14. Mr. Sam Cohen's Deal

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GERMANY'S destitute foreign-currency situation, aggravated so severely by the Jewish-led boycott, had a swift impact on the Zionist currency exemption. The exemption had been approved to defuse the boycott, increase German exports, and generate more foreign currency for the Reich. But the anti-Hitler boycott was as virulent as ever and expanding daily. Palestine itself, which stood to gain a windfall from the exemption, was as active in the boycott as any nation. Ironically, despite Nazi hatred for Jews, Jewish Palestine was vital to the German economic strategy.

At the turn of the century, when the Zionist movement was headquartered in Germany and its official language was German, Herzl and his circle looked to Kaiser Wilhelm as the logical sponsor of the Jewish State in Palestine. Herzl promised Imperial Germany a perpetual commercial and military outpost, as well as a colony of German culture in the Holy Land. From Jewish Palestine, the German Empire could anchor a highly desired sphere of influence in an undeveloped Mideast ripe with commodities and cheap labor, and equally in need of German merchandise. Jewish Palestine would be to Germany what India and Hong Kong were to England. In return, Kaiser Wilhelm was to persuade his ally, the Turkish sultan, to make Jewish Palestine a German protectorate. Although Herzl and the kaiser met twice in 1898 to consummate the arrangement, the kaiser ultimately withdrew his support.¹

Although colonial status had not been arranged, Zionists continued to look to Germany for commercial, cultural, and political support. During the Great War, Britain enunciated the Balfour Declaration and similar pledges to various Arab potentates, intending to create local rebellions in the Turkish Mideast. Only the German government's intervention saved the Jewish population in Palestine from annihilation at the hands of the Turks, who suspected Zionists and Jews in general of favoring the Allied cause against Turkey.² (The same Turkish regime systematically slaughtered 1.5 million Armenians during the same years for many of the same political reasons.³)

After Palestine was mandated to the British, Zionists switched allegiance to the United Kingdom. But extensive ties to Germany remained. In fact, during the postwar years, German leaders fashionably showed their support for Jewish nationalism through Germany's Pro Palestine Committee. A leading plank of this support pointed to Palestine's reliable place in German commercial and diplomatic recovery. This view prevailed right up to the Hitler ascendancy.⁴

Yet Palestine's importance to Germany was more vital after Hitler than before. In the decade since the Jewish Agency had been established, Jewish Palestine had flourished, even amid a worldwide Depression. While this tiny corner of the Mideast by 1933 accounted for only 0.1 percent of Germany's overall exports, it was a disproportionally important customer for certain vital Reich industries such as fertilizer, farm equipment, and irrigation pipes.⁵ Far beyond its own consumption, however, Palestine was now the crucial gateway to expanding German exports throughout the emerging Mideast market: Egypt, Iraq, Lebanon, Syria, North Africa. This market was deemed essential by the Reich if certain strategic raw materials Hitler craved for war were to be acquired via bilateral trade agreements.

But the Yishuv—that is, the Jewish population of Palestine—was not following the direction of the Zionist Organization leadership. Despite official Zionist calls to abstain from anti-Nazi activities so as not to jeopardize Zionism's commercial and political ties with Germany, the rank and file said no. As early as February 1933, Jewish newspapers in Palestine began urging a boycott, and merchants in great numbers complied. On March 27, the Revisionist newspaper Doar HaYom expressed the popular sentiment in a defiant editorial: "Listen Hitler," the Jews of Palestine will not display "criminal apathy." World Jewry, the paper predicted, would rise up "as one man" to boycott Germany. Palestine would set the example: "No German machines, no German textiles, no German films, no German medicines, no German books and newspapers will be bought."⁶

Official Zionist rejection of the anti-Nazi movement, which became public just before the April First action in Germany, changed the nature of the boycott in Palestine. It quickly became a grass-roots trend spreading in spite of Zionist leadership. Hence, it was no different from the boycott in America and many other countries. People wanted to boycott and fight. Leaders refused. Thus, in the days after April First, many Palestinian newspaper editorials—heavily influenced by Zionist institutions—became stunningly silent about the German situation. No longer was boycott advocated. Tel Aviv's Chamber of Commerce tried to keep its merchants in line by resolving against any boycott, insisting that world trade was too valuable to the continuing Palestine boom.⁷

Since mainstream Zionist officials refused to confront Hitler and insisted on continuing mutual trade, it was only logical that the Revisionists would assume the vanguard of protest. Revisionists—the followers of Vladimir Jabotinsky—rejected the Zionist Organization, advocated paramilitary Jewish self-defense, and pursued a maximalist territorial claim in Palestine. Their ranks were composed largely of East European Jews, especially Polish Jews. What Revisionists did around the world was often a direct reflection of Jewish activism in Poland. Naturally, Revisionists in Palestine agitated for an emotional, often violent, boycott of anything German.

