The economic crisis of huge proportions now perplexing the State of Israel can be met only by aid from abroad; and leadership, both in Israel and here, has agreed that America’s share in this effort should amount to one billion dollars over the next three years. What are the needs that prompt this ambitious plan? By what means is it to be accomplished? What are likely to be the effects of such a fund-raising effort on the structure and activities of the American Jewish community? Hal Lehrman, author and lecturer, tries here, on the basis of information obtained from authoritative sources in and outside of the American Jewish community, to sketch the economic, institutional, and political facts and factors involved in this unprecedented demand upon American Jewish resources.
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By rough but fairly sound computation, the total of all the funds raised during the past three years for Jewish development in Israel from all sources in the United States—philanthropy, investment, and credit—adds up to something just beyond 400 million dollars. The goal for the next three years, however, is no less than an additional thousand million dollars. This is the apparently astronomical pledge to which the leadership of the organized Jewish community is now formally committed.
The dimensions of this goal grow even vaster when one reflects that the 400 million-odd dollars were amassed in three years of high drama and exhilaration. The first year, 1948—the year of Israel’s birth, of her battle against the Arab invader, of the opening of her gates to the mighty immigrant tide—was the peak year in the history of fund-raising. The following two years saw a progressively slackening response—but a response still relatively alert to the challenge of buttressing the victorious new state, shutting the DP camps of Europe forever, “ingathering the exiles.”
Ardor has cooled, inevitably. Yet now the call is out for one billion dollars. True, new fund-raising channels are being devised: Israeli bonds and United States government aid. But even they will be tapping reservoirs which have already been generously drawn upon—and the fact remains that the sum demanded, in a time of emotional fatigue, is more than twice the sum yielded in the three previous years of ardor.
The task is mammoth. It need not by any means be impossible. But it clearly needs objective analysis rather than pure sentiment if we are to understand the dimensions of the task and the problems it sets for American Jews, and to assess the prospects for success. It is almost too early to attempt this, but the implications for American Jews of a billion-dollar three-year drive for Israel are too great for the community-minded not to want even now to know as much as possible. It is the purpose of this survey to describe the situation in all its controversy and complexity, and leave it to time and the mature judgment of the community to separate the real and the possible from the merely hopeful and visionary.
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The emergency requirements of Israel until the end of 1953 are officially set at one and one-half billion dollars—one-third to be somehow extracted from the already hard-pressed Israeli community and the rest of the world outside America, the remaining billion to come from the United States. What is this staggering amount for? The reception, care, and economic absorption of new immigration. How is the calculation made? By multiplying 600,000—the total of the anticipated yearly average of 200,000 immigrants for three years—by $2,500, the estimated cost of absorbing each arrival. Result: one and one-half billion dollars. How will this be allocated? The Israeli Finance Ministry’s plan presents this break-down: 600 millions for housing and public works, 290 millions for industrial development, this much for agriculture, that much for transportation, immigrant maintenance, resettlement, and so on, all neatly balancing up to the requested billion and a half.
These figures are round, inspiring, and easily understood. The economics are transmuted into warm human terms; the emphasis is exclusively concentrated on the new immigrant and his crisis. Certainly such an appeal is likely to evoke maximum sympathy.
A considerable body of informed opinion, however, holds that the calculations are arbitrary and the emphasis inexact. Such observers point out that Israel’s present financial condition—the result mainly of the large numbers of immigrants already received—is desperate enough for emergency measures. As for immigrants still to come, there is no way to anticipate their precise or even approximate number. The caprice of other governments—in Poland, Rumania, Hungary, Iraq, and elsewhere—will determine how many Jews may enter Israel. The number may be far less than 200,000 annually—and it may be substantially more. Presumably the government of Israel will impose no ceiling on immigration. Dictated by idealism and hard military prudence, unlimited immigration has become an axiom in Israel. Consequently, arithmetic based on any fixed immigration total will be subject to large error, in either direction.
Moreover, according to the analysts, the $2,500 proposed as the cost per immigrant does not have to be raised in dollars. Some 60 to 70 per cent of it is payable in Israeli currency. This does not mean that 30 to 40 per cent of the one and one-half billions is all that is needed from the outer world. It does mean that the real crisis is one not of immigrant expenditure but of foreign exchange—hard currency to meet the requirements not merely of immigrants but of the entire country and whole population. This is a cold and intricate problem which lacks the simplicity and resonant overtones of rescue, survival, and global calculations. It is nevertheless the true problem.
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That a foreign exchange crisis of disturbing magnitude now rages in Israel is indisputable. Without going into head-aching statistics, it suffices to say that the pitiful inadequacies of dollar and other hard-currency reserves are the primary and overwhelming cause of Israel’s current Spartan austerity, hoarding, and black-marketing. Further, the dollar shortage is directly responsible for Israel’s inability to obtain abroad the equipment and materials without which its economy cannot expand to meet the needs of an expanding population. Production is the key to Israel’s solvency. Israel must export more—and import less of the non-productive commodities, like food, which she now is buying abroad instead of producing at home—in order to live and grow. Without a rapid acceleration of her productivity, Israel’s currency and economy will topple.
