The Transfer Agreement (41 page)

Buenos Aires:
German commercial interests in Argentina were powerless to stop the accelerating boycott organized by Argentinian Jews; the Argentine boycott not only involved German ships and products, but called for depositors to transfer accounts from German to Argentine banks.
Paris:
The League Against Anti-Semitism began proliferating the boycott throughout the provinces by opening boycott offices in Lyons, Nice, and Marseilles.
¹⁴
Amsterdam:
Two boycott groups printed thousands of "boycott stamps" to be used on envelopes and parcels. The stamps featured a swastika transmuted into a four-headed snake behind prison bars over Dutch, French, and English inscriptions urging boycott. They quickly became an international boycott tool. In late May, sample stamps were delivered to New York for the American movement by a Dutch physician. But the Jewish War Veterans were already mailing an American version at the rate of I0
million per week.
¹⁵

A sudden growth in the boycott was also spurred when national trade unions became active in the movement. British trades were sympathetic from the beginning in March
I933.
But by late May, guided by Jewish industrialist Lord Melchett, the powerful Trades Union Congress (a union federation) declared the anti-Nazi boycott a mandatory pursuit for its members. The T.U.C. instructed member unions, Labour party supporters, and Cooperative Societies to bring the benefits of boycott to British manufacturers.
¹⁶

At about the same time, the Dutch Federation of Trade Unions and the Social Democratic Labour party in Holland adopted a stance identical to British labor. Britain's ambassador at The Hague reported that the boycotters acknowledged the "harmful effect such a boycott would have on Dutch agricultural exports to Germany . . . but decline to be deterred by such considerations."
¹⁷

If anyone in Berlin dreamed that the mid-May deal with Sam Cohen would act as an automatic boycott circuit breaker, they quickly realized they were mistaken. During late May, German consulates throughout the world continued to report attacks on Reich commercial interests. On May 24, Hitler was handed a report on the entire foreign-trade question. Protectionist trade policies coupled with the growing international boycott were listed as the two principal reasons for Germany's dwindling exports. The report explained that the boycott itself was a joint reaction by Jewish groups and labor unions. The prospects: bleak.
¹⁸

By June, data from the previous months was starting to pile up in Reich offices like delayed battle casualty reports. The news was always worse than expected. Germany's vital trade surplus for the first four months of
I933
was down more than 50 percent from the I932 figure, dropping from RM 70.2 million to RM 35.4 million.
¹⁹
Throughout North Africa, ordered and shipped German goods were being refused, resulting in staggering losses. Egyptian refusals alone amounted to about
$500,000
weekly.
²⁰

Specific German industries were hit hard. Reeling from the failure of the Leipzig fur auction, in June the fur industry was authorized to proclaim: "Jews in the fur trade are welcome in Leipzig."
²¹
But Jews in foreign countries who controlled almost all wholesale fur transactions were keeping their promise to destroy Germany's fur business. Jews were also heavily represented in the international textile market. Britain's most outspoken boycott leader, Lord Melchett, headed one of England's textile conglomerates. So when Germany's already suffering textile industry suddenly lost another RM
I
million in sales, the Reich readily conceded that the boycott was responsible.
²²

Perhaps the most devastating and visible loss struck the German diamond industry. Previously Germany had employed
5,000
diamond workers, even as thousands of Dutch polishers went jobless. In the last days of May, Holland's mostly Jewish diamond traders collectively refused to send any more gems to Germany for polishing or cutting. In less than a week,
4,000
unemployed Dutch diamond workers were hired in Antwerp and Amsterdam to handle the diverted business. Germany's lucrative diamond industry was dismantled overnight.
²³

The Jews were striking back. Not in the shoulder, where the enemy was armored, but in the region of the wallet, where the enemy was tender and exposed.

By early June
I933,
the specter of collapse was hovering over the Third Reich. On June 6, Hjalmar Schacht sent a grim letter to the Fuhrer reporting that as of May
3I,
only RM
280
million in gold and foreign-exchange reserves remained in the Reichsbank. There was now "the great danger that the foreign exchange available will no longer be adequate for the orderly payment of the millions needed daily in German foreign trade transactions. This danger is all the greater, since the constant reduction of available foreign exchange reserves causes foreign trade to shrink more and more." Schacht then confirmed what foreign newspapers had already published, that Germany's positive trade balance—that is, her vital surplus of exports over imports—for the first quarter of
I933
was
less than half
the
I932
figure: down from RM
94
million to RM
44
million. Schacht warned that a drastic decline in trade was now "dangerously imminent."
²⁴

"We should not wait for such a situation to occur if we do not want to jeopardize payments for imports, especially of raw materials and semi-finished goods, the processing of which forms the basis for the
employment of a highly qualified German labor force."
²⁵
The words, underlined by Schacht, carried an ominous message. Germany's exports were mainly finished goods, which relied upon the imported components. It was one thing for Germany to default on its past debts, bonds, and intergovernmental obligations. But if Germany could not continue the day-to-day purchasing needed to keep its people working, they would suddenly stop working.

Schacht demanded an immediate prohibition on paying foreign-exchange obligations incurred before the bank crisis of July
I93I,
except those required by the Standstill Agreement, which froze most of Germany's debts as part of a restructured repayment plan. This measure would barely allow Germany to continue day-to-day business.
²⁶
France's ambassador in Berlin, André Francois-Poncet, visited Reich Foreign Minister von Neurath the next night, June 7, to protest that French creditors would be severely affected. Von Neurath defended the move as a natural consequence of the export decline.
²⁷
It was Germany's old argument against the boycott. How could she honor her international debts when her ability to pay was dependent upon exports that were being refused throughout the world?

