The Haavara Agreement

In August 1933, after talks that had been going on since the spring, the Zionist Federation of Germany and the Anglo-Palestine Bank, acting on behalf of the Jewish Agency, concluded an agreement with the Reich Ministry of Economics known by the Hebrew word Haavara, meaning “transfer”. Many studies give 25 August 1933 as the date it was concluded, while others mention earlier days in August; it was put into effect by ministry circular No. 54/1933 of 28 August. The agreement allowed German Jews emigrating to Palestine, then a British mandated territory, to save part of their property. The money they could not take out of the country was used to buy German goods exported to Palestine, and on arrival the emigrants received the equivalent in Palestinian pounds, minus costs and losses. For thousands of people it was the only legal way to leave the Third Reich without being destitute. At the same time the agreement undermined the boycott of German goods declared by some Jews around the world, and from the very first days it provoked fierce controversy. By the outbreak of war some 50,000–60,000 Jews had arrived in Palestine from Germany, many of whom made use of this mechanism.

Driven out and plundered

From the first weeks of Adolf Hitler’s rule, the Jews of Germany were being pushed to the margins. The boycott of Jewish shops on 1 April 1933 was followed by a law removing them from the civil service, bans on practising professions and restrictions in schools. The regime’s aim at that time was to drive the Jews out of Germany, but in such a way that they left as much of their property as possible behind. This was the purpose of the currency regulations and of the Reich Flight Tax (Reichsfluchtsteuer), introduced as early as December 1931 by the government of Heinrich Brüning to stem the flight of capital during the Depression, and used after 1933 primarily against emigrating Jews. Anyone who left lost a large part of their savings, and could do little with the rest, because the mark could not be freely exchanged for foreign currency.

Refugees also faced closed doors. During the Great Depression the United States, Britain and most European countries were reluctant to admit immigrants. In Palestine the British mandate authorities set quotas for Jewish immigration, but outside these quotas they admitted “capitalists” – people who could show assets of at least 1,000 Palestinian pounds. For a German Jew whose income had been taken away by the state and whose savings were blocked, raising such a sum in foreign currency was almost impossible.

From citrus groves to transfer

The first step was taken by a private company. In May 1933 Sam Cohen, head of Hanotea, a company that planted citrus groves in Palestine, obtained the Ministry of Economics’ consent to transfer emigrants’ money: they paid marks in Germany, Hanotea used them to buy German goods, and the emigrants received plots and plantations in Palestine. A broader plan was put forward by the head of the Jewish Agency’s political department, Chaim Arlosoroff, who travelled to Germany in the spring of 1933. He believed that German Jews and their property could be saved only through an agreement with the authorities, and that liquidating Jewish assets through the export of German goods might interest the Reich government, which was worried by the boycott. On 16 June 1933 Arlosoroff was shot dead on a beach in Tel Aviv. Members of the radical wing of the Revisionist Zionists, opponents of any deals with Germany, were charged with the murder, but the only man convicted was acquitted on appeal in 1934, and the case was never solved.

The negotiations were completed by Georg Landauer and Siegfried Moses of the Zionist Federation of Germany; Eliezer Siegfried Hoofien, director of the Anglo-Palestine Bank, the forerunner of today’s Bank Leumi; and the sociologist Arthur Ruppin, one of the architects of Jewish settlement in Palestine. On the German side the talks were conducted by officials of the Ministry of Economics and the foreign exchange office. From the end of June 1933 the minister was Kurt Schmitt, former head of the Allianz insurance group. What mattered most to the ministry was that the agreement increased exports, provided work for German factories, accelerated Jewish emigration and broke the boycott at a crucial point: where Jewish merchants, instead of rejecting German goods, would import them.

How the transfer worked

The emigrant paid marks into a special account at the Reichsbank held for the Anglo-Palestine Bank. In Berlin the business was handled by the trust company Paltreu, in which the Jewish banks M.M. Warburg of Hamburg and A.E. Wassermann of Berlin had a share. From this money German manufacturers were paid for goods shipped to Palestine: agricultural machinery, irrigation pipes, fertilisers, building materials and electrical equipment. The importer in Palestine paid the equivalent in pounds to the Haavara company, registered in Tel Aviv in November 1933, which paid the money out to the emigrant, often in the form of shares in businesses, land or houses. The system also made it possible to obtain the “capitalist” certificate required by the British, since the transferred assets counted as proof of means.

