talked for some time about investment, emigration, and public opinion, but the underlying theme was the boycott. The Nazis wanted to know how far the Zionists were willing to go in subverting the boycott. The Zionists wanted to know how far the Reich was willing to go in allowing them to rescue German Jews.

Hartenstein was about to call the inconclusive meeting to a close when a messenger arrived with a telegram from German Consul Heinrich Wolff in Tel Aviv, who advised Hartenstein that concluding a deal with the Zionist delegation was the best way to break the crippling boycott. Hartenstein complied, and the Transfer Agreement was born.

*         *         *

Three days later, the Reich Economics Ministry issued the pact as Decree 54/33.

The Transfer Agreement permitted Jews to leave Germany and take some of their assets in the form of new German goods, which the Zionist movement would then sell in Palestine and eventually throughout much of the world. The German goods were purchased with frozen Jewish assets held in Germany. When the merchandise was sold, the sale proceeds were given to the emigrants, minus a commission for administration and a portion reserved for Zionist state-building projects, such as industrial infrastructure and land purchase.

Two Zionists transfer clearinghouses were established: one under the supervision of the German Zionist Federation in Berlin and the other under the authority of the Anglo-Palestine Trust Company in Tel Aviv. The Berlin-based office exchanged blocked Jewish cash for German wares.

The Tel Aviv office, called Haavara Trust and Transfer Office Ltd. (Haavara Ltd.), sold the swapped German merchandise on the open market, collected the proceeds, and matched them up to the German Jewish emigrants whose money had been used. Organized under the Palestinian commercial code, Haavara Ltd. was operated by conventional business managers. Its stock was wholly owned by the Anglo-Palestine Bank, the official Zionist financial institution that later changed its name to Bank Leumi.

The Transfer Agreement enabled both Germany and the Jewish community in Palestine to achieve key objectives. Transfer helped Germany defeat the boycott, create jobs at home, and convert Jewish assets into Reich economic recovery. It helped the Zionists overcome a major obstacle to continued Jewish immigration and expansion in Palestine. Under British regulations then in force in Palestine, Jews could not enter without a so-called Capitalist Certificate, proving they possessed the equivalent of $5,000. To be in possession of such a sum qualified the immigrant as a "capitalist" or investor. Transfer made capitalist immigration possible because destitute Germans received the required $5,000 (actually the immigrant's own seized funds) once the assigned German goods were sold.

The Transfer Agreement also allowed "potential emigrants" to protect their assets in special blocked bank accounts, which could not be accessed without purchasing and reselling German goods. Between the active and potential emigration accounts, the Transfer apparatus, through official and unofficial transactions, generated an estimated 100 million Reichmarks. The more German goods Zionists sold, the more Jews could get out of Germany and into Palestine, and the more money would be available to build the Jewish State. The price of this commerce-linked exodus was the abandonment of the economic war against Nazi Germany.

*         *         *

The Transfer Agreement tore the Jewish world apart, turning leader against leader, threatening rebellion and even assassination.

In the painful choice between relief vs. rescue, most of the Jewish world opted for relief; that is, defending the right of Jews to remain where they were as free and equal citizens. But the Zionist leadership favored rescue, which was completely in keeping with their solution to anti-Semitism--a Jewish homeland in Palestine.

A half-century earlier, the Zionists visionary Theodor Herzl had foreseen that a "Jewish Company" would be created to manage the businesses and assets of Jews who immigrated to the future Jewish State. Their assets would be sold off at a substantial discount to cooperating "honest anti-Semites," who would then step into the former occupations of the departing Jews.

Zionists saw Haavara as Herzl's envisioned "Jewish Company" and Transfer as an opportunity to contract for a more secure Jewish future. Forty years of struggle to create a Jewish State had come to a sudden and spectacular turning point. The Zionist leadership's awesome and difficult task was to enter into cold, anguished negotiations with Jew-haters, not in an atmosphere of emotion and frenzy, but with diplomacy and statecraft.

*         *         *

By the end of April 1933, total Reich exports were down 10 percent as a result of the boycott. But the economic war against Germany still lacked cohesiveness. Stephen Wise, who possessed the organization, the universal recognition, and the will to unify and direct an efficient campaign, knew that only a central group could target specific German industries and avoid duplication of effort. Wise also envisioned an enforcement apparatus insuring that any entity that traded with Germany would itself become a boycott target. This strategy set the Zionists and the boycott movement on a collision course. If the Zionists were to finalize a merchandise-based pact with Nazi Germany, then Jewish Palestine would be in violation of the boycott and its products and fundraising declared untouchable. Wise and other boycotters felt certain that this threat would derail any exploratory commercial talks between the Zionists and Hitler's  regime.

In fact, secret preliminary and partial negotiations and even interim "transfer" agreements had begun in April 1933. When news of these early negotiations leaked out, the Zionists split along Revisionist and Mapai (Labor) lines. Transfer became a convenient battleground in an already tense atmosphere in which Zionist factions fought over economics, settlement policy, and other issues. The Transfer deal was widely seen by Revisionist leader Vladimir Jabotinsky as an unholy pact with the Nazis that would mainly benefit Labor-dominated Zionist institutions. Protest meetings, screaming headlines, public debates, and rancorous shouting matches broke out in Zionist circles throughout Europe and Palestine. David Ben-Gurion and other Laborites retaliated, calling Jabotinsky "the Jewish Hitler" and his black-shirted Revisionist followers "Fascists." Revisionists became the most ardent anti-Nazi boycott organizers, attacking any Jew or Zionist who would do business with Hitler. It was all complicated by the fact that the Jewish Palestinian economy was inextricably linked to German commerce. Indeed, Germany was the number-one customer for Palestine's number-one export product--oranges.