Already half throttled by the foreign exchange vise, the country confronts in 1951 the prospect of further tightening, notably through the exhaustion of its present Export-Import Bank loan and its sterling reserves and the need to make payments in foreign exchange on certain overseas loans and investments. Estimates of Israel’s requirements in dollars or other hard currencies vary widely. To import the same volume of goods in 1951 as this year, and to meet her growing international obligations, Israel would need about 325 million dollars. She is expected to earn, in visible and invisible exports, only about 100 million dollars. The balance of 225 million dollars will have to be met by gifts and worldwide philanthropy (around 100 million dollars for 1950), private investment, inter-government aid, capital of immigrants, dwindling foreign exchange reserves, and borrowing—borrowing by government, by organizations, and by individuals.
But the 1950 level of import has already put Israel into an economic strait jacket, with a hardly tolerable standard of food, clothing, and housing. In 1951 the population will continue to be swelled by immigration; prices of all the commodities Israel must buy abroad are higher now and still rising; more development programs must be inaugurated. Therefore a total of only 225 million dollars in “unearned” foreign exchange will obviously be inadequate for 1951. From this point of view, a billion-dollar drive for 333 million dollars annually in the next three years—to meet the foreign exchange needs of the country as a whole, and not merely for new immigrants—does not seem at all unreasonable.
Objective economists point out that there is one approach to the problem which fundraisers generally pass over in silence: how much of the unearned foreign exchange needs could be cut down if Israel herself increased her earnings by ampler and more efficient production from her own farms and factories? This question has evidently not received proper emphasis even in Israel.
It was only in October 1950 that the top posts were filled in the two production ministries—Agriculture, and Trade and Industry. Visitors to Israel have noticed, even if they do not discuss publicly, the neglect of important foreign-exchange-earning assets such as the abandoned (and now destroyed) citrus groves, the vineyards, olive trees, and fruit plantations, and the years of delay in resuming potash workings. It is also asked whether Israel is really putting to most effective use the resources in foreign exchange which she does possess even now. The construction of hospitals, office buildings, stadiums, cinemas, convention halls, or the importation of passenger automobiles and materials for “luxury” housing, are related to production only in a very indirect way. Are these so necessary, or, at least, are they consistent with Israel’s crucial need for emphasis on expanding production? Admittedly, some of this failure to concentrate on purely economic development is due to the uncontrollable preferences of well-meaning organizations which raise money abroad, or of non-Israelis whose funds are paying for the luxury imports. It is nonetheless undeniable that much more good could come from the available resources if these expenditures were more rationally coordinated and aimed at first things first.
In essence, the Israeli crisis may be pictured as a race between production and the expanding needs of an expanding people. Production is starting far behind in the race—at least by 225 million dollars in 1951 and probably much more. How much will it take to catch up, and when? This is beyond precise evaluation at this time. Even with the one and one-half billion dollars advertised, the government has promised to be “well on the road to economic stabilization” only by 1956. It should be noted, on the other hand, that there is a limit set on the use of dollars by the limitations of Israel’s present planning and productive resources; only recently have the final projects been elaborated for all of the 100-million-dollar American loan available since December 1948. But, in general, it is correct to say that the more aids extended, the earlier will American Jewry begin to see release from its moral obligation to sustain and underwrite the struggling people of Israel.
The mobilization of the American community for this new and vast effort will require more careful planning and effective techniques than ever before. What progress can be reported up to this moment?
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There seems, unhappily, to have been very little planning for or during the National Planning Conference for Israel and Jewish Rehabilitation held with much éclat and advance publicity in Washington over the last weekend in October. Seven weeks earlier, some fifty American Jewish leaders, assembled in Jerusalem, had agreed with the government on a billion-dollar drive through philanthropy, bonds, private investments, and inter-government aid. The Washington meeting was to present this plan to the national community and lay the groundwork for its implementation. But even before its opening, word went out that the Hotel Statler conference would be mostly eloquence, with a minimum of deliberation.
Reportedly, the original intention in Jerusalem had been to launch the idea of bonds in Washington; all the mass organizations of American Jewry, which had little experience with large-scale fund-raising but might be important pins in a bond-selling machine, were invited; it quickly became evident that any definite talk about bonds was premature; still, the meeting had been called—there was nothing to do but go ahead and muddle through.
This, by and large, is what happened. The agenda was reportedly not available to component organizations in advance, nor were even printed programs distributed until the conference was well under way. A significant number of top fund-raising personnel came to Washington persuaded beforehand that, in view of the variegated makeup of the groups attending and the absence of preparatory documentation or concrete proposals, no worthwhile results would ensue. They were pretty nearly right. Neither the “Steering Committee”—which, with 280 accredited members, was somewhat overloaded for accurate steering—nor the vast plenary sessions heard much fruitful exchange of views. The only genuine discussion occurred in small caucuses, committees, private breakfasts and luncheons—but there, too, the emphasis was something less than positive: to eliminate all differences, however basic, simply by postponement Thus, the vexing questions of a central fund for unified campaigning for Israel in this country, and of a central budget for priority disbursements in Israel, were gingerly sidetracked to spare the sensibilities of groups like Hadassah, Histadrut, and the Jewish Agency. Conversely, the explosive issue of pre-campaign budgeting in the communities, i.e., allotting a first guaranteed share to Israel in advance of the welfare fund campaigns, was tabled to avoid ruffling other national agencies, and some overexuberant phrases identifying world Jewry too nationalistically with Israel were removed from resolutions in order to meet the criticisms of pro-Israel non-Zionists. The result was acceptable to all but scarcely productive.
