A Tale of Two Hospitals: Kuwait 1991, Bahrain 2011

A Tale of Two Hospitals: Kuwait 1991, Bahrain 2011

Posted on Apr 24, 2011  By Barry Lando



"I volunteered at the al-Addan hospital. While I was there, I saw the Iraqi soldiers come into the hospital with guns, and go into the room where . . . babies were in incubators. They took the babies out of the incubators, took the incubators, and left the babies on the cold floor to die."
The massacre never occurred. The girl was actually the daughter of a Kuwaiti emir, and had been coached by the public relations firm Hill and Knowlton to give persuasive false testimony.
http://en.wikipedia.org/wiki/Nayirah_%28testimony%29   http://www.youtube.com/watch?v=e_JfqkEXdAg

Scene: The Human Rights Caucus of the U.S. Congress hears the testimony of a 15-year-old girl, introduced by only her first name, Nayira, in order, the audience is told, to protect the safety of her family. The girl recounts how invading soldiers had stormed into the hospital where she says she had been working as a volunteer. Tearfully, she describes how rampaging soldiers had trashed the hospital, brutalized patients, gone "into rooms where fifteen babies were in incubators. They tore the babies out of the incubators, took the incubators, and left the babies on the floor to die."

That story is flashed around the world by a horrified media. "I don't believe that Adolf Hitler ever participated in anything of that nature," declares the outraged American president.

If anything justified a U.S. war against Saddam Hussein in 1991 to a wavering Congress and American public, that performance was it.

The problem was that the story was not true. Kuwaiti medical authorities denied that the incubator incident ever occurred. It was only after the end of the Gulf War, however, that the deception was revealed. It was a total fabrication, right out of the fertile, high-priced imagination of Hill & Knowlton, the Kuwaiti ruling family's Washington PR firm.

Nayira, the tearful 15-year-old who had so convincingly recounted the atrocity, turned out to be the daughter of the Kuwaiti ambassador to the United States; she had never been in Kuwait after the Iraqi invasion. By the time that was discovered, however, the U.S.-led coalition had charged in and the Kuwaiti royal family was securely back on its throne, and the folks at Hill & Knowlton had earned their pay.

Scene two: Police swarm through the wards of another major Arab hospital. At least 32 doctors, including surgeons, pediatricians and obstetricians, are arrested and detained. Their crime: guaranteeing medical care to people wounded in a popular uprising against an aged, corrupt dictator.

According to emails received from a surgeon at the hospital and published by Britain's The Independent, "One doctor, an intensive care specialist, was held after she was photographed weeping over a dead protester. Another was arrested in the theatre room while operating on a patient. Many of the doctors, aged from 33 to 65, have been 'disappeared'—held incommunicado or at undisclosed locations. Their families do not know where they are. Nurses, paramedics, and ambulance staff have also been detained."

The emails provide a glimpse of the terror and exhaustion suffered by the doctors and medical staff.

The article went on: "The author of the emails, a senior surgeon … , was taken in for questioning at the headquarters of the interior ministry. … He never re-emerged. No reason has been given for his arrest, nor has there been any news of his condition."

A hospital in Libya? In battered Misrata, perhaps? Where President Barack Obama has ordered a couple of Predator drones to join in the flailing struggle against the barbarous Moammar Gadhafi, where Sen. John McCain jetted in for a quick look-see and instantly declared the rebels "my heroes." Libya, to which France and England have dispatched an unknown number of military trainers to see if they can whip the hapless, squabbling rebels into shape?

No, that hospital is not in Libya but in Bahrain: It is the Salmaniya Medical Complex, the tiny state's main civil hospital. And, of course, the more than 1,000 heavily armed invading troops who are backing the police terrorizing the hospital, "disappearing" doctors and brutally crushing the local uprising are Saudis. The same Saudis who gave the U.S. and NATO the green light to intervene to save the largely Sunni rebels in Libya—in exchange for which America discreetly turned its back as the Saudis invaded Bahrain to prevent a Shiite majority there from toppling a repressive Sunni monarch. God only knows what the experience will do to radicalize tens or perhaps hundreds of thousands of Shiites.

But true to its promise, America's back remains turned.

A footnote: Such smarmy diplomatic tradeoffs are not at all unique. In 1991, for instance, the U.S. and its coalition allies were also looking for Arab "cover" for their move into Kuwait. In exchange for agreeing to back the invasion, Syria was given—among other things—a free hand to take control of most of Lebanon. The European community also lifted economic sanctions it had imposed against Syria, while Britain restored diplomatic relations. In the end it was all symbolic: None of the 18,000 Syrian troops who joined the coalition forces in Saudi Arabia ever fought.

Dr Walter Zander - FULL TEXTS (prophetic ISRAEL PALESTINE)

Zander Der Kampf der Wertpapierbesitzer, in English

A rough translation by John Zube

Improvements and better translations are invited by me. – J. Zube, jzube@acenet.com.au

____________________________________________________________________________________________

The Fight of the

Owners of Securities

By Dr. Walter Zander, lawyer

25. 1. 1933

(J.Z.: This lecture is still important for the protection of property rights, the prevention of inflation, the history of legal tender paper money and for raising price of securities, firstly those of public authorities, which are standing below pari, through granting them tax foundation, i.e., the clearing option against tax debts. Secondly, it deals as well as the clearing option for private securities, for private debts owed by the holder of private securities to the issuers of these securities.

That this suggestion ist an old one does not deprive it of its correctness and value.

This talk also stressed the need for an effective representation of the rights of creditors.

I would be grateful for hints to newer treatments of the same topics and do recommend to everyone the online memorial to Dr. Walter Zander, in form of his writings. in English, which his sons established for him a few months ago: www.walterzander.info/

Hopefully, the original German versions of his talks, papers and significant letters will also appear there, together with translations in French and in other languages.

Some of his monetary talks and brochures have already appeared on www.reinventingmoney.com

John Zube, 22.11.03, 23.6.05, jzube@acenet.com.au )

_________________________________________

A lawyer, Dr. Walter Zander, Berlin, gave on 25. 1. 1933 the following lecture, in a meeting of the United Berlin Local Groups of the League of Savers, on the fight of the owners of securities in Germany:

________________________________________________________

Ladies and Gentlemen!

Permit me to express first of all my thanks to you and your directors for providing me with an opportunity to talk you. I am fully aware of the importance of such an assembly. For the Leage of Savers (Sparerbund) is in my view one of the very rare organisations for the protections of creditors which does, indeed, pursue those aims which are expressed in it name. In most cases other aims are hidden behind these.

As for myself, as you can find in the invitation, I am Director of the "Independent Organization of Owners of Securities" (Unabhängiger Verband der Wertpapierbesitzer). The aims of our organizations are largely the same and I do regard it as a good sign, of being comrades in arms, that you have invited me to speak to you today.

The topic of my talk is:

"The Fight of the Owners

of Securities and their Rights."

To you I need not speak of the present emergency and the difficulties in which the savers of Germany find themselves. Regarding this I will not speak of the consequences of the general economic crisis, which all have to bear in the same way. The savers do not want to exempt themselves from the general crisis, they do not demand any privilege but they will resist the special wrongs by which they are threatened.

All around us are powerful and organized groups whose interests are opposed to those of the savers. The

Agricultural sector

has recently demanded and this in a strong public declaration, the cessation of all debt repayments. It is obvious that this would mean, for the savers, the loss of interest and capital, the collapse of the value of mortgage letters and for all the breakdown of the whole credit system.

Furthermore, the

House owners

are well organized to achieve a lowering of the interest rate, a moratorium on mortgages, wherever they are possible.

The savers have little or nothing to oppose them with. This is all the more surprising as in modern life all imaginable groups of the population have organized themselves. Not only farmers and house owners, which I mentioned already. The workers and clerks are united in their trade unions, the employers in their professional associations,

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trade and industry are organized into detail and not least of all are those groups with which the savers are most concerned, namely the banks and savings institutions.

The savers, if only they become aware of their importance, do constitute an

immense power.

Consider that the savings at the savings & loan associations alone came in the last year of the crisis still to 9.7 Billions. To this must be added the many billions of investments in federal, state and local government securities as well as in mortgage letters.

Embracing all those groups, which do have the same interests, does not at all transform a people into a heap of special interest groups but does, instead and really serve to achieve clarity and the proper adjustment of the different interests.

Thus the first requirement is that those, who want to organize themselves, firstly become quite clear what their interests are.

Land lords, who want to associate, are aware that they should not elect a tenant as their director and vice versa, an association for the protection of tentants should not of all persons appoint a land lord to be their leader.

Simple and clear as these self-evident matters are, nevertheless they are still ignored by savers. There are, as I intend to show in detail, organizations of savers, whose leadership has been placed into the hands of savings and loan associations, i.e. groups of creditors who have transferred their

management to the debtor.

Naturally, such an arrangement cannot serve the interests of the creditors.

It is not sufficient that one associates with others but is important with whom one does so. The sheep will not become more powerful by forming a united front with the wolf.

In any combination of interests care must be taken that interests do not cross each other. In this respect I think especially of our relations with the banks.

Take for instance the case of the

cities Cologne and Frankfort a.M.

Both cities, as you know, have not been able to redeem their treasury notes, which were due on October 1^st, 1932. The amounts came in Frankfort to 30 millions and in Cologne to 40 million. In the assemblies of the creditors we found out that, apart from these 30 and 40 million RM debts to the holders of treasury notes, there were also very considerable public

debts owed to the banks,

which in the case of Cologne came to about 145 million RM.

There can hardlly remain a doubt that between the Bank creditors and the holders of treasury notes, i.e., the savers, there was a conflict of different interests. For, whenever a debtor is unable to fulfill his due obligations, then a competition arises between his creditors about which of them will be satisfied first and best.

Such a competition is called with the Latin name "concurrence". On this there should remain no doubt among reasonable beings. Nevertheless, most of the holders of public debt certificates have authorized the

banks

to take care of their rights, instead of entrusting with this job an organization that is independent of the banks.

The consequence of this did not fail to appear, as I may show you in a small example.

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As you know, in both cities it was resolved to postpone the claims of the holders of treasury debt certificates for two years.

In Frankfort I tried to achieve that the banks would grant the same postponement as well. For I considered it to be right that equal rights should apply to all. However, this motion was denied and this explicitly with the votes of the banks. Or, to speak more precisely, with those securities of the savers over which the Banks could decide during the assembly.

Thus the curious situation arose that they holders of treasury certificates – always represented by the banks – resolved themselves, they wanted to be placed into a worse position than the banks and did not insist that the same postponement would be applied to the banks.

Such mismanagement brings about an

unbearable condition.

To this must be added the following fact:

Most savers were not represented at all in the assamblies of the claimants.

In Cologne as well as in Frankfort always only about one half of the capital in circulation was represented. For instance, in the case of Cologne, of the the total of 40 million treasury notes only about 20 million were represented and of these ca. 90 %, i.e., about 18 million RM were in the hands of the banks.

If one wants to establish an activist and powerful

organization of savers

then one must avoid such conflicts of interest and has to confine oneself to organize only the combination of the saved capital.

(J.Z.: The possibilities to vote via mail and email could now improve this situation to some extent. The same should be done for meetings of shareholders. Otherwise the managers remain all too powerful at the meetings and also somewhat arbitrary in their decision-making – to their own advantage. They do constitute a permanently present and active bureaucracy. However, achieve here a complete or at least sufficient reform only the best forms of cooperatives, partnerships and other decentralized self-management organizations would help.

An annual general meeting in which all too many members are not present or only formally represented, does not suffice to control the controllers. – It is hardly better than the periodical political vote in controlling politicians sufficiently. - J.Z., 23.11.03.)

The great organizations to protect creditors in

England and France

are correspondingly established. The english corporation of foreign bond-holders, as far as I know the oldest organization for the protection of savers in Europe, was exclusively established, by the holders of securities, ca. 1870, while expressly excluding those banks which emitted securities.

Today it represents a capital of about 1 billion pounds.

As long as it existed, as its leader told me, it has always cooperated with the great English emission houses for capital securities but the decision was always reserved to the organization of savers itself and it often was made against the interests and wishes of the emitting houses.

What, on the other hand, is the situation in Germany?

Corresponding to the Corporation of foreign bondholders we do have the

"Standing Committee to Preserve the Interests of German Holders of Foreign Securities"

('Ständige Kommission zur Wahrung der Interessen deutscher Besitzer ausländischer Wertpapiere.")

Both organizations deal with the protection of the capital of savers that is invested in foreign countries. But while the English corporation does, indeed, form a league of savers, the "standing Committee" in Germany is a creation of the

Central Organization of the Banking industry.

While in England the emitting banks stand outside of this League of Savers, in Germany the banks do decisively determine the conduct of its business and,

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finally, while in England the League of Savers has repeatedly acted against the will of the emitting banks, the "Standing Committee" is only active in collaboration with the emitting banks.

Nor is this all: Aside the "Standing Commission" we have still other protective associations, for instance the "Association to take care of the interests of German Owners of Loans of the former Austrian-Hungarian Monarchy." ("Verein zur Wahrnehmung der Interessen deutscher Eigentuemer von Anleihen der ehemaligen oesterreichisch-ungarischen Monarchie E.V.")

This association was altogether formed exclusively by the emitting banks. According to its statutes only the banks can become members und among those only the ones which were participating in the emission of austrian-hungarian state securities. The majority of their chief executives must, according to the statutes, be provided by these emitting banks as well.

Such an arrangement is thus exactly the opposite of what has proven itself in England for about 60 years.

All these organizations deal exclusively with the protection of capital invested in other countries. Thus they are only of secondary importance for German condions. For the largest part of German savings capital is, naturally, invested in German itself. Here England cannot provide us with a model. For a protective association for the English capital invested in England does not exist, as far as I know. Moreover, such an organization - at least until the fall of the English pound – was completely superfluous. For the English state securities were highly rated, interest and due capital were punctually paid and a League of Holders of Public Loans would have been an association of persons who are satisfied in every respect. As a rule such associations are not established at all.

These matters are differen in the case of

France.

In the years France experienced after the war a severe financial crisis and the French saver, who, as you know, takes his affairs very serious, had reacted thereupon in an extraordinarily effective way. In diverse locations in the country protective associations developed. In 1925 they combined into the great "Fédération des porteurs de l'épargne française". This organization embraces today by far the largest part of the whole of the French savings capital. It levies an annual fee of 5 French Francs, i.e., 80 Pfg. and from from these membership contributions it derives more than one million Goldmarks annually. Spread over the whole country it has a network of 81 branches. At the summit of each stands a president and a committee and each group has monthly public meetings. There the present deputies and, before the general elections, the candidates, do appear and have to publicly answer to the members of this association. This federation exerts an effective control of public finance and represents in France a

significant power.

(J.Z.: Apparently and either from ignorance, prejudice or lack of interest in the own affairs it has not yet sufficed to end a) the abuse of forced and exclusive currency in France and b) compulsory & excessive taxation. – On the contrary, the holders of state securities have retained a vested interest in maintaining tax-slavery. - J.Z., 14.6.05.)

In all this one has to appreciate that it was established without the help of banks and even against the will of Poincaré. It

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has managed, in the few years of its existence, to achieve general recognition. In its management it has highly respected men and the CEO had long been a knight of the "Legion of Honour".

(J.Z.: What good does that do when the most respected men are fools and their recognition is given to them by the majority of fools? – J.Z., 23.11.03.)

As opposed to this, what is the situation in Germany?

Apart from the League of Savers (Sparerbund), on which I need not talk to you, there was so far no all-embracing organization at all. In October of last year, as you know, the

People's League (Volksbund)

for the protection of saved wealth was established. But while the federation in Paris was founded under exclusion of the banks, this Volksbund was establish with the participation of representative personalities of the

banking and savings industry.

The savings and loan associations are significantly represented as members and banks appeal to every customer to become a member. I do not want to say that this Volksbund is hereby prevented from doing anything for the savers. I remind of the fact that some weeks ago it raised its voice for the first time in public - when the Landbund demanded a moratorium on all due payments.

(J.Z.: Alas, it didn't demand the right to pay with the own clearing certificates and this in a way that is quite fair to both sides! – J.Z..)

But this should not deceive us. In this case the interests of the banks and of the savers were identical. However, in all those cases, where those interests do not equal each other but are even opposite ones, the Volksbund is completely incapacitatet and the history of the last few months has also proven this. For in numerous cases, in which the saved wealth was endangered, in the assemblies of the cities Frankfurt, Cologne and Dresden, in the assemblies of the Zellstoff-Verein etc., the

Volksbund was absent.

Thus I hold it to be necessary

To establish a large and embracing organization of savers that, excluding all contrary interests, would only protect the rights of the savers and holders of securities, according to the English and French model.

(J.Z.: Employees, as creditors of their employers, could and should form the largest protective association of creditors and should come to deal, as such, with the problems of providing sufficient means of payment and also sound value standards and, ultimately, they should demand: Monetary and clearing freedom, combined with free choice of value standards and the investment of the own savings capital and insurance funds in the own interest, that of the employers and that of the general economy. – Trade unions have so far altogether neglected these common interests and are likely to do so in the future as well. – They profit from monetary and financial despotism, e.g., by making them seemingly necessary as negotiators, all too often.

Under complete monetary, clearing, value-standard and credit- freedom trade unions and employer federations would soon become largely superfluous. Then full employment and the absence of all general economic crises, i.e., a lasting boom economy would become the norm.

Employees who could freely establish employment banks, e.g. on the model explained by Ulrich von Beckerath in his books – www.reinventingmoney.com – and also factory savings banks, could always be fully employed and could accumulate, in a short time, considerable capital, which might suggest to them to make take-over-bids for the factories they work in and to run them as productive coops or partnership,while retaining all effective managers. – J.Z., 22.11.03 & 14.6.05.)

Such an organization would be able to control public finances, to supervise industries whose loans are in trouble and could strengthen the trust in public credit.

(J.Z.: I think that "public credit" deserves almost everywhere the utmost distrust, e.g. as investment in tax slavery, and thus should be replaced by other arrangements that are quite voluntary, private, cooperative and organized only among like-minded people, with all societies independently, even exterritorially autonomous, running their own public affairs according to their own ideas, opinions and preferences. – J.Z., 14.6.05.)

However, the task of protecting savers is not confined to exert general control. Beyond that

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there are urgend special tasks to solve.

Primarily the savers have to care for the

value preservation

of their saved wealth, i.e., to take care that

no inflation does uselessly destroy the the achievements of years of labour.

For me it is a special pleasure that I may talk to you particularlly about this problem in your circle, since the

Sparerbund arose out of the fight against inflation.

I wish to permit myself to include in this connection a personal remark. I have myself, in former years, underestimated the significance of inflation and believe that the same applies to the largest part of the

younger generation.

We moved from the school benches into the war. We did not have savings of our own. When inflation came we were at the university or otherwise in training for our future occupations. It is self-evident that we had to suffer under the rapid depreciation of our low incomes. The severed quakes of economic and social lives did not pass us by without leaving marks but, in relation to the experiences of the war they played no predominant role and since we did not possess any wealth of our own, we lacked this direct personal relation to the widespread loss of wealth. More or less we perceived the complaints of our parents about the vanishing of their savings as the moans of the older generation.

The extraordinary social effects of inflation, the complete social revolution and its great political significance became clear to me only in later years and I do admire the Earl Posadowsky, who, as far as I know, was the only politician of the post-war years who recognized the general political importance of the inflation to its full extent.

