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Abstract
Britain honored its international commitment under the Balfour Declaration for the duration of the 1920s in order to retain control of Palestine – a strategic buffer to the Suez Canal. The import of Jewish capital and revenues from Zionist enterprise and commerce in Palestine enabled it to do so. Not only was Britain able to administer Palestine at a minimal cost to the British taxpayer, but it also used Zionist-generated capital to finance its own imperial projects in the region: the construction of Haifa harbor, and an oil pipeline and road from Baghdad to Haifa.
Notes
1 This article may be seen as a sequel to my previous one, “Was the Balfour Declaration at Risk in 1923? Zionism and British Imperialism.”
2 CitationSmith, The Roots of Separatism; CitationMetzer, The Divided Economy.
3 CitationDarwin, Britain, Egypt and the Middle East, 221.
4 CitationDarwin, Britain and Decolonisation, 9–14. Most of Britain's white Dominions and India were granted tariff autonomy after World War I.
5 Smith, The Roots of Separatism, 176.
6 Diary entry of Henry Gurney, chief secretary of the Palestine administration, 15 April 1948, cited in CitationSherman, Mandate Days, 228–29; also CitationSegev, One Palestine, 262 n.
7 Smith, The Roots of Separatism, 28–30, 38. On 1 November 1927, a Palestine Order-in-Council tied the Palestine pound to the English pound sterling, at the rate of one-to-one.
8 It has been estimated that between 1920 and 1929 Britain spent over £9 million – nearly half of Mandatory Palestine's annual budget – in order to maintain the military garrison in Palestine. See Segev, One Palestine, 72.
9 Unsigned, undated note, March 1925, CO 733/110/260, National Archives, London (hereafter NA).
10 Smith, The Roots of Separatism, 32ff.
11 CP 351 (23), 27 July 1923, Cab 24/161, also Treasury file T160/44, NA.
12 Weizmann to Ormsby-Gore, 9 October 1928, in Letters and Papers, 13:499. The construction of the harbor at Haifa, begun in 1930, was the outstanding case of Palestine being made to pay for British imperial interests: the harbor was required for the trans-desert oil pipeline and railway from Kirkuk, as well as an entrepôt of British commercial interests, cf. Smith, The Roots of Separatism, 49.
13 British records show that the few main roads built by the British in Palestine were for strategic purposes, and that the majority of second- or third-class roads were built to connect Jewish settlements with the main roads. Zionist-generated capital funded as much as three-quarters of the costs. See Weizmann to Ormsby-Gore, 9 October 1928, in Letters and Papers, 13:499. The construction of the harbor at Haifa, begun in 1930, was the outstanding case of Palestine being made to pay for British imperial interests: the harbor was required for the trans-desert oil pipeline and railway from Kirkuk, as well as an entrepôt of British commercial interests, cf. Smith, The Roots of Separatism, 58.
14 Jerusalem, still subject to an Ottoman concession, was not hooked up to the grid until 1928.
15 Shuckburgh to Masterton-Smith (permanent under-secretary at the Colonial Office), 17 January 1922, CO 733/29, NA, cited in CitationCohen, Churchill and the Jews, 126.
16 Metzer, The Divided Economy, 7; and Smith, The Roots of Separatism, 159. Jewish employers were intimidated and deterred from hiring Arabs by the nationwide General Federation of Jewish Labor, the Histadrut.
17 Shuckburgh to Churchill, 7 November 1921, cited in CitationWasserstein, The British in Palestine, 115.
18 Wasserstein, The British in Palestine, 87.
19 Metzer, The Divided Economy, 177.
20 CitationWasserstein, Herbert Samuel, 254.
21 Samuel to J.H. Thomas, 8 February 1924, T160/44, NA.
22 Metzer, The Divided Economy, 4, 188.
23 Initialed note by Treasury official, 9 July 1922, cited in Metzer, The Divided Economy, 4, 188
24 Sir Alfred Mond, the first Baron Melchett, visited Palestine for the first time in 1921, with Chaim Weizmann; he became an enthusiastic Zionist. In 1926, he would initiate the merger of four companies to form the Imperial Chemical Industries (ICI).
25 For this and following, cf. Smith, The Roots of Separatism, 33ff.
26 Meeting of British officials with EBP, 26 February 1923, Treasury files, T160/44, NA.
27 In May 1923, Lionel de Rothschild informed a Treasury official that his bank did not wish to be associated in any way with a Palestine Loan. Norman to Niemeyer, 2 May 1923, Meeting of British officials with EBP, 26 February 1923, Treasury files, T160/44, NA Lionel de Rothschild and his brother Anthony were joint managing partners of the famous banking house.
