Excerpt of Three Letters from Mr. Heinrich Margalith, Anglo-Palestine Bank
Jewish Land Purchases and Arab Land Dynamics in Palestine (1929-1931)
Source: Central Zionist Archives, S25/7619, Translated from the German, June 1975
Introduction
Central to linking Jewish immigrants to the establishment of a Jewish state was essential ability for Jewish arrivals and Zionist organizations to acquire land to build villages, settlements, small industries and urban suburbs. Critical to the process of obtaining lands for a Jewish national home was its purchase from Arab owners, be they small peasant farmers or large owners; demand for land provided Arab owners and land brokers every incentive to find available land, sell directly to Jewish buyers, or accumulate smaller parcels and aggregate them into larger real estate blocks for sale offerings. We learn from these two letters by a Jewish Agency official that the competition could become keen between potential Arab sellers and Jewish buyers, sometimes tenant and small peasant owners found themselves having been maneuvered by Arab ‘bundlers’ to sell at prices far below market prices, sometime motivated to do so because of growing indebtedness to Arab grain merchants or money lenders. This particular Jewish Agency official shows empathy for the individual peasant, even claiming that directly or indirectly Jewish land purchase is causing some peasants to get deeper in debt.
Margalith notes that the effendis, who sold their land to Jews, profited significantly. However, with the cessation of direct sales by effendis, these landlords shifted to acting as intermediaries, often exploiting the fellaheen. The effendis would purchase musha (shared) land claims from the fellaheen, usually at dramatically low prices, and then resell the consolidated land of multiple shares to Jewish buyers at much higher rates. This practice resulted in the fellaheen often being unaware of the true value of their land and being pressured into unfavorable sales.
He highlights the exploitative relationships between the effendis and the fellaheen. Effendis would use various pressures to redeem musha claims at low prices, consolidating these lands to sell to Jews at substantial profits. Margalith describes instances where fellaheen sold their land at prices as low as twenty piasters per dunam, which the effendis later sold for around £6 per dunam. This speculative practice not only displaced the fellaheen but also drove them into deeper poverty as they were evicted from their lands more brutally by the effendis than by the Jewish purchasers. Effendi -large Arab landowner speculative behavior occurred with a rural economy that suffered half a dozen bad crop yield years. Margalith blames some of the unrest contrived by the effendis in order to drive up land prices further. By creating a climate of instability, they aimed to force the fellaheen to sell their land even cheaper, ensuring higher profits when reselling to Jews.
Margalith reminds his Zionist colleagues how the fellaheen, due to their lack of formal land ownership and indebtedness, were easily manipulated by the effendis. In many cases, the fellaheen were driven off their lands without proper compensation, contributing to their impoverishment. Jewish organizations like the Palestine Land Development Company (PLDC) and Keren Kayemeth Leisrael (JNF) often paid significant sums to purchase these lands, but the compensation to the actual tillers of the soil was managed, or rather mismanaged, by the effendis.
While he dwells on effendi greedy and the self-aggrandizing behavior, he assigns responsibility to the British for not doing enough to prevent peasant displacement; he also points his finger at Zionist leadership for failing to provide public exposure of the effendis corrupt and greedy practices. He notes that the British government’s policies preferred to align with the effendi interest since it was through them the British communicated policy., further marginalization and adding to the fellaheen’s impoverishment. Finally, he warns of the long-term consequences of ignoring these issues; Margalith was truthful, yet naïve. Neither the British, Zionist, nor effendi interest was going to curb the Jewish interest in land acquisition and Arab effendi interests were not all interested in changing their access to continued profits in land speculation. Palestinian Arab collaboration with Zionist state building is well documented particularly in the 1930s from Arab newspapers in Palestine that fully ridiculed Arabs for selling to Jews what was termed by some as their ‘patrimony’ Further confirmation of Arab collaboration and collusion with Zionists in their state building may be found in Hillel Cohen’s Army of Shadows.
Ken Stein, June 23, 2024
Note:
Effendi is a landlord usually owning considerable land areas, sometimes in co-ownership with fellaheen;
fellaheen are peasants;
musha refers to a type of collective land ownership or land usage where land is redivided every 2, 5, or 7 years by village members, driving peasants to extract as much from their land parcels as possible before it is handed over to some else to farm already nutrient deficient and water scarce land; economically debilitating procedure when used over generations.
kushan is a title deed, rarely representing actual areas of land held by a person or village.