In this connection it appears to me as if the

younger generation

does, presently, occupy itself all too little with the problem of an inflation. Inflation appears to it merely as an accident that once occurred, years ago, which one has now more or less overcome and one that it would be quite useless to reflect upon. In this lies an

extraordinary danger,

for the possibility exists that such a catastrophe is repeated.

Nothing essential has been changed in our currency laws since the inflation period. Thus I wish to permit myself to enter into the fundamental aspects of this matter.

Between the nature of the paper money in the 19 th century and that of the present there exists a deep and essential difference.

In this I do not think of the question of redemption, for in the 19^th century as well there were repeatedly times in which the redemption of paper money into the coin of the realm

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(gold- or silvercoins) was suspended.

Decisive was something quite different and this point of view, curiously, is hardly noticed in our times. Up to the year 1909

(J.Z.: 1910 ! The legal tender law of 1.6.1909 came into force only on 1.1.1910. – J.Z.) there was, in Germany, for banknotes and the

empire's "Kassenscheine"

( J.Z.: Typified and standardized notes in convenient money denominations, accepted in all payments due to the Reich, i.e., with "tax foundation". – J.Z., 14.6.05.)

no legal tender.

Only through the law of 1. June 1909 was the forced circulation introduced. This essential difference cannot be stressed too much. Thus I permit myself to read to you the two legal clauses here in question:

§ 2 of the banking law of 14. March 1875: which was formulated on the model of previous laws of the various German States, proclaimed:

"An obligation to accept banknotes in payments which, by law, have to be made in money, does not exist and cannot even be established, by State laws, for the State's payment offices."

Thus nobody was forced to accept a note of the Reichsbank even though the Reichbank's notes were redeemable in Gold at any time.

Contrary to this runs Art. 3 of the law of 1 June 1909, concerning the Change of the Banking Law:

"The Notes of the Reichsbank

are legal tender."

With these few words a quite decisive step was taken. From now on

compulsory acceptance

for Reichsbanknotes (J.Z.: central bank notes, the German equivalent to the notes of the Bank of England. – J.Z.) was introduced and everybody was forced to accept the Reichsbanknotes at their nominal value in payment, regardless of how deep under the nominal value their true value would be.

(J.Z.: Compulsory acceptance was right away combined with forced value. – J.Z.)

At first the harmful consequences were not noticed, for as long as redemption existed the holder was protected from losses. But this was changed with one stroke, when on August 4^th, 1914, redemption in gold was repealed.

With this we passed to the pure paper currency.

(J.Z.: "Impure", because "dishonest" would have been more fitting descriptions. – J.Z., 22.11.03.)

Paper money had become legal tender (lawful money).

(J.Z.: Both are misleading terms, for e.g. cheques were not unlawful and could be freely offered. But cheques could also be refused and discounted. State paper money was thus and from then no longer checked and controlled in this way. – J.Z., 14.6.05.)

All payments and obligations were measured in their values by this paper money.

(J.Z.: "Value" and "measure" are misleading terms in this connection. – J.Z., 22.11.03.)

Everybody was forced to accept to paper money at its nominal amount in payment.

Nothing has changed in this condition until today. For even the new Banking Act of 30 August 1924 determined in § 3, section 7:

"The banknotes of the Reichsbank are, apart from the gold coins of the Reich,

the only unlimited means of payment in Germany."

Further, the Coinage Act of the same day determined the same in § 5.

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The present monetary legislation is thus shaped exactly after that form which was passed in 1909 and had

made the inflation possible.

On this we must not be deceived by the circumstance that presently and luckily we do not have an inflation. But the legal preconditions for it are given and once the dams break then then there is the danger that the same financial catastrophe will be repeated.

(J.Z.: This newer, the later and even the latest legislation in this field was passed and is maintained by supposedly sufficiently informed and also peace-loving "representatives of the people", who either do not recognize the relationship between inflation and legal tender or recognize it only too well and, therefore, insist upon the laws of monetary despotism and maintain them. Alas, their victims, the "represented" ones or, rather, the stamped-upon and exploited and cheated people let this happen to themselves, all too ignorantly, patiently and full of prejudices, imagining that this treatment is the best that they could achieve! – Moreover, the forced currency or fiat money act of 1909 was passed with the expressed intention [to be found in the Banking Enquete of 1908], to finance the next wars through inflation! – The more things "change", the more they are the same! – says a French proverb. - J.Z., 23.11.03, 14.6.05.)

It is highly instructive to realize what

former legislation

had, quite otherwise, decided in this sphere.

More than 100 years ago the Prussian Government, in connection with the unfortunate Napoleonic Wars was compelled to end the redemption of the Prussian "Tresorscheine" (treasury-notes with "tax foundation". – J.Z.) But, instead of maintaining legal tender or even to introduce legal tender, it repealed legal tender, at the same time. (J.Z.: Underlining by me. – J.Z.)

Such an action was required by justice. For, since the government was unable to redeem the "Tresorscheine" emitted by it

(J.Z.: Was it at least prepared to accept them at their nominal silver value in payment of all taxes? – J.Z., 23.11.03.)

it hat no justification to enforce their acceptance at their nominal value.

(J.Z.: Not in general circulation. But it should itself have accepted them in paytment of all taxes and other dues at their nominal value and, if necessary, should have raised taxes etc. sufficiently to keep them at par in this way. – J.Z., 14.6.05.)

When, as a result, the "Tresorscheine" (The government's paper money. – J.Z.) fell in their exchange rate, the government passed on the 23^rd of October 1807 a decree, signed by the Freiherrn vom Stein, which runs literally as follows:

When from the first of June this year we left the acceptance of the Tresorscheine to the free will of the recipients of payments, it could not remain hidden to us that this paper money would thereby lose still more in the exchange rate against current silver cash than was already the case by the restricted redemption in it.

However, we saw and still do regard this as the lesser evil in relation to the incentive to dishonesty which arises from the possibility to force upon a creditor a payment in paper money with an enforced pari, which, with discontinued redemption loses against coins."

The Prussian Government of the year 1807 thus preferred the fallen rate for its own paper money to the incentive to dishonesty und renounced the possibility of an inflation.

It was similar in Austria. There it had come to inflation during the Napoleonic Wars and, consequently, an Imperial Patent of 1. June 1816 solemnly declared:

"from now on there shall never again occur the manufacture of a new papermoney with

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compulsory value and compulsory acceptance nor any multiplication of that which is currently in circulation."

(J.Z.: The Austrian government did not keep this promise but it is interesting that it felt compelled to make such a declaration, for the public was then informed on the connection between legal tender and inflation while today even most of our "scientifically trained economists" are not. – J.Z., 23.6.05.)

Interesting is, moreover, the following:

In the writings of the classical German science of finance one seeks in vain for the term

"inflation"

in the indexes and contents lists of the textbooks and encyclopedias. Instead, the whole question of money depreciation is dealt with under the term

"legal tender"

and this not as something extraordinary but, instead, as a self-evident symptom of legal tender.

Thus and for example the old master of the science of finance, Adolf Wagner:

"Economic disturbances, injuries of interests and rights, corrupting gambling spirit and wild speculations at the exchanges, wastefulness and unprofitability do always more or less accompany the rule of paper money."

(Schönberg, Handbuch of politischen Ökonomie, , Bd. III, 1, S. 845.)

And Menger says in the 3^rd. edition of the Handwörterbuch der Staatswissenschaften in the article on money:

"Legal tender, a measure, (*) which, in the majority of cases, has the purpose to force into circulation or to keep within it, a pathological (that is: exceptional) form of means of exchange, against the will of the population and, mostly, through an abuse of the mint monopoly, as well as by an abuse of the juridical monopoly, cannot possibly belong to the concept of money and, far less, that of a perfect form of money."

(*) (J.Z.: It is an unmeasured "measure", an unlimited and uncontrollable one, a quite arbitrary, injust and harmful, a despotic decree. – J.Z., 14.6.05.)

Still more interesting is a small remark by Laves, who, in 1890, in his book on "Die Warenwährung" (The Goods Currency) says:

"We will not consider the excessive fluctuations of the value of money under a paper money currency. Such a currency is almost a joke upon the demand that the measure of value should be invariable.

All disadvantages of changes in the value of money do appear here in a multiplied stronger form.

Even in moderately exited periods we have, thanks to this wonderful institution, a continuous fever condition in a country. An illustration of the enourmous disadvantages is offered by the present conditions in Argentinia."

At that time one had to point out Argentinia in order to explain what an inflation is.

Karl Marx, too, who knew very well the laws of money (*), stated in his "Kritik der politischen Ökonomie", 1859, the following:

"It becomes, therefore, obvious, why observers who studied the phenomena of money circulation quite onesidedly, only on the circulation of

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paper money with legal tender, had to overlook all inherent laws of money circulation."

(*) (J.Z.: If he had really known them, sufficiently, then he would not have developed and published all his nonsense! Towards his end, however, he had characterized his whole system as "shit" (Scheisse). – J.Z., 23.11.03. – According to Ulrich von Beckerath, whose large reference library was burnt. I doubt that one could find this remark in editions produced by communist regimes. – J.Z., 14.6.05.)

The present condition of the paper-money command-economy, dominated by a central note-issuing bank, stands in contradiction to the tradition of the German financial system.

On the other hand it is extraordinarily informative to find out that the Communist Manifesto, which was developed in the years 1847-1848 by Marx and Engels, demands the present condition and this as a

means to expropriate the Bourgeoisie.

and to establish the Dictatorship of the Proletariat. For there it says expressly:

The proletariat will use its political rule to gradually deprive the Bourgeoisie of all its capital and to centralize all means of production in the hands of the State, i.e. the proletariat, organized as the ruling class and to multiply the mass of the productive powers as rapidly as possible.

Naturally, this can at first only happen by means of despotic intervention with property rights and with the bourgeois conditions of production, thus through measures which, economically, appear as insufficient and intenable, but which, in the progress of the movement will act beyond themselves and are inevitable as means to revolutionize the whole method of production.

These measures will, naturally, be different in accordance with the different countries.

For the most advanced countries, however, it will be possible to apply the following rather generally:

….

5. Centralisation of credit in the hands of the State by means of a national bank with an exclusive monopoly.

(J.Z.: In the printed original of the German brochure this quotation from the Communist Manifesto was stressed by a fat stripe on the left side. I cannot easily enough reproduce this mark here so I gave the text enlarged and in bold. – J.Z., 22.11.03.)

- 12 -

In 1848 this demand was described more clearly in a leaflet of the Communist Party under point 10. There it runs:

"A State bank, whose paper has legal tender, will take the place of all private banks.

'This measure will make it possible to regulate credit matters in the interest of the whole people and undermines the domination by the great men of money. By gradually putting paper money in place of Gold and Silber it will cheapen the irreplaceable instrument of civil exchange, the general means of exchange and will permit Gold and Silver to be used externally. Finally this measure is necessary to weld the interests of the conservative bourgeois to the revolution."

The law of 1909 has, essentially, fulfilled this demand of the Communist Manifesto. We do have today the central note-issuing institute, whose notes possess legal tender.

(J.Z.: No central bank does proudly display, at its palace, the following declaration:

"We are the realisation of point 5 of the program of the Communist Manifesto!"

– J.Z., 23.11.03.)

As opposed to this all savers must demand a return to the old German right of the people, according to which everyone has the right to refuse to accept a depreciated means of payment and nobody, not even the absolute monarch, has the power to introduce legal tender for his paper money.

It is one of the most essential tasks of the movement of savers to act towards the abolition of legal tender and to make, thereby, once and for all, every inflation impossible.

But even with this the activities of a really

powerful organisation of savers

is not yet exhausted.

It has the task not only to preserve the value of the wealth of the savers but to increase it.

For this great possibilities are offered. For the value of a paper depends not at all merely upon its metallic redeemability but, in a still higher degree, upon its

usability.

Everyone knows that a tram ticket, that he has in his pocket, is worth just as much as one ride on a tram costs. It stands at par, for every holder of it can at any time use this ticket by riding on a tram and for this there is a sufficient demand.

It is very different is the tram ticket is that of another city. This ticket, in its town, may be fully useful but in another town it lacks usability. Thus the value of this paper is smaller than the price of a tram ride. It stands under pari.

- 1 3 -

It is similar with a loan certificate. The German Savings and Giro-Association, as is well known, had taken up two loans, in dollars, in the US. These loans reached their lowest prices during the last year, with 13 ¼ and 15 %. Thus, with interest on their nominal value at 6 and 7 % they had an effective interest rate of about 50 %.

(J.Z.: Only for those, who had bought them as cheaply.)

It is obvious that this was only possible because there was no usability for these loans at all.

As opposed to this some German communities, especially the city

Magdeburg

have shown how to create demand for public loans. In the autumn of 1932 Magdeburg declared itself ready

to accept in payment

the loan certificates issued by it - for certain debts due to the city.

Although this city accepted the loan certificates only at 90 % instead of at 100 %, their rating increased by about 20 % and has since reached a

rise of almost 50 %.

For everybody, who had to make a payment to the City of Magdeburg, sought out such loan certificates, i.e., exerted a demand for loan certificates of the city and in this way their price was driven up. (J.Z.: Through this increase in their usability. – J.Z.)

It is apparent that hereby the the creditors of these loans and the city were served in the same way, for both are naturally interested in seeing that the municipal credit is in order. Thus the example of Magdeburg served as a model for others.

When the cities Cologne and Frankfort-on-Main had to declare themselves unable to redeem their treasury notes falling due on October 1, 1932, they at least declared themselves ready to accept in payment these treasury notes to a large extent in the payment for private debts (Stressed by me. – J.Z.) owed to the city.

I am firmly convinced that merely through this the collapse of the whole market for municipal loans, which was then threatening, was prevented at that time and even that their price received a powerful upwards push. For now we have the astonishing condition that the loans of those cities, which declared themselves unable to fulfill their obligations, are the highest rated ones and that, as soon as a city announces, that it can no longer pay, a rush is created for its securities. For this phenomenon there exists only a single cause, namely the fact that

clearing is permitted

or that one expects that clearing would be introduced.

Regarding the civil law debts of the cities no fundamental questions are raised any more. However, this is only the first step and one has to work, on principle, to achieve as well the clearing in case of tax debts. The city Frankfort a.M. has at least made a start in this direction by permitting the payment of the overdue value-added-taxes with loan securities. But this is no more than a beginning.

What we really have to achieve is that all taxes can be cleared, on principle.

- 14 -

It is selfevident that thereby the liquidity of the city must not be worsened.

(J.Z.: To become more liquid, issues by each city of its own and stable-value tax-foundation money would be required, which the city would accept in payment of all taxes, fees etc. due to it, a paper money of its own that would not posses compulsory acceptance and a forced value in general circulation. But then and there Dr. Zander was then unable to discuss this topic as well. – One should never try to say more than the listeners are able to absorb, if they really try. - J.Z.)

The city has to be able to pay its public servants and the unemployed and, beyond this, must be able to cope with its other sovereign tasks.

(J.Z.: Neither the States nor cities do, by natural law or economic necessity possess such tasks. All what they do could be done better and more cheaply and also quite justly through voluntary communities for all those public services which those communities wish for themselves. But this was, perhaps, never quite clearly demanded by Dr. Walter Zander and by such a radical and anarchistic demand he would, probably, have provoked many of his listeners. As a wise lawyer, he always tried to avoid too radical and provocative statements, always keeping in mind the prejudices and convictions of his clients and of his opponents. – J.Z., 23.11.03, 15.6.05.)

None of this must, naturally, be changed by the introduction of clearing.

Furthermore, it is self-evident that, fundamentally, clearing is only possible for due loan certificates.

In other words, due loan certificates and due tax demands must stand opposite to each other.

To the extent that loans repayments in the case of Frankfortand Cologne were already overdue and because of this a

new amortisation plan

had to be provided and I will not abstain from declaring that the postponement of the repayment of the due debts for two years was no solution of the problem.

This is equally true from the point of view of the cities and that of their creditors.

The new amortisation plan to be offered must correspond to the real economic strengths of the city.

But then it must be fulfilled under all circumstances.

(J.Z.: Even after the city has been hit by a nuclear bomb? – J.Z., 23.11.03.)

For the single creditor as well as for the whole capital market it is far more important that the finally determined periodical amortisation payments are always certainly paid than that some amounts become due a bit earlier. For, if anywhere, then on the capital market, the principle prevails that security goes before everything.

(J.Z.: Today at least the state's "securities" rather deserve the term "insecurities". – J.Z., 23.11.03.)

If, for instance, an amortisation plan has been drafted, according to which a city would redeem today's due debt by repaying, during the next 10 years annually one tenth of the debt, then in the budged of this city this annual payment will have to be included in the regular expenses. To the amount of this annual repayment instalment the city will have to raise the necessary funds, either by levying taxes or by supplying electricity, gas, water or similar services.

(J.Z.: Here he should, perhaps, have mentioned the own tax foundation money of cities as well as private kinds of money of private issuers, which, in combination, could rapidly ended the crisis of that time. Such a solution was not impossible but merely prohibited and most people did not even consider such a solution theoretically. Thus they were not mentally and sufficiently prepared for such proposals. Dr. Zander was certainly aware of this limitation and offered then and there no more than his listeners, with some effort, could comprehend. – J.Z., 23.11.03.)

In this situation it would not mean any kind of extra burden if the city were to permit, up to the amount of the annual amortisation sum, the payment of this amount in loan certificates.

Thereby its liquidity (*) would be in no way be changed (*), for while it receives less means of payment on the one side, it saves the same amount in means of payment for its loan certificates on the other side.

(*) (J.Z.: stressed by me.)

Economically this procedure would mean a certain relaxation, for means of payment are saved thereby.

For the creditor, moreover, this clearing means an essential strengthening of his position, for in this way he becomes enabled, through his own rightful action, namely the handing over of due loan certificates, to pay his tax debt.

All too often, lately, we have experienced how doubtful it is whether a loan debtor will actually pay when payment is due.

However the clearing option is always possible, as long as taxes are raised and we can safely assume that taxes will also be raised in the future.

(J.Z.: One can at least hope and work towards it, that compulsory taxes or tributes are no longer raised for many further years or even decades. – J.Z., 23.11.03.)

Selfevidently, the cleared loan certificates must become

cancelled

so that they could

no longer appear on the market,

thereby reducing the value of the remaining certificates. For the precise purpose of the

- 15 -

whole measure consists in this to raise and to secure the price of

the loan certificates by raising the demand for them them.

The following is part of this measure:

The clearing option must not be made dependent upon having owned the loan certificates already before a certain cut-off date. I do expressly mention this because in the assemblies of Cologne's creditors such a view was represented.

In reality all such restrictions, well-meant as they may be, are fundamentally misdirected and act to the disadvantage precisely of those who are supposed to be helped by them. For decisive is not whether and why such securities were formerly acquired. It is much more important that an incentive is established to purchase loan certificates in the future. Precisely this will be made impossible when the clearing options become confined in this way.

On the contrary, everything must be done to facilitate clearing, as far as is possible and in any way.

In this connection and finally the following is also important:

The possibililty should also be established to pay future dues in advance for. That means that already today and with loan certificates falling due in the future, also taxes etc. that fall due in the future can be paid.