28 Meeting of 26 February 1926 (n. 26 above).
29 Meeting of 26 February 1926 (n. 26 above); and letter from Sir Robert Waley-Cohen to William Ormsby-Gore, 13 March 1923, T160/44, NA. Waley-Cohen came from a prominent Anglo-Jewish family, one of a small group that had built up the Royal Dutch Shell oil conglomerate.
30 Cf. cabinet memorandum by Colonial Secretary Amery, 17 February 1926, CP (26)71, Cab 124/178, NA.
31 William Joynson-Hicks, a solicitor, was first elected to Parliament on behalf of the Conservative Party in 1900. He supported the Aliens Act of 1908, which was aimed primarily against Russian Jews seeking asylum in England. In the 1908 bye-election for Manchester North-West, he defeated Winston Churchill, a Liberal at the time.
32 The Crown Agents for the Colonies signed the agreement with Rutenberg in September 1921.
33 Times, 29 May 1922, cited in Cohen, Churchill, 144.
34 Times, 31 May 1922.
35 CitationNewton, Fifty Years in Palestine, 221. Newton was something of an eccentric, a virulent opponent of Zionism with distinct anti-Semitic inclinations. Rutenberg was involved in the socialist-revolutionary movement in Russia in 1905 and was forced to flee the country after the abortive revolution in that year. He returned in July 1917, as an adherent of the socialist-revolutionary Kerensky government. When the Bolsheviks seized control after the October revolution, they forced Rutenberg to leave the country again, for good.
36 Baldwin was chancellor of the exchequer in Bonar Law's cabinet; when he became prime minister he stayed on nominally as chancellor until the end of August. In order to relieve himself of the burden of the two posts during these three months, Joynson-Hicks was appointed as financial secretary to the Treasury, effectively chancellor, with a seat in the cabinet, until the appointment of Nevile Chamberlain as chancellor at the end of August 1923. Joynson-Hicks was then appointed minister of health.
37 Memorandum by Sir William Joynson-Hicks, 17 August 1923, T160/44, NA.
38 Correspondence in Memorandum by Sir William Joynson-Hicks, 17 August 1923, T160/44, NA
39 John Meikle (Treasury) to the Under-Secretary of State for the Colonies, 17 August 1925, Memorandum by Sir William Joynson-Hicks, 17 August 1923, T160/44, NA The construction of Haifa harbor was begun in 1930.
40 R.V. Vernon to Samuel, 2 April 1924, T160/44, NA.
41 R.V. Vernon to Samuel, 2 April 1924, T160/44, NA
42 Metzer, The Divided Economy, 180; Segev, One Palestine, 171.
43 Metzer, The Divided Economy, 67; Segev, One Palestine, 237. In 1924–25, the net Jewish immigration to Palestine was 22,000; in 1926–27, 2,220 and in 1928–31, 2,546. Metzer, The Divided Economy, 71.
44 In a recent article in the New York Times, 12 January 2011, Nobel laureate economist Paul Krugman commented: “The hard right often favors hard money — preferably a gold standard.”
45 The Conservative majority of 432 seats in the House of Commons was reduced to 213. The Labour Party increased its share from 154 to 393 seats.
46 Metzer, The Divided Economy, 178.
47 Smith, The Roots of Separatism, 35.
48 Churchill to Amery, 4 December 1924, and Amery to Churchill, 22 December 1924, T160/44, NA.
49 Smith, The Roots of Separatism, 48.
50 Smith, The Roots of Separatism, 48
51 Cabinet memorandum by Amery, CP 71(26) 17 February 1926, Cab 24/178; cabinet discussions on 3 February and 31 March 1936; also Amery–Churchill correspondence, T160/44; and notes, CO 733/124, NA; also Smith, Roots, 34–35.
52 Plumer to Amery, 27 October 1926, CO 733/117, NA; also Cohen, Churchill, 149–57.
53 Cf. Smith, The Roots of Separatism, 47.
54 For this and following see minutes and correspondence of February 1928, CO 733/151/1, 57155, NA.
55 Churchill agreed to waive Palestine's payment of half of Trans-Jordan's administrative costs – in return for which Palestine would pay five-sixths of the costs of the Frontier Force indefinitely, and in 1927–28, pay an additional £30,000 towards the costs of stationing British troops in Trans-Jordan. Cohen, Churchill, 154.
56 Plumer to Ormsby-Gore, 8 January 1928, CO 733/151/1, 57155, NA, cited in Churchill agreed to waive Palestine's payment of half of Trans-Jordan's administrative costs – in return for which Palestine would pay five-sixths of the costs of the Frontier Force indefinitely, and in 1927–28, pay an additional £30,000 towards the costs of stationing British troops in Trans-Jordan. Cohen, Churchill, 155.