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Even the one strongly avowed purpose of the conference—to stimulate a great surge of popular feeling for the billion-dollar drive—almost fizzled. There were 1102 delegates—the most representative communal and organizational assemblage in American history. It was a superb opportunity to spark an élan which would send the multitude home burning to touch off enthusiasm around the country. Instead, the conference was treated to round after round of platform oratory—eloquent enough, but all saying much the same thing and virtually none of it on ways and means of collecting the money that everyone agreed ought to be collected. Delegates began strolling disconsolately through the Statler’s spacious corridors, wondering how many refugees could have been transported to Israel for the price of the conference. The climax of futility came with a monster banquet in the National Guard Armory on Saturday night, when a skilful, acrobatic but quite inappropriate rifle drill by a squad from Boiling Field was fatuously described as “a salute by the armed forces of the United States to the armed forces of Israel”; the longest dais of dignitaries ever seen by mortal man disgorged seven more orations; a regiment of waiters forgot to serve dessert and coffee.
The conference, miraculously, was retrieved at the closing session on Sunday. A few valiant men gathered at 8 AM to plan the last day properly. With unprecedented courage they struck two Congressmen from the list of speakers. Resolutions reaffirming and elaborating the Jerusalem program, calling for immediate preparation of the 1951 United Jewish Appeal campaign, and urging the communities through their welfare funds to amass fifty million dollars in emergency cash for Israel by the end of 1950 were resoundingly moved, seconded, and passed. Discussion from the floor, partly by pre-arrangement, kept to a high level of purposefulness. Over five million dollars in community checks paraded to the platform. Delegates pledged themselves to take bank loans now in advance of 1951 pledges, to call state-wide meetings, to pitch into the campaign with all possible strength. The hall throbbed with belated but true enthusiasm. At the close, a magnificently apt speech by young Israeli Ambassador Abba [Aubrey] Eban—who is fast becoming the Winston Churchill of English-speaking Jewry—lifted everyone up in prolonged and proud tribute. It was a fine and memorable moment.
But the fundamental procedures and necessary agreements for 1951 still remain to be achieved in the time ahead—and these problems are now being deliberated by the pertinent organizations and personalities. Meanwhile it may be possible here, on the strength of private interviews in Washington and elsewhere, to throw some preliminary light on a few aspects of the four-point, billiondollar plan for Israel’s economic salvation.
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Inter-government aid: Loans and free grants by the United States may be a large—perhaps the largest—part of the total funds from all channels tapped by the billion-dollar drive.
To begin with, it is expected that shortly—possibly before this article reaches print—the Export-Import Bank may announce a new loan of 35 million dollars for Israel’s agricultural development This duplicates the 35-million-dollar agriculture slice of the bank’s 100-million-dollar loan in 1948. Industrial use of the previous loan has lagged, but on the agricultural side the bank seems highly satisfied. Israel has made good or better on its pledges: it has invested two dollars of its own for every borrowed dollar; its projects are financially sound; it has increased its farm production by 50 per cent or more in two years instead of the promised three (although some outside observers do not consider the latter too striking an achievement in view of the greatly increased land, labor, and capital made available for agriculture).
But the borrower’s successful application of part of a loan is not necessarily reason for the lender’s giving more. A usual prerequisite is the borrower’s ability to repay. On a cold economic diagnosis, according to American government analysts, the symptoms are unfavorable. US Department of Commerce reports have not overlooked a steady decline of the Israeli pound, severer rationing, and rising gold quotations on the Tel Aviv exchange. Official specialists here read Israeli statistics as demonstrating small ability for repayment when servicing of the loans commences, and even less chance of repayment in dollars.
Why the new loan, then? Because, it is cautiously indicated, there are other considerations besides economic ones—moral, humanitarian, and political. These, especially the last, may impel Washington to give not only interest-bearing loans but free grants.
The question hinges on the degree of Israel’s reliability as a democratic partner. Eighteen months ago Israel might even have rejected Marshall Plan aid in order to maintain its hopeful policy of “non-identification” with East or West. Today, responsible Israelis are prepared for almost any commitment the West may require. The chasm between Mapai, the dominant government party, and the Moscow-genuflecting Mapam is deep and now unbridgeable. Mapai has shelved its naive belief that Soviet policy toward Israel—on Jewish emigration from Russian or satellite territory, on Jerusalem, on Arabs, and other matters—might be influenced by anything Israel said or did. Short of belligerent denunciation of the Kremlin, Israel has lost no recent opportunity to make its pro-Western turn clear. Its vigorous stand on Korea at Lake Success, and forthright declarations by its spokesmen at home and abroad, particularly in Washington, have underscored the change.
In consequence, friends of Israel have been able to plead with good conscience that, among all the wavering Arab feudalistic states, modern and democratic little Israel is America’s strongest bastion and “best friend” in the strategic Near East—and therefore entitled to at least the same kind of direct aid given by the United States to friends elsewhere. American Jewry will continue to contribute and invest, but it cannot carry the whole burden of Israel’s development and has the right to expect help for a sister democracy from the great American democracy too. This argument has been carried forcefully to the White House, the Export-Import Bank, and the State Department. In the last, certain echelons still have doubts as to whether Israeli Prime Minister David Ben Gurion or King Abdullah of Jordan and other Arab potentates would be more dependable in an East-West showdown. But the department at top level seems to have made up its mind that the national interest requires a more active policy than mere concern for Arab sensibilities.