Excerpts of Three Letters from Mr. Heinrich Margalith, Anglo-Palestine Bank
to Mr. Felix Rosenbluth
(5 February 1930)
Central Zionist Archives, S25/7619, Translated from the German by Kenneth W Sein, June 1975
This provides a general overview. Within this framework follows observation of the private economy in general, and that of the Arabs in particular. That is to say, the question concerns which parts of the Arab population have profited, in what form, and what special causes have brought about the profit.
This leads then to the most difficult point: as a result of the (1929 Shaw Report) various political hindrances are contained in the Inquiry Commission, presented in an inadequate and alarming fashion. This points to the question, which Arabs have suffered economic disadvantages from (Zionist) colonization. I shall leave this point out entirely in the provisional wording of the manuscript, as I assume that the doubts which have prevailed against its discussion here are also prevalent there. Just in case, however, I am adding my observations concerning the matter in this letter, so that you and your colleagues may form an idea of its importance. Should you find it opportune, you may transmit instructions to me by telegraph.
The nature of the distribution of Arab interests concerning land purchases has only recently become clear in connection with the negotiations by the (Shaw) commission. Those effendis (landlords) who sold their own land to the Jews have profited. However, since the cessation in sales of large effendi landholdings by the owners themselves, the effendi has concentrated increasingly on intermediary dealings, which means, quite bluntly, nothing less than a base robbery of the fellaheen. The fellaheen have musha kushans (title deeds) which, as pertains to the numbers used, are written in such hieroglyphics that no one knows how many dunams (one dunam equals ¼ acre) he actually owns or where the exact borders lie. The effendis redeem such musha claims, naturally with the application of corresponding pressure, and offer the Fellah a lump sum. The Fellah cannot judge the relationship between the price and the number of dunam. The fellah is attracted by the price, which at least has a clearly numbered and convertible value. For this he exchanges a possession of a worth unknown to him, and which is additionally difficult to liquidate. According to notorious cases, such effendis have recently bought land areas in this manner. Later measurement revealed that the dunam has been bought with 20 Pt. The effendis needed the land in order to form larger complexes which they had sold earlier to the Jews for approximately £6 – P.D. This method of selling is evidently widespread. These sales take place on the basis of a set dunam price, while the effendis, on the contrary, subsequently supply themselves with musha kushan. Having parted with their land ownings in such a manner, the fellaheen may very easily fall into poverty. Even more so as the effendis drive them off the land in a more disproportionately inconsiderate and brutal manner than the Jewish purchasers would ever dare.
The fellaheen, who learn amazingly quickly through the propagation of the educational system, etc., have recently grasped these connections and begun to sell directly to the Jews, thus eliminating the effendis. In this way they have obtained the high prices which the Jews are accustomed to paying and become rich as a result. Hence, an extraordinary disturbance of the lucrative intermediary dealings threatened the effendis, and there are people — I almost number myself among them — who are of the opinion that the entire unrest has been contrived by the effendis as a large-scale land speculation maneuver. Since they know perfectly well that the Jews will always buy land in the long run, they have no fears for their business, but they must force the fellaheen to sell only to effendis and not to Jews. If they succeed in this, they will have attained two things: they may purchase even more cheaply from the fellaheen and sell even more expensively to the Jews. That this argument is not totally unfounded may be seen in the fact that all the effendis currently at the head of the inflammatory movement have been concurrently pursuing selling negotiations with the Jews. In any notable family, there is usually one who agitates and one who sells, obviously by agreement. The PLDC (Palestine Land Development Company) and the KKL (Keren Keyemeth LiYsirael, or JNF) have, for fear of disturbing these purchase negotiations, hindered exposing of these connections during discussions with the (Shaw) commission. We had prepared an entire black list of “Arab leaders” who were incriminated in this manner and guilty of indescribable corruption; however, upon intervention (by the Zionist leadership), presentation or use of this list was not made.
I myself view this development with great apprehension, as it makes us abettors, instigators, or accomplices to this corruption of the effendis, and can only endanger our position with the fellaheen, who are becoming increasingly alert of the situation.
Letter from Mr. Heinrich Margalith, Anglo-Palestine Bank, to Dr. Abraham. Granovsky,
Keren Kayemeth Leisrael
(12 March 1930)
Central Zionist Archives, S25/7619
Translated from the German, June 1975
Dear Dr. Granovsky,
Yesterday I received from your office a publication of Dr. Siman: “Facts About the Jewish Colonization of Palestine.” It is certainly convincingly written and difficult to dispute. But I must inform you that I find it increasingly necessary to criticize the handling of the effendi-fellaheen question. In discussions of this question, I have had to state repeatedly that the people who have been entrusted with this matter have failed to recognize sufficiently certain economic and resulting political consequences.