57 The Kirkuk–Haifa oil pipeline was completed in 1934. The Haifa oil refineries, which became operational in 1940, were capable of supplying the entire needs of Britain's Mediterranean Fleet; cf. CitationMorehead, The British Defence of Egypt, 23.
58 Cohen, Churchill, 156.
59 Amery to Plumer, 13 April 1928, cited in Cohen, Churchill, 157.
60 Parliamentary Debates, Commons, 5th ser., vol. 310, 24 March 1936, col. 1114. Churchill also expressed his satisfaction with the tranquil state in which he had found Palestine – just three weeks before the outbreak of the Arab Rebellion. On the circumstances in which it was decided to carve out a separate emirate of Trans-Jordan from the Palestine Mandate, cf. Cohen, Churchill, 80–82, 87–90; on Churchill's inflated admiration for T.E. Lawrence, see Cohen, Churchill, 75–76.
61 The wealth of the Jewish middle class in Poland was emasculated by the erosion of the value of the Polish złoty and new government restrictions on cash transfers. Cf Metzer, The Divided Economy, 68; also Smith, The Roots of Separatism, 81; and note by T.K. Lloyd, 13 February 1928, CO 733/150/5, NA.
62 Smith, The Roots of Separatism, 153. Of the 7,365 Jews who emigrated from Palestine in 1926, 95% had been in the country for between one and three years. The wealth of the Jewish middle class in Poland was emasculated by the erosion of the value of the Polish zloty and new government restrictions on cash transfers. Cf Metzer, The Divided Economy, 68; also Smith, The Roots of Separatism, 81; and note by T.K. Lloyd, 13 February 1928, CO 733/150/5, NA, 81.
63 Churchill to Amery, 30 April 1927, in CitationGilbert, Winston S. Churchill: Companion Volume 5, pt. 1, 995. Dole was the term commonly used for unemployment benefits. This letter appears in the companion volume to the official biography, but not in the main volume. In his recent study, Churchill and the Jews, CitationMartin Gilbert, Churchill's official biographer, devotes less than one page (90–91) to Churchill's five-year term at the Exchequer.
64 Weizmann to Oskar Wassermann, 20 February 1928, in Letters and Papers, 13:380.
65 Weizmann to Leonie and Alfred Landsberg, 3 January 1928, in Weizmann to Oskar Wassermann, 20 February 1928, in Letters and Papers, 13:380 338. Raymond Poincaré, a veteran French politician, was serving his third term as prime minister, from July 1926 to July 1929.
66 Weizmann (New York) to the Zionist Executive, 14 April 1928, in Weizmann to Oskar Wassermann, 20 February 1928, in Letters and Papers, 13:380, 13:436.
67 Weizmann to Blanche Dugdale, 17 April 1928, in Weizmann to Oskar Wassermann, 20 February 1928, in Letters and Papers, 13:380, 439 The conference of Jewish magnates was scheduled originally to meet in London on 10 June 1928. It was postponed until the official establishment of the Jewish Agency for Palestine (which included non-Zionists), at the 16th Zionist Congress, held in Zurich from July to August 1929.
68 CitationQuoted in Cohen, “Was the Balfour Declaration at Risk in 1923?” 90.
69 Lloyd note, 8 February 1928, CO 733/150/5, NA. Lloyd was an assistant principal secretary at the Colonial Office.
70 The regressive Ottoman land and buildings taxes (werko) were replaced by a new urban property tax in 1929, and a new rural property tax in 1935; whereas a general progressive income tax was introduced in 1941, import duties remained the largest single source of revenue throughout the Mandatory period. Cf. Metzer, The Divided Economy, 181–82.
71 Lloyd note of 8 February 1928 (n. 69 above); Lloyd estimated that it would cost £200,000 to finance a public works program that would keep 10,000 Jews at work for a whole year.
72 The Egyptian pound was the official local currency at the time. Zionist subsidizing of the costs of the Jaffa–Petach Tikva road was an indirect payment of the dole of many Jewish unemployed. In 1922, the Zionist Executive had loaned the administration some E£22,000 for the construction of the Bet Dajan–Rishon le-Tziyon–Rehovot road. Smith, The Roots of Separatism, 150–53.
73 Note by A.J. Harding, 26 April 1928, CO 733/158, NA, quoted in The Egyptian pound was the official local currency at the time. Zionist subsidizing of the costs of the Jaffa–Petach Tikva road was an indirect payment of the dole of many Jewish unemployed. In 1922, the Zionist Executive had loaned the administration some E£22,000 for the construction of the Bet Dajan–Rishon le-Tziyon–Rehovot road. Smith, The Roots of Separatism, 56. The Palestine Currency Board, under Colonial Office supervision, governed the issue of Palestine's currency.