I may remind you of the reapyment option for the taxes on interest from housing investments. It is known that not much use was made of this option. This depended especially upon the fact that through this repayment one could no longer achieve the benefit of a future reduction of this tax. Moreover, many may not have the required confidence. Once confidence is restored and all energies are to be directed towards this aim –

(J.Z.: Not "confidence" was necessary but, instead, the ability to pay and the possibility to clear! Under the monopoly of a central bank for note issues and prohibitions for alternative standards of values and for clearing options, monetary and financial freedom were all too much restricted and are so still and such a condition does never deserve the confidence of the public but, on the contrary, deserves the utmost suspicion, distrust and resistance – until it is abolished. – J.Z., 23.11.03, 15.6.05.)

only then will it become sensible again to attempt to liberate oneself also of future tax burdens.

Then, for instance, the landlord will have an incentive, if a public loan stands below pari, to use such certificates to make his real estate free of land and housing taxes.

It is self-evident that the loan certificates, handed over in payment of future taxes, must be preserved in their full value. Thus they must no longer be affected by interest rate reductions that occur lateron, devaluations, moratoriums or whatever else there may be disadvantageous, so that, in a sense, they would become altogether untouchable and secure investment options.

Everything that I have explained with the example of municipal loans does correspondingly apply to the loans of the Federation and of the States. Here, too,

clearing

must become fundamentally realised, as happened already in the example of of the tax-vouchers of the Reich. (Federation)

Here, too, the certificates handed over in payment are to be cancelled and clearing must not be made dependent on having possessed them at a certain cut-off date.

Here, too, the possibility of tax-payments in advance must become established.

Furthermore and possibly one could even establish the opportunity to pay the inheritance tax without regard to the due dates, with the loan certificates of the Reich (Federation). The loss in cash revenues that would result from this is relatively small. The returns from the inheritance tax are presently only about 80 million RM annually.

It seems only fair to permit, in this case, clearing with not yet due loan certificates as well, for nobody can predict the day of his death,

- 16 -

and thus the acquisition of due loan certificates is impossible.

In any case one may assume that in this way a not inconsiderable demand for state securities can be created, which may come to the fourfold amount of the actual inheritance tax. For many people will then aquire state securities precisely to keep them ready in favour of their heirs, in anticipation of the own death.

If, in this way, a demand for only 300 (365 – J.Z.) million Marks would be thus established annually, then this would mean, in the average, one million Marks per day, that is a sum which, under the presently low turnover of government securities at the exchanges, could have

even a decisive importance

for the development of their price.

What applies to the papers of the government authorities does likewise apply to the

mortgage letters

of mortgage banks and the bonds of industrial societies.

You all know that through the Bruening emergency act an option was established to pay mortgage debts with mortgage letters. I think that I may remind you that upon the mere news of this possibility the mortgage letters rose in their price by about 10 per cent. Later, upon pressure by the mortgage banks these clearing options were greatly obstructed but it would lead to far if I attempted to deal with this question here and now.

But one thing is certain, namely that the introduction of the clearing option

increases the price of securities.

For the owners of securities thus a great opportunity arises.

The introduction of clearing corresponds exactly to the repeal of legal tender for the banknotes.

In both cases it is required that the debtor fully recognizes his own debt.

The repeal of legal tender for bank notes and the introduction of clearing for loan certificates do both operate in the same direction, the only one which can be fruitful for economic development, namely a return to honesty, good faith and the fulfilment of contracts.

Thus let us combine the whole of the German savings capital and let us utilize it in the fight against inflation, deflation and for the free development of the German economy.

Publisher: Sparerbund e.V., Berlin SW 68, Zimmerstr. 7-8.

Printed by: K. Willenberg, Berlin-Friedrichsfelde,

Walderseestrasse 24.

(J.Z.: Even without the combination of the German savings capital, or its representation by a single organization, where Dr. Zander may have thought that he would have deserved a significant position for himself, already merely either through the abolition or the ignoring of the laws of monetary, currency, clearing and financial despotism, the same aim could have been achieved rapidly. But Dr. Zander could not then and there have appealed with such ideas to these people. He spoke merely to an association of savers, who, mostly, had paid little attention to the liberties required for money, currency, clearing and credit transactions and had formed not enough clear thoughts on these matters.

I do not know whether Ulrich von Beckerath had influenced the style and ideas of Dr. Zander or whether the influence went the other way. One thing is certain, namely that on many fundamental points they had come to think alike and either would have welcomed the use of their ideas by other people.

When I corrected the very flawed scan of the German original, I was sometimes almost under the impression as if I were reading another article by Ulrich von Beckerath. Both did certainly and often refer to the same text sources. Both were also prepared to accept good ideas and hints form others and gladly recognized their origin.

J.Z., 22.11.03, 15.6.05.)

___________________________________

 Published in English translation as an appendix in E. Milhaud, ORGANISED COMPENSATORY TRADING
  Williams and Norgate Ltd, London, 1937

 A WAY OUT OF THE MONETARY CHAOS.

 By Dr Walter Zander

  The subjoined study is the outcome of a lecture delivered by the author on 8 March 1935 before the National Institute of
Geneva (Institut National Genevois).

  The devaluation of the belga, which supervened in April 1935, is taken account of here. On the other hand, the May 1935 crisis
of the French franc took place after this study had gone to press. It forms an additional link in the lengthening chain of monetary
difficulties and offers one more illustration of the dangers to which every monetary system, even when supported by an enormous
gold reserve, is exposed under the rule of a forced rate for the notes of central banks. The proposals so far made known for ending
the French monetary crisis do not suggest anything beyond what is implicit in the views generally current to-day.

Berlin, 2 June 1935.

Dr. Walter ZANDER.

1. The Monetary Chaos. 
 
  The States participating to-day in the world economy
may roughly be said to be divided into two groups. One of
these has abandoned the gold standard and has thus removed 
the foundations of its currency. The other has introduced
foreign exchange legislation and has thereby abolished the 
freedom of settlement operations. The first group includes 
more particularly England, the sterling  bloc  countries, the
United  States, and  Japan;  the second  group, Austria, 
Germany, Russia and the great majority of the remaining
countries. Placed between these two groups, is the steadily
disintegrating  gold  bloc.  Italy  left  it  for  all  intents  only
recently and yesterday as it were Belgium followed suit. If
we bear in mind that since the War France and Poland had
already devaluated their currencies to a fraction of their pre-
war parity, virtually Holland and Switzerland alone may be 
said to uphold the pre-war monetary system. However, even
in these two small countries, which represent but a tiny 
fraction  of the world economy, certain restrictions 
concerning the  convertibility  of banknotes and the gold
market have been introduced, and the general uncertainty as
to the future of currencies exerts a baleful influence in these
countries also.
 
2. Disadvantages of Devaluation.
 
  Whether the abandonment  of the gold standard is
advantageous to an economy, is decidedly problematic. In 
most cases the object aimed at has not been attained. So far 
as devaluation is intended to stimulate exports, we should not 
forget that for most countries the magnitude of their export 
:trade compared to that of their total trade is comparatively
insignificant. This alone renders it questionable to embark, 
for the sake of the export trade, on measures which modify 
the basis of a national economy as a whole. Moreover, such 
measures,  if  successful,  may  be imitated  by any  other
country, thus nullifying their favourable effect. Accordingly, 
the abandonment of the gold standard has led to "a race for
the worst currency", in which the most powerful States are 
participating. It is obvious that in the long run such measures
for the stimulation of the export trade are bound to prove 
worthless. 
 
  Moreover, devaluation does not only affect the export
trade of a country. On the contrary, it touches every branch 
of an economy. This holds most especially of imports, since
these must become dearer to the precise extent that exports
become cheaper. So far as exporting, like in Germany for 
example,  presupposes  the  importing of  raw  materials,  a 
portion of the anticipated gain is thus necessarily lost. But, in
general, import  restrictions, so popular  to-day  in  many
countries, lead eventually to a decline in exports, for the
simple reason that in the last resort exports can only be paid 
with imports.
 
  Furthermore, money debts abroad are augmented by a 
devaluation of the currency. 
 
  However, what is of crucial importance is the fact that an 
abandonment of the gold standard involves the devaluation
of the entire savings of a country, particularly as invested in
savings banks, State loans, bonds, and mortgages. If the 
effect of a general adjustment of prices to the fall in the value
of money is not visible at first or is deferred by artificial
devices, eventually prices always rise when a currency has 
 
been devaluated. 
 
Thus while the intended advantage for the export trade is
emphatically  dubious  and  at best  only  of passing
importance, the loss in savings and capital is certain and 
lasting. 
 
  But even if the reason for abandoning the gold standard, 
as in the case of the United States, is the desire to devaluate
capital savings, - that is, if it is intended thereby to adjust the
claims of  creditors to  fallen prices and to  the shrunken
turnover of the debtors - the success is nevertheless more 
than doubtful. For what is decisive for the value of a claim is
not so much its magnitude as the business turnover of the
debtor. Everything depends therefore on increasing trade and 


this is nowise assured by attacking the rights of creditors, to
say  nothing  of the  moral  and economic  disorganisation 
which this creates.
 
  The  heavy  depletions  on the capital  market, the
abrogation of the rights of creditors, the menace to State 
credit, and the decline in the standard of living, represent 
drawbacks  which ultimately  outweigh  the  transitory 
advantages.
 
 
3. Disadvantages of Foreign Exchange Legislation.
 
  The injuriousness of foreign exchange legislation is even
more patent. Everybody agrees, and the President of the
Reichsbank, Dr. Schacht, has repeatedly expressed himself
to this effect, that foreign exchange legislation constitutes a
great evil, even though in most quarters such legislation is 
considered inevitable. 

  Foreign exchange legislation places obstacles in the way 
of settlement operations. These obstacles, in turn, hamper 
trade. But every decline in trading leads necessarily to a 
decline in well-being, as the latter, in our age of the division 
of labour, depends on commerce. Everything therefore that
obstructs trading tends to intensify want and unemployment.
 
 
4. Inadequacy of Compensation and Clearing 
Agreements.

  All  attempts  to  surmount  the  difficulties involved in 
foreign exchange legislation have hitherto proved abortive.
This is especially true of the different forms of compensatory
trading and is evident as regards its earlier developments. It 
could happen  then, for instance, that an instrument 
manufacturer had to accept in exchange coffee and was thus 
compelled to become a produce dealer. In principle, later
developments left matters unchanged. It is the very essence
of a compensatory transaction that there is properly speaking
no money payment involved and that the goods themselves
have to fulfil this function. That is, every such transaction
represents a barter operation. 
 
  Whilst it  is  agreed that  movements of  goods  (in  the
broadest sense) underly all settlements, nevertheless as much
as  fifteen centuries  ago the Roman  Emperor  Justinian 
explained  in  his Corpus  Juris  why  barter operations  are
necessarily inferior to monetary transactions. And yet the 
distinguishing  mark of the present-day international
compensatory  trade is  the  abandonment of  the  monetary 
system and the falling back on barter. It is evident that a form 
of economy which the Corpus Juris deemed obsolete, must
be unequal to the task of conducting efficiently the exchange
of goods in our highly developed age. A serious effort should
therefore be made  to  re-instate the system  of  monetary 
settlements in international transactions.
  Similarly  with so-called clearing  agreements  between
countries. These have now become very common, but they 
cannot remove the difficulties arising from foreign exchange 
legislation, for apart from the fact that in most cases, as
between  Germany  and  Switzerland, they have  led  to  a
considerable dislocation of  trade,  they are necessarily
confined to transactions between two countries, while the
realities of life  demand freedom of  movement in  every 
direction and rebel against bilateral arrangements. They lack
therefore the necessary fungibility  and the attempts  to
supersede the monetary system in this way have hence failed. 
The League of Nations Committee for  inquiring into
international clearing  agreements  has accordingly drawn
attention recently to their disadvantages and recommended
their abolition. 
 
 
5. Need for Stable Standards of Value and for Removing 
Restrictions' to Settlement Operations.
 
  Shrinkage of  international  and of  intra-national  trade,
want and unemployment, heavy investment losses, and a
general uncertainty and loss of confidence, characterise the 
present situation in most countries. It is imperative to create
once  more  reliable and stable standards  of  value and  to 
secure the removal of the impediments to settlement
operations between countries. The solution of these closely
related problems has become a question of life and death for 
our social order.
 
 
6. Falsifying the Gold Standard through Banknotes
being Legal Tender.
 
  Whatever the monetary system of a country, it is essential 
that  the  measure  of value should be  clearly  and 
unequivocally determined.  Thus  where there is  a  gold 
currency, a silver currency, or an index currency, the value 
should  be measured by gold,  silver, and  the index 
respectively. This basis of measuring economic values, and 
therefore of any monetary system, is destroyed when in the 
case of a gold or silver currency the notes of the bank of issue 
are made legal tender, for this compels everybody to accept
these  notes  in  payment  regardless  of their real  value. 
Compulsory acceptance  renders  it  even  impossible to
measure the notes by the unit of value and thus to ascertain 
their value within the country. Indeed, it establishes a legal 
fiction on the basis of which note and unit of value are 
identical. For this reason, the names of the units of value -
e.g., the terms dollar, mark, pound - become ambiguous in
that they mean now a fixed weight of gold and then the note
of a bank of issue. Accordingly, the measure of value, on the
unambiguity of which everything depends, comes to have 
two  definitions. This renders impossible any  real
measurement and thus  the  whole monetary  system is 
falsified. 

  This falsification is generally hidden from the public so
long as the central bank is legally obliged to redeem its notes. 
This, however, only masks the reality, since convertibility
introduces in the measurement of value an alien element. 
Indeed, the fact that convertibility becomes a decisive factor,
shows  how  the  whole  problem has assumed a different
complexion.
 
  Where convertibility is suspended, we have only a pure
paper currency, this despite  strenuous legislative  and 
administrative efforts to keep the value of the paper at a 
certain definite level, for what counts now is no longer the 
value of the gold, but the question whether the note of the
central bank, measured by gold, changes its value. In fact,
the system that has been in general use since the beginning
of the World War, including the so-called gold standard or
nominal  gold  currencies, may  be described  as paper 
currency.

 
7. Compulsory Acceptance a Relative Novelty. 
 
  Although the compulsory acceptance  of banknotes 
appears to-day so natural that most people cannot imagine a
means of payment not having that character, this system has
in reality only come into general use in recent times. Here are
two illustrations
 
  Par. 2 of the German Bank Law of 1875, provided :
 
  Payments statutorily required to be made in money need 
  not be accepted when tendered in banknotes and the 
  constituent States cannot enact such an obligation for the
  State treasuries.
 

  This provision was only replaced by its converse in 1909.
Article 3 of the Act of 1 June 1909 decreed :
 
 The notes of the Reichsbank are legal tender. 
 
  The course of development was similar in Switzerland.
Here article 39 of the Federal Constitution of 1874 prohibited 
once for all  the  compulsory acceptance  of banknotes.
However, already in 1891 the Constitution was amended and
they became legal tender in 1914.
 

8. Compulsory Acceptance establishes the Dependence
of the Currency on the Central Bank. 
 
  The statutory obligation to accept the notes of the central
bank in settlement operations  involves not only  the
falsification of the basis of the currency. It also makes the
fate of the currency dependent on that of the central bank and 
frequently on that of the banking system generally. If for any 
reason the central bank can no longer redeem its notes or
maintain their parity - that is, if the market rate of the bonds 
it issues falls - then, owing to the legal equivalence between 
the notes of this bank and the legal standard of value, the
calculation of values generally will be prejudicially affected.
Thus it -was in the main the situation of the Bank of England, 
which led in 1931 to the abandonment of the gold standard
and, similarly, it was the National Bank of Belgium that 
suggested in 1935 the devaluation of the currency. 
 
  Almost  a century  ago Lord  Overstone  grasped  this
interdependence when he said that  if he ruined his private
bank, he would be ruined, but that if the Bank of England
committed a gross blunder, the Bank could save itself, but the 
whole of the community might have to suffer grievously.
 
 
9. Compulsory Acceptance a Condition of every
Inflation. 
 
  Moreover, compulsory acceptance for banknotes forms
the legal and conceptual basis of  every inflation, In  the
absence of such an obligation, bank crashes, with all their dire 
consequences, may  occur, but never an  inflation, for  the
destruction of the standard of value and the falsifying of all 
monetary relations, which are the mark of every inflation, can 
never result from  the  collapse  of a  single  bank. This 
confusion is only possible when a legal equivalence has been 
established between the notes of this bank and the standard of 
value. It was compulsory acceptance that brought forth the 
ominous slogan of the German inflation period : "One mark
is as good as another" ("Mark gleicht  Mark"). History has not 
known an inflation not due to the legal obligation to accept.
 
 
10. The Gold Standard as Gold for account. 
 
  If, then, the  pre-conditions  of  an  inflation  are  to  be
eliminated  and a  reliable :and stable currency is  to  be
assured, if  more  especially  the gold standard is  to  be
restored, the falsification introduced in recent decades must
be eradicated and the earlier separation between standard of 
value  and  means  of  payment  must be re-established. A
compulsory  exchange  rate excludes a  stable and  safe
currency. No wonder the distinguished German historian 
Niebuhr stigmatised compulsory acceptance as "a legislative
provision both ridiculous and abominable" (Nachgelassene 
Schriften nichtphilologischen Inhalts, 1842, p. 485 ff.) 
 
  The re-introduction of the gold standard in Germany in 
October 1923, after the inflation, offers an impressive and
instructive illustration. The notes of the Reichsbank, which 
were legal tender, had completely collapsed and their value
could only be stated in astronomical fractions. At long last it
was decided to introduce calculating in gold value. First, 
taxes were thus calculated. Then a new institute of issue, the 
Rentenbank was founded, whose accountancy basis was to 
be gold units. There was, and this cannot be too strongly
insisted on, no legal obligation for the public to accept the 
new notes in payment, and these notes have to this day never
been legal tender, They have therefore never been identified
with the unit of value  which was then the gold mark The
system, which lasted from the passing of the inflation in the 
autumn of 1923 until the introduction of the new Bank Act 
in the summer of 1924 (which Act formed part of the series
of Dawes Acts), was therefore a pure system of calculating
in gold units which was not falsified by any compulsory 
acceptance. 
 
 A similar example, although confined  to  one domain 
only, is offered by China which recently adopted a gold unit
for its  customs charges. By  a  decree of  the Minister  of
Finance  of  15 January 1930,  counting  in silver  in the
department of maritime customs, the most important for the
Chinese budget, was replaced by counting in gold. The basis
for  these calculations in  gold  is  a  weight of  60,1866 
centigrammes of fine gold and represents the customs gold 
unit. This, customs unit is exclusively a calculating unit and
the decree specifically provides that the payment of duties 
may, as before, be made in local means of payment, that is in 
silver dollars and in banknotes. Of course, these are only
accepted in payment at the current exchange irate, this being 
measured by the customs gold unit.
 
 In conformity  with the foregoing illustrations,  it  is 
therefore suggested  here to  introduce generally (whilst
abrogating the statutory obligation to accept the notes of a
central  bank)  calculating in  gold value  and thus to  re-
establish the conditions existing until 19,09 in Germany and
until 1914 in Switzerland.
 
 
11. Is the Inconvertibility of Notes incompatible with the
abrogation of Compulsory Acceptance ? 
 
 It ,might be objected that before the War compulsory 
acceptance could be dispensed with because then, unlike 
now, the notes could at any time be converted into gold. The
objection does not hold, for convertibility is not of decisive
importance, as will transpire from what follows.
 
