The Transfer Agreement (58 page)

In late June and early July, a number of Nazi organs, especially in Rumania and Austria, called for an international Aryan convention to arrange the forced emigration of all Jews from all countries to a "Jewish National State." One convention call noted that Palestine could not hold the millions of Jews in the world. Therefore, a larger receptacle, equally remote, would be designated. Madagascar was suggested. By late June, Nazi parties in twenty-two countries agreed to participate in the movement.
¹⁵

Those Jewish leaders who hoped Hitlerism might somehow just go away, or that somehow Hitler could be reasoned with, were finally convinced by the summer of
1933
that there would be no compromise. At the height of Germany's unemployment panic, on July 2
,
Hitler reassured a nationwide
gathering of SA leaders that while the tactics might become more restrained, there was no thought of altering the ultimate goal of National Socialism: the speedy annihilation of Jewish existence.
¹⁶

By summer, Hitler's words and deeds forced Jewish leaders to begin viewing German Jews as utterly doomed. For example, by late July, Stephen Wise sent a report home from Europe advising the Congress, "I have a mass of cumulative evidence which proves that the Jewish situation in Germany is hopeless." A few days later, Dr. Joseph Tenenbaum, a leading Congress boycott proponent, told Congress officials that it was no use delaying the boycott proclamation in the hope German Jewry might
be
saved. "This hope," said Tenenbaum, " ... now seems to have gone forever."
¹⁷

If
Nazism survived, Germany's Jews would all perish.
If
Nazism was overturned amid economic upheaval, German Jews would suffer bloody reprisals. But the question was now larger than the
600,000
Jews in Germany.
In the minds of Jewish leaders, the future of millions of Jews throughout all Europe was at stake.
¹⁸
Whatever was done now would set the example for other governments coping with the rise of Nazism.

When Zionist leaders of the Mapai camp looked at this global threat to Jewish survival, it only reinforced their determination to force the crisis to yield a Jewish State. Could Jews be successfully resettled in Eastern Europe, in Latin America, in Western Europe, even in the United States? Traditional anti-Semitism and the new Nazism thrived in all lands. Some of those Nazi and anti-Semitic movements would flourish, others would recede. But the threat would always remain—whatever color shirt, under whatever color flag. A Jew outside his homeland was a Jew waiting for the next pogrom.

Some of the most effective fighters are those who use their adversaries' own weight and power against them. This was the Mapai Zionist defense. Out of the attempts to destroy would emerge the final impetus to attain victory for the Jewish cause: a State.

But the overwhelming majority of Jews and Zionists had not given up on Jewish existence in the Diaspora. They were not willing to pay the price of Mapai's defense strategy. They could not stand still and suffer Hitler's blows in the hope that those blows could
be
converted to victory strokes. These Jews could not stand by and witness the disintegration of Jewish communities in Europe. They had seen all reasonable efforts to stymie the Hitler plan fail. Moral persuasion, diplomatic pressure, economic warning shots—all of it had failed. Defense-minded Jews saw only one solution: boycott, rigorous and comprehensive, until Germany cracked wide open. Germany would have to be crushed, not merely punished.

Here was the tearing dilemma: Should Jews transplant to their own nation in Israel, abandoning existence in a world that in Jewish terms could be judged only by the
degrees
of Jewish hatred found from one place to another, from one era to the next? Or should Jews stand their ground and
defend their right to exist anywhere in the world? It was a choice. Plain and simple. A choice.

T
HEOSE
who chose to fight Hitler had every reason to be encouraged
during the summer of
1933.
German industry was crumbling in an increasingly publicized chain reaction of crises.