American complainers were more outspoken. Chief among them was John Foster Dulles, an attorney representing American banks. Ironically, Schacht had always believed that the threat to default on American holders of German bonds, due to a lack of foreign exchange resulting from the boycott, would be a major incentive for Americans to reject the anti-Hitler campaign. But Dulles' written protest promised even more retaliation: "I believe that if Germany inaugurates such a system, your outgo of
devisen
[foreign currency] will continue to be very substantial and your income of devisen will
be
very sharply reduced due to increased obstacles and prejudices against the use of German goods and services." The last clause bore the familiar ring of anti-Nazi boycott phraseology. Dulles' message added, "There is already a considerable element which is discriminating against the use of German goods and services. This may prove to be merely a passing phase, or it may crystallize into a well-defined national attitude. In my opinion it will crystallize if ... [Germany] alienates that important element of our population which is represented by the holders of German bonds."
²⁸

Punctuating his threat with the statement "Defaulted bonds do not evaporate," Dulles listed retaliatory measures beyond a boycott, including a court-ordered seizure of German private and public assets in the United States. An attached memo actually itemized some of the assets that could be liquidated: the vessels and revenues of three German shipping lines; the property and funds of the German-Atlantic Cable Company; the AEG and Gesfurel electric companies; and the United Steel Works; plus the deposits of at least two major German banks in the United States. Together the targeted assets represented
$I55
million. But Dulles promised that the seizures would extend even to unrelated German firms abroad that owed money to the targeted German debtors.
²⁹
In other words, Dulles was threatening a systematic repossesssion, confiscation, and liquidation of Germany's international commerce.

Currency and debt manipulations bought time, but precious little of it. Nazi leaders were frantic and divided on how best to fight the boycott. Increased threats were offered. In a June I0
Volkischer Beobachter
editorial reprinted in America, Hitler's philosopher Alfred Rosenberg warned, "The fate of the Jews ... might become worse if world Jewry does not give up its isolation plan against German business."
³⁰
But boycotters ignored such threats, believing that Nazi persecution was proceeding as swiftly as possible—boycott or not.

In one test case, the Reich used its precious remaining influence with a foreign power to outlaw a boycott movement. This happened in Latvia, one of the strongest boycott centers in the Baltic region. In late May, the German embassy sought court restraint for Jewish student groups urging a boycott of German films. Then in early June, shortly after the All-Latvian Jewish Conference and various Socialist groups voted to officially sponsor a boycott, the Reich hit back with a German boycott of Latvian butter. Germany promised that butter was only the beginning. In truth, the Reich could not afford to disrupt more bilateral trade than that; butter was selected only because such a ban was already needed to protect the domestic German butter market. But for Latvia, the warning was sufficient. Within a week, von Neurath had concluded an agreement in London with the Latvian foreign minister to ban all further anti-Nazi boycott activities in Latvia. However, while the agreement did reduce open anti-Nazi organizing, Latvian boycott groups in fact remained in the forefront of international boycott actions.
³¹

But the Latvian case was isolated. The anti-Hitler movements in other countries were only becoming more organized and more comprehensive. One of the most threatening precedents was being set in England by an elderly gentleman named Capt. Walter Joseph Webber. Captain Webber, who earned the nickname "the Gallant Captain,'" established a system of "boycott certificates'" for British stores. Just as the NSDAP in Germany had circulated window certificates for Aryan businesses free of Jewish commercial dealings, so Captain Webber's organization in England would begin distributing window certificates for stores in strict compliance with the anti-Nazi boycott. Those stores not displaying certificates would be blacklisted and, if necessary, boycotted themselves.
If Webber's vigilant inspectors found any breach, the certificate would be removed.
³²

At first, Captain Webber set June IS, I933, as the deadline for compliance. But when a multitude of shops asked for extra time either to return or to sell off at discount their remaining German inventory, the deadline was extended to July I
When the certificates were finally released,
5,000
were affixed to store windows in England the first day alone. Many went to non-Jewish concerns. Adherence was strictly enforced in Jewish neighborhoods. For example, late one Friday night, Mr. Isaac Angel's London toy store was found with German stock. An angry mob of about a thousand protesters surrounded the store and became so menacing that mounted police were dispatched. The incident ended only when the frail Captain was summoned and escorted through the crowd to confer with Mr. Angel. The protesters finally dispersed when assured the German toys would be sent back, whereupon a certificate of compliance would be issued.
³³

Despite the economic and psychological impact of local and national boycotts, what the Nazis feared most was a coordinated global operation. For instance, when a haberdasher in London considered refusing to sell German gloves, where was he to find alternate sources of gloves? When an optical house in Newark considered switching its long-established German source of ground lenses, where were the new lenses to come from? Locating new distributors, hammering out new commercial relationships was not an overnight process. Even when the outrages of Nazism provoked merchants to discontinue stocking German goods, this could be done only for a few months before their own businesses would begin to suffer for lack of merchandise. Sympathetic businesspeople and consumers were only too happy to cut off German goods permanently if someone would only locate alternates of identical quality and price.

Germany's competitors in France, Canada, England, Czechoslovakia, America, and Holland were glad to fill the void. But how were the cutlery manufacturers in Sheffield, England, to discover the neighborhood cutlery stores in Pittsburgh and Krakow? How were the quaint china ware shops of Oslo and Buenos Aires to locate the china factories of Rumania?