 
12. Convertibility as a Basis of Value for Paper Means
of Payment. 
 
 It is generally believed that the value of banknotes resides 
in their being convertible into metallic currency, banknotes
being considered in the main a substitute for gold or silver.
Already Adam Smith, in a famous passage in his  Wealth of 
Nations (bk.2, ch.2),  declared that all  paper money 
represented only gold or silver. Similarly, the Bullion Report
of the British Parliament of 1810, which was very strongly
influenced by Ricardo, expressed itself to the same effect.
Probably not a single theory in the whole domain of political
economy has evoked such universal assent.

  It is therefore natural that this view should have been
  incorporated in legislative enactments. Since paper money is 
 regarded as a substitute for gold or silver, it must be at any
 time convertible into these. Banknotes and convertibility are 
 therefore interdependent conceptions and hence all bank acts
 the  world over contain definite provisions  concerning 
  convertibility, metallic cover,  and the  ratio of  the  notes 
  issued 'to the current gold reserve. Indeed, every monetary
  claim is hence regarded as being in the last resort a claim for
 payment in gold, although there is no necessary connection
 between this  and a gold standard,  for a  gold standard
 primarily presupposes, apart from calculating in gold, that a 
  creditor cannot refuse acceptance of a payment in gold, i.e.,
 that there is a general obligation to accept gold, but by no
 means  the right  of a  creditor  to  insist,  in  any and  all 
  circumstances, directly or-indirectly, on being paid in gold.
 
  Firmly based, on the one hand, as seems the general
  conviction that convertibility is necessary (and practically 
  everywhere the ratio of the gold cover is deemed to be of the
 utmost importance), there is, on the other, no doubt that to- 
  day most banknotes have become legally, or at least actually,
  inconvertible, without thereby losing all their value. In fact,
  for  some notes  there exist  to-day  no  provisions of
 redemption, and yet they possess value. Accordingly, there
 must be, apart from convertibility, another basis for the value 
  of paper means of payment. 
 
 
  13. State Fiat as Basis of Value for Paper Means of
  Payment ?
 
  All eyes are turned towards the State to see whether, by 
  its  fiat,  it  is  able  to  confer value on valueless  paper. It 
 becomes, however, quickly manifest that the power of the
  State  is  strictly limited  in  this  sphere.  All large-scale
 monetary devaluations known to history have referred to 
 means of payment the value of which rested on a State fiat. 
  This holds, for example, of the notes which the Scotchman
  John Law issued, in France at the beginning of the eighteenth
  century and even more so of the assignats of the French
  Revolution. In both instances acceptance was at first not
  compulsory. But presently the obligation to accept them was
  decreed and soon reinforced by penalties. On 11 April 1793 
 the French Government prohibited the use of all metallic
 money on pains of six years in chains, and in September of
 the same year the decrying - that is, the verbal discrediting of
 the  assignats  -  became  punishable with  death  and the
  confiscation of property.
 
  These drastic measures proved, however, unavailing. The
  exchange value of the assignats declined steadily. At the
  close of 1793 it was only 22 % and in 1795 it had fallen to
 under 1%. 
 
 
Not so dramatic, but not less impressive and instructive,
were  the experiences  during  the two  great American
monetary devaluations  on the occasion of the war of
liberation and of the civil wars. There, too, the fiat of the
State was unable to prevent devaluation.

But by far the greatest financial catastrophe of modern
times was the German post-war inflation. It  is  common 
knowledge that the legal obligation to accept the banknotes 
of the Reichsbank could not prevent their complete collapse 
and it is most significant that the notes of the Rentenbank,
which succeeded in stopping the inflation, have never been
legal tender. 
 
 Nor  was  it  different  in  the case of  the  Austrian  and  was
Russian inflations. Nowhere, in fact, has the power of the  its
State been able to prevent devaluation. 
 
 But this was not only the fate of weak States crushed by 
defeat. France and Italy, both victors in the World War, had
to suffer heavy devaluations which annihilated more than
four-fifth of the value of their currency.

 It cannot be therefore the State's fiat which confers value
on inconvertible paper money. 

 
 14. Confidence as a Basis of Value for Paper Means of
Payments ?
 
 Not  even confidence and national  enthusiasm, 
revolutionary  determination  and religious belief,  can 
accomplish this in the long run. One example may suffice. 
When during the French Revolution in April 1793 the above-
mentioned  currency law  was  promulgated, the whole
population of Metz assembled on the Place de la Légalité, 
took a solemn oath, in the presence of the garrison, the
National Guard, and the administrative and the judiciary
staff, not to draw any distinction between the face value of
the paper money and silver. Similarly, from Toulon, where 
analogous ceremonies took place, the Government received
a report stating that. the population would carry out the law 
with the religious respect ( "respect religieux") due to it.  at
However, after a few days the workmen at the arsenal of 
Toulon petitioned that they might have their wages paid in
silver, for, they declared, "try as we may, we cannot live
otherwise". (See Marion, Histoire financière de la France,
vol. 3, p. 47, Paris, 1921.)
 
 Even  the powers  of the soul  cannot, therefore,
permanently confer value on paper money.
 
 
 15. Acceptance by Fiscal Offices as Basis of Value
for Paper Money.
The value of inconvertible paper means of payment has a
different basis, clearly revealed, in the history of German 
finance. Thus during the nineteenth century several German
States issued paper money the value of which did not lie in
its convertibility, but in that the State agreed to accept at its
pay offices the notes it issued at their face value, regardless
of their rate of exchange. German financial science called 
this the taxation foundation ("Steuerfundation" ). 
 
 This acceptance by the State should not be confused with
the current. obligation to accept, for under-the regime of 
compulsory acceptance the taxation,offices, following the
universal custom, accept notes at their actual and not at their
nominal value. Thus the notes of the Bank of England are 
worth no more at the English fiscal offices than anywhere
else. The State accepts them at their paper value and not at 
the value of the gold pound. Compulsory acceptance and 
taxation foundation are therefore fundamentally different. 
The basis of value of this paper money lay in that it
accepted at the fiscal offices of the issuing authority at
nominal value and, accordingly, this obligation to accept was
the important element in the wording of the warrants. Thus 
the Saxon fiscal notes simply read : - 
 
In conformity with the edict of 1 October 1818, this will
be accepted at the Royal fiscal offices,
and the Prussian money orders of 1835 and 1856 contain,
besides the value of the order, only the statement 
 
 Of full value in all payments.
 
 Similarly in most other countries. It is true that in many
cases, as in Baden, Austria, and Wurttemberg, there was, in
addition to the obligation to accept by the fiscal offices -that 
is, to the fiscal foundation-a more or less widely current
obligation to redeem the warrants. However, here also the
fiscal foundation was of prime importance and redemption 
constituted only a kind of supplementary guarantee. This is
already expressed in the order of the two undertakings on the
notes. Thus we read on the Baden paper money of 1849:
 
 Paper money of the Grand-Duke of Baden, which all 
 Baden fiscal offices accept in payments at its full nominal 
 value i.e., as equivalent to the gross silver money struck at 
 the country's standard of coinage-and is exchangeable at
 sight for gross silver coins at the redemption office 
 Carlsruhe.
 
 Likewise, in the Reich Act concerning the issue of Reich
fiscal office notes of 3,0 April 1874, § 5, we read :
 
 Federal fiscal notes are accepted at their nominal value in 
 payments made to all fiscal offices of the Reich and all
 constituent States. They are redeemable at any time on
 demand for cash by the Reich's Central Fiscal Office on 
 the Reich's account.
 
 In both cases therefore the fiscal foundation comes first.
It covers all  fiscal  offices, whilst the notes can only be
redeemed at one fiscal office. 
 


 The Wurttemberg Act of 1 July 1849 makes this relation 
still plainer. Article 2, par. 1, provides: 
 
 This paper money is accepted at its nominal value in 
  payment at all fiscal offices of the State, as also at the tax
 collecting offices. These offices are instructed to redeem 
 on demand this money,  so far as the available funds 
  permit , and in amounts not under twenty gulden at a time.
 
  Here the claim to redeem notes is conditional on means
being available. According to the clear wording of the Act, 
the  notes  are  in principle  only  covered by the fiscal
foundation.

  Later, this principle  was  further  developed  in the
Rentenbank notes of 1923. Here no provision at all was made 
for  direct  redemption. Apart  from utilising  them  in
connection with public pay offices, the holder had only a 
claim to convert them into annuity bonds, which fact has
played no important part in practice. Lastly, in recent years 
the fiscal foundation has  been  most conspicuously 
exemplified in the fiscal warrants of 1932, although these are
not intended to be means of payment proper. They cannot be, 
either directly or indirectly, converted into ready money. Nor
can they be exchanged for securities. No redemption fund
exists nor repayments or amortisation. Their value is entirely
due  to  their being  accepted  by the fiscal  offices at  the
indicated value, regardless of their exchange rate. 
 
  From the Saxon pay office notes to the fiscal warrants of 
the  Reich,  the  same  principle  of a  fiscal  foundation is
evident.
 
 
16. Commercial Bills as Basis of Value for Banknotes.
 
 
 The  principle  of  the  commercial bill  for  the  Scottish 
banknotes corresponds to that of the fiscal foundation for
State  paper  money.  Whilst  English banknotes have their
origin in the receipts given by the London goldsmiths for 
gold deposited with them (which means that redemption is of 
their essence), the Scottish notes have a different history. In 
the latter case, the banks gave in exchange for commercial
bills round sums in notes of small denominations, expressing
themselves at the same time ready to accept the notes they
had  thus issued, in payment at  their  face value  for  the
commercial bills they had discounted. Thus the basis of the 
value of the English notes was the gold deposited, whereas
the value of the Scottish notes was based on goods sold as
expressed in commercial bills.

 It is  true  that the Scottish banknotes  were also
redeemable in precious metal, very much as was frequently 
the case with the State paper money, but redemption played
an indifferent part in practice. By means of a so-called option 
clause the banks frequently reserved to themselves the right

of postponing the redemption of the notes several months 
after they had been presented. Thus they could wait until the
commercial bills had matured. When, on the withdrawal of 
the  bills,  the  notes flowed back, they disappeared  from
circulation and the question of their redemption did not arise.
So far as the bill debtors redeemed their debts in coin or other 
means of payment and not in -the notes of the bank, the bank,
without  drawing on its  reserves,  acquired thereby the 
necessary means of redeeming any floating notes. 
 
  Ultimately, in any case, the value of these notes lay in 
their being accepted by the bank that had issued them. 
 
 
17. Fiscal Foundation and Commercial Bill as Forms of
Clearing.
 
  The fiscal  foundation for State  paper  money and the 
principle of the commercial bill for banknotes are therefore 
basically related. In both instances acceptance by the issuer
at their nominal value, regardless of the exchange rate of the 
paper, is decisive. The significance of this acceptance (or
reflux) is manifest. If, for example, the State pays an official 
with such a warrant, if the official passes this warrant on to 
his baker in payment for bread, and if, lastly, the baker
liquidates his tax debt with it, the baker clears his debt to the
State with the warrant that the official had passed on to him. 
In the last resort we have here a clearing process, i.e., a
balancing  of  mutual obligations.  And these settlements, 
unlike in barter or in modern international compensatory 
transactions, are not made without resorting to money. On
the contrary, the exchange is operated by means of a clearing
process cancelling the mutual claims through our monetary
system.
 
  An inconvertible paper means of  payment  assumes
therefore a reflux. It represents, in fact, a clearing certificate 
and derives  its  value  from  the  exchange  of economic
services.  This indicates consequently the limit to issues of
unredeemable notes. Since the value of freely quoted money,
as for instance of the Reich pay notes of 1874 .or of the
Rentenbank notes, is determined by supply and demand, no 
more notes may be issued than there is a demand for, that is,
than must flow back to the issuing centre. Thus in the case of 
State paper money, the aggregate sum to be issued must 
depend on the aggregate tax claims due or all but due. Within
this limit issues are always justifiable. If, however, this limit
is exceeded by circulating paper  money representing tax 
claims in  the distant future, depreciation will  inevitably 
follow, even if the State should promise to accept the notes 
at their face value in the future. 
 
 Similarly with banknotes. In principle, only short-term 
obligations should be admitted as cover. The nearer the due
date of the bill, the greater is the demand for means of 
payment in order to redeem it and the more assured is the
value of the banknotes issued in connection with the bill.
The more distant the due date and the less assured the payment, 
the more in jeopardy are the notes having such a basis. 
Rightly, therefore,  many bank  acts,  among them  that of
Germany, expressly provide that  only sound commercial
bills  falling due  within  three months at most  may  be 
discounted by banks of issue, Indeed, experience teaches
that long-dated financial bills have hurled whole monetary
systems into the abyss. 
 
 
18. Redemption or Clearing,.
 
 There exist, accordingly, two entirely independent and 
wholly different foundations whereon the value of paper 
means of payment may be based : redeemability in precious 
metal and clearing. There is no third possibility.
 
 Thus all paper means of payment in every country may 
be to-day actually resolved into these two elements of value. 
Insofar as notes can be really exchanged for gold, their value
may be attributed to this. So far, however, as there is no
redemption and there is an inadequate metallic cover, only
clearing can confer value on the notes, and this either by
clearing against commercial bills or against fiscal claims. 
Moreover, in order to extend the facilities for clearing and
thus to increase their value, many countries, at a time when
banknotes were not legal tender, introduced in addition a tax
foundation for the banknotes, statutorily obliging public pay 
offices to accept them. (See, e.g., the Federal Act concerning
the Swiss National Bank of 6 October 1905, article 23.) 
 
 The difference between the two  elements of value, 
convertibility  and  clearing,  which  latter  means here  the
clearing of taxes due, is well exemplified in the Bank of 
England. Here, since the Peel's Act, the note circulation is
divided into a so-called fiduciary and non-fiduciary issue. 
The latter must have a 100% gold cover. It reflects the pure
idea of convertibility. The fiduciary issue however, which at 
present amounts to 260 million pounds, is based exclusively,
on "an eternal debt of the English State". It is not covered by 
any redemption fund. It rather embodies the idea of a fiscal
foundation. 
 
 How, then, are these two elements of value related ? 
Although in the  public  mind the idea of  convertibility 
predominates, what is actually of decisive importance for the 
prosperity of a country is clearing.
 
 The idea of convertibility makes the quantity of means of
payment basically dependent on the gold reserve available at
any time. This is an entirely impracticable principle. All
attacks on the gold standard, directed against this principle,
which more especially combat the creditor's right to claim
from his debtor directly or indirectly gold, are to that extent 
justified,  For there is  never  a  possibility  of  meeting all
liabilities by gold payments. This holds both of international
obligations and of domestic payments. It was therefore of 

momentous importance and evinced profound insight, when 
Milhaud  in  his great work,  A Gold  Truce,  called for a
universal gold truce. 
 
  Whether a country possesses a gold reserve, depends 
always more or less on chance. Accordingly, the amount of 
the means of payment in circulation should never, not even
under the  most orthodox.  gold  standard system,  be 
determined by the size of the gold .reserve. The economic 
life of a country would have otherwise to shrink regularly
with  the shrinkage  of  its gold reserve. In  reality, the 
exchange of goods remains a necessity and possible, even if 
there is no gold reserve at all. On the other hand, as the cases
of France and the United States to-day show, not even the 
largest gold reserve of a central bank can save a people from 
widespread unemployment and poverty, whilst a monetary
system intelligently based on mutual clearing, can provide a
people with work and wealth, even in the absence of any 
store of gold.
 
 
19. Examples of Clearing Money. 
 
  The diverse possibilities of issuing inconvertible means
of payment  based  on the idea of  clearing  can only  be 
adumbrated here.
 
  In the first place, we may mention the inconvertible and
freely quoted State paper money described above. In most
countries to-day  this is  to  be found  in  a  more or  less 
disguised form. Besides States, local authorities may also
issue clearing notes for the imposts they are entitled to raise.
Thus in the nineteenth century Hanover city issued notes
which promoted most effectively the town's prosperity.
 
  In the economic sphere, railways enter primarily into 
account as centres for the issue of special railway clearing
notes.  In  Germany there is  the noteworthy  case  of  the 
Leipzig-Dresden Railway founded by Friedrich List. This 
Railway issued in the thirties of the last century railway
money to the amount of 500.000 thalers and this money, to 
the  general  satisfaction,  freely  circulated  until  the 
establishment of the Reich. After the World War, the German 
Federal Railway also repeatedly issued its own means of 
payment, most of which exhibited the character of goods 
warrants, i.e., they were based on the principle of clearing. 
Naturally, other undertakings, for whose goods or services
there is a general and constant demand, would also benefit by 
such facilities.
 
  The clearing  principle  is  most  particularly useful in 
international settlements. Thus  leading  firms  might  issue 
purchasing certificates. For instance, certificates accepted at 
their face value by the I. G. Farben Company or by Siemens, 
could be disposed of in London, Cape Town, and generally. 
To  make  the certificates  more  widely  acceptable, whole 
groups of undertakings concerned with agriculture, export,
or  the tourist traffic,  might agree  to  issue purchasing 
certificates jointly. Issues might  also be undertaken  by
special foreign  trade banks, whose clients would bind
themselves to accept the certificates in payments up to a 
certain amount. Lastly, work provision banks might similarly
be established to combat unemployment within countries. 
For particulars on this subject, the reader is referred to the
valuable works of Milhaud and Beckerath published in 1933 
and 1934. 

 The central banks existing at present in most countries
ought not to oppose the issue of such means of payment. In
this connection we need not examine here whether these
banks have fulfilled the hopes placed in them or have not 
rather aggravated all  financial catastrophes,  such as 
inflations and deflations. In any case, so long as private
enterprise exists  at all,  mutual  clearing cannot be
monopolised by a single central undertaking.  The idea of a 
monopoly is most closely  associated with the idea of 
convertibility. The issue of clearing warrants, which neither 
affect the store of gold nor are able, since they are freely
quoted, to modify the average price, cannot in principle be
restricted to central banks. 1t ought rather, within the limits 
drawn by the State, to be allowed to develop freely.
 
 
20. Abrogation of Foreign Exchange Legislation. 
 
 Once it is recognised that the value of inconvertible paper
money depends on the likelihood of the issuer clearing it, the
way is  open to  abolish  obligatory  acceptance  and to  re- 
establish the gold standard. This, in turn, would facilitate the
abrogation of foreign exchange legislation, for this, too, is 
based in the last resort on the idea of convertibility and of 
obligatory acceptance.
 
  In every country foreign exchange legislation is in the 
main identical. The endless number of laws, regulations, and
principles may be reduced to the following three aims 
 
 (a)  Retention of gold;
 
 (b)  Retention of foreign means of payment (foreign
 exchange proper) ; and 
 
 (c)  Restriction of payments abroad. 
 
 Compared  with  these,  all  other  provisions  are of 
secondary importance. And these three aims may be reduced 
to one, namely the seizure of gold. The retention of foreign
means of payment and the restriction of payments abroad are 
only means towards attaining that one object. The foreign 
means of payment are seized because they are regarded as
substitutes for gold and because it is anticipated that by their
redemption  or, at  least, by  their being  sold  on the
international market, gold might be obtained in exchange. 
Inversely, payments abroad are restricted as far as possible
because it is feared that through the efflux of means of 
payment  the gold  reserve  might be drained and  the
maintenance of the parity be thereby endangered. The idea
that gold is not only the standard of value but ultimately the 
 sale and supreme means of payment lies therefore at the root
 of this type of legislation. Hence the efflux of gold and the 
 associated  threat  to the redemption fund  have been 
 invariably  the  direct  cause  of  the enacting of foreign 
 exchange legislation. 
 