Shipping and transatlantic passenger travel had been a strategic foreign-currency earner for the Reich. But anti-Nazi boycotting had virtually bankrupted the entire industry. In late July, at the Hamburg-American Line's annual stockholder meeting, chairman Dr. Max von Schinkel and all board directors announced their resignations with this statement: "The disaffection in the world toward Germany and the boycott movement are making themselves trongly felt. This has severely hurt the Hamburg-American's business and is continuing to hurt ... German shipping generally."
¹
The Philadelphia Record
, in commenting on the shipping bankruptcies, editorialized: "In a civilized world, the Nazis cannot hound
600,000
fellow Germans out of existence because they happen to be Jews without arousing international indignation. Resentment makes itself felt—and rightly—in a widespread refusal to buy goods or travel on the ships of a great nation lapsed into ugly barbarism."
²

At about the same time, the Solingen Chamber of Commerce, in the heart of Germany's ironmaking region, was predicting the same fate for the iron industry, given the "tremendous decrease of export possibilities." Heavy machinery exports alone were only half their profitable
1930
level.
³
The medical industry, was also reeling. Berlin, once renowned as the medical capital of Europe, was suffering a 50 percent decline in its lucrative foreign patient market. German educational institutions received an even more damaging blow. Foreign endowments, vital to Germany's academic funding, diminished by over 95 percent.
⁴

The declining German export surplus—down 68 percent from May to June—continued dropping during July and early August. The export surplus over imports was the traditional measuring stick of overindustrialized Germany's ability to pay for the raw materials needed to keep its factories running and pay its monthly debt service of RM 50 million. But by summer,
Germany's trade balance was so decayed that the export surplus was becoming outmoded as a true indicator of the Reich's decline. So little foreign currency had been earned that Germany could not purchase many vital raw materials. And German industry had reduced normal imports of raw materials because chain-reaction shortages had halted or slowed certain manufacturing processes. The trade-balance ratio was further moderated by canceling nonessential imports. For instance, the rubber used in sport shoes was simply eliminated. So the
total export
figure—without regard to surplus ratios—was by summer becoming the more valid measure. Overall exports to its European neighbors had dipped at least 23 percent in the first half of 1933, compared to the previous year, according to the Reich's own figures. Total exports were reported down to RM 385 million.
⁵
The true losses were probably far greater, since statistical falsification was official Nazi policy. But even these admissions were ominous to a nation absolutely dependent on abundant exports.

Added to boycott damage was the worsening domestic economic dislocation caused by Jewish pauperization. In those businesses where Jews were well entrenched, the result was calamity. Germany's vast wine industry was a perfect example. Prohibiting Jews from growing grapes or manufacturing and selling wine threatened to wipe out large sectors of the German wine industry. Non-Jewish vintners, including many active Nazis, pleaded with the government to stay the exclusion. One Palatinate Nazi publication,
Landauer Anzeiger,
openly admitted that without the Jews, the region's wine business would be utterly wrecked, adding that if "the Jews' share in the wine trade heretofore amounted to 80 percent, one comes to the conclusion that even under the most favorable conditions, wine growers will only sell half the amount of wine this fall that they ... must sell. In view of the growers' great indebtedness, there rises the danger of a ruinous price catastrophe."
⁶

A companion move to exclude all Jews from the Palatinate tobacco industry could not be implemented because there was simply no one to replace them.
⁷

An analogous situation occurred in the metallurgical field. In mid-July, Nazi kommissars demanded the ouster of the six Jewish members of the industry's trade organization. The six were the most knowledgeable experts in the field. Almost as soon as the Aryan substitutes were installed, however, the organization realized no one else could do the job. So the six ousted Jews were immediately rehired as "consultants."
⁸

Equally damaging to the German economy was the wholesale departure of foreign business. Prior to 1933, hundreds of European and American companies maintained sizable operations in Germany. But by summer 1933, Germany was witnessing mass corporate flight. Each foreign firm that withdrew from Gennan soil left a wake of unemployed Germans and lost opportunities for other, interacting German businesses. The German government often tried to suppress news of such departures, but the banks knew the truth: defaulted loans, diminished deposits, and a virtual cessation of normal lending.