In fact, in late March 1933, as the Zionist leadership's stance toward Hitler crowned a constellation of other Revisionist political grievances, Jabotinsky advocated an open break with the Zionist Organization. Since 1925, his Revisionist Union had enjoyed special dissenter status within the Zionist Organization. But now Jabotinsky was determined to lead his Revisionist Union toward an actual takeover at the coming Eighteenth Zionist Congress in Prague, scheduled for August I933. However, when the Revisionist hierarchy gathered in Kattowice, Poland, in the last week of March, they could not agree on tactics; nor could they bring themselves, in the face of the Hitler threat, to abandon the Zionist Organization. Jabotinsky knew that the rank and file was with him. So, in an action that stunned the movement, Jabotinsky dissolved the entire Revisionist leadership structure, declaring he would lead by personal fiat.⁸ In his fight to evict the existing Zionist leadership, the anti-Nazi boycott would be the single most visible arena of confrontation.

Doar HaYom, the Revisionist newspaper in Palestine, and Betar, the paramilitary Revisionist youth corps, were relentless. Tactics included public humiliation of businessmen trafficking in German goods, mass recruitment of boycott pledges from merchants, picket lines, disruptive demonstrations, and incessant editorials condemning those who traded with Hitler. Many thousands of dollars' worth of German orders were canceled in Tel Aviv and Jerusalem in the first days of April alone.⁹

Berlin clearly understood that much of Palestinian Jewry was in the forefront of the anti-Nazi boycott. By mid-April, Consul Heinrich Wolff was dismally reporting that the boycott was seriously damaging all German economic interests in the area. Many German businessmen in Palestine desperately sought to issue oaths repudiating Hitler's crusade; such oaths were useless. By May 1933, Consul Wolff informed Berlin that the boycott movement had made the crucial transition from a merchant-based protest to a consumer protest. The results: Agfa film sales, very poor. Of 626 physicians in Palestine, 452 were Jewish and no longer prescribing German medicines; German pharmaceutical houses were in ruin. No more German films were being screened; Ufa film distributors were devastated. Buying loyalties were abruptly transferred to Belgium, Holland, France, and Sweden, even when those products were more costly.¹⁰

The Zionist rank and file in Palestine were waging economic war against Hitler—with or without their leaders' permission.

An anti-Hitler Yishuv violently hostile to German merchandise was the accurate Nazi perception in Berlin when Chaim Arlosoroff arrived in early May—and when Mr. Sam Cohen arrived shortly thereafter. Acting separately, both men discovered that the precious Zionist currency exemption had been abrogated by the Germans. When the first German Jews approached Reich authorities seeking their special allotment of foreign currency—about RM 15,000 worth of British sterling—they were sent on bureaucratic runarounds, or told they could obtain only RM 10,000 a third shy of the equivalent needed to enter Palestine. Many who took what they could were nonetheless turned back at the border by Reich guards.¹¹

Foreign exchange was essentially exhausted, and the Reich was about to suspend most of its external obligations. Currency Control director Hans Hartenstein had only granted the exemption on the promise of extra foreign currency flowing into Germany as a result of boosted German exports. Since the Jews had failed to keep their side of the bargain, the exemption was stricken.

Arlosoroff must have certainly been discouraged. After spending weeks to secure the cloak of authority for his visit to Germany, the deal was dead. Just as he feared, too much time had been wasted.