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President Truman, it is known, has a much broader vision of the “Point Four” program than the narrow legislation already enacted to dispense American “know-how” with small funds in undeveloped regions. His concept, rather, blends know-how with the wider aims of the Marshall Plan, enlarging the latter’s focus on recovery of the war-damaged European democracies to encompass development of backward—and deserving—areas around the world. This concept, only vaguely hinted at in recent declarations by Secretary Acheson and others, has now been strongly reinforced by a projected Philippine aid plan and the Gordon Gray “Report to the President” recommending large loans and grants to Asia. The technical staffs in government have their research well advanced, with the data for concrete programs ready on short notice. Emphasis has been primarily on the Far East. I understand there is no specific program for Israel, or even for Israel and the Arab states. But all that is needed is a White House green light and a Congressional proposal.
Congress—especially the lower House, where the measure is likely to originate as a financial bill—now takes the spotlight. This is the first time the State of Israel will be testing its prestige with the legislative branch—and with the American people at large. It will therefore be an important objective of the billion-dollar drive to create a favorable climate of opinion for Congressional action. Significantly, the inter-government aid idea, which was soft-pedaled at the September meeting in Jerusalem, became the leading plank in the platform of the October conference in Washington. The general campaign proceeds vigorously, having already elicited vocal approval of aid to Israel from leaders in the old and new Congresses as well as from a host of political spokesmen for the major parties throughout the nation.
The form which an “Aid Israel” program may assume in Congress has several possible variations. It might come as a separate bill, or as an amendment to a fresh Marshall Plan appropriation, or even as a technical rider to some phase of the military aid program. Any one of these would be a bargaining advantage for Congressional supporters of Israel if, as may occur, a State Department recommendation for a vast program of grants to a “Near East” including India and Pakistan takes Congressional shape.
Such a proposal would be a welcome recognition by the department of the feasibility of helping the part of the world where Israel is situated. On the other hand, if the Near East aid bill—which may envisage an annual expenditure of a half billion dollars for five years in the entire area—is allocated on the basis of population rather than need and merit, tiny Israel’s slice would be very thin. It is at this point that bi-partisan support in Congress, fortified by White House benevolence and a strong current of public opinion, would be most needed.
No hard figures for Israel’s eventual share of such American grants-in-aid seem yet to have been broached. The rather peremptory call by Zionist Organization of America President Benjamin G. Browdy for a cool half billion is considered over-enthusiastic and ill advised, to put it mildly. But knowledgeable circles feel the atmosphere is agreeable to substantial help—provided that the strengthened Republican-Southern Democrat coalition in the 82nd Congress does not entirely frustrate White House plans for increased US participation in world economic recovery. It is noted, as a sign of the times, that the 35-million-dollar agricultural loan will put Israel close to the top among the Export-Import Bank’s beneficiaries. There is good reason to hope that Israel will not be badly treated in any grants-in-aid program either.
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Private Investment: The government of Israel is being urged by its economic advisers here, and in turn is urging them, to increase the flow of venture capital into Israel. To date, despite consultations, plans, and even laws passed in the Knesset, not too much progress can be recorded.
Not that private investment from the United States in Israel has been any feebler than elsewhere. The present-day American businessman is notoriously allergic to any kind of foreign risk. Compared with his puny investments in other countries, he has been positively bold in Israel. This year has seen the beginnings of American-financed factories for shoes, tires, and automobiles, more investment in Israeli concerns through the American Palestine Trading Corporation (Ampal) and Palestine Economic Corporation (PEC), a housing program sponsored by the International Ladies’ Garment Workers Union, and numerous smaller individual projects. The grand total for 1950 may reach 30 million dollars.
But this falls far short of the great potential hoped for, especially from American Jews, whose zeal for Zion was supposed to override much of their normal commercial caution. Israel’s hunger for investment dollars is particularly sharp because the entrepreneur, not the government, absorbs any loss; his success means increased revenue for the state through taxes, and further expansion of the economy; his investment does not subtract dollars which might otherwise have come to Israel anyway through philanthropy.
A main problem has been the rather weak and confused cooperation by Israel and interested organizations here among themselves and with potential investors. Israeli representatives are currently striving for some kind of over-all committee which will harmonize the sometimes competing activities of PEC, Ampal, and the economic section of the Jewish Agency and other groups, as well as secure better liaison with the official Investment Center apparatus in Israel.
The latter’s sluggishness and slow motion have provoked justified complaint, whose echoes resounded even at the Jerusalem meeting between government and American leaders. Criticism there of the new investment laws’ poor administration brought government admission of buck-passing and red tape, at least in the middle and lower bureaucracy, and a request for advice on remedies. Independent American economists are now urging a large-scale revamping and expansion of the Investment Center, giving it greater authority and staffing it with energetic Americans who will go out looking for investors instead of waiting for them to turn up, and will know how to deal with them when found. Until now, the government has revealed a willingness to engage American technicians, but at Israeli salaries—wistfully proposing as an alternative that they serve, in the American style, as “dollar-a-year” men.