We make much of the fact that we have bought estates from the effendis and have satisfied the fellaheen through agreements. We would appear to have fulfilled a worthy sociological function by destroying deleterious feudal estates and dividing them up into smaller farms. Unfortunately the facts of the case are not so simple. It would be well and good if we were only to buy lands owned by foreigners or by people from the city who run exploitative leasehold estates, leaving vast areas uncultivated. That such an effendi would sell his own land is both his right and is indisputably a desirable act. What if, however, the effendi is not selling his own land, but rather, as a land speculator, makes a sales contract with the Jews without first owning the land and afterwards pieces together the property?
Take the typical case of Qubeibeh, the facts of which you are well acquainted. I. Moyal never owned 8000 dunams in Qubeibeh, but when he signed the contract with the PLDC ( Palestine Land Development Company). he did not even have backers to finance the buying of the land. He, in connection with a group of speculators and land-robbers, pieced together an at that time still imaginary estate of 8000 dunams. They first made a sales contract on the basis of a dunam price that would guarantee a hefty profit and intended to brutally exploit the fellaheen, who were not tenants, but were in fact musha (share) owners. The number of these musha-owners was, as you know, extraordinarily large. None of them knew how much land he owned or where it lay. Even if the effendis were unable to exert pressure upon the fellah, he presumably would have in most cases made his profit by giving up his problematic musha claim for a lump sum. I need not tell you, however, what sort of pressure was exerted by the effendis. It is, for example, notorious that a member of this Arab notable group had as early as 1928 acquired a complex within our 8000 dunams for a sum — which, when assessed, was found to be a price equal to 20 piasters per dunam.
In the whole Qubeibeh affair we, the buyers, have nothing to do with the fellaheen and their settlement. We get land that is free and unoccupied with fellaheen. All the compensation that the fellaheen have received — the tenants of the land and those with rights of ownership to the musha alike — were paid (or, as the case may be, not paid) by the effendis. What has been revealed about the expropriation and impoverishment of fellaheen by the Arabs is exemplified here in one situation, which is far worse than the complaints brought before the (Shaw) Inquiry Commission.
The business procedure of which I speak, and of which Qubeibeh represents only a small part, of the overall picture. The effendis are engaged in large-scale speculation with short sale — that is, they sell a piece of merchandise that they do not have for a high price, in hopes that they can obtain this piece of merchandise for a low price. It is a well-known procedure in the grain and securities businesses. Those who are aware of such evils know that all over the world the speculative “short salesmen” use all legal and illegal means, after the successful completion of a sale, to place pressure to artificially depress the price, to might make a cheap and lucrative purchase. If these short sales, men see that they have speculated poorly, and the prices rise so that they can no longer purchase free of cost, their selection of methods of influence becomes increasingly unscrupulous. There is certainly no doubt now that it has become more and more difficult for the effendis in the past two years to expropriate land from the fellaheen in this known way, and if, the Qubeibeh affair, after ten years of continuous work, is still unsettled, then I must attribute it to a miscalculation by the effendi- notables. They were simply unable to put together the 8000 dunams as cheaply as they thought they could.
If we keep in mind that there are probably several or dozens of cases such as the Qubeibeh that await settlement, then we can well imagine what kind of mentality among the notables results from this: they looked forward to with great uneasiness the initial attempt on the part of the Jews and fellaheen to form a business alliance that excluded the effendis and seek to counteract the tendency of the fellaheen to profit from the high prices of the Jews. Something has to happen to make it more difficult or impossible for the fellaheen to sell land to the Jews, so that the price demands of the fellaheen would lower, and their willingness to sell to and their general dependency on the effendis would increase. The Jews would be made anxious and would become more willing to pay additional premiums to gain possession of the land.
I now wonder whether we can play politics with the land question when we ourselves are not clear about the economic and political consequences of the problem.
You know, of course, that the relevant material, which we prepared for the Inquiry Commission and which was to be presented by Mr. Hoofien, was not in fact presented because the PLDC along with KKL supposedly placed pressure on his contact with them, declaring that discussions with the commission (on this topic) as inopportune. I have the strong impression that we thereby committed a catastrophic error and further erred by continuing our policy of cooperation with these speculators. There is certainly no doubt that the fellaheen are damaged by this and the small farmers (including all of those who owned a musha kushans of unknown size) see us more and more as an ally in this expropriation caste and, that they actively oppose this, and it is equally clear that the fellaheen are capable of doing so in a most effective manner all over the world.