Actually, the deal was never really very alive. Georg Landauer, director of the ZVfD, knew as early as mid-April that the growth ofthe Jewish-led anti-Hitler movement had prompted the Reich to renege on the exemption. In an undated letter, sent sometime between April 14 and April 17, Landauer cautiously complained to Professor Brodetsky of the Zionist Organization in London that German Jews were receiving only two-thirds of the £1,000 needed to enter Palestine.If emigrants could not obtain "the minimum in accordance with Palestine immigration law," the currency exemption would not be workable, wrote Landauer. He asked Brodetsky to confirm again via the British whether the exemption was still formally in place.¹²

The British now found themselves being dragged in as the medium of negotiation—a role they did not want. And Brodetsky's overly thankful letter of April I3, I933, to A.C.C. Parkinson, falsely identified the British as having won the exemption. Two days after receiving Brodetsky's letter, which also asked to publicize the exemption as a British deal, Parkinson telephoned the Foreign Office and explained the situation. A Foreign Office functionary commented, "Professor Brodetsky needs careful watching, as he is only too anxious to maneuver His Majesty's Government into acting or appearing to act as the protectors of the Jews in general in foreign countries and not merely of those Jews who possess British or Palestinian nationality." Parkinson drafted a response explictly denying that the British were involved in the currency concession. He added that since Nazis were paranoid about foreign interference, "from the point of view of the Jews in Germany, it would seem wiser not to suggest that a concession had been made as the result of representations from abroad."¹³

But just after Brodetsky received Parkinson's denial, Landauer's new request came in. So Parkinson was asked to verify again whether the currency exemption was formally in place. In view of the crisis, Parkinson reluctantly agreed to once more ask the British embassy in Berlin to make inquiries.¹⁴ But at this stage, inquiries were useless. The one common ground between Germans and Jews—emigration to Palestine-had become off-limits because the boycott of German goods had dried up the essential lubricant of any deal: money.

Only money could reopen the dialogue between Zionists and Nazis. Here Arlosoroff, the planner, could only fail. But Mr. Sam Cohen, the doer, could possibly succeed. While Arlosoroff slowly struggled to conceive a legally valid plan, Sam Cohen quickly presented the Reich with a marks and pfennigs proposal Germany would find irresistible.

Cohen started by retaining attorney Siegfried Moses. Moses was experienced in government as the postwar food controller of Danzig. He was active in Jewish communal affairs as director of the Jewish Workers Aid Society in Berlin until 1923. And he was attuned to business as the former manager of the prominent Schocken department store in Zwickau. Moses had one other important credential. He was president of the German Zionist Federation.¹⁵

So while Chaim Arlosoroff was in Berlin on behalf of the Jewish Agency, Sam Cohen would be able to pose as the official emissary of Zionism. And who in the Third Reich would doubt him when Siegfried Moses, president of the ZVID, stood at Cohen's side? This kind of window dressing was exactly why Cohen hired Moses.¹⁶

The ZVfD leadership—Landauer and Moses—"allowed" Cohen to usurp the negotiations, believing that the official international Zionist bodies were politically inert. German Zionism needed a pragmatic, resourceful person who could quickly, without consulting anyone, consummate a deal with the Reich; someone who could speak the language of the Reich—a language now dominated by the nouns of commerce. The Reich, unaware of the charade, would believe they were dealing with the official Zionist movement. But they would in fact be negotiating bilateral trade and emigration with a single man.

In early May I933, that man, Sam Cohen, returned to the two senior bureaucrats who had originally granted him the currency exemption in late March: Foreign Currency Control director Hans Hartenstein, and Hans Schmidt-Roelke of the Foreign Ministry's Eastern desk. In his new meetings, Cohen told them about Hanotaiah Ltd., which bought land from Arabs and sold it to Jewish settlement groups for orchard development. Cohen explained his company's impressive activities, which included vast imports of pipes, fertilizers, and other agricultural items—all traditionally purchased from Czechoslovakia, with eager sources in Yugoslavia and Italy bidding for the business.¹⁷

Then there were the key issues of liquidation and emigration. Any emigrant, Aryan or Jewish, was subject to several currency regulations. Once a German emigrant liquidated his assets—stocks, bonds, property—those reichmarks were frozen as sperrmarks in a blocked bank account. The émigré would then automatically forfeit 25 percent of the account to the Reich Flight Tax, the standard government claim on the assets of any German emigrant. This left 75 percent of the emigrant's assets intact. Of this 75 percent sum, the Emigrant Advisory Office would recommend how much could be removed and/or converted into foreign currency to satisfy a receiver nation's entry requirements. This allowance was generally 200 to 500 reich-marks—under $200. The remainder of his holdings were left behind, still frozen in a German bank as sperrmarks.¹⁸

