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Economic Structure and National Goals—The Jewish National Home in Interwar Palestine

Published online by Cambridge University Press:  11 May 2010

Jacob Metzer
Jacob Metzer
Affiliation:
The Hebrew University of Jerusalem and The Maurice Folk Insitute for Economic Research in Israel
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Extract

The formation of the Jewish national home in Palestine provides an opportunity to examine the economics of an unusual “nation building”: the planning and making of a national existence without a state. The revival of Jewish nationality in Palestine started in the late nineteenth century with the first immigration motivated by national ideology (Alia Rishona) and with, the establishment of the World Zionist Organization (1897), whose goal was to create a Jewish political entity and ultimately a state. It was not, however, until the end of World War I that the revival achieved momentum. The Balfour Declaration (November 1917) proclaiming Britain's intention to promote the formation of a Jewish national home in Palestine and the establishment of the British mandate in Palestine after the war provided the supportive political environment for the renewal of Jewish nation building. Moreover, both the League of Nations (which officially granted Britain the mandate) and the British government recognized the Zionist Organization as the legitimate representative of world Jewry and as the leading body of the emerging Jewish community in Palestine for matters concerning the national home. This gave the Zionist Organization an international legitimacy to add to its legitimacy among Jews as a quasi-governmental institution for the purpose of re-establishing their national existence.

Type
Papers Presented at the Thirty-Seventh Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 38 , Issue 1 , March 1978 , pp. 101 - 119
Copyright
Copyright © The Economic History Association 1978

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References

1 The Zionist Organization was (and still is) a voluntary democratic institution of world Jewry. Jews become members in the organization upon payment of annual dues (shekel) which makes them eligible to elect and to be elected to the Zionist legislative body—the congress—and to the executive organs of the organization.

2 See Johnson, Harry G., ed., Economic Nationalism in Old and New States (Chicago, 1967)Google Scholar, for a comprehensive source of the various treatments of economic nationalism in the literature.

3 For example, Roger Weiss has convincingly argued that both the free trade policies of Britain in the mid-nineteenth century and her trade restriction in the second half of the century were motivated by the same objective of economic nationalism; namely, the maximization of national income. Roger Weiss, “Economic Nationalism in Britain in the Nineteenth Century,” in Johnson, Economic Nationalism, pp. 31–47.

4 Breton, Albert, “The Economics of Nationalism,” Journal of Political Economy, 72 (1964), 376–86CrossRefGoogle Scholar. Harry G. Johnson, “A Theoretical Model of Nationalism in New and Developing States,” in Johnson, Economic Nationalism, pp. 1–16.

5 What seems to be uniquely characteristic of new states is the combination of all these policies and not necessarily the implementation of one or only part of them which may be observed in other cases as well.

6 Manning Nash, “Economic Nationalism in Mexico,” Johnson, Economic Nationalism, pp. 71–84.

7 Johnson, Economic Nationalism, pp. 15–16.

8 The analysis in the two following sections of Jewish economic nationalism and of the implied sectoral structure in the Jewish economy is based on the factual background contained in Jacob Metzer, “National Capital as a Basic Concept in Zionism: The Economic Philosophy in Zionist Thought, 1918–1921” (Hebrew), Falk Institute Discussion Paper No. 763, 1976 (mimeographed).

9 The Jewish population in Palestine was 69,000 in 1921 and 425,000 in 1939; this constituted 9.5 percent and 28.1 percent respectively of the total Palestine population. As far as landholding is concerned, Jews owned about 2 percent of Palestine land in 1921 and 6 percent in 1939. See Nachum T. Gross and Jacob Metzer, “Public Finance in the Jewish Economy in Interwar Palestine,” Research in Economic History, 3 (forthcoming), Table A-5; and Gurevich, D., Gertz, A. and Zanker, A., eds., Statistical Handbook of Jewish Palestine (Jerusalem, 1947), p. 140.Google Scholar