More politically-minded observers, however, suggest the real need is for several fresh and impressive examples that it is possible for new investment to operate healthily in Israel without ideological impediments, to make money and to get a reasonable part of it out of the country in usable form. Only if this can be demonstrated, it is said, will American risk capital be encouraged to fill a fair quota of the billion dollars for which Israel is asking.
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Philanthropy: The downward trend of Jewish community giving has been persistent since 1948. Yet many fund-raising experts now profess to believe that, if all other things were equal, the trend could be arrested in 1951 and the total sum raised in Jewish philanthropy next year might match the results of the year now closing.
This theoretically hopeful view is based on a prognostication of increased prosperity and taxes ahead for big givers. Improved business and suffer tax rates have already stimulated the use of income tax exemptions for philanthropy and given a fillip to this fall’s campaign. For the first time in years, unsolicited gifts have been coming in from contributors who find they now have more dispensable tax-exempt cash on hand than when they made their pledges.
In view of American defense preparations in a troubled world, continued economic acceleration and sharper taxation seem inevitable. Hence the confident assertion by many observers that fund-raising next year, despite the reported general fatigue of the givers with giving, has a good chance of breaking even with this year. Interestingly enough, however, such prophets are, almost to a man, those who are dubious about the success, or downright antagonistic to the use, of a contemplated new fund-raising method in the billion-dollar program for Israel. This new method is the Israeli government bond issue. No discussion of philanthropy’s prospects in the period now opening can be valid without consideration of the bond flotation and its possible effect on the collection of free philanthropic dollars.
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Bonds: It may be stated flatly that the Israeli government has made a positive desision to float bonds, though formal announcement is being delayed.
The parliament’s Finance Committee has given its “agreement in principle.” For final action the committee awaits a definitive plan from the Finance Ministry, now being prepared by Finance Minister Eliezer Kaplan with American consultants. But the date of its presentation thereafter to the Knesset will be determined by the dispersion of the last lingering possibility of technical, legal, or political embarrassments here. There are the forty-eight states, whose “Blue Sky” laws necessitate fulfilment of various stipulations. More important, there is the necessary registration with the federal Securities and Exchange Commission, whose approval is paramount. No serious reason exists, however, to believe the SEC will not be satisfied with the information supplied by Israel as required by American law. It is hoped that the SEC will even waive any “full” disclosure of Israeli finances which might include details of top-secret military expenditures.
Two kinds of bonds are being considered—the coupon type for large investors, the E-bond type for small. From details revealed to the Washington conference by Henry Montor, director-designate of the bond drive, and from high Israeli sources, it appears that the general term will be twenty years, with an interest rate between 3 and 4 per cent payable in dollars, immediate convertibility into Israeli currency, and redemption in dollars after five years from a sinking fund. This fund, estimated to start at around 20 per cent of receipts, will be designed to absorb the shock of any dumping and keep the market steady against sudden investor demands for cash. The redemption scale will show a disproportionately large dividend in the last two or three years.
In the communities, welfare funds will retain their present primacy as raisers of philanthropic (non-bond) dollars. Acquisition of bond dollars is to be supervised by an entirely new national organization which will develop its own regional and community branches distinct from the welfare-fund system. Banking and investment houses may be integrated into the bond-selling mechanism; mass Jewish organizations certainly will. In all phases of the billion-dollar drive, each segment of American Jewry will perform tasks suitable to its competence, form, and traditions. Just as the American Jewish Committee and its president, Jacob Blaustein, are specializing effectively in the area of inter-government aid, so groups like the Zionist Organization of America are prepared to enlist their mass memberships for the purchase of bonds and for the recruitment of other purchasers. B’nai B’rith, for example, with its 350,000 members and some 1,500 lodges and chapters, sold 700 million dollars in US bonds during World War II. Nobody expects the same monumental performance with Israeli bonds, of course, but B’nai B’rith is planning to set up a special bond department and hire a technician at its own expense to coordinate the drive. There is no question, however, of any one of these large groups—Zionist or non-Zionist—taking over the top national direction. Each will be asked to make its maximum effort under a unified professional command and lay coalition.
What success will the bond issue enjoy? Estimates range from 25 million dollars to 100 millions and over in the first twelve months of sale. But these are sheer guesses. There are too many imponderables. The risks and disadvantages of this new fundraising instrument are legion, and critics have not hesitated to point them out. Let us list some of the arguments here, remembering that the whole subject is experimental and that dogma is not the best pilot for ships braving an uncharted sea.
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It is warned that Israeli bonds may have to compete with US war bonds if the American government should decide to finance part of its rearmament program by public borrowing; that money going into interest-bearing bonds will reduce non-repayable money which might have gone into expansion of private enterprise or even into philanthropy; that the latter loss—if the bond drive fail—may grievously damage Israeli’s credit with banks, which have hitherto relied for security on the large flow of gift dollars into Israel; that the bond issue, on the other hand, has no real security and may constitute, moreover, a crippling burden of repayment. Israeli Labor Minister Golda Myerson assured the Washington conference that the best security behind Israel’s pledge to repay was the established settlers, the torrent of immigrants yet to come, the tent-dwellers in the transient camps, and the ardent generations to be born of the free citizens of the new state. This, it is countered, is uplifting doctrine but hardly calculated to persuade bank officials and investors with cash to lose. True, governments rarely, if ever, pay off their national debts; when obligations come due, these are largely refunded through more borrowing. But, it is pointed out, such borrowing is likely only if credit is maintained, if the borrower is a going concern, with a stable economy and plausible sources of future earned income.