But there were ways to transfer the value of these sperrmarks out of Germany. It was a bit convoluted, but very much in practice by emigrants and foreign businesses. Essentially, the owner of blocked marks would swap his sperrmarks for someone else's foreign currency in another country. The swap was always at a loss to the owner of the sperrmarks. Potential swappers or buyers were usually foreign businesses in Germany wanting cheap reichmarks. International manufacturing companies, oil firms, and banks were typical foreign buyers. But whoever bought sperrmarks could pay for them only outside Germany, usually with foreign currency reposing in a bank in Amsterdam, London, or Paris. German banks regularly sold sperrmarks by this method. No merchandise transactions were necessary because the prospect of a cheap reichmark was inducement enough.¹⁹

In practice, then, if a German citizen decided to emigrate, he would sell off all his assets, realizing, say, RM I00,000, equal to $33,000. That entire RM 100,000 would be deposited in a blocked account, and automatically suffer a 25 percent Flight Tax. Of the RM 75,000 that remained, the emigrant would be allowed to take with him only a few hundred reichmarks, which would be converted to francs, dollars, or whatever currency was needed to satisfy immigrant entry requirements. The emigrant would then own just under RM 75,000 in a blocked German account he could no longer spend. Before departing Germany, he would go to a bank and offer to sell his sperrmarks to the highest bidder. A foreign buyer would be found, offering perhaps RM 60,000 for the 75,000 sperrmarks, paying with the equivalent in foreign currency from a foreign bank account. If agreed, the two would simply swap bank accounts. Thus, the foreign buyer would purchase RM 75,000 marks for the foreign equivalent of RM 60,000. And the emigrant would have successfully transferred his money out of Germany, albeit at a loss of about 20 percent after discounts to the buyer and bank commissions. After delays of perhaps months, the transaction would be complete.

Aware of sperrmark transfer techniques, Sam Cohen started dealing. First, find a way to generate enough foreign currency for the German Jewish emigrant to enter Palestine; this amount was £1,000. Then, transfer additional amounts of the emigrant's money to help develop Jewish Palestine, which would be the only allowable destination for the transferred cash.

Under Sam Cohen's plan, the money would never really leave Germany. Instead, Hanotaiah Ltd. would shift its purchases of farm equipment from Czech to German exporters. These German exporters would be paid with reichmarks from the blocked emigrant accounts. When the equipment was sold for pounds sterling in Palestine or elsewhere in the Mideast, Hanotaiah would find some way to compensate the emigrant for the sperrmarks used to pay for the equipment. This compensation would not necessarily be cash. It might be value—giving the emigrant some orchard land, some agricultural equipment, or a farmhouse. Naturally, Hanotaiah Ltd. alone would determine the "value" of the land or equipment and how much of it equaled the £1,000 needed to enter Palestine.²⁰

In summary, Sam Cohen's complicated transfer procedure called for the German Jews' assets to be frozen in special blocked accounts of which the emigrant could convert RM 15,000 into £1,000 to gain entry to Palestine. But instead of actually receiving the RM 15,000 or £1,000, the emigrant would receive land or equipment that Hanotaiah Ltd. said was "worth" RM 15,000 or £1,000. This would technically satisfy British immigration requirements. The prospect of Hanotaiah inflating the true value of land, equipment, or farm buildings to artificially equal the RM 15,000 was obvious. Herzl had in fact predicted that Jewish wealth could be transferred by assigning an inflated value to land that had been acquired without cost or quite cheaply. Compared to Germany's standard of living, Jewish Palestine's boom was still a primitive economy where labor could be found for a few pounds daily, where simple domiciles could be erected for well under £100.²¹ Cohen's scheme promised massive windfalls for Hanotaiah and good business for Germany, as the emigrants' assets were divided between Zionism and the Third Reich—in the Reich's favor.

Cohen's idea seemed credible to the Germans. By linking the purchase of German goods to the settling of German Jews in Palestinian orchards and the circuitous capitalization of the Jewish national home, the anti-Nazi boycott could now be broken. The Zionist movement would be obliged not only to refrain from and oppose any boycott, they would be obliged to aggressively sponsor German exports. Moreover, the systematic egress of German Jews would create vast pools of blocked marks that Germany could use to pay debts. Sam Cohen's deal was more than business; it was brilliance. Every German pipe sold, every German chemical purchased, every pound of foreign currency earned contributed toward another dunam and another citizen for Eretz Yisrael. At the same time, every economic or diplomatic knife slash at Hitler merely lacerated the hopes for a Zionist solution. The deal carried abundant political and economic incentive for the Reich.