 Here also the obligation to accept the notes of the central 
bank plays a. special part. Thus whilst the State may leave to 
their fate the freely quoted notes of a private bank, without
the monetary unit being affected by the bank's exchange
 losses, the statutory obligation to accept the notes of the 
 central  bank  implies that they are identified  with  the
 country's standard of value. A loss in exchange in the case of
the latter involves therefore a modification in the monetary 
basis itself. Accordingly, the State is compelled to maintain
the parity of the notes of the central bank so long as it is bent
 on saving its standard of value from fluctuations.
 
 The identification of the monetary unit with the notes of 
the central bank has, lastly, created another source of danger 
which  has repeatedly acted  as  a  decisive  factor  in  the
 introduction of foreign exchange legislation, namely its close
 association with certain large-scale banks at home. Thus the
 collapse of the Kreditanstalt  in Austria and the Darmstadt 
Bank in Germany instigated  the  introduction of foreign 
 exchange  legislation in  those  countries.  Of itself there
 existed no direct connection between these banks and the
monetary standard, and the example of Sweden, which did
not rush to the aid of the collapsed Krueger undertakings, 
 shows that in  such  emergencies  other methods  may  be
 applied than  those  chosen by  Austria  and  Germany.
 However, where through the obligation to accept the notes of
 a given bank a statutory bridge has been built between the
banking system and the national currency, the temptation 
will always exist to shift the difficulties of the banks onto the
 shoulders of the currency.
 
 All these problems assume a very different complexion if
we take inconvertible means of payment to be what they 
really are, namely means of clearing in relation to an issuer. 
A fundamentally inconvertible note, the value of which lies
 in the issuer accepting it and which therefore really involves
no claim to payment in gold but a claim to the services of the 
 issuer, can never lead to a reduction in the gold reserve. A
 State paper money based on such principles could be freely
 allowed to go abroad without this prejudicially affecting the 
 currency. It could never entail liabilities in precious metal.
 On the contrary, it would necessarily lead to goods being 
 exported and may be accordingly even followed by an influx
 of gold or foreign exchange. What matters is that the means 
 of payment shall not be legal tender; in other words, that it 
must be accepted by the issuer at its face value. With this
 condition satisfied and the above-mentioned limit to issues 
being respected, even the heaviest losses on foreign bourses
would involve no danger, for the lower the market rate falls, 
the greater the temptation, would be to acquire the warrants, 
inasmuch as the issuer has to redeem them - at their nominal
value, the loss being thus converted into a gain. Everybody 
therefore who has to meet his obligation with these warrants, 
- in our example, the taxpayer - will try to benefit by such
falls and thereby produce a steady demand which has the 
peculiarity of rising as the market rate falls. This necessary
demand provides the floating power that imparts value to
inconvertible paper money. Such a means of payment need 
not dread the throwing open of frontiers. In the words of a
Swiss writer, it will, "like a carrier pigeon", return always to
its point of departure and necessarily lead to a demand for 
home products abroad, in this way furthering the export 
trade.
 
 Since such a clearing warrant has by definition a free 
market rate and is therefore not linked to the currency unit, 
the latter cannot be affected by any fluctuations in the value
of the former.
 
  For clearing  warrants  of the  type described, foreign 
exchange legislation ceases to have any meaning, for any
stipulations relating to convertible money would lose their 
point. In all countries, therefore, sound clearing warrants 
should be freed from their fetters,  since they were only 
imposed on them on account of the unsound ones, and thus
at last  bestow  on the present the freedom of  movement
denied them to-day because of the past. That is, foreign
exchange legislation should be abrogated at least for sound 
warrants. Given this  first  step and the  basis for a  new 
economic structure is laid. Further progress will be thereby
facilitated,  for in  most countries the  inconvertible notes 
could be without difficulty converted into State paper money,
thus investing the present state of things in this matter with
its proper form. Should, however, one or another central
bank have transgressed the limits that would apply to a fiscal
foundation, it will not be difficult to remedy this, without
fettering a  country's general  economic life  by foreign 
exchange legislation. 

  Nor can it be objected that the national economy requires
foreign exchange and can therefore not be satisfied with
clearing transactions, for, to begin with, we should remember
that probably in all countries depending on foreign exchange, 
the supply of the latter has shrunk despite the most stringent
legislation and that therefore the object aimed at has not been 
fully  attained. But  a  more  important point is  that  both 
commercial and  financial debts, according to  firmly and
universally established views, can only be liquidated by the
goods or services of the debtor, and it is just these that are
offered by clearing warrants. It must be therefore possible to
start again payment operations on this basis. So far as the
importing of  raw  materials  is  in question,  this is  not
challenged.  A clearing  warrant, unhampered by foreign 
exchange legislation and made out in gold units, is a fully
utilisable means of payment so long as there is a demand on
the world market for the goods and services of the issuing 
country. If  this condition  is  not satisfied,  then foreign
exchange legislation  also would be of  no avail. If  an 
exchange of goods is actually impracticable, - that is, if the 
country no longer plays a part in the world economy, - no
debt  can  possibly  be liquidated.  This  holds equally  of 
commercial and financial debts. No one can expect that a 
country possessing  no gold, should  pay in  gold.  Every
creditor should therefore recognise that a debtor can only 
offer a lien on his goods and services.
 
  Years ago the Economic Committee of the League of
Nations expressed the same idea when it said that creditor 
countries must either agree that debtor countries may directly 
or indirectly redeem their obligations in goods or services or 
they must be resigned to not receiving any payments. The.
clearing warrants described here indicate the way in which 
even heavy liabilities may be in time honestly liquidated, to
the common advantage of creditors and debtors. 
 
 Once the banknotes that had become inconvertible have 
been superseded by clearing warrants, the free gold market 
can  be at  last  re-established.  So soon  as  gold has been
divested of the property ascribed to it of. being the exclusive
means  of  payment  and representing the core of  money
claims, it becomes again a commodity like any other, Its free
movement no longer causes alarm and may therefore the
better fulfil the function of a standard of value. And this
completes  the circle of  our proposals,  for  the free  gold
market which here appears as the result of -clearing, at the 
same  time presupposes  it,  since the various  means of 
payment can only be reliably valued when gold may be 
freely moved.
 
  It follows, lastly, that under the system above outlined 
there would be no objection to gold coins being minted for 
private firms and this not, as seems to be the intention at
present in France, as a form of note cover, but for immediate
circulation with a view to measuring by them at any time the 
value of all other means of payment. 
 
 
21. Summary. 
 
  Accordingly, we propose
 
1.  The introduction of unambiguously determined gold
  units of account as a monetary basis, e.g. 
 
  1 mark =  1/2790  kg. fine gold. 
  1 franc  = y kg. fine gold.
  1 £  = z kg. fine gold.
 
2. The transformation of the whole monetary system on the
  basis of a gold unit of account. 
 
3.  The abolition of the statutory obligation of acceptance for
 the notes of the central banks. 
 
4.  The removal of the monopoly of the central banks and its 
 replacement by general regulations concerning the issue 
 of means of payment.
 
5.  The abrogation of foreign exchange legislation and the 
 re-establishment of a free gold market. 
 
6.  The unrestricted right to mint gold coins. 
 
 
22. The Practical Realisation of the Proposals.

 a) Through international agreements.

 Everybody is agreed that something should be done to
remove the monetary chaos and the obstacles to settlement
operations. Here  also  hope  is  commonly  centred in 
international  conferences.  However,  the value  of  such 
conferences for the solution of economic problems is not 
great.  Think  in  this  connection  of  the  World Economic 
Conference of 1933. This was eagerly looked forward to by
all peoples  and yet, notwithstanding  careful preparation,
produced virtually no practical results. 
 
 However,  even  if  within the  near future a monetary
conference could be arranged to meet and if, moreover, full
agreement could be reached among the participating States, 
the effect would be at best to re-establish the parity between 
the monetary units and to impose an unconditional obligation 
on the parties not to modify deliberately this parity nor to 
change it without the consent of the other contracting parties.
But that would only dispose of a comparatively small part of 
the present difficulties, for only most rarely - as in the United
 States recently - has the abandonment of the gold standard
been an arbitrary act. In by far the majority of instances, the
gold standard was most reluctantly dropped. Heavy calls on 
credit  institutes, excessive  claims  on  the central  bank,  a 
rising efflux  of  gold,  and,  finally, the  threatening
impossibility, despite all efforts, of maintaining the parity of 
the banknotes, were for the most part the really decisive
factors in the abandonment of the gold standard. For such
cases an international agreement on monetary parities would
offer no solution. 
 
 So long as the principle of central banks is retained and 
their notes, being made legal tender, are identified with the
standard of value, no international agreement will be able to
prevent the recurrence of present-day conditions , for under 
this system the collapse of a single leading bank, to say
nothing of the collapse of the State finances, may render
impossible the maintenance of parity. However, even if, to 
meet  such  cases,  the several  countries concluded a 
convention providing that the gold reserves of the diverse 
central banks should be automatically mobilised to save the
currency  of  a  country  in  need, a  scarcely  credible  sup-
position, even this would be insufficient in hard cases, for the 
magnitude of the monetary obligations maturing at any given
moment would  probably always exceed  the  quantity  of
available gold.
 
 It also remains a moot point how the problem of foreign 
exchange legislation could be settled at such a conference,
seeing that the granting of loans, useful as these would be to 
those immediately concerned, in no way solves the problem. 
And yet without this, even a fresh determination of parities 
would  prove unsatisfactory. On  the  contrary,  the  object 
should be to rebuild on a sound basis the entire system of 
international payment arrangements,
 
  b) Through intra-State legislation.
 
  From  what precedes follows the possibility that  each 
several State, having made up its mind, may, by abolishing 
the obligation to accept and recognising the reflux principle, 
re-establish for itself the gold standard and rescind its foreign
exchange legislation. This may seem fantastic. But the reader
should remember the German inflation period. Then, too, an 
escape without external  assistance  appeared impossible.
"The hole in the West", speculation on foreign bourses, and
similar obstacles, which Germans could not control, were 
quite generally regarded as the causes of the depreciation of
the mark. Eventually, when things were at their worst, when
in some parts of the Reich serious disorders had broken out, 
and when external help was out of the question, the country
succeeded, by its own efforts, without the aid of any foreign
Government, without  an international  conference  or
convention, to stabilise the mark, to safeguard it against all 
foreign speculation, and even after a few months to abrogate 
the foreign exchange legislation then in force. To-day, as at
that time, the free resolve of any country may determine the 
fate of its currency. The country that first finds the way out,
that removes insecurity, and at the same time re-establishes 
the freedom of monetary operations, will march well ahead
of the other countries. It may even be assumed that a mighty 
stream of capital for long-term investment will pour into it 
from all sides.
 
  c) Through private initiative. 
 
 Even if, however, no State were for the moment ready to 
proceed along  this  line,  there remains  the possibility of
finding a way out of the monetary chaos through private
initiative or at least to prepare the way for this. When in the
eighteenth century the national monetary units, because of 
11alleged State needs, continually fluctuated and when it was
therefore impossible to rely on the value of currencies for a
measurable time  even, Hamburg  merchants, more
particularly, discovered a way out. By founding the famous 
Hamburger  Girobank, they, following the  centuries'  old
Chinese Tael system, made themselves independent of the
debased State coinage by adopting as the basis of all their
accounts an unminted definite weight of silver in the place of
State money. This weight, called Mark Banko, constituted an
unchangeable unit of calculation,. which came to be of the
greatest service  economically  for the  whole of  Northern
Europe.

 There can be no doubt that the application of the same
principle, with gold instead of silver as the basis naturally,
might exercise a similarly far-reaching influence to-day. Just
imagine that before the devaluation of the Belgian franc, a
Belgian undertaking of good repute had declared itself ready
to take up a long-term loan at its actual gold value, regardless
of the exchange rate of the franc. The crowd of would-be
investors would probably have broken through all barriers.

 In this connection the proposed private calculation in
gold should  on no account be linked with  the national
monetary system. Accordingly, I do not suggest here the
appending of gold clauses (gold dollar, gold pound, or gold
franc) to a country's currency unit, for experience teaches
that  such  clauses  -  which  hold  permanently before  the
statutory means of payment its ideal as in a mirror - only
rarely  survive  the fate  of  the national  currency.  Thus  in
Belgium, when the franc was devaluated, the gold clauses
were revoked and only contracts in foreign currencies were
left untouched. Private calculation in gold, like the erstwhile
Mark Banko system, should be independent of the national
currency. It should be therefore based on a separate unit, for
which a simple calculation in grammes of fine gold suggests
itself  here. This,  would also serve  as a  basis  for an
international calculating unit, which has.  been  widely
desiderated for many decades.

 All that would be demanded of the State is not to prohibit
calculating in gold. The State could never suffer through this,
for  even  if  a  Government should deem it  expedient  to
devaluate the national currency, as was frequently the case
already in the seventeenth and eighteenth centuries, there can
be no ground for imposing a devaluated currency unit on
those who  had freely  agreed  to  use for their  economic
transactions among themselves another and constant value
basis. Investors in all countries would joyfully welcome such
a solution and there are not a few undertakings which, under
these conditions, would be decidedly ready to place long-
term  loans at moderate interest  rates.  Once  it is
demonstrated,  however,  that  the monetary  chaos,  which
seems to most men the work of an inscrutable fate, may be
overcome, the profoundly beneficent effects of this for the
peoples of the world will not fail to become apparent.

(Translated by G.Spiller, London.) http://www.walterzander.info/acrobat/Montary%20Chaos.pdf

Reprinted from THE JEWISH CHRONICLE, April 2, 1948

IS THIS THE WAY?

THE Anglo-Palestinian Club is to be congratulated on arranging a symposium,
to take place next Thursday, based on Dr. Walter Zander's pamphlet, "Is this the
Way?" with Mr. Victor Gollancz and Mr. Maurice Rosetté as the opposing
protagonists. Dr. Zander's outspoken pamphlet has received considerable notice in
the general Press, and has aroused no little controversy within the Jewish
Community. An essay which, on the one hand, has received warm commendation in
the columns of responsible weekly journals as well as from such men as Sir
Wyndham Deedes and Dr. Robert Weltsch, while, on the other hand has gained the
obloquy of Great Russell Street, deserves serious discussion, and the Anglo-
Palestinian Club's symposium should provide a valuable platform for supporters
and critics alike to voice their opinions. With the whole Zionist structure, nay, all
Israel, faced with one of the supreme crises of its history, many people will urge that
this is not the time to criticise our leaders, and that unquestioning obedience in face
of danger is imperative. But if this argument were valid, neither Lloyd George nor
Churchill, Haig nor Montgomery would have led Britain to victory in two world
wars. The truth is that courageous, honest, and constructive criticism, such as Dr.
Zander provides, is urgently needed today. His stimulating essay, however open it
may be to criticism in certain details, deserves the closest attention of all those who
are concerned with the Jewish renaissance. The fifteenth of May is only six weeks
ahead. We have just enough time, if we are wise, to change the direction of our
policy, and to follow a better way.

 

Is this the Way?

  A CALL TO JEWS

 by
  WALTER ZANDER

  " I have read your paper twice & I was time & again both moved & inspired by the courage, the straight forwardness & the accuracy of your arguments."
Dr. Leo Baeck, former Chief Rabbi of Berlin.

  "I have been profoundly moved by
  reading your pamphlet : to its courage
 & insight there is little that I would
  like to add."

 Rev. J. W Parkes, D.D.

 This pamphlet is about Palestine

  V I C T O R G O L L A N C Z  LT D
  1 4  H E N R I E T TA  S T . .  W. C . 2


  IS THIS THE WAY?

 A Call to Jews

  by WALTER ZANDER

And they will confess their iniquities....

 Leviticus xxvi. 40.

Abstain from accusing others even in your
 most secret thoughts : accusations only
  destroy our peace of mind, they serve no
 purpose at all.

  MACARIUS, Starets of Optimo.

 LONDON
  VICTOR GOLLANCZ LTD
  1948

 

 Introduction

  HE DECISION OF THE United Nations to recommend the
Testablishment of a Jewish state by the partition of Palestine
has been the recognition of Jewish nationhood by the supreme
forum of world opinion. Accordingly, it has been hailed by the
Jewish national movement as an achievement of paramount
significance and celebrated with rejoicing. At the same time, it
is obvious  that this  decision  is  not  the fulfilment  but  the
beginning of the task which is fraught with tremendous diffi-
culties. Whatever  may  have been in  the  past the  aims  and
opinions of the  various  groups  within the  Jewish  National
Movement, a supreme united effort is required to overcome the
present dangers and to turn the historic opportunity ultimately
into a true fulfilment of the ancient and most cherished Jewish
hopes.

  The task of rebuilding a State out of the dis-integrated parts
of the Jewish people - with their different experiences - would
have been difficult enough even under conditions of peace and
general approval. For it is a formidable problem to bridge a gap
of two thousand years in the national history of a people. But all
these  difficulties have been  multiplied  by  the fact  that  the
decision of the United Nations could only be brought about
against a determined and powerful opposition; and it would be
disastrous to underrate the strength and significance of this
resistance.

  In the General Assembly of the United Nations thirty-three
nations voted for and thirteen nations against the establishment


 

of a Jewish state. This was considerably more than the formally
required two-thirds majority. Even if one counts, instead of the
governments,  the  represented populations themselves,  there
remains a majority in favour of partition, although this majority
is not very large. The thirty-three states in favour of the Jewish
state have a total population of about 560 million, against 480
million of those who voted against it. But if one considers that
the eleven nations who did not vote at all represent no less than
625 million people, it appears that out of the total populations
represented in the General Assembly only 33.6 per cent. voted
for partition, whilst 37.5 per cent. abstained and 28.9 per cent.
opposed  it:  and  the proportion  of  those in  favour  becomes
probably even smaller if it is taken into account that more than
400  million  people  (including  the  peoples  of North Africa,
Burma, Manchuria, Indonesia and Japan) were not represented
at all.

  Infinitely more important, however, is the composition of the
character of the two groups. The neighbours of the new Jewish
state, without any exception - reaching from Egypt to Iraq and
beyond to India, and from Greece and Turkey to Saudi Arabia -
were united in  their opposition,  whilst most  of  those  who
declared themselves for the Jewish state are far removed from
the scene of action. Many of them have only a small real interest
in the matter themselves, and some of them could be induced to
change their opinion from one day to the other, whilst the Arabs
and their supporters feel strongly in the matter, and most of
them consider the issue as their own.
  But even more significant than the political issue is the fact
that  many of those who opposed partition  are sincerely
convinced that the legal and moral right is on their side and that
the  establishment of  the Jewish state under  the existing
conditions is a breach of law and a violation of the established
principles of national freedom and personality.

  For many years it has been our custom to put the blame for
every new difficulty and every new setback to our cause on the
shoulders of others; and we have made great efforts to convince
the world and ourselves that not-we, but outside forces were
responsible for every resistance to our aims. "Arab absentee -
landlords" or "Moslem religious fanatics," "Fascist and Nazi
agents," and in  recent  years "British  imperialists  and anti-
Semites"-all in turn were made responsible for our misfortunes.
But great as the influence of all these groups was at their time,
it is impossible to be satisfied with the belief that these outside
forces were alone responsible for the course of events.