I would like very much to speak to you about this last point another time, but for the moment I can only ask to hear from you if you have any arguments to refute my basic understanding of the issue.
Letter from Mr. Heinrich Margalith of the Anglo-Palestine Bank
to the Palestine Jewish Agency
(9 November 1931)
Source: Central Zionist Archives, S25/7619
The current uproar is restricted (at least as far as the Jews have been informed) to the following question: if tenants — that is Fellaheen without property or kushans — would be displaced from the land or obtain a settlement (after or before leaving the lands)
“Displacement” — the word sounds uncanny. But it loses this sound immediately if one keeps in mind that there is a fundamental economic procedure of requiring the fellaheen to work other lands in the future. This is a part of the feudal and fellaheen economy that is taken for granted and has no connection with Zionism. No one sees any harshness in this because even the best-funded, debt-free fellaheen landholder, as long as his kushan is a musha kushan, has exactly the same expectation to fulfill. Every two years, on the decision of the village, he will be transplanted to another piece of land that he may not choose himself.
Compare the lot of the tenants, who, compensated by Jewish purchasers (according to the PLDC (Palestine Land Development Company)., they receive amounts up to 100 pounds) with those of the musha fellaheen — it’s that easy to verify that the tenants now find themselves in the better position. If the Fellah owns no property, no land, no kushan, he receives cash as a completely unanticipated gift, a capital gain that he normally could never have hoped for. Those without property are given a sum of 50-110 pounds, a very respectable amount. In contrast to the musha-fellaheen, who are assigned a new piece of land without influence or choice in the matter or the opportunity to invest, they cannot choose their land and put their money into it.
If we were to restrict the whole discussion to the tenants’ question, the executives [in the Zionist leadership] would, by clever argumentation, be able to avoid being placed in a difficult position. But it seems that the government would be content to ignore the situation. It is not really the responsibility of the government to help the tenants, but it is responsible for the completion of the displacement process as far as it is connected with Zionism. The fact is that the displacement process extends far beyond the tenants, and if the government does not reach its goal in the tenant question through discussion, they will not forget the goal, but rather question further.
It is not the tenants who are the victims of the land sale deserving of protection, but the musha Fellaheen, about whom we have not yet spoken. This makes the question unclear. The effendis and land speculators swindled the musha fellaheen of their lands for prices that were a tiny fraction of the price for which they were resold. Although, as stated, the process of transplanting is not harsh, in this case an actual expropriation took place — exactly the opposite of what happened in the case of the tenants, who made a fortune from their lack of property. While the tenants were given public assistance, the musha fellaheen must be silent because they “willingly” sold their land, and to Arabs at that.
The effendis and executives alike do not want to talk about this. The effendis fear having the whole fellaheen versus effendi issue brought up, because they are the ones who robbed the kushans, and they could do so only by virtue of the absolute enslavement of the fellaheen in the feudal economy. The (Zionist leadership) executives hope to have a halfway-good position in the tenant question, because they do not want to risk discussion of this area, in which real economic hardships indisputably exist.
In addition to this apprehension, it is necessary to say that the land taxes and the robbery of the kushans on the part of the effendis has gone on for a long time and without any connection with Zionism. Only in this way did the effendis amass large estates. Ownership of large amounts of land in Palestine is the only basis for the economic and political positions of power of the ruling classes. (Industry and capital as a basis of power do not exist.) But Zionism has at least furthered this development, and has knowingly or unknowingly encouraged it.
In any case it is not an issue of whether the effendis or the executives tend to silently overlook this question, but rather what the government will do. It is clear that their base of power lies with the ruling classes and that they wish to act in favor of the effendis. That (Colonial Secretary) Passfield has not only surrendered himself to the support of the effendi, but has also decried this policy protection of the fellaheen, shows that the conservative wire-pullers understand only too well how to maneuver him into this matter. It also demonstrates that the imperial interests, for whom peace with the ruling classes is essential today, were strong enough to force even the Labor Party into their service. In any case there is no doubt that all that has happened has been in the interests of the effendis, and if that could be so under a Labor Cabinet, it will be even more the case under a Tory Cabinet.
It is not out of the question that the government, in agreement with the effendis, wished to dismiss the musha fellaheen question, and that they want to give the relatively harmless tenants’ question the appearance of an act of protection that they did not seriously intend at all. And it is even less likely that the new Cabinet wishes to liquidate the whole action.