Who will buy the bonds? Large coupon bonds are bought mostly not by private individuals but by insurance companies, foundations, and similar institutions. Foreign government issues generally find no mass market here, as demonstrated recently by British, Canadian, and Australian flotations. As for the big givers to Jewish philanthropy, Israeli bond-buying will mean to them a cut into capital, without benefit of tax exemptions. These big givers constitute the heart of the United Jewish Appeal, which normally raises some 80 per cent of its total from 15 to 20 per cent of the contributors. The very wealthy invest in steel, motors, oil, railways, and the like, not in sentiment—especially not in a region where, in the minds of such investors, there hover the unexorcised specters of socialism and other devils. What will those in the $10,000-and-over gift category do? Will they sell their domestic stocks, or American Abonds, to buy Israeli debentures? Will bonds from Israel be impressive collateral when businessmen turn to the banks for ready cash on current operations?
What about the small giver? Bond advocates hope that he will rally to the call, digging into his savings for an extra $100 or more after he has done his UJA stint, that bonds will become standard gifts for graduations and Bar Mitzvahs—and that the sum of many little purchases will make a great total. Possible, but if so, say the critics, it will be an amazing phenomenon, a revolutionary reversal of all previous theories and techniques of fund-raising. Hitherto the belief and practice has been to solicit small givers in the mass not for any vast amounts of money that might be raised from them but to establish a popular mood and atmosphere in which the big gifts—the ones which really count—could be most effectively extracted. In fact, the experts say, the expense of mass campaigning has scarcely been justified by the size of the total collected from the mass.
Nor can little givers be expected to regard bonds primarily as an investment. How can they, it is asked, after years of exposure to the UJA’s “misery and crisis” propaganda, especially when they see at the head of the bond campaign some of those who until yesterday were long-time leaders of the “charity” campaigns? If bonds are bought, the argument runs, they will be bought by and large for sentiment, not investment. Where is the advantage in that? Isn’t there a danger that bonds will become simply a new gimmick in philanthropy, eliciting the same cash from the same people for essentially the same reasons and through the same appeals? Must bonds not then, inevitably, be a dangerous competitor to the collection of free dollars?
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The above arguments, and others, are not unknown to Israeli leaders and to bond sponsors in this country. As a matter of fact, when the bond idea was advanced by its American partisans a year or more ago, it was supported among the “Big Three” in Israel only by Mrs. Myerson. Finance Minister Kaplan rejected it, and the Prime Minister backed him up. Kaplan in particular, as the man who would have to obtain funds with which to service and redeem the bonds, realized then—and realizes now—that a free dollar is worth in effect at least twice as much to Israel as a borrowed dollar. But another year has gone by, and UJA receipts have continued to decline—from 150 million dollars in 1948 to 105 million in 1949 to an expected 90 million dollars in 1950 (according to latest estimates); and, of course, a sizeable fraction of UJA receipts goes for purposes not connected with Israel. And the dollar need is more acute than ever. The bond decision is a counsel of despair. Israel cannot suffer a further slump in its foreign exchange supplies. Bonds may cut into free dollars, but the total from both, it is hoped, will substantially exceed any total from philanthropy alone. The accompanying risks are therefore considered justifiable.
At the same time, there is no sign that the Israeli government is prepared to dismiss gift dollars as a vital source of support. It knows too well that vast sectors of Israel’s reconstruction, such as irrigation, soil improvement, and low-cost housing, are thirty-to-fifty-year programs which cannot show an early profit and should be financed by free dollars or, at worst—as often in the United States—with assistance of loans at ultra-low interest rates. So far as the Israeli government is concerned, therefore, all possible precautions must be taken to keep the structure of philanthropy in this country healthy. “Priority to the UJA” is virtually an official slogan. In any case, it is anticipated that the involved procedure for clearing the bond issue through federal and state agencies, and the necessity of building a bond-selling apparatus from the ground up, will delay the flotation until the late spring of 1951 at the earliest. By then the major part of the UJA campaign will have unfolded without hindrance.
Beneath this anxiety not to damage philanthropy, there can nevertheless be detected a fundamental change of official Israeli attitude toward the future financing of the country. Gift dollars will continue to be a source of solace and sustenance for some years to come. But they can never again play the dominant role they did in the years of Palestinian development and Israel’s emergence. A new financial organism must somehow be fashioned, resting not on emotion but on confidence in the viability of a flourishing economy. The decision to issue bonds represents an initial step in the direction of a new pattern of American-Jewish cooperation with Israel.
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Such is the long-term view held in Israeli quarters. But in this country, where the actual labor of amassing Israel’s desperately needed funds must be accomplished, the serenity of theories will give way to the hot clash of field operations. It requires no divination to anticipate at least two sharp conflicts in the months ahead: between Israeli and domestic Jewish needs; between Israeli philanthropy and Israeli bonds. On both these fronts, the opening skirmishes are already being fought.