At the center of the maelstrom was Chaim Arlosoroff, a member of the Jewish Agency Executive Committee. This quiet academician and visionary designed the Transfer plan and supervised all negotiations with the Reich. So tense was the public hysteria over what Transfer was--and was not--that in May 1933 Arlosoroff granted a lengthy interview to a Zionist newspaper disclosing the entire plan, which only 24 hours earlier had been marked "Top Secret."

*         *         *

On June 16, 1933, the Revisionist newspaper Hazit Haam published what many considered a death threat: "There will be no forgiveness for those who for greed have sold out the honor of their people to madmen and anti-Semites.... The Jewish people have always known how to size up betrayers...and it will know how to react to this crime." That evening, Chaim Arlosoroff and his wife Sima took a Shabbat walk along the beach in north Tel Aviv at a point now occupied by the Tel Aviv Hilton. Two men dressed as Arabs approached the couple and asked for the time. Sima was worried, but Arlosoroff assured her, "Don't worry, they are Jews." A few moments later, the men returned, one with a Browning automatic. A bullet flashed into Arlosoroff's chest, mortally wounding him. Two Revisionists were charged with the murder and sentenced to death, but they were released later on technical grounds.

The boycott question also divided the American Jewish community. Leaders of B'nai Brith and the American Jewish Committee, organizations largely comprised of German Jews who had for decades preached staunch Jewish defense, feared that the boycott would subject their brethren in Germany to retaliation. The Jewish War Veterans, who well remembered their German enemy from the Great War, were not swayed by such reservations. Though it lacked the resources of the larger Jewish organizations, the JWV pressed for a total commercial war against Germany. Joining them was feisty Louis Untermeyer, founder of his own anti-Nazi organization, the American League for the Defense of Jewish Rights.

In Germany, the besieged Jewish community opposed the boycott. They fervently appealed to friends and relatives in American Jewish organizations to halt any talk of protest or boycott, fearing the reprisals promised by Reich authorities and Nazi hooligans for any encouragement of anti-Nazi actions. As a result, B'nai B'rith and the American Jewish Committee did their best to blunt the boycott's impact.

*         *         *

The Eighteenth Zionist Congress opened on August 18 in Prague, only 11 days after the Transfer Agreement was sealed in Berlin. Advocates of the pact planned to outmaneuver, outtalk, outscheme, and outlast boycott proponents. The August 7 pact would be adopted, either overtly before the assembled delegates or covertly in closed-door rules committees. Either way, Transfer would go forward.

At the Congress, Wise fought the Transfer Agreement privately and publicly. He lost. After midnight motions and surprise votes, the Transfer Agreement was adopted on August 24 as official policy. Zionist discipline was imposed upon all boycotters, including Stephen Wise. Despite his allegiance to Zionism, Wise vowed to press ahead with his plan to form a unified global boycott within the framework of a so-called "Central Jewish Committee," which was to be declared two weeks later in Geneva at the Second World Jewish Congress.

But as the days progressed, the plight of German Jewry became more and more desperate. Nazism's stranglehold on Germany appeared all the more irreversible. European anti-Semites everywhere were following suit. Jewry seemed finished in Europe. A Jewish homeland in Palestine seemed the only answer.

*         *         *

September 8 now became the crucial date: the Central Jewish Committee would be established at the much-publicized Second World Jewish Congress in Geneva to deal the economic deathblow to Germany. In the end, however, Wise bowed to Zionist pressure and simply backed down. The boycott was abandoned.

A dejected Wise left for Paris. On the train, he met a 14-year-old German Jewish girl, a refugee, who had heard about the Geneva meeting. Wise asked her whether she thought the decisions there had helped or done damage. Looking at him, the young girl answered, "Es muss sein, es muss sein." "What must be, must be."

In the weeks that followed, Wise dodged reporters' questions about the decision. Haunted by the girl's remarks, Wise simply said, "What must be, must be." Decisions had been made that only God could judge, only history could vindicate.

*         *         *

After war erupted on September 29, 1939, the dispossession of the Jews turned to annihilation. The Transfer Agreement served as a lifeline to the Jews who still could be saved. All debate about Haavara among Jewish groups ceased. The less said the better, lest the Nazis cancel the deal. Ultimately, the war did force an end to Transfer, but not before some 55,000 Jews were able to find a haven in Palestine.

Those who would condemn the Zionist decision to enter into a pact with Hitler have the luxury of hindsight. In 1933, the Zionists could not have foreseen the death trains, gas chambers, and crematoria. But they did understand that the end was now at hand for Jews in Europe. Nazism was unstoppable. The emphasis now became saving Jewish lives and establishing a Jewish State.

From the Zionist point of view, the boycott did succeed. Without it, there would never have been a Transfer Agreement, which contributed immeasurably to a strengthened Jewish community in Palestine and the creation of the State of Israel. And Transfer would never have happened had American Jews not mobilized as quickly as they did, only days after Hitler rose to power.

No one can say what combination of factors might or not might have stopped Hitler. What is clear, however, is that American Jewry did not react to the Nazi threat with indifference, cowardice, or indecisiveness. We were determined, courageous, and resourceful--but, ultimately, divided.

Sources:Reform Judaism Magazine, (August 1999).

Edwin Black is the author of the recently released novel Format C: (Dialog Press). This article is based on the newly updated The Transfer Agreement: The Dramatic Story of the Pact Between the Third Reich and Jewish Palestine (Dialog Press). More information is available at © 1999 Feature Group, Inc. All rights reserved. Reprinted here by permission.