And the deal was good for Zionism. Once the emigrant arrived in Palestine, possibly penniless, he was essentially obliged to work the land to stay alive. Hence, middle-class German Jews would be steered to Jewish agriculture in the Promised Land.

This cashless transfer did resemble a twentieth-century update of indentured servitude, but the Zionists, needing money to purchase land and men to work it, were committed to social engineering and occupational retraining. Philosophically, they were devoted to converting the Jews from merchants and bankers in Europe into farmers and laborers in Eretz Yisrael.

This goal was also acceptable under Nazi theory, which sought German Jewry's expulsion to their own land in Palestine and their conversion to occupations detached from international commerce. In effect, the Zionist ideal and Sam Cohen's offer were exactly what the Nazis had in mind.

Hitler and von Neurath were waiting at the Wilhelmstrasse government complex the morning of May 11, 1933. In walked Britain's Ambassador Sir Horace Rumbold. Rumbold tried to defuse the urgent atmosphere by explaining his request for an audience as a formality with each new chancellor. Hitler brushed aside this explanation, declaring that statesmen outside Germany could not understand what was happening inside the Third Reich. The Poland situation was a bad problem, said Hitler, a problem created by the Versailles Peace Conference. Hitler wanted the Polish Corridor moved east so Germany could absorb the territory now occupied by the Corridor. Otherwise, tension between Poland and Germany would remain.²²

Hitler abruptly turned to Germany's massive unemployment. He vowed he would not allow the Aryan work force to become deteriorated and demoralized. Labor conscription—drafting an essentially unpaid work force to engage in great public works—was the only solution. Suddenly, switching topics again, Hitler identified Marxism as the party's great target. Marxism would be destroyed. Der Führer did not directly refer to Marxism as a Jewish movement, but there was no doubt in Rumbold's mind whom he meant.²³

Rumbold kept trying to get a word in during Hitler's ramblings. Finally, the ambassador was able to speak, and he brought up the treatment of Jews under National Socialism. No sooner had Rumbold uttered the words than Hitler became excited, working up to a trancelike state. Der Führer stood up as though addressing thousands in a stadium. "I will never agree," he shouted with sweeping oratorial gestures, "to the existence of two kinds of law for German nationals. There is an immense amount of unemployment in Germany, lind I have ... to turn away youths of pure German stock from the high schools. There are not enough posts for purebred Germans, and the Jews must suffer with the rest!"²⁴

Hitler warned the world in the presence of his imaginary throng, "If the Jews engineer a boycott of German goods from abroad, I will take care that this hits the Jews in Germany!"²⁵ It was as though the moment were filled with cries of mass adulation, as though the swelling fury of the crowd itself were fueling Hitler's verbal violence, as though he could see the scores of thousands with their white palms exposed in a rhythmic Nazi salute, producing ear-splitting roars of "Seig Heil, Seig Heil."²⁶

But the room was empty. Except for Hitler, von Neurath, and Rumbold. When suddenly the imaginary crowd seemed to dematerialize before Hitler's eyes, and not before, a frightened Rumbold tried to calm the chancellor by claiming that the anti-German boycott placards had probably already been removed from the store windows of London's East End. Rumbold wanted to mention that foreign boycott or not, German Jews were German nationals as much as anyone else, and entitled to the full protection of law. But he was afraid to rekindle Hitler's maniacal flame.²⁷

In a somewhat milder manner, Hitler then unexpectedly brought up Palestine. He zeroed in on Jewish immigration policy, telling Rumbold that he understood that Jews wishing to settle there could not gain entry unless in possession of £1,000. Hitler thought this was a good idea. If Germany had required such a financial test for the East European Jews who had settled in Germany since the Great War, there would now be no Jewish question facing the Reich. But without such a requirement, Hitler declared, lower-class, impoverished Eastern Jews had brought in every form of disease and caused rampant demoralization.²⁸

Hitler, now totally calmed down, told Rumbold that Germany knew how valuable a good relationship with England was. Rumbold answered cautiously—and Hitler did not seem provoked—that no country, especially a great country, could live in today's world "in isolation surrounded by a Chinese wall." Hitler agreed. Rumbold cautiously continued, explaining that the economic, trade, and even internal policy of one country necessarily caused reactions in other nations. Still no flare-up. Rumbold, still cautious, acknowledged that the treatment of German Jews might be described as "internal affairs" by Germany. But the reactions to that policy—no matter how Germany described them—were clear. In England, Germany was forfeiting the sympathy gained during recent years.²⁹

As Rumbold took his leave, Adolf Hitler seemed more reasonable. Rumbold couldn't help thinking that although he was speaking to a fanatic beyond the reach of reason, the meeting had ended on pleasant terms.³⁰ Rumbold did not know it, but the spontaneous comments of this interview would echo for seven years as Hitler's policy toward Palestine.