The rivalry between champions of “Israel First” and of “America Too” is not new.1 But it threatens to become more bitter than ever because the demand on both sides grows steadily greater.
At the Washington conference many supporters of local and national Jewish activities regarded as ominously feverish the efforts being made to accumulate emergency funds for all kinds of Israeli causes through essentially the same channels. Various persons were being pressed simultaneously to contribute or collect money for special transportation of immigrants, special needs of the Israeli Defense Ministry, and a variety of other urgent year-end requirements. The same persons were also being invited to set up local groups for the stimulation of private investment in Israel. The conference resolution calling for an immediate 50 million dollars in cash urged a speed-up in collection of outstanding 1950 pledges, advance use of 1951 pledges yet to be made, short-term loans from banks, and further borrowing from individuals and organizations blessed with inactive funds. A move to launch the 1951 UJA campaign virtually at once was blocked, but only by agreement on immediate planning for that campaign and its inauguration as far ahead of normal date as possible.
All this is interpreted in some circles as a dangerous abandonment of tried and tested procedures and schedules for the sake of making a fast dollar. It is conceded that the primary objective—quick cash accumulations—may be largely achieved. But at what cost? At the cost, it is said, of getting welfare funds too deeply in debt, of exhausting the givers, of pushing the next campaign too hurriedly, and of ultimately injuring the net total from which all causes—overseas and domestic—must draw their share.
Moreover, since the bond issue will accelerate the drain toward Israel from funds generally available for philanthropic purposes, advocates of local causes are contending that domestic needs must take larger percentage allocations of the money to be raised by welfare funds next year, and basic budgets of domestic agencies should be met before overseas agencies receive their portion.
To this extreme view—and to restrained versions of it—the Joint Distribution Committee, the United Palestine Appeal, and other constituent parts of the UJA are understandably and vehemently opposed. Countering that their percentage of welfare funds has been shrinking in the recent lean years, they speak with determination of making a stand not merely to hold percentages but for a better deal this time. As for gambling that enough will remain for them after local agencies have peeled off “basic needs,” which they contend are inflated or at least postponable, their attitude right now is aggressively opposed. As happened last year, one hears strong talk again of separate UJA campaigns in communities that decline to make satisfactory pre-campaign agreements giving UJA what UJA may think it deserves. And the same is being heard from the Joint Defense Appeal on behalf of the Anti-Defamation League of B’nai B’rith and the American Jewish Committee, which already are groggy under previous cuts by the welfare funds and are legitimately concerned for the survival of their varied programs to forestall and check anti-Semitism and to fortify the American democracy through improvement of intergroup relations and integration of the Jewish group into the broad American pattern.
Again, there is the old complaint by overseas advocates that certain communities are sapping the welfare funds’ gross receipts through large allocations or competitive drives for “unnecessary” projects like synagogues, hospitals, and Jewish centers. In view of the Israeli crisis, it is asserted, such communities should delay further building programs. To this the local advocates reply they have been delaying long enough. They also suggest that there might be less crisis in Israel if competitive overseas drives like. Histadrut were merged with the welfare funds, if philanthropic money reaching Israel were more wisely expended on priority needs there, and if “unnecessary” building were curtailed in Israel itself. They note with some asperity that Hadassah is commencing a large Israeli hospital project; they read with wonder a current resolution by the Mizrachi Organization of America which summons the Council of Jewish Federations and Welfare Funds to limit new local construction here to “minimum needs” but in the same breath sets aside money for construction in Israel of a Mizrachi college!
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Pinched purses make strange bedfellows. Despite the old and recurring antagonisms described above, friends of UJA and of community causes are now tending to line up side by side against a new opponent: the bond salesman. It is ironically true that, on this fresh battlefield, local advocates are zealous in support of the ancient opponent, the UJA—for the obvious reason that bond incursions on free dollars for Israel threaten also to reduce the common philanthropic total in the communities for all causes, foreign and domestic.
Even if the bond sale is delayed till next summer, and its agents were to refrain scrupulously from interference with the spring philanthropic campaigns, the mere anticipation of bonds is gloomily expected to make inroads into the 1951 pledges. Knowing that bond-sellers are sure to catch up with them, many givers will, it is felt, put aside some of their available cash to meet the pressure. This may be new funds, distinct from the sum reserved for philanthropy—but too often it will be at least in part shaved off the latter. Next fall, besides, UJA and bond campaigns will be running neck and neck. Overlapping and friction seem inevitable. In addition, the creation of a bond staff will raid key UJA personnel, further injuring the free-dollar prospects.
Philanthropic officials believe some system of clearance, consultation, and coordination should be devised to hold bond interference down to a minimum: to control, for example, alleged overzealous efforts by bond enthusiasts who are said to be approaching certain big givers, and, despite UJA’s priority, seeking their advance commitment to large bond purchases before they have been approached for their UJA pledges.
Part of this gathering storm centers around the personality of Henry Montor, until now the dominant figure in fund-raising and the future supreme commander of the bond-selling battalions.