74 Note by Lloyd, 8 February 1928 (n. 69 above).
75 Note by Lloyd, 27 February 1928, CO 733/150/5, NA.
76 Note by Lloyd, 27 February 1928, CO 733/150/5, NA
77 Note of 27 March 1928, CO 733/150/4, NA.
78 Cf. Cohen, Churchill, 113–16. Balfour was born in 1848 and first entered Parliament in 1874; he was brought into the government by his uncle, Lord Salisbury, and held numerous ministerial positions from 1885, often replacing his uncle as acting foreign secretary during his trips abroad; Balfour was leader of the Conservative Party for many years and prime minister in 1902–05; during World War I he served as first lord of the admiralty (1915–16) and foreign secretary (1916–19). In 1928, when he was an elderly invalid, approaching his 80th birthday, he held the sinecure cabinet post of lord president of the council. He died in 1930.
79 For this and following, see records of the meeting by Sir John Shuckburgh, 27 February 1928, CO 733/150/5, NA; and note of conference on 27 February by Chaim Weizmann, in S50/5, Central Zionist Archives, Jerusalem, and in Weizmann Archives, Rehovot (hereafter WA).
80 Weizmann to Isaac A. Naiditch, 27 February 1928, and to Manka Spiegel, 18 March 1928, in Letters and Papers, 13:387, 408.
81 Shuckburgh note, 5 April 1928, CO 733/150/4, NA; also Amery diary note, 27 February 1928, The Leo Amery Diaries, 1:538.
82 On Churchill's belief in the influence of American Jews on American foreign policy, cf. Cohen, Churchill, 113, 146, 186–203, 328.
83 CP 71, 5 March 1928, Cab 24/193. NA. His memorandum reads as if the Zionists had drafted it for him.
84 In February 1924, Samuel estimated that the annual repayments of the Ottoman debt would come to roughly £180,000, which amounted to about one-seventh of Palestine's annual revenue from taxes; he added that this charge was not balanced by any assets left behind by the Ottomans, Samuel to Colonial Secretary Thomas, 8 February 1924, T160/44, 1401/01/02; Colonial Office officials later conceded that Palestine was the only territory detached from the former Ottoman Empire that had not defaulted on its repayments of the Ottoman debt, note by Lloyd, 8 March 1928, CO 733/150/4, NA.
85 Minutes of the cabinet debate on 13 March 1928, Cab 14 (28), Cab 23/57, NA.
86 In his recent study, Churchill and the Jews, Gilbert, writes, quite misleadingly, that Churchill supported a government guarantee for the Zionist Loan. He has nothing at all to say about the government guarantee for the Palestine Loan.
87 Dugdale to Weizmann, 5 April 1928, WA., cited in Cohen, Churchill, 352 n. 45. Dugdale indicated that her source was “M.H.” – possibly Douglas M. Hogg, the Lord Chancellor.
88 Diary entry for 4 April 1928, The Leo Amery Diaries, 1:541 (my emphasis). There were doubts whether Balfour would even survive his illness.
89 Foreign Office memorandum, 29 March 1928, CP 110 (28), and Treasury memorandum, 2 April 1928, CP 114(28), Cab 24/194, NA; the expert opinion was written by Sir Otto Niemeyer (Financial Controller at the Treasury, and a Director of the Bank of England), which concluded “both the Financial Committee and the Council of the League would find great difficulty in regarding the Zionist case as a proper subject for their intervention.”
90 Amery attached to his cabinet memorandum a paper in which the Zionists argued “a substantial and growing income is in itself no substitute for the capital without which the orderly execution … of a systematic plan of colonization presents serious difficulties.” Appendix to Colonial Office memorandum, CP 85 (28) 15 March 1928, Cab 24/193, NA.
91 Cabinet meeting, 4 April 1928, Cab 20(28) Cab 23/57, NA.
92 Weizmann to Dugdale, 17 April 1928, in Letters and Papers, 13:438.
93 Diary entry, 20 June 1928, Leo Amery Diaries, 1:546.
94 Meeting, 20 June 1928, Cab 23/58, NA.
95 Weizmann report to Zionist Executive, 21 June 1928, WA.
96 In the general elections of October 1924, the Liberal Party was reduced from 159 to 40 seats in the Commons.
97 Cf. Weizmann to Zionist Executive, 4 April 1928, in Letters and Papers, 13:425.
98 Amery, an assistant secretary to the cabinet in 1917, drew up the final draft of the Declaration.