  In 1889, when modern Zionism was just emerging, Ahad
Ha'am, one of the greatest and most impartial Jewish thinkers
of that time, wrote his famous essay,  "This is not the Way" In
this he raised his warning voice against certain features of the
young movement, maintained that the return to Zion must be
preceded by a "revival of the heart," and foretold that otherwise
the whole movement might end in disaster. In the face of Jewish
progress  and achievement,  these words must  often  have
appeared as the nightmare of a dreamer. But in view of the deep
anxieties which we have to face at present, the opposition to our
movement, the bloodshed in which we are involved, the crimes
committed by our own brethren, the deep cleavages among our
own ranks, and the uncertainty of the Jewish situation in the
world - with anti Jewish riots even in Britain - in view of all
these dark signs, the words of the great thinker receive a new
and poignant meaning.

  As long as our political fate was mainly determined by other
peoples, it was understandable that we were inclined to see the
cause for our situation in the actions of others. But since we
have taken again into our own hands the shaping of our political
history,  full  responsibility rests  now  upon  us, and this  will
require the greatest moral courage. We must ask fearlessly to
what extent  we ourselves have  contributed  to  the present
situation. Was  our attitude  perhaps  such,  as Ahad  Ha'am
assumed,  that sooner  or  later it  had  to  lead to  the present
conflicts? To raise such questions in no way exculpates from
their  mistakes  other  nations  which are  involved in the
Palestinian issue. But there will be no lasting improvement of
the situation until each party becomes aware of its own faults in
the matter. We have to face the fact that our relations with those
two peoples whose friendship should be our main concern - the
Arabs and the British - have sadly broken down. Moreover, our
whole  movement is  threatened from  within  by dissension,
violence  and  moral confusion.  Clarity  was never  more
important than in this hour of danger and hope, and constructive
criticism of our own work is needed for the sake of the very
survival and the establishment of a truly independent and free
community. It is on the basis of these considerations that the
following lines are written.
 Failure with the Arabs

  The cardinal problem of the Palestinian issue can be summed
up in the single sentence that we Jews had to build our National
Home in a country in which another people is living. From this
root all other difficulties have ultimately sprung, and although
many outside influences - economic, political and religious -
have affected the issue, the Jewish-Arab problem has remained
the  core of  the matter. The  solution of this  problem was,
therefore, the paramount task. But, instead of concentrating on
this task all our efforts and creative energies, we have treated
the Arab question, when it was remembered at all, as if it were
of secondary importance.

  This attitude goes back to the very beginning of the Jewish
national movement.  As  early as  1891,  Ahad  Ha'am in  his
article,  "The Truth from Palestine"warned us to give the Arab
question the most careful consideration:

 "We abroad are accustomed to believe that the Arabs are all savages
 who are living on the level of animals, and who do not understand
 what is happening here around them. This, however, is a great
 mistake. The Arab, like all Semites, possesses a sharp intelligence
 and  great cunning.  The  Arabs,  and particularly  the  urban
 population, see through our activity in the country and its purpose,
 but they keep silent, since for the time being they do not fear any
 danger for their future. When, however, the life of our people in
 Palestine will have developed to such an extent that the indigenous
 population will feel threatened, then they will not easily give way
 any longer."
  Again:

 "How careful must we be in dealing with an alien people in whose
 midst we want to settle. How essential is it to practise kindness and
 esteem towards them. . . . For if ever the Arab could consider the
 action of his rivals to be oppression or the robbing of his rights
 then, even if he keeps silent and waits for his time to come, the rage
 will remain alive in his heart."

  In  words which are too painful to  repeat  to-day,  he
complained how gravely our brethren failed in this elementary
duty. Through nearly three decades he repeated his warnings,
and in  1920-surveying  his life's  work-he  summed up his
criticism in  the bitter  words  that  "since  the  beginning of  the
Palestinian colonisation we have always considered the Arab people
as non-existent."

  The following years saw  no  fundamental change of  this
attitude. Instead of giving the highest priority to the Arab case,
we gave it  to  our relations  with Great  Britain.  Instead  of
concentrating our attention on the people who have been living
in the country for more than a thousand years, we put our trust
in those who happened to be their rulers for one generation.
Accordingly, the centre of our political activities was London
and not Jerusalem, and we succumbed to the superficial and
portentous  mistake that the fate  of the country would  be
determined in the long run, not by the people itself, but by the
ephemeral  influence  of the Mandatory Power.  England,
therefore, was paramount in our mind, and we exaggerated her
importance for our future, both in the days of hope and in those
of despair. It was the same fundamental attitude which made our
early Palestinian settlers see in Britain the saviour from their
 plight and  caused in  our  days  the unfortunate  "illegal
immigrants" to write on the funnels of their ships: "Our enemy
is England."

  But not only did we fail to give the Arab problem first
priority; we also deceived ourselves about the seriousness of
Arab opposition. The  years  between the wars  saw  many
outbreaks of Arab armed resistance against Jewish immigration,
from the disturbances of 1920 and 1921 to the riots of 1929 and
the revolt of 1936-9. The intensity increased with every new
clash. But, unperturbed, we tried to persuade ourselves that the
resistance  of  the Arabs was not real,  but artificially
manufactured. Every time we found another excuse to explain
away the true meaning of the event. Every time we offered
small remedies for a great disease, and utterly failed to face the
reality of Arab resistance. In a world where from Algiers to Java
the nations are yearning for independence, we made ourselves
believe that in Palestine alone the indigenous population had no
interest  in  national  self-determination and  self-government.
And this in spite of the fact that the Palestinian Arabs have not
only to face a static foreign rule, as had the Indians or Syrians,
but a most dynamic change of their situation by the continuous
flood of Jewish immigration into the country.

  Failing to give the Arab problem its proper place and to
recognise  the seriousness of Arab  opposition, we  equally
omitted to give adequate consideration to the question of how
the two peoples could in fact live together within the Jewish
commonwealth. Very little thought was given to this task, and
the Anglo-American Committee of 1946 could, therefore, sum
up the situation as follows:
 "It is not unfair to say that the Jewish community in Palestine has
 never, as a community, faced the problem of co-operation with the
 Arabs. It is significant that in the Jewish Agency's proposal for a
 Jewish state, the problem of handling a million and a quarter Arabs,
 is dealt with in the vaguest generalities."

  Of  course, we never  aimed  at  harming the  Arab  in  his
economic or social position in the country. We paid for every yard
of the land which we occupy, and we paid dearly. We took great
care that no landless Arab population would be created; nor did
we exploit Arab labour. We are, in fact, blamed for not using it
enough. All impartial observers agree that the standard of living
in the country has risen for all-but we failed as a community to
grasp the elementary significance of the political issue.

  This strange development sprang largely from the fact that
the Jewish national movement entered Palestine in the train of
the victors of the First World War. Jewish longing for the return
to Palestine was, of course, ancient and sacred. But it did not
take the shape of a political movement before the rise of modern
nationalism in the second half of the nineteenth century. The
World War  1914-18, which  brought the  first  realisation of
Zionist hopes, ended with the victory of the West. Russia had
collapsed; China was powerless; Japan stood aloof; and when
Germany was conquered, it was the Western democracies which
dominated the scene.

  This domination, visibly expressed in the great assemblies of
Paris and Versailles, was not limited to the military sphere. The
ideals  of the French  Revolution,  liberalism,  progress  and
democracy had been the banner under which the war had been
fought. They  had profoundly  influenced the  minds of  the
leading statesmen, and upon these ideals the new world was to
be formed. The West stood at its zenith. But it had not yet
accustomed itself to apply the ideals of democracy to the East,
and very little thought was given at the time to the national
independence of the Asiatic and  African peoples. The
superiority of the West, based on its achievements in nearly all
spheres of life, appeared to be overwhelming; and if it did not
justify the right to rule, it seemed at least to give the right of
political, moral and even spiritual leadership.

  The consent of the peoples of the Middle East to the new
order under these conditions seemed hardly to be required. Two
years before the Balfour Declaration, France and Britain, in a
secret agreement, had divided between themselves their mutual
spheres of influence throughout the Arab world without asking
the consent of the indigenous populations; and although certain
modifications had taken place in the days of Versailles, there
was no fundamental change in the Western attitude.

  One attempt, however, was made at that time to ascertain the
will of the people. But the result was not encouraging for the
Western Powers. Early in 1919 the victors had agreed that in
Syria,  Iraq  and Palestine, where  Western  mandatory
governments  were  to  be established, the  will of  the local
populations  should  be consulted before the mandatory  was
chosen. But soon afterwards France as well as Britain became
reluctant to send out such an inter-Allied commission for this
purpose, and it seemed advisable to both governments not to
probe too deeply  into  the whole  matter.  President  Wilson,
however, anxious to ascertain the true position, sent out a purely
American commission, which unofficially toured the country
and, in due course, submitted the so-called King-Crane Report.
According  to this report,  the Arabs wanted  complete
independence immediately, though, if a temporary supervision
was unavoidable, their first choice was the United States, their
second  Britain. Against a  French mandate, they declared
themselves with all  possible  determination.  Regarding  the
Balfour Declaration, the commission expressed the opinion that
its carrying out would lead  to  serious  difficulties,  and
recommended therefore a substantial reduction of the Zionist
programme. The Report did not attract much attention at the
time;  and  the opposition of  the local populations  to  the
settlement  was  ignored for  the time  being.  In  all  these
developments Palestine played a comparatively small part. It
shared the fate of the much bigger countries of the Middle East,
and if the Powers did not consider Arab consent essential for the
establishment of French rule in Syria and the British mandate in
Iraq, it is natural that the Jews, whose claim to the Holy Land
was infinitely stronger, did not insist on Arab consent for the
establishment of the mandate over Palestine. In January, 1919,
Dr. Weizmann had tried to secure Feisal's consent by a famous
agreement but this became abortive because the Arabs did not
obtain from the Powers that independence which they had made
a condition of the treaty with the Jews. Thus the whole order in
the Middle East was based  by the  Western Powers  on the
assumption that the consent of the local populations could be
ultimately dispensed with.

  But soon afterwards the Western Powers had to realise the
instability of the edifice which had been erected. French rule in
Syria and the Lebanon came to an end. Iraq and Transjordan
were declared independent states. Britain agreed to negotiate
the evacuation of Egypt. The right of Arab self-government was
recognised  by all,  at  least in  theory. Most  important, the
superiority of the West, in view of its failures and of the rising
of the Eastern communities, remained no longer unchallenged.
But whilst all other nations adapted themselves more or less to
the demands of the new times, at least in the political sphere, we
Jews alone refused any change. We alone still clung to a period
which has passed. We alone still maintained that, as far as
Palestine was concerned, Arab opposition to the establishment
of the Jewish National Home could be ignored; and it must have
appeared to the Arabs as though we were the only survivors of
the world of Clemenceau and Lloyd George. It is a sad paradox
that, by the force of circumstances, we were denying to the Arab
in our own case those  principles  of  democracy and self-
determination for which we are fighting everywhere else so
stubbornly; and, instead of taking up the challenge of such a
situation, trying to find a bold and constructive way out, we
have continued to behave as if the colonial era of the nineteenth
century was still unchanged.

  It was this - our Jewish unwillingness to face the realities of
the situation - which has made opposition throughout the Arab
world so adamant.Whilst thirty years ago  the  Arabs were
divided  among  themselves  and,  as  the Weizmann-Feisal
agreement shows, inclined, at least under certain conditions, to
reconcile themselves with the Jewish National Home, to-day
they  are united  in  their determined  opposition against  its
development, if not its very existence; and for a long time both
nations have been preparing for a full-scale military conflict.

  Opposition against the Jewish National Home has grown
solid and undivided from Morocco to the Indian border. But it
is not restricted to the Arab world. Most of the Asiatic and
African peoples have formed a most unfortunate conception of
the Jewish National Home. To them Jewish immigration into
Palestine, against the will of the Arabs, appears to be one more
of the violations of the rights of a native population with which
they are so painfully familiar. In this respect, the attitude of
India is a striking example. Not only the Moslem League and
Pakistan, but the Congress Party and India identified themselves
with the Arab case as well. As far back as 1938, under the tragic
impression of the first pogroms in Germany, Mr. Gandhi wrote:

 "My sympathies are with the Jews... but my sympathy does not
 blind me to the requirements of justice. Palestine belongs to the
 Arabs  in  the  same  sense  that  England belongs to  the  English,
 and  I  have  no doubt that  the  Jews  are  going about it  in  the
 wrong way."

  In 1946, he repeated the same thought:

 "The Jews have erred grievously in seeking to impose themselves
 in Palestine with the aid of America and Britain and now with the
 aid of naked terrorism"

  And  in 1947  Pandit Nehru,  at  the  first  Pan-Asiatic
Conference held in New Delhi, proclaimed that Palestine, in the
opinion of India, is an Arab country. There is no doubt that these
words  expressed  the  feeling  of most  African and  Asiatic
peoples, and although we never intended to treat the Arabs as a
colonial people, in  their eyes  we are linked  up with  the
imperialist Powers on whom we have so largely relied. The
votes on the Palestine question in the General Assembly were
an exact reflection of this fact, and all peoples whoever in the
past, directly or indirectly, were the objects of colonial policy
were in opposition to the establishment of a Jewish state.
 Under this aspect, the so-called minority report of the U.N.O.
Committee, presented by India, Iran and Yugoslavia, which
advocated the establishment  of a  Federation  and Jewish
immigration according to the economic capacity of the country
over a  period  of  three years, would have  had invaluable
advantages. It would have broken the iron front against the
Jewish  National Home which reaches from  Morocco  to
Indonesia, and a determined concentration on the report might
at least have led to an interim solution during which the pressure
of the general political atmosphere could have been reduced.

  . .  .  . .

  To justify our claims, we have put forward strong and most
impressive reasons. We have pleaded, with all the power which
deepest conviction can give, the need of our homelessness. We
have pleaded all the miseries of persecution, the millions of our
dead, the despair in the camps of displaced persons, the burning
longing and hope of those who, in unseaworthy vessels, cross
the seas in their quest for home, and have not forgotten the less
spectacular but very subtle pains of exile. We have compared
our need with the vast possessions of the Arab nations, and have
proclaimed our right to survive as a people and to restore once
more our national life in the land which our forefathers have
made a sanctuary to the world.
  With all  this  we  have  aroused  sympathy,  but have  not
convinced the Arab peoples that the country is ours. Even Mr.
Gandhi, a saintly man, maintained that his "sympathy does not
make him blind to the requirements of justice." What could we
expect under these conditions from the Arabs? They regard
themselves as the possessors of the country for more than a
thousand years, and if that is true, even the most heart-breaking
need of the Jewish people does not deprive them of this fact and
all the rights arising from it. To what example can we point to
show that the possessing nations of the world share voluntarily
their possessions with the needy? As long as the vast, thinly
populated  areas  of  the globe  are  not open  to  all  for free
immigration, how can the Arabs be blamed for refusing such an
obligation to us? And even the ancient and sacred connection of
our people with the country, which for us is a powerful reality,
will not induce the Arab to give up his right.

  To  him our return without his  consent  remains a  forced
invasion. Correspondingly, many of our people long ago gave
up all hope for a peaceful solution, and prepared themselves 'for
conquest and defence of the country. If war in fact were the
issue, I feel, it has to be admitted that rarely in human history
have conquerors been driven by greater need than the Jews.
Great countries, even continents, were conquered for a much
less reason. The issue, however, is not war, but must be peace.
And if we search through all that we have written and said
through all these years to prove our case, we shall find that we
have said everything to  stress our  need,  but that we have
omitted  one  thing which might  have changed the whole
relationship with the Arab: Never in the thirty years' argument
have we admitted that our return, justified as it appears to us,
inevitably  requires  from  the Arab  a sacrifice  of  the first
 magnitude - the sacrifice of giving up his right to rule himself.
So much have we been involved in the problems of our own
case that  we  have  not even  realised  the position  of our
neighbour and what we were asking from him. Of course, we
frequently pointed out the benefits which he derived from our
coming: the rising standard of living, the improvement in the
health service, and perhaps even social progress. But all this
could make things only worse and was bound to insult the Arab
if at the same time we did not stress equally the loss and
sacrifice which  our coming must  have  meant  to him. The
decisive point for him was not the profit he might make, but the
harm and the wounds which he felt he received from our hands;
and-paradoxical as it seems - a frank discussion of these wounds
(and how  to  heal them) would  have  been  infinitely more
profitable than all talk of alleged advantages. Paramount in the
Arab's consciousness was the violation of his right - in fact, of
his whole national personality - and as long as we ignored this,
his main concern, we were preaching to deaf ears. And even if
we had preached with the tongues of angels - which, indeed, we
did not - we could not have changed this fact.

 .  . . .  .

  The failure to address ourselves to the main point in the
whole issue was not only a signal psychological blunder: it was
much  more than that. It  sprang  ultimately  from  lack of
confidence and faith in our own cause. It was a belief which was
afraid to face the full reality of the issue.

  Nobody, of course, can prove that a wiser attitude would
have led to a constructive solution of the problem. But it is safe
to say that the method which we adopted has not only failed, but
was bound to lead to the present deadlock. It was exactly that
attitude of which Ahad Ha'am had warned us: the attitude of the
cheap and easy way, the short-cut to Utopia which, by ignoring
the main issue, made the difficulties almost unsurmountable.

 .  . .  . .

  There have been in the past many attempts by noble idealists
on  the Jewish  side to  establish  friendly  relations  and co-
operation with the Arabs. The Ihud group under Dr. Judah
Magnes, the venerable President of the Hebrew University, has
been leading  in  these efforts. For the  sake of peace, they
proclaimed their willingness to restrict Jewish immigration to
parity with the Arab population, and to satisfy themselves with
a bi-national  state in  which  the  government of  the  country
should be conducted jointly by the two peoples. On this basis
they have offered time and again their friendship to the Arabs.
But the more sceptical elements among the Jews could rightly
point to the fact that these attempts, laudable as they were, have
remained without success. They felt that under these conditions
it was quite useless to reduce their claim, and that ultimately
everything will depend in any case on force. "Show us," they
challenged the idealists, "one single Arab group which has been
willing to accept our friendship"; and no such group could be
produced. But the reason of this failure was not necessarily the
"hopeless obstinacy of the Arabs" (which does not leave any
other way out than the sword), but also may have been a lack of
realism on the side of the Jews. For what is required here is not
the  establishment of peace  between two quarrelling parties
among whom right and wrong may be equally divided. Our
problem is how, if at all, the Arab can be compensated for the
sacrifice which we ask from him. Even our idealists, moderate
as their demands are, have failed to set themselves this question.
To the Arab, even our reduced claims remain infringements of
his rights. Even a restricted immigration remains to him an
immigration which he opposes,  and  even  a bi-national
government one in which he does not rule alone. More than
moderation is required to solve this problem.

  To find a  compensation  for the Arab's sacrifice was at all
times the key to the matter. To this task all our faculties and
thoughts  ought to  have been  turned.  This,  and  not the
advertisement of our achievements, was the question to ponder
on in our meetings, study groups and prayer-houses, both in
Palestine  and  in  the world abroad; not by enumerating
complacently  the  more or  less  incidental  advantages  which
accrue to the Arab as a result of Jewish colonisation, but by
deliberate  and sincere  intention  to  do something for  him,
equivalent to what we ask  him to grant to us. The needs and
desires of human life are so manifold, and the requirements of
the Arab peoples - eager to take their full share among modern
nations - are so multifarious that, given the will and imagination
on our side, there was a strong chance of finding a workable
solution. Nobody can say what concrete suggestions might have
grown out of these deliberations. There is no precedent for such
a case. But the general principles might well be outlined.