The emigrants lost a good deal in the process. Part of the funds was swallowed up by taxes and fees, and the prices of German goods, artificially inflated by the non-convertible mark, had to be reduced at the expense of the money being transferred. Over the years the terms worsened, as the Reich authorities raised taxes and restricted the lists of permitted goods. According to various calculations, goods worth between more than 100 and about 140 million marks had been transferred to Palestine by this route by 1939. The Israeli historian Yehuda Bauer estimates that some 20,000 people left with their property thanks to the transfer, but the agreement also helped others, because money from the transfer financed the emigration and settlement of people without capital.

The dispute

The agreement caused a storm. In August and September 1933 the 18th Zionist Congress met in Prague, overshadowed by Arlosoroff’s murder and by bitter rivalry between David Ben-Gurion’s labour party, Mapai, and the Revisionists. The Revisionist leader, Ze’ev Jabotinsky, who demanded a total boycott of Germany, opposed the agreement. So did the leaders of the American boycott movement, Rabbi Stephen Wise and Samuel Untermyer, and many Jews in Poland, where the boycott was strongest. In their view a deal with a regime that was persecuting Jews was a betrayal, broke the unity of the protest and gave the Nazis foreign currency and prestige. The agreement’s defenders replied that the boycott would not save a single German Jew, whereas the transfer could save thousands and build Jewish Palestine at the same time. Arlosoroff’s successor, Moshe Shertok (later Sharett), said that building the country was “our war against Germany”. The Zionist movement long avoided taking an official position. Only the 19th Congress in Lucerne, in August 1935, approved the transfer by a majority vote and placed it under the control of the Jewish Agency.

The Nazis had their doubts too. Some party functionaries and officials did not want to help build a Jewish homeland in Palestine, and when in 1937 the British were considering partitioning the country and creating a Jewish state, the Foreign Ministry began to fear that this would create a centre of “world Jewry”. According to researchers, however, at the turn of 1937 and 1938 Hitler came out in favour of keeping the agreement because it accelerated emigration. What the National Socialists cared about was not sympathy for Zionism but getting rid of the Jews of Germany and the economic benefits.

The balance sheet

Haavara operated until the outbreak of war in 1939. From 1936, with the Arab revolt in Palestine, doing business there became increasingly difficult, and in May 1939 the British White Paper drastically restricted Jewish immigration. Even so, the agreement had tangible results. It enabled tens of thousands of people to leave Germany and to transfer part of their property, and the German immigrants of the so-called Fifth Aliyah – doctors, engineers, lawyers, entrepreneurs and craftsmen – contributed to the development of the economy and the towns of Jewish Palestine. On the other hand, the transfer did weaken the boycott and made it easier for Germany to export at a time when it needed exports most.

Against the background of emigration from Germany as a whole, this was an important, though not the largest, stream. According to estimates by the United States Holocaust Memorial Museum in Washington, by September 1939 some 282,000 Jews had left Germany and some 117,000 had left annexed Austria. About 95,000 went to the United States, about 60,000 to Palestine and about 40,000 to Britain, and many to neighbouring countries, where after 1939 and 1940 the Germans caught up with them again. Palestine was one of the few places where one could legally arrive with one’s property and start life afresh, and Haavara was the main instrument that made this possible.

The agreement still arouses strong feelings today. Anti-Zionists and propagandists of various stripes, from the far right to part of the far left, present it as proof of “Zionist collaboration with the Nazis”, or even of Hitler’s sympathy for Zionism. Historians such as Yehuda Bauer and Yfaat Weiss reject such simplifications. Haavara was a difficult compromise made by people trying to rescue the persecuted in a state that held absolute power over them, not an alliance of equal partners. The British sociologist Keith Kahn-Harris has observed that the agreement with the Zionists no more made Hitler a supporter of Zionism than the pact with Moscow in 1939 made him a communist.

Significance

The Haavara Agreement illustrates the dilemma Jews faced from the first months of the Third Reich: to protest and boycott, at the risk of reprisals against the defenceless, or to negotiate with the persecutor in order to save whoever could be saved. In the 1930s Nazi policy aimed to drive the Jews out of Germany and rob them, while the world did not want to take them in. The Évian Conference in 1938 and the closing of Palestine in 1939 showed how few escape routes there were. When war broke out and Germany conquered Poland and most of Europe, expulsion gave way to extermination. Thousands of German Jews who had reached Palestine through Haavara and by other routes survived the Holocaust. Many of those who had gone to neighbouring European countries or had stayed in Germany perished in the ghettos and extermination camps.