On May 11, other Reich leaders were equally worried about the international economic backlash. Economics Minister Alfred Hugenberg, one of the non-Nazi cabinet members still in power, issued a "Decree for the Protection of the Retail Trade," exempting Jewish retailers and certain others from recent sweeping anti-Semitic regulations. Hence, any international boycott of German merchandise would also affect Jewish businessmen. And, in desperation, many German export corporations were actually dismissing their Christian employees stationed abroad and replacing them with Jews.³¹ The hope was that somehow world Jewry might then lessen its campaign.

But boycott organizations only continued to gain strength and support. The newly founded American League for the Defense of Jewish Rights and the Jewish War Veterans had finally begun large-scale organizing. And boycott groups in Poland, France, and England were making plans to create a common international front.³²

By mid-April, the effects were dramatic. England had already supplanted Germany as the single largest exporter to Denmark and Norway, two of Germany's leading customers. Reich sales to Finland were drastically down. Many U.S. stores found merchandise labeled "Made in Germany" virtually unsalable. American retailers urgently sought alternative suppliers in Japan, Czechoslovakia, and England, especially for glassware, toys, china, and sausage. Competitor countries happily rushed in to reap the boycott's benefits.³³

Total Reich exports were down 10 percent in April. That initial decline was limited because of many unexpired contracts. Reich economic sources were convinced the May figures would be calamitous. With roughly half the German workforce employed by just 2 percent of the companies in Germany, the successful boycotting of even a limited number of cartel industries would be disastrous. Food prices in Berlin were already reflecting the concern, bread and other items escalating 4 percent weekly.³⁴

Meanwhile, Germany's border crisis grew hour by hour. Poland's proinvasion military hawks found widespread support among a population inflamed by Jewish boycott committees. Czechoslovakia's known pro-Zionist stance and her readiness to join a preemptive strike only intensified German nervousness about her eastern border.³⁵ By May 11, the invasion threat had doubled, because France was consumed by what Reich officials called "war fever," fueled by boycott committees and the press.³⁶

Events were culminating. The destruction of Hitler's tenuous regime—from without or within—loomed as the crisis of the hour in Berlin. German officials and corporate leaders had been dispatched to the cities of Europe and America to try to blunt the attack. Their efforts were unsuccessful. Government clarifications, token protective decrees and threats of unrestrained retaliation against German Jews were also unsuccessful.

Hitler had sworn never to compromise with the enemy. But with bankruptcy and invasion at the door, the discussions with Sam Cohen intensified. Hjalmar Schacht was in America at the time. So the contact point was the Foreign Currency Control Office headed by Hans Hartenstein.

The struggling Reich believed that developing Palestine as a springboard for crucial trade with the Middle East was a desirable thing, as was the organized emigration of Germany's Jews. But desirable as those things were, all of them might somehow be achieved without Sam Cohen and the Zionists—or at least they could be achieved on Germany's own timetable. However, if the boycott continued much longer, there might be no future for National Socialism. The main question was whether the Zionists could really intervene, not only in the boycott, but also in the anti-Nazi protest movement that was flaming a war fever among Germany's neighbors.

Perhaps so. Even though the Nazis and the Zionists were enemies, the two now needed each other.

On May I2, Sam Cohen was already in the Polish industrial town of Lodz, where he was born and raised, and where he had commercial and political connections among mainstream Zionists, Revisionists, and other Jewish circles.³⁷ While Cohen was in Poland, the German Zionist Federation found itself in a complicated position. Landauer and his colleagues had originally conceived the transfer concept in mid-March. That was when they called upon the services of Cohen to negotiate the original currency exemption. The exemption procedures were to be worked out secretly as a fait accompli by Chaim Arlosoroff on behalf of an ad hoc Zionist combine led by German Zionists. But in April it had become painfully clear to Landauer and his ally in Jerusalem, David Werner Senator, that Arlosoroff, working officially, could not engineer the mammoth task entrusted to him—the organized transfer of an entire society. So they turned once more to Sam Cohen to travel to Berlin and negotiate, as though he were the representative of the international Zionist movement.In fact he was representing no more than Landauer's ad hoc faction. The authentic envoy, Arlosoroff, was also in Berlin, believing he would arrange the transfer. He was unaware, however, that the German Zionists had decided to consummate the agreement via Cohen.