  In the material sphere it might have been possible to connect
our compensation to the Arab step by step with the progress of
the immigration itself. Thus the establishment of new Jewish
settlements would have been much easier for the Arab to accept
if it had brought at the same time new tractors or new school
buildings  to  the neighbouring  Arab villages; and  although
difficulties and objections would by no means have  been
 lacking,  such procedure  would  at  least have  created a
considerable interest among those who are most concerned, and
the general application of this principle would have brought a
direct and immediate benefit to him.

  But there are other spheres of co-operation with the Arabs
which are of infinitely greater importance. The sacrifice which
we have asked from the Arabs is political. It can not therefore
be compensated in the material or educational sphere alone, but
must be redeemed in the political field itself. There, indeed,
great possibilities existed. The Arabs had started their fight for
independence  from  Western control  almost  alone, without
friends or help. If we had been associated from the beginning
with their movement for national independence, had sincerely
allied ourselves with their demands and used our influence in
the world to strengthen their case, instead of grudging every
success if not opposing it, such help would have been of the
utmost value to  the Arabs. Our  experience and position as
mediators between East and West could have given us a great
opportunity, and the Arabs might have found in us an ally in
their case and learned to see in Israel a brother. The political
alliance on the other side would have increased the possibility
for  material  co-operation, and both  combined  might  have
attracted the  help  of  all  those  who  are interested  in  the
development of the countries of the Middle East. As Mr. Gandhi
said : "There are hundreds of ways to deal with the Arabs if the
Jews will only  discard  the  help  of  the bayonet." These
opportunities were lost.

  Our  failure to recognise  the real situation has made a
settlement with the Arabs nearly impossible. We ourselves have
made the position of the moderate Arab untenable and that of
the Mufti almost unassailable. What on earth did we expect a
moderate  Arab  to do if  we showed so little  imagination
regarding the difficulties of his situation? We have frequently
complained that the  refusal of the  British Government  to
increase the number of immigrants has driven a large proportion
of the Jewish youth into the arms of terrorism. How much more
is it true to say that our refusal to recognise the Arabs' sacrifice
has brought about the united and determined opposition of the
whole Arab world against the Jewish National Home.

  Fifty years ago Ahad Ha'am warned us to show to the Arab,
not only kindness, but esteem; and this shy and awkward man
was a greater realist than most of his noisy and self-assured
opponents. If we had followed his advice, Arab chivalry might
have given us an unexpected, positive response. But we have
failed,  and  this  failure  is  not the result of intellectual
shortcomings. It springs from a lack of moral courage.

 Failure with the British

  The second field which was to be of the utmost importance
for the fate  of the  Jewish  National Home was  that  of our
relations with Great Britain. This period is now coming to an
end. But what has developed between us during these years will
remain alive for a long time to come. Great Britain was  the
country which enabled us to lay the foundations of our work.
More than that, for many years Britain represented to us the
whole Western world as far as it was benevolent to our cause.
To-day these relations are almost destroyed, and we Jews have
convinced ourselves that this was Britain's fault. Nobody will
deny that Britain has greatly contributed to the deadlock by
mingling the trust of the Mandate with imperial interests, by the
exaggerated and broken promises of the Labour Party, by lack
of vision and timely decision; but unless we realise to what
extent the collapse of our relations was brought about by our
own fundamental shortcomings we shall remain unable ever to
restore the broken links and in addition shall endanger our
relations with any people who may become our friends or allies
in the future.

  The thirty-year-long history of Jewish-British relations since
the Balfour Declaration suffered from the very beginning from
a fateful ambiguity, for  which, I  feel,  a  large share of  the
responsibility rests with us.
  Everybody knows  now  that  from the  openings  of  the
negotiations on the Jewish National Home in 1917 we Jews
aimed at the establishment of a Jewish state, and the draft which
Dr. Weizmann and our other negotiators submitted to the British
Government in July of that year accordingly requested the "re-
establishment of Palestine as the Jewish National Home." It is
equally well known that the British Government, after careful
deliberations and negotiations which lasted for more than three
months,  refused  to  undertake this obligation.  Instead  they
offered in the Balfour  Declaration  something  essentially
different - namely, "the establishment of a Jewish National
Home in  Palestine." Whatever  the interpretation  of  this
"National Home" was to be, it is beyond all doubt that it was
meant to be less than we had asked for. This was perfectly clear
to all concerned; and although the possibility of a future Jewish
state was  by  no means excluded  in  fact,  it  was repeatedly
mentioned in platform speeches of British statesmen at that time
- it  is  equally certain that  the  British Government did not
undertake  any  obligation  in this  respect.  This was  made
abundantly clear when Mr. Churchill in 1922, in the first White
Paper on Palestinian policy, declared:

 "Phrases have been used, such as: Palestine will become as Jewish
 as England is English. His Majesty's Government have no such aim
 in mind."

  But in spite of these facts, we continued to act as if our
original draft had not been refused, but accepted; and from this
ambiguity sprang untold confusion and even misery.

  Again Ahad Ha'am, who had partaken in the negotiations,
alone among our leaders had the vision and the courage to draw
the attention of the Jewish people to this discrepancy between
our hopes and their fulfilment. In 1920, in the Foreword to the
third edition of his essays, he dealt with the question in great
seriousness:

 "I do not believe that many words are required to explain the
 difference between the two formulations. If the British Government
 had accepted the text which we had suggested, the promise could
 have been so interpreted that the country, as it is to-day, was to be
 returned to the Jewish people on the strength of its historical right;
 that the Jewish people may rebuild the ruins, rule in future in the
 land and conduct its affairs according to its will without heeding the
 consent or the opposition of the present inhabitants. But the British
 Government, as explained explicitly in the Declaration, did not
 want to  promise  anything which might  injure  the present
 inhabitants of Palestine. For this reason they changed the Zionist
 formula and restricted its contents.

 "The initiated realised immediately the significance of this change.
 But some thought that it was just a variation of style without any
 particular intention, and they tried therefore later several times,
 when in the negotiations with the Government occasion arose, to
 translate the promise into their own text as if nothing had been
 changed. But every time they found in the reply of the Government
 a repetition of the formula which is contained in the Declaration
 itself. This showed that we have not to deal here with a phrase
 which might be expressed in different ways, but that the promise is
 limited in reality by this formula: thus far and no farther."

 

 

  Furthermore

 "When the British Government  promised to promote the
 establishment  of  a  National  Home for the  Jewish  people  in
 Palestine and not, as it had been suggested, 'the re-establishment of
 Palestine as the Jewish National Home,' this promise had a twofold
 purpose: (1) the recognition of the historical right of the Jewish
 people to establish for itself in Palestine a National Home, in which
 the British Government promised to assist; (2) the refusal to abolish
 the right of the present inhabitants and to make the Jewish people
 the absolute ruler in the country."

  In  an  almost prophetic  manner,  he summed up  his
apprehensions:

 "This and nothing more the leaders and writers should have told the
 people, lest it would see in its imagination more than exists in
 reality and later fall into despair and lose all confidence in our
 whole cause."

  But such words were most unwelcome at the time, and no
attention  was paid  to  them in  the general atmosphere  of
jubilation. They were never mentioned, and - in spite of the
masses of paper which we Jews poured out on the subject of the
Balfour Declaration  - the essay  from which the above
quotations are taken has  not up to  the present  day  been
published in English and is unknown to the large majority of the
Jewish people. Twenty-six years later, Dr. Weizmann, in his last
speech as  President  of the World Zionist Organisation,
reminded the people of these warnings:

 "I remember how angry we were with the late Ahad Ha'am when,
  in the honeymoon of the political triumph which surrounded the
 Balfour  Declaration, he  wrote  an  article  that in  the  Balfour
 Declaration they were promised a National Home in Palestine, and
 not Palestine as a Jewish National Home. And there is a vast
 difference between one interpretation and the other."

  But  when these warnings  were  repeated, Jewish-British
relations had already deteriorated almost beyond repair.

  Although, therefore, the Balfour Declaration was much less
favourable than we had expected, it was a mighty step towards
the realisation of our hopes, and very much depended on the
wisdom of our further action. If we had told our people at the
time that what we had reached was only the first objective and
that it was up to us to secure further stages by continued efforts
and adequate negotiations with all  concerned,  its  attention
would have been directed towards the right aim and very much
might have been achieved. Such a policy would have been the
more appropriate since the Balfour Declaration in any case gave
us sufficient time to lay the new foundations for Jewish life in
the Holy Land and nurse it through its first essential stages. But
here, as in the Arab case, we chose again the "cheap and easy
way" of an ostrich policy and pretended that the problem which
we had to solve did not exist.

 "Do we not all know," wrote Ahad Ha'am, "how the Declaration
 was  commented upon  at  its  publication, and  what boastful
 exaggerations many party men and writers from then till this day
 tried to read into it? The Jewish people heard it and believed that
 the end of the Galuth had come in reality, and that Palestine after a
 short space of time would be a Jewish state. The Arabs, whom,
 since the beginning of the Palestinian colonisation, we have always
 considered as non-existent, heard it also, and they believed that the
 Jews had come in order to expel them from their soil and to deal
 with them at their pleasure. All this was bound to lead to frictions
 and embitterment on both sides and is largely responsible for that
 position which was revealed in all its ugliness by the events in
 Jerusalem during the recent Passover days."

  The ugly events to which Ahad Ha'am alluded were the Arab
riots of April, 1920, and an unbroken chain links these first
disturbances with the appalling toll of murder and destruction
which since then have fallen on the Holy Land.

  During the first years of the Mandate the question of the
British obligation did not become acute. The size of the Jewish
population in the country was so small that the claim for a
Jewish state had no practical value, and as late as 1932 Dr.
Weizmann himself publicly disowned such a demand. In fact,
during the first ten years of the Mandate interest in our cause
was so small that we were not able to develop the National
Home even to the limits which the legal position gave us at the-
time. But with the approaching catastrophe on the European
continent the situation changed. Masses of immigrants pressed
towards the country and paid little attention to what appeared to
them to be formal objections. Legal considerations in the face
of death seemed a mere travesty of justice. The National Home,
whatever it had meant in the learned discussions of lawyers and
diplomats twenty years before, to the haunted masses in their
despair was  the only  reality which could  save  them from
destruction.  They had no  doubt  that,  whatever  the
circumstances might  be, it  was Britain's duty to open  the
country to all who wanted, and were able to enter. The more the
catastrophe progressed  the  more passionate  grew  this
conviction. After all, had not Britain, instead of France, secured
the Mandate over the Holy Land, with its invaluable strategic
position, the harbour of Haifa and the pipeline from Iraq, only
for the purpose of building up the Jewish National Home? And
was not the Mandate the only justification for their presence in
the country? If she hesitated to fulfil her duty in the face of so
much human misery, what else could be the reason but "the
most shameless malice"? It was in full accordance with such
lines of thought that Dr. Herzog, Chief Rabbi of Palestine, in his
Easter broadcast in 1947, saw fit to describe the misfortunes of
Britain,  in obvious  analogy to  the Pharaonic plagues,  as
heavenly punishment for her maltreatment of the Jews.

  Meanwhile, the main  issue was  almost  forgotten,  and
nothing happened which could solve the Jewish-Arab problem.
On the contrary, these relations steadily decayed. In 1936, the
increased influx of immigrants led to the outbreak of the great
Arab revolt which lasted for almost three years, until at last it
was crushed by the British. At that time we did not yet consider
the British as invaders and did not object to an application of
British armed force in  Palestine, to  mass-imprisonment,
collective punishment,  destruction of whole  villages,  and
execution of Arab patriots. The numerous police fortresses all
over the country, which to-day appear to us as instruments of
national oppression, were then erected to protect the Jews and
were welcomed by the Jewish population. In those days Jews
and British were still friends and Wingate's genius stirred the
hearts and roused the love of Jewish youth.

  In May, 1939, under the impression of the Arab revolt, the
British Government issued the ill-famed White Paper by which
Jewish immigration  -  after  a  further admission of another
75,000 - was in future to be dependent on Arab consent. Soon
afterwards  the Second World War  broke  out, and  Arab
resistance came to an end. But the breathing-space did not bring
any rapprochement; the gulf grew wider. Whilst the Mufti went
to Berlin and there joined Hitler, the Zionist movement - in the
Biltmore Programme - raised the claim for unrestricted control
of immigration and officially demanded the establishment of
Palestine as a Jewish state. This was the return to the original
request  of July,  1917. It  was a  deliberate  step beyond  the
Balfour Declaration, and certainly more than either Britain or
the League of Nations had ever promised. But in the face of the
mass destruction  of Jewish  life  on the  Continent and the
amazing successes of Jewish colonisation in Palestine itself, the
claim appeared justified to the majority among us. Arab consent
to the new and far-reaching demand seemed to be even less
required now than thirty years before. The Nazis had linked up
their propaganda with that of the Arab national movement; and
whilst the Jews had been most eager to fight on the Allied side,
the Arabs had been, to say the least, reluctant. Rashid Ali had
even raised arms against Britain, and the Mufti himself had
identified his cause with that of the Nazis. Were not, under these
conditions, all previous hesitations to admit Jewish immigration
into the Holy Land,  and above  all  the  hated White  Paper,
exposed and branded as appeasement? Could one not hope that
they would end once and for all when victory was won? This
was the cause for which the Jewish leaders pledged their word.
There seemed, indeed, a chance that the attitude of the Arabs in
the war might justify that of the Jews in peace, and that all our
mistakes of the past would be blotted out by the glory of victory.

 But victory was bound to bring a grievous disappointment. In
spite of all the links which had been forged between many
influential Arabs and the Nazis, in spite of all the active help
which the Mufti and his friends had given to the Germans, the
Arab national movement emerged from the war stronger than
ever, and resistance against Jewish mass immigration remained
as adamant as it had been before. Indeed, the assumption that
this resistance would collapse together with Germany was as
erroneous  as would  have  been the belief that  the national
movement of India, Egypt or Indonesia would end with the Axis
downfall; and to-day the position of the Arab peoples is stronger
than at any time since their subjugation by the Turks.

  Not even the notorious White Paper disappeared. True, its
worst part  -  the  complete  stopping  of  Jewish immigration,
which certainly was incompatible with the idea of the Mandate,
never came into force. For the British Government continued to
admit at least a quota of 1,500 immigrants per month. But the
other restrictions, particularly those concerning the acquisition
of land, remained. Moreover, neither the Labour Government
nor Mr. Churchill, neither the Anglo-American Committee nor
any member of the United Nations, has ever suggested the
restoration of free Jewish  immigration into the whole  of
Palestine which was our demand when the White Paper was
issued, and which  remained  our official demand  until  the
decision of the United Nations.

  The battle against the White Paper became for us the battle
for the National Home and, to the Jewish mind, the White Paper
became  the source of all  our  troubles.  "The White Paper,"
declared Dr. Weizmann in the opening address at the last Zionist
Congress, "is  directly  responsible for the  present  troubled
situation in Palestine," and in this he certainly expressed the
opinion of the overwhelming majority of his audience.

  For us Jews the White Paper became indissolubly linked
with the  impossibility  for  innumerable innocent people  in
deadly peril of reaching the haven of safety. But did this White
Paper  really fall upon  us one  day  unexpectedly like a
thunderbolt from a blue sky? Was it not foreshadowed for years
by a long series of unmistakable signs of bloodshed and riot?
Was this document really the root of our trouble? Was it not
only a very imperfect, heavy-handed, clumsy attempt to deal
with a situation which in itself had become unbearable? Has the
origin of this situation ever been anything else but the simple
inescapable fact that we had to build our National Home in a
country where another people is living, and that we lacked the
imagination and the wisdom to master such a problem? And,
lastly, is not this White Paper precisely one of those events
which Ahad Ha'am had in his mind when he warned us that our
right in the country is restricted by the formula, "Thus far and
no farther," and that the day would come when the people will
awaken from their dream and "will fall into despair"?

  That something of that kind would happen one day was to be
foreseen. The White Paper was the point at which the dyke
broke. But that it would break somewhere some day had long
become unavoidable. It was impossible to pretend indefinitely
that our right to enter the country was unlimited; that it was
Britain's duty to enforce the admission of every Jew for whom
we could provide a living, until at last we reached the majority
in the country. It was impossible to demand that Britain by this
method should do just what she had refused to do from the
beginning - that is, to establish a Jewish state against the will of
the Arab, and thereby run the risk of violence and even war. But
so blind were we to the reality of the situation that when in 1937
Britain had accepted the Peel plan of partition - which once and
for all would have abolished the need and even possibility for
any White Paper - we Jews, who should have jumped at this
solution, did not consider the plan as good enough.

  It  sometimes  could  appear  from our utterances  as if  the
White Paper was nothing but the work of sheer arbitrary British
malice without which the doors of Palestine would have been
wide open to us. But Arab opposition against handing over the
country to us was certainly not less during the war than before,
and did not decrease by the  acceptance  of the Biltmore
Programme. Can we really maintain under these conditions that
it would have been possible to force into Palestine - at a time
when the war was in the balance or seemed even lost-all the tens
or hundreds of thousands who might have escaped from the
Continent and of whom we now dream? The riots which have
shaken Palestine since the decision of the United Nations to
recommend partition give the answer to this question. To blame
the White Paper as the root of all our troubles was therefore just
another attempt of escapism. It was a new attempt to evade
again that problem which Ahad Ha'am unveiled to us so clearly
and which, since then, by iron necessity, has grown to terrible
proportions.
  Under easier conditions it would perhaps have been possible
at the end of the war to make a new start. There was even a
moment when the Arab mind, which had been deeply impressed
by the year-long successes of Fascists and Nazis, was thrown
into confusion by their downfall. A new approach then might
have found a certain readiness to respond. But no such attempt
was made, and the gulf between the parties grew still wider.

  The plan of the British Government, according to which
96,000 immigrants were to be admitted over a period of two
years, and the decision on further immigration to be left to the
High Commissioner -  a  scheme  which would have  given
widespread relief to  the refugees  and  plentiful constructive
work to the  people in  Palestine themselves  -  was equally
rejected by Jews and Arabs. We now embarked on a course
which put the blame for our situation exclusively on others, and
accordingly led to a campaign of ruthless vilification against
Great Britain. Our failure to find a solution of the Arab problem
increased the bitterness of our attitude - as if we wanted to
compensate our shortcomings on one side by our claims on the
other. The hopelessness of the general situation further threw its
shadows over the picture, and it seems sometimes as if our
capacity to see the reality of the situation in its right perspective
has, as the result of so much sorrow, been partially darkened.

  Suddenly our propagandists discovered that Great Britain
had imperialist  interests and  poured  forth their  moral
indignation upon such depravity. They forgot that these same
imperialist interests had not been repellent to them as long as
they seemed to be in harmony with the development of the
Jewish National Home. Soon the campaign spread overseas. For
many years Jewish writers and orators had hardly been able to
 do enough in praising the humanity, unselfishness and wisdom
of British  statesmanship.  But now  we were  told of  British
treachery and were invited to look beyond the ocean for "bigger
and better" editions of the same qualities. Important groups of
American Zionists began to pour out a powerful propaganda
against England. They  linked up with all  other anti-British
forces, and exerted not inconsiderable influence on American
policy. But their presentation of the case was so one-sided and
exaggerated, and so neglectful of the reality of the Arab case,
that this influence is bound to be of very short duration; and it
may even come back one day like a boomerang on American
Jewry and  deeply  affect what  has remained of  the Jewish
position in the Western world. In fact, these Zionist groups in
America repeated in  a  cruder  and  coarser  form  all  those
fundamental mistakes which had previously been made over
here. To them the shortcomings of Great Britain appeared as
"malicious  crimes." They  replaced  the methods of  political
discussion by "big salesmanship with streamline advertising"
and in some cases Jewish publicity there even descended to the
level of the late Julius Streicher. But the idea that we Jews
ourselves have to bear a grave responsibility for the present
situation and that it is our duty to recompense the Arab for the
sacrifice which we ask from him was hardly ever mentioned.