Montor is the man who first had the audacity to set 100 million dollars as a UJA campaign goal—and make good on it. He is highly competent, energetic, and aggressive. But his previous high-pressure tactics have left resentment in many communities; and he has the opposition of a considerable number of Zionists, who think they detect in him the spearhead of an Israeli effort to cripple the Jewish Agency and the World Zionist Organization. In the UJA also, some of his former associates are already uneasy over the potential impact of his brand of zeal on their campaign.
Montor made a statesman-like speech in Washington denouncing as a “grave injury to Israel” any backsliding from large contributions to philanthropy. He has given every assurance that he will respect UJA’s priority, at least until the spring campaign is over. He has offered his direct help to UJA in any consultative capacity during the interim months. But he is also expected to exert himself for the largest success of the new bond enterprise with which he is to be identified. In all calculations he is regarded as a formidable and uncertain factor.
To provide the proper coordination between philanthropy and bonds, there is, on the part of some, talk of the elevation of a small, impeccably recruited committee over both the UJA and bond structures to act as umpire, arbiter, and final judge; and they also have a man in mind to head that group—Dr. Joseph J. Schwartz. Now slated to lead the UJA next year, he is felt to possess the prestige, based on his achievements as JDC director-general overseas during more than a decade, for an impartial chairman.
Dr. Schwartz’s departure would leave the UJA directorship vacant, but a replacement should certainly be obtainable. A more difficult obstacle, it is felt, is the resistance to be encountered—from the permanent UJA nucleus and the new Montor organization—to the idea of control from above. Each organism, very naturally, would be jealous of its own prerogatives and autonomy. But precedents exist. There is, for instance, the Secretary of Defense in the US Cabinet, who oversees and outranks the Secretaries of the Army, Navy, and Air Force. And to take a smaller precedent, which has worked somewhat better, there is organized baseball, with its National League, its American League, and the High Commissioner over both. Federation of philanthropy and bonds, it is said, should not be harder to arrange. The chances are admittedly slim, but there is strong sentiment in favor of a serious attempt. What is required most of all is a resolute approach by those who, in this case, have a clear moral right to intervene: the responsible leaders of Israel.
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Perhaps almost as much as in politics, fund-raising operates in a volatile atmosphere charged with mutual recrimination and power conflicts, all the more disconcerting because of the undoubtedly noble end-purposes. This correspondent, while waiting at the National Airport for his plane after the Washington Planning Conference for Israel and Jewish Rehabilitation, assisted at the following bizarre dialogue between one large and one medium-sized UJA leader:
Medium: You gotta go in and clean up the situation in C—.
Large: Yeah. We’ll be in there in a coupla weeks and talk to some of the fellers. If we don’t get the right deal, we’ll take over the joint. Either way, we’ll settle things by the first of January, I promise you.
Medium: Well, get goin’ fast. If not, they’ll jump us. Leave ’em alone three months to make their own drive, and there’ll be nothin’ left for us to collect.
The Writer (stupidly): Does that mean a separate UJA campaign?
Medium: Sure. What else? Should we knock ourselves out campaigning so that they can go fix their hospital? We’ll see ’em dead first.
Large: There are a few guys who might back us up. If they won’t, we’ll beat their brains out too.
I suspect that the opposition camp in C—, and in some other communities around the country, is not deficient in vigorous intention either. But invective and throat-cutting, needless to say, are misdirections of useful energy, particularly in an effort whose final purposes are works of mercy, enlightenment, and brotherly love. Indeed, internecine warfare and unbridled competition are likely, in the end, to reduce the total funds raised for all and each of the very legitimate needs clamoring for the contributors’ attention.
These needs—local, national, and overseas—are real and valid. The desire to meet them is equally real and valid. American Jewry recognizes a firm and enduring commitment to the construction of a flourishing Israel. More and more, also, American Jewry is becoming aware of a desire to strengthen and enrich its own internal programs on the local and national levels. How fulfill these needs, how compose these differences? Certainly not by unlicensed sharpshooting.
This is a time, instead, for planning. There is no reason to despair over American Jewry’s capacity to reconcile inner strife. On the local scene the welfare funds have been demonstrating for years the communities’ ability to consult with all competitors and administer a tolerable measure of justice. On the national scene, the American Jewish Committee and the Anti-Defamation League, by merging their fund-raising drives in the Joint Defense Appeal—and on the international scene, the alliance of the Joint Distribution Committee, the United Palestine Appeal, and the United Service for New Americans in the UJA—have shown an ample ingenuity for creation of cooperative machinery to appease their own various stresses and strains.
It remains for the leaders of the local and national communities to inform themselves and their constituents, to seek and find other mechanisms, to devise the fresh and original plans which will soften the impact of the present conflicting claims and coordinate the common effort. In this search for conciliation of the three distinct needs-all of which must somehow be fed from what is perhaps a shrinking granary—one has the right to expect a spirit rising above partisanship from American Zionism and large-minded guidance from the Council of Federations and Welfare Funds, itself an amalgam and instrument of the regional variety in American Jewish life. And one may also expect the comprehension and good will of Israel, whose government and people, despite occasional forgetfulness, understand that there can be no health or longevity in a Jewish state without a vigorous and inwardly harmonious American Jewry.
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1 See the author's “Turning Point in Jewish Philanthropy?” in the September 1950 COMMENTARY, which discussed the present crisis in fundraising and the conflict for allocations as between domestic and overseas needs.