The convoluted intrigue played Cohen and Arlosoroff against each other, depending upon the changing perception of which man could deliver the fastest results. But by mid-May, Landauer was losing his tenuous control over the situation. Because Landauer felt Sam Cohen's deal would turn German emigrants into modern-day indentured servants, he tried to manipulate Cohen out of the negotiations and bring Arlosoroff back in.³⁸ However, without Cohen, Landauer was uncertain exactly how to reestablish communication with the Reich. One idea advanced to Arlosoroff suggested that he contact his old schoolmate Magda Friedlander, whose stepfather was Jewish. Magda and Arlosoroff had been friends during their youth. Magda could now be immensely valuable. She was after all the wife of Paul Joseph Goebbels. But Arlosoroff refused. He had heard that his onetime friend was now among the most rabid Nazi fraus in Germany. Once she had even thrown white mice from a balcony to disrupt a pacifist film.³⁹

Landauer and Arlosoroff found themselves in a political doldrum. Unable even to approach the government, they confined their activities to studious deliberations on the fine points of any future plan. Would it conform to international law? Could other countries, even the League of Nations, guarantee or oversee the operation? These theoretical details were put into memos and discussed between them. But their ideas never reached the German government.⁴⁰

Even as Landauer and Arlosoroff hypothesized, the boycott was undeniably reaching into Germany in ever more destructive ways. On May 12, for example, the prestigious Leipzig annual fur auction was held. Ninety percent of the world's fur industry was in Jewish hands, and French, Dutch, British, and American furriers boycotted the event totally. Reich sources admitted that the entire auction was a failure as $3 million worth of furs were withdrawn for lack of buyers.⁴¹

A decision had to be made, and only Hitler could make it. An accommodation—a deal—with the Jews would be necessary. Their weapons of economic retaliation and political agitation were devastating Germany. If those weapons could be neutralized long enough for Germany to recover economically, to rearm its military, then all glories would be within reach of the Aryan people.

A deal made perfect sense, for all the known reasons. Unemployment, foreign currency, raw materials, economic recovery, political rehabilitation, military rearmament. Those were the logical reasons. Yet Hitler had always defiantly resisted logical reasons, and he undoubtedly could have continued resisting them until the Reich broke apart. Adolf Hitler was not a servant of logic. He was, after all, the man who in 1945 fought until the last minute in his concrete cloister and even then chose to destroy his own life and scorch Germany with it rather than capitulate. So what then compelled der Führer to acquiesce to the logical dictates of the crisis? It could well have been his own madness.

In his conversation on May 11 with Sir Horace Rumbold, the British had the outlandish nerve to lecture him, Adolf Hitler, on the correct treatment of the Jews—even though, in Hitler's mind, the British themselves, like the rest of the world, indeed recognized the Jews were parasites. Had the British not erected financial barriers to keep the foul, impoverished Eastern Jews out of Palestine? On May 11, Hitler pointed out to Ambassador Rumbold that had Germany erected such financial barriers, the Eastern Jews would never have migrated into the Reich. But Rumbold did not see the validity of Hitler's claim. In Hitler's mind, they were all hypocrites.⁴² Very well, he would see how well England liked the very Jews they were pretending to be concerned about.

Adolf Hitler would arrange for those very "disease-carrying" and "demoralizing" Eastern Jews to flow out of Germany and into British Palestine. He would give them the financial wherewithal to overcome British financial barriers, or for that matter the financial barriers of the United States or any other country. Der Fuhrer revealed this attitude just a few days later to Bernard Ridder, publisher of a New York-based German-American newspaper, Staats-Zeitung. In the interview, Hitler confessed he would "gladly pay their [the Jews'] freight to the U.S. and make them a present of a bank account in addition if America would only harbor them."⁴³ For years, Hitler would continue to harp on this theme: The British didn't want the Jews, otherwise why would they establish a £1,000 Palestinian entry requirement that Jews obviously could not meet? And yet Britain and the other nations maintaining financial requisites for immigrants were constantly assailing him. They could conveniently do so behind their £1,000 protective shields.⁴⁴

Hitler would play a racial trick on the British. He would give them the Jews they sought so self-righteously to protect.