  Under these conditions of increasing bitterness and hostility,
the outbreak of violence on the Jewish side and the growth of
terrorism  were an almost natural  development.  But  the
fundamental  basis of  the whole  anti-British  terror was  the
grotesque  though sincere  belief of  the terrorists that  Arab
opposition to the establishment of a Jewish State in reality did
not exist. This was expressed in amazing clarity as late as June,
1947, when the Commander of the Irgun Zwai Leumi, in his
interview with  the Chairman of the U.N.O. Committee,
declared that  "Irgun does not believe in such a phenomenon as
independent Arab opposition,"  and added: "All Arab opposition is
instigated by the British themselves." If this assumption was really
true, all the hesitations of Britain in the past to open the gates of
Palestine to an unlimited flood of Jewish immigration were in
fact  the  result of  criminal malice and  even deliberate
participation in Hitler's plan of Jewish extermination, and every
new act of Britain, short of handing over the country to us Jews,
appeared as  a  new  piece  in  the mosaic pattern  of  British
hostility.  Essentially -  though  not so  radical  -  this  became
indeed the general attitude of large parts of the Jewish people in
Palestine and particularly in the United States. For if, in the
words of Ahad Ha'am, we considered the Arab people as non-
existent, it was only logical that we denied the possibility of any
serious Arab opposition. The  simple statement  that Arab
opposition against  Jewish  mass immigration  was  not only
natural but real should  have  been  the most  trivial of all
commonplaces. But under the existing  conditions  it  was
fervently denied by masses of the Jewish people and thus took
on for them almost the character of a revolutionary thesis.

  Every national movement sooner or later has to face the issue
of violence; and this issue is always the supreme test for the
sense of reality and the moral courage of its leaders. But rarely
in modern history was leadership less determined in face of
such danger than our own.

  To oppose the movement was difficult from the beginning,
since we had accustomed ourselves to put all blame for our
situation on the British. Official Zionist reaction to the outbreak
of violence was therefore hesitant and undecided and lacked
 completely  constructive  leadership.  At first our  leaders
dissociated themselves from the movement by denouncing the
terrorists as "criminals or lunatics"; and since the assassination
of Lord  Moyne  this  condemnation was  repeated  with  great
monotony at every single act of  violence.  Such an
interpretation, however, was profoundly inadequate. For the
terrorists were never lunatics or criminals in the ordinary sense
of  the word,  but passionate, sincere,  although  misguided
patriots who, after innumerable disappointments, had despaired
of any solution by peace and persuasion, who, after centuries of
Jewish persecution had risen to take up arms in their own cause
and were resolved to sacrifice everything, including their lives,
for what they believed to be the redemption of the people. To
turn their devotion and sacrifice to constructive aims would
have required great powers of imagination and infinitely more
than negative protestations.

  To make things worse, Zionist leadership took the line that
the terrorist activities - deplorable as they were - were at least
understandable in view of the Palestine policy of the British
Government, and implied thereby that the ultimate political
responsibility rested, not with us, but with the British. This,
however, was in fact the abdication of Zionist leadership. For if
events were indeed determined on one side by the British and on
the other by the terrorists as their opponents, the official leaders
of Zionism reduced themselves to the humiliating role of an
impotent go-between. Instead of taking upon themselves the full
responsibility for all that was done, which incidentally would
have been in accordance with Jewish religious teaching, they
tried  to shift the responsibility  to others.  This  attempt
necessarily  destroyed the  foundations  of  their authority, for
there can be no authority which shirks responsibility. Moreover,
the whole discussion took place, as it were, on two different
planes: the  terrorists threw  in  their lives,  the  leaders  made
pronunciamentos . But worst of all, in many decisive issues our
attitude was ambiguous; and at least in the beginning much was
privately condoned  and even  promoted  which  was publicly
condemned. The whole campaign of violence and bloodshed
developed, as Dr. Magnes  said, in  an atmosphere which
countenanced the  terror.  The  minds  of many were divided
between fear and hope; fear that the application of force might
harm, and hope that it might ultimately further the national
cause. About the moral issues themselves, there was widespread
indecision and confusion.

  There has been one example in our time of a different way to
meet a similar emergency, and this stands out as a shining light
of moral integrity and singleness of heart. When in the earlier
years of the Indian movement for independence, Mr. Gandhi
once was faced by the outbreak of violence against the police
among his followers, he did not put the blame on the British
Government, although his case would have been very strong
indeed, nor did he limit himself to declamations. He took the
full  responsibility  upon  himself.  He  accepted  the challenge
which the rioters had thrown at him, and offered his own life
against theirs. He called off the demonstration which he had
ordered,  and threatened to  fast  unto  death unless  the  riots
stopped.  Nobody, including his  opponents,  could doubt  the
sincerity of his determination, and in one stroke he recaptured
all authority and power of leadership which the hot-headed
rioters had tried to snatch from him.

  If only one among us had challenged the terrorists in time to
turn their weapons against him before any more innocent blood
was shed, he might have changed the whole course of events.
He would have deprived his opponents in the twinkling of an
eye of the immeasurable advantage which they enjoy as long as
they alone were ready to give their lives. He would have given
a powerful inspiration far beyond the Jewish community itself,
and might have restored the unity and dignity of the Jewish
National Movement.

  . .  .  . .

  Some  of  this  spirit  of  self-sacrifice  was revealed  in  the
movement of "illegal immigration"; and in spite of the violence
and propaganda with which it was connected, the devotion of
the Jewish people to this central cause has made a profound
impression which may have greatly contributed to the decision
of the United Nations. When the 4,500 passengers of the Exodus
persevered through endless weeks on the high seas, refusing in
spite of their miserable conditions all invitations and pressure to
land in France, and even preferred an enforced disembarkment
in Germany  to a  voluntary  landing  anywhere  else  than in
Palestine,  they revealed to  an astonished world the
indestructible connection between the Jewish people and the
Holy Land.

  By  an unfortunate  combination of circumstances and
shortcomings, the relations between Jews  and British have
deteriorated beyond anything which could be imagined when
thirty years  ago both set  out upon  their  joint  undertaking.
Sympathy with the National Home, once strong and sincere in
this country, has practically vanished. Great forces have become
strongly anti-Zionist and even anti-Jewish. The Jewish position
in Great Britain is profoundly shaken. Many Jews all over the

 

world have become for the first time in their history enemies of
Britain,  and  bitterness and  disappointment have tragically
destroyed a wealth of human relationships.

  Both  sides have contributed gravely  to  the  disaster. But
however much the British have failed on their side, they have
never promised us what we had asked them to give the Jewish
state. Justice demands that this fact be fully recognised by all.

  Through the different fields of our policy there has been
running like a thread, as a characteristic element, the refusal to
accept our share of guilt for the ever-increasing crisis. We have
blamed everybody but ourselves; and very few among us Jews
have indeed accepted before God and-man the full share of our
responsibility for what has been done. Self-righteousness leads
to isolation and despair about the alleged injustice of the world.
But recognition of guilt releases the greatest creative forces and
builds communities.

 

 The Next Task

  The hope that the situation in Palestine would ease, and Jews
and Arabs would settle their differences as soon as the end of
the Mandate and the withdrawal of the British were certain, has
proved to be another sad illusion. The decision of the United
Nations has been followed by an outbreak of violent riots, and
as the year 1947 is drawing to its close the intensity of the
conflict appears to increase. More and more it has become
evident that outside forces have not been the decisive causes of
the  conflict. The  conflict  is  springing from  the unsolved
problem of Jewish-Arab relationship, and although we Jews
have tried for decades to minimise or evade the real issue, we
have now, in this belated hour, to face it in all its implications.

  In addition, the Jewish National Home is threatened for the
first time in its history by the dangers of isolation. For nearly
thirty years it formed practically a part of the British Empire,
and, in spite of the recent tensions with the Mandatory Power,
the National Home was safe under British protection. This is
now to change, and the Mandate is to end, not because its
purpose has been fulfilled and the young community has grown
beyond the need  for  any  further  help, but  because the
continuation of the work has led to insurmountable difficulties.

  But worst of all is the danger from within. The dragon's seed
of political and moral terrorism and the abdication of Zionist
leadership are bearing frightful fruit. Not only does terrorism,
with  its  far-reaching aims and  influence  on the  Palestinian
scene, give the Arabs an excuse for claiming that even a small
Jewish state may become a springboard for further expansion;
the terrorist movement - after having been tolerated during
critical years in the past - is beginning to dominate the scene;
and those  whom  Zionist leadership used  to describe as
"criminals" or "lunatics" are determining for all the course of
events. Demonstration of violent force and a spirit of ruthless
retaliation are becoming the essential elements in their struggle
and carry with them the seeds of ultimate self-destruction.

  The main task, as in all periods of the whole movement,
remains the solution of the Jewish-Arab problem. It is obvious
that ultimately peace with our neighbours is required if the
Jewish state is to survive. At present we are trying to achieve
this peace by force and to build up in feverish haste the military
strength which is  to  guarantee  our security. But  under  no
conditions can force be enough. The very establishment of the
Jewish state by force, with hundreds of thousands of hostile
Arabs within its borders and millions around it, creates a hot-
bed of continued underground warfare, sabotage, boycott and
massacre, let  alone  the grave dangers facing  the Jewish
communities everywhere in the Arab world. Initial successes
for us Jews may even ultimately share the fate of Napoleon's
and Hitler's  campaigns against  Russia. At best, military
successes  will bring  only temporary respite; and until we
succeed  to secure  the goodwill of the Arabs  a dark and
portentous shadow remains over the National Home.

  Since all acts are the results of an inner attitude, the first
precondition for the achievement of this aim must be the full
realisation that the establishment of the Jewish state requires
from the Arabs a sacrifice of the first order. It is irrelevant in this
connection that the Arabs did not rule themselves politically for
many centuries (although during the last years of the Ottoman
 Empire they enjoyed a certain autonomy). Decisive is the fact
that the Arabs, like all other peoples, have the right of self-
determination and at least a potential sovereignty, and that what
we ask from them is surrender of this right. Only if we are aware
of this fact, do the pre-conditions of any peaceful solution exist.

  It is obvious  that  this situation creates a particular
responsibility and obligation on our side. The spirit of mutual
retaliation and vengeance - aiming at subduing the opponent by
fear - is not only utterly senseless, but, as far as we Jews are
concerned, fundamentally wrong. The Arabs react as probably
every normal and primitive people would react when they feel
threatened by a mass immigration of another people into the
country  which they  have considered  their own for many
centuries. We Jews should have a deeper insight and should be
able to see both sides of the problem. It is we who aim at a
change of the existing conditions, and it is therefore our duty to
find a solution. The initiative for this task must remain with us.

  The spirit of  responsibility  must  express itself  first  and
foremost in our relations to the Arab population  within the
Jewish state. It is of the utmost importance that the constitution
of the new state is framed with vision and in the spirit of
tolerance. Everything must be done to assure the Arabs that
required. The shortcomings of more than one generation cannot
be made good within a few months. Many attempts will fail,
such as an offer of medical help during the recent cholera
epidemic in Egypt, and the way will be long and thorny. But the
recognition that a debt is owed by us Jews to the Arabs for the
sacrifice which our restoration must mean to them will enable
us to persevere until at last we may succeed to win - as Mr.
Gandhi said - the Arab's heart.

 

 

  Such efforts may help to break the isolation which surrounds
the Jewish state, and if we can convince India and Pakistan that
we do not aim at conquest and can secure their sympathy and
mediation much will have been achieved. The more the centre
of activities shifts from the capitals of the West to Jerusalem,
Cairo, Karachi and Delhi, the easier will it be to integrate the
Jewish National Home into the Eastern world in which it is
situated and with which its fate is linked. The restoration of our
relations with Great Britain is only slightly less important, but it
will  be easier to achieve.  For  the conflict never affected
similarly vital issues. But here, too, the realisation that we
ourselves  are sharing  the  guilt for  the deterioration of our
mutual relations will be an essential precondition for a new
beginning.

  The simultaneous  failure  in  the  two  main  fields of our
relations with the outside world was not the result of  tactical
mistakes, but sprang from fundamental shortcomings. It was
ultimately due to a lack of moral courage to face the realities of
our situation. If we are to succeed in the future, a complete
change of this attitude is required. We must establish again
"complete  and  unconditional  truthfulness"  both  towards
ourselves in our approach to the problems which surround us
and in our relations to our neighbours. This truthfulness alone
can create those conditions without which no stable relationship
can be built.

 . . .  . .

  In the last  analysis,  our situation  springs  from  spiritual
causes and may even be connected with the foundations of our
religious position. The isolation of the Jewish people in the
 realm of politics may be a reflection of their unique position in
the religious sphere. Israel's spiritual existence is based on its
election among the nations. Whilst Christianity aims at the
conquest of the globe and rejoices in its expansion, Israel is
deeply concerned in its own preservation; and although our
fathers have developed very lofty religious principles about the
relation to the non-Jewish world, the present generation has not
solved for itself the problem of spiritual communion with its
neighbours. But without such a basis it is difficult to establish
stable relations even in the political field.

  On the other hand, these limitations are only of a temporary
character. The conviction that our religious position is not yet
final is a powerful driving force in our life. There is a deep
longing in the Jewish heart for the establishment of an ultimate
oneness of mankind, and the pious pray thrice daily to hasten
the  day  "when He  will be One  and  His Name  be One."
Throughout  the ages  the Jewish mind  was  imbued  with a
burning Messianic expectation, and was always ready for the
imminent transformation of human history. The eyes of the
Jews are turned towards the future, and Israel can be fully
understood only on the eschatological plane. As Dostoevski
said, in spite of their forty-century-old history, the final word
about the Jews has not yet been spoken. Our history is not yet
completed  and a last  and  decisive event  is  still  to  come.
Essentially, the Palestinian crisis is not political, but spiritual.
To deal with the Jewish question without regarding the things of
the spirit is to ignore the very essence of the issue. Through
thousands of years Jewish life has seen the ultimate reality in
the spirit and has found its deepest expression in religion. The
restoration to the Holy Land must have its final meaning in our
religious destiny.  It  must be more  than  the renascence  of

 

 

Hebrew as a living language and the birth of a new literature
and art, more than the revival of an ancient and venerable
national civilisation, and even more than the creation of a new
society. The return to Palestine is the pre-condition of a new era
in our religious development - an era in which the present
spiritual frustration will end and Israel will find its redemption.

  The fate of the Jews is once again in the balance. If we fail
in Palestine, it will be a catastrophe of the first magnitude; for
the hope of return for vast numbers has taken the character of a
religious belief. But if we succeed, and find there the salvation
of Israel's soul - in spirit and in truth - then even two thousand
years of wandering, with all their sorrows and tears, have not
been too high a price for such fulfilment.

  GERRARDS CROSS. December 30th, 1947

www.walterzander.info/acrobat/Spiritual.pdf
JEWS AND CHRISTIANS IN A CHANGING WORLD
www.walterzander.info/acrobat/Changing%20World.pdf
RELIGION AND NATIONALISM
www.walterzander.info/acrobat/Religion%20and.pdf
ISRAEL AND WESTERN IMPERIALISM
www.walterzander.info/acrobat/Western%20Imperialism.pdf
A JEWISH VIEW OF "THE SWORD OF THE SPIRIT"
www.walterzander.info/acrobat/Jewish%20View.pdf
NEW CONTINENTS OF THE MIND
www.walterzander.info/acrobat/New%20Continents.pdf
TRUCE ON THE TEMPLE MOUNT
www.walterzander.info/acrobat/Truce%20On.pdf
THE RUSSIAN CHURCH AND THE JEWS
www.walterzander.info/acrobat/Russian%20Church.pdf
SPIRITUAL LEADERSHIP
www.walterzander.info/acrobat/Spiritual%20Leadership.pdf
MOUNT OF CONFLICT
www.walterzander.info/acrobat/Mount%20of.pdf
THE JEWISH QUESTION (in its inmost nature) IS A RELIGIOUS ONE
www.walterzander.info/acrobat/Jewish%20Q.pdf
WHERE DOES ISRAEL BELONG?
www.walterzander.info/acrobat/Where%20does.pdf
THE ANNALS COLLECTIVE ECONOMY
www.walterzander.info/acrobat/Railway%20Money.pdf
China and the Middle East
www.walterzander.info/acrobat/China%20and.pdf
THE DAY OF ATONEMENT
www.walterzander.info/acrobat/Day%20of.pdf
Common Foundation
www.walterzander.info/acrobat/Common%20Foundation.pdf
PROBLEMS OF MONETARY REFORM IN CHINA
www.walterzander.info/acrobat/Problems%20of.pdf
SOVIET JEWRY, PALESTINE AND THE WEST
www.walterzander.info/acrobat/Soviet%20Jewry.pdf
IS THIS THE WAY?
www.walterzander.info/acrobat/Is%20this%20JC.pdf
ON SETTLEMENT OF DISPUTES
www.walterzander.info/acrobat/On%20Settlement%20of%20Disputes.pdf
Is this the Way?
www.walterzander.info/acrobat/Is%20This%20the%20Way.pdf
STRENGTH THROUGH SUFFERING
www.walterzander.info/acrobat/Strength.PDF
JEWISH YOUTH IN THE CRISIS
www.walterzander.info/acrobat/Youth%20In.pdf
BEST OF FRIENDS
www.walterzander.info/acrobat/BEST_OF.pdf
THE RUSSIAN CHURCH IN THE MIDDLE EAST -
www.walterzander.info/acrobat/Russian%20Church%20NEW.pdf
ISRAEL --- AN ANTI-COMMUNIST BULWARK?
www.walterzander.info/acrobat/ANTI_COMMUNIST.pdf
THE CRISIS IN PALESTINE
www.walterzander.info/acrobat/Crisis%20in%20Pal.pdf
ISRAEL AND THE ANTI-COLONIAL MOVEMENT
www.walterzander.info/acrobat/Israel%20and%20anti.pdf
NOTES ON THE WAY
www.walterzander.info/acrobat/Notes%20On.pdf
THE TIMES ASIAN AND AFRICAN STUDIES
www.walterzander.info/acrobat/ASIAN_&_AFRICAN.pdf
JERUSALEM
www.walterzander.info/acrobat/Jerusalem-Can.pdf
ARAB NATIONALISM AND ISRAEL
www.walterzander.info/acrobat/Arab%20Nationalism.pdf
THE FUTURE OF THE CONTINENTAL JEWS
www.walterzander.info/acrobat/The%20Future%20Of.PDF
JURISDICTION AND HOLINESS
www.walterzander.info/acrobat/JDN%20and%20Holiness.pdf
HOLY PLACES AND CHRISTIAN PRESENCE IN JERUSALEM
www.walterzander.info/acrobat/Holy%20Places%20&%20Christian.pdf