10 The terms Zionist and Jewish are used interchangeably in the paper.

11 Sussman, Zvi, “The Determination of Wages for Unskilled Labor in the Advanced Sector of the Dual Economy of Mandatory Palestine,” Economic Development and Culture Change, 22 (1973) 95–113.CrossRefGoogle Scholar

12 Statement to the Delegates of the Twelfth Zionist Congress on Behalf of the Former Administration of the Zionist Organization of America (New York, 1921), p. 16.Google Scholar

13 The resolutions of the World Zionist Conference, London, July 1920 in the Reports of the Executive of the Zionist Organization to the XII Zionist Congress, III, Organization Report (London, 1921) p. 95.Google Scholar

14 The implicit assumption about the elasticity differentials rested on the notion that the relatively uneducated and unskilled Arab labor force had very limited employment opportunities outside agriculture at the time, not like the educated Jewish laborers whose comparative advantage may very well have been in non-agricultural pursuits.

15 All of these contentions obviously rested on some questionable assumptions with regard to profit-maximizing behavior, the nature of speculation, and the a priori efficiency of nationalization in preventing speculative capital gains.

16 See Organization Report, p. 95.

17 ibid.

18 In actuality, the share of Zionist public funds in total capital imports of the Jewish economy during the interwar period was quite small, about 21 percent (calculated on the basis of Tables 1 and A-5 in Cross and Metzer). The rest consisted primarily of private transfers by immigrants, most of whom were of urban background and inclination. This may have contributed to the fact that although agriculture was the preferred national industry, its share in the Jewish economy declined from 15.9 percent in net domestic product and 26.5 percent in employment in 1927, to 9 percent and 20.8 percent respectively in 1939. [Szereszewski, Robert, Essays on the Structure of the Jewish Economy in Palestine and Israel (Jerusalem, 1968), pp. 29–40Google Scholar.] Nevertheless, it was by and large agricultural settlement that determined the geographical extent of prestate Jewish colonization in Palestine as envisaged by the Zionist organization in the planning stages of the early 1920s.

19 For example the Zionist national (and social) principle of Jewish labor was successfully implemented only on agricultural settlements using national land. Farmers who settled on non-national land (particularly citrus growers) and non-agricultural Jewish employers (especially private contractors) did use Arab labor quite extensively during most of the interwar period. See Sussman, “The Determination of Wages.”

20 It should be emphasized that a substantial part of what would be technically defined as a private sector in our context was essentially collective in its structure and objectives. Reference is here to the productive establishments belonging to, or associated with, the Histadrut (the General Federation of Jewish Labor). Their value added constituted about 20 percent of the net domestic product of t h e Israeli economy in 1953 [see Barkai, Haim, The Public, Histadrut, and Private Sectors in the Israeli Economy (Jerusalem, 1968), p. 2Google Scholar.] and it was probably of a similar order of magnitude in the Jewish economy during at least the last interwar decade. The Histadrut used its productive establishments in coordination with the Zionist executive to achieve various national objectives in infrastructure investment, colonization, and other economic undertakings. Thus the public component of the mixed Jewish economy during the interwar period was actually larger than that revealed by the share of the economic activity and the possessions of the Zionist executive in any of the macroeconomic aggregates.

21 For comprehensive treatments of the economic aspects of the Mormon settlement see Arrington, Leonard J., Great Basin Kingdom (Cambridge, Mass., 1958)Google Scholar; Arlington, Leonard J., Fox, Feranory Y., and May, Dean L., Building the City of God (Salt Lake City, 1976)Google Scholar; and Hughes, Jonathan, The Vital Few (London, 1973), pp. 67–116.Google Scholar

22 See Hughes, The Vital Few, pp. 88–105.

23 Arlington et al., Building the City of God, pp. 15–40.

24 Ibid., p. 15.

25 Ibid., pp. 63–78.

26 Gurevich et al., Statistical Handbook, p. 140.

27 Arrington et al., Building the City of Cod, passim.