And so, as compelling as the logic, was the madness. Quite probably it was that very fleeting moment of madness that made it easier for Hitler to do the logical thing for the illogical reason.

On May 13, 1933, the German Zionists were still perfecting theories, still wondering how to approach the government. Arlosoroff was studying a short, six-point memorandum from Landauer, suggesting the Zionists "offer the German government a large influx of foreign currency to create a basis for negotiations about assisting in emigration." The emigration would be linked to massive land acquisition based on transferred German Jewish assets. But suddenly Siegfried Moses, ZVfD president, still listed as Sam Cohen's solicitor, was contacted by the Foreign Currency Control office. The message was brief: Sam Cohen's deal is accepted.⁴⁵

What Sam Cohen deal? Dissatisfied with his cashless version of transfer, Landauer had cut Cohen out of the negotiations. How was it that the Economics Ministry was now signaling the acceptance of a deal with Sam Cohen?

Siegfried Moses, to avoid prejudicing whatever was happening, simply telegraphed the information to Cohen in Poland, in care of the firm Ben Mazur Brothers, 46 Poludniowa Street in Lodz: "MINISTRY INFORMED TODAY BASIC CONSENT REACHED."⁴⁶

On May 19, the Reich economics minister directed a formal declaration to Sam Cohen of Hanotaiah Ltd., outlining the deal. Jewish emigrants would contact Hanotaiah and purchase real estate and agricultural equipment as Hanotaiah saw fit. Bearing the sales contract, the emigrant would then contact both the Emigrant Advisory Office and the Foreign Currency Control Office. The emigrant would then be allowed to exchange his blocked marks for Hanotaiah's land and equipment. No cash was involved unless the Emigrant Advisory Office specifically recommended it, and even then only "the absolute minimum necessary to establish a new existence" in Palestine. A case-by-case review would ensure the least possible release of foreign currency. In return, Hanotaiah would use the emigrant's sperrmarks for the "purchase of all kinds of [German] raw materials, pipes, iron constructions, agricultural machines, fertilizers, pumps, fertilizing machines, and chemicals." For the time being, up to 1 million reichmarks of purchases would be allowed. The Economics Ministry declaration cited "the previously held negotiations between Mr. Cohen and Ministry assistants" and Cohen's assurance "that the same goods until now were bought in Czechoslovakia, and now, because of the [new] regulation improving the position of the German Palestine emigrant, they are to be purchased in Germany."⁴⁷

The German Zionists had constructed a maze of political intrigues. They had shifted their loyalties from Arlosoroffto Cohen to Arlosoroff. Unaware of the intrigues, Arlosoroff persisted in formulating a visionary fait accompli. But Cohen hadn't gone away. He had continued his ruse, negotiating on behalf of the Zionist movement—even though he represented nothing more than an orchard company.

Meanwhile, the German government felt certain it had triggered the breakup of the boycott because the Zionist movement would now be in the German export business. German Jewish wealth and emigrants would be transferred in a flow wholly dependent upon the purchase of German merchandise and commodities. The Jews of the world would now have to choose between fighting Hitler and building Palestine, preserving the old or securing the new.

Sam Cohen's deal was, in fact, only the preliminary agreement. When discovered by the international Zionist hierarchy, it would be considered inadequate, delivering too little money and too narrow a variety of merchandise to Jewish Palestine. If the Jewish State was to be built, it needed more than Hanotaiah's transactions, more than the sale of a few dunams of orchards. It needed the building blocks of a new society—everything from taxis to bridges. And it needed more than the mere transferred value of a million reichmarks; it needed a sizable portion—in cash—of the billions that constituted German Jewish wealth. The result of a broadened transfer would be more than the expansion of Hanotaiah's few settlements, it would be the expansion of all settlements, and the towns and villages, into an economically, geographically, and politically cohesive state—Israel. A massive, historically irreversible agreement was sought-a final solution to the persecution of Jews.

The plan was not a rescue or a relief project. If it was, the Zionists would have labored for an agreement for Jews fleeing Germany without regard to where they sought refuge. Instead, Jews would be allowed to bring assets out of Germany to rebuild their lives, but only if they liquidated their European existence and rebuilt those lives in Palestine.

The correct word, then, for Mr. Sam Cohen's deal, and the arrangements to follow, was not rescue. It was not relief. It was in fact transfer—the point between the philosophical spheres where Zionist and Nazi circles touched.