Desperate directors of Germany's prestigious Dresden Bank hoped to call upon the international banking fraternity for help. In a dramatic written appeal sent in mid-July to a major French bank, the Société Générale, Dresden Bank frantically declared, "The atrocity propaganda . . . harmful to German trade . . . is
based
on lies and distortions of fact. Complete tranquility reigns in Germany, and any non-Party person on the spot can convince himself that no one is hindered in the lawful pursuit of his private and professional affairs. We would be glad if, in the interests of international trade relations, you would spread the truth and do your utmost to bring about a speedy end of the boycott of German goOds."
⁹

The highly unusual plea provoked an equally unusual response from Société Générale, which had for decades enjoyed cordial professional relations with Dresden Bank. Société Générale's response, which ultimately reached the world's newspapers, answered that "on opening our mail we find an amazing.circular from your esteemed bank. We beg to draw your attention to the fact that a French business would never presume to send propaganda material in business correspondence. We are thus compelled to assume that the tactlessness of your letter arises from an inborn lack of taste. As for the systematic persecution of Jews by your government, we know what to believe. We know ... doctors have been driven from hospitals, lawyers struck off, and shops closed down.... Every nation is a master in its own home, and so it is not our business to interfere.... Nevertheless, we are free to turn our business sympathies to our friends and not to a nation which aims at destroying individual liberty. We assure you, gentlemen, that we will continue to esteem your bank, but we cannot extend our sympathy to Germany in general, for we cannot hide our belief that the National Socialist Party will extend its lust for power to other countries at the first opportunity. You ask us to pass on this circular. Rest assured we will do so, and our answer with it. Yours truly, Société Générale, Paris."
¹⁰

The continuing deterioration of the Nazi economy in the summer of
1933
triggered yet another sequence of time-buying tricks. The first was a series of special multimillion-reichmark industrial subsidies. But the regime was running out of reichmarks. The government turned to the Reichsbank, but it, too, lacked sufficient resources to help. So the Reichsbank itself applied for a loan.

Sometime around the end of July, German go-betweens approached London brokers for an embarrassingly small loan of RM
40
million, or slightly more than
£3
million. Once known, the request caused a round of derisive laughter in the London financial community. The
Investor's Review
broke the news with a mocking tidbit in its August 5 issue: "We have seen a letter written by a financial broker in Berlin ... [that] throws a lurid light on the dreadful condition to which Hitlerism has reduced Germany.... The writer states that he has been asked by the German Reichsbank itself to negotiate for it a loan ... of 40 to 50 million marks! That the Reichsbank, formerly perhaps the greatest financial institution on the Continent, should have come begging to London for ... a paltry sum is ... alarming.... So it is not surprising to hear that authoritative opinion is that Hitlerism will come to a sanguinary end before the New Year."
¹¹

With London a forfeit market, Germany turned to New York to help finance one of the department store subsidies, this one for Kaufhaus des Westens. An even smaller sum was requested, this time just RM 14.5 million, or about $5 million. Chase National said no. Germany then approached the lesser financial markets of Europe. One after another, each said no. Many refused even to consider the loan. The Hitler regime finally turned inward and demanded that the Dresden Bank extend the RM 14.5 million. Dresden had already suffered department ,store defaults and was extremely reluctant to advance further funds. But the Reichsbank insisted, backing up the arrangement with an amorphous "guarantee."
¹²

In reporting on the RM 14.5 million loan fiasco, American Consul General in Berlin George Messersmith confirmed that the loan begging was done at the behest of Hjalmar Schacht. The dismal failures, reported Messersmith, made it crystal clear to Schacht that "foreign banks irrespective of nationality are for the present avoiding to increase in any way their commitments in Germany." The Wizard had publicly admitted as much to the Berlin correspondent of a Dutch financial newspaper,
Algemeen Handelsblad.
Answering a question about the economic consequences of the Reich's anti-Semitic campaign, Schacht declared, "Germany does not reckon in any way further upon international financial assistance."
¹³