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Bankrupt: Financial Life in Late Mandate Palestine

Published online by Cambridge University Press:  06 May 2020

Sreemati Mitter Open the ORCID record for Sreemati Mitter [Opens in a new window]
Sreemati Mitter*
Affiliation:
Department of History, Brown University, 79 Brown Street, Providence, Rhode Island, 02912
*
Corresponding author. E-mail: sreemati_mitter@brown.edu
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Abstract

In the late 1930s, the first independent Arab banks in Palestine, the Arab Bank and the Arab Agricultural Bank, sued customers who had defaulted on loans in an attempt to maintain solvency. Their indebted customers, unable to pay, fought back to prevent their lands from being foreclosed and sold to Zionist buyers. Each party claimed that its position was consistent with, indeed essential to, the anti-Zionist nationalist cause. The story of these pioneering Arab banks and their legal battles with their customers in the wake of the 1936-1939 revolt provides insight into Arab financial life in Mandate Palestine. It reveals the banks’ struggles to survive; complicates notions of Arab-Palestinian landlessness and indebtedness; and argues that political and economic exigencies, not reductive notions of collaboration or patriotism, produced the banks’ antagonistic relationship with their customers, whereby the survival of one came at the expense of the other.

Keywords

Financeland salesdebtbankscitrusMandate Palestine
Type
Article
Information
International Journal of Middle East Studies , Volume 52 , Issue 2 , May 2020 , pp. 289 - 310
Copyright
Copyright © Cambridge University Press 2020

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References

1 Letter from Shaykh Sulayman al-Taji al-Faruqi to Bernard Joseph, 10 November 1939, 854/10פ, Israel State Archives, Jerusalem, Israel (hereafter ISA). [All spelling/grammatical errors and infelicitous prose in al-Faruqi's letters are in his original letters]. £P = Palestinian pounds.

2 Examples: “Taʾsis Bank Ziraʿi fi Filastin: Fikrat Mudir al-Bank al-ʿArabi,” Filastin, 29 May 1933; “Faraʿ al-Bank al-Ziraʿi fi Gaza,” Filastin, 24 November 1933; “al-Bank al-Ziraʿi: al-Taqrir al-Qanuni,” Filastin, 16 December 1933; “Ijtimaʿ Sharikat al-Bank al-Ziraʿi: Ziyadat Ras al-Mal,” Filastin, 24 December 1933. See also Hakim, George and al-Husayni, M. Y., “Monetary and Banking System,” in Economic Organization of Palestine, ed. Himadeh, Saʾid B. (Beirut: American Press, 1938), 493–501Google Scholar.

3 ‘Shuman, Abd al-Hamid, al-Muhami: Sirat ʻAbd al-Hamid Shuman, 1890–1974 (Beirut: al-Muʾassasa al-ʿArabiyya lil-Dirasat wa-l-Nashr, 1982), 154Google Scholar.

4 The Agricultural Bank was established in the wake of the 1929 Wadi al-Hawarith land acquisition by the Jewish National Fund (JNF), a Zionist institution, which led to the forced eviction of almost a thousand Arab Palestinian tenant farmers. Charles Anderson, “From Petition to Confrontation: The Palestinian National Movement and the Rise of Mass Politics, 1929–1936” (PhD diss., New York University, 2013), 223.

5 Bank, Arab, Twenty-Five Years of Service to the Arab Economy, 1930–1955 (Amman:Arab Bank, 1956), 44Google Scholar.

6 Al-Faruqi to Joseph, 16 June 1941, 854/10פ, ISA.

7 Al-Faruqi to District Court Jerusalem, 7 July 1939, 177/14פ, ISA.

8 Table 1 lists all the lawsuits I found at the Israel State Archives, but most files were empty or inaccessible. See, for instance, 181/1פ, ISA.

9 Shehada, transliterated here as per IJMES rules, is usually rendered Shehadeh in English. Author interview with Fuʾad Shahada, 20 April 2010, Ramallah, Palestinian Territories.

10 On the disappearance of Palestinian archives, see Seikaly, Sherene, Men of Capital: Scarcity and Economy in Mandate Palestine (Stanford, CA: Stanford University Press, 2016), 9, n39Google Scholar.

11 Ibid., 9.

12 Owen, Roger, “Economic Development in Mandatory Palestine,” in The Palestinian Economy: Studies in Development under Prolonged Occupation, ed. Abed, George (London: Routledge, 1988), 17Google Scholar. The “land question” became politically explosive in 1929, after the Wadi al-Hawarith sale and after British reports on the condition of the peasantry fueled Arab outrage, although sales by indebted peasants had started earlier, in the mid-19th century, following Ottoman land reforms. For factors causing debt-driven land sales, see Schölch, Alexander, “European Penetration and the Economic Development of Palestine, 1856–82” in Studies in the Economic and Social History of Palestine, ed. Owen, Roger (London: Macmillan, 1982), 56Google Scholar; Sarah Graham Brown, “The Political Economy of the Jabal Nablus,” also in Studies, ed. Owen, 91–92; and Anderson, “Petition,” 344–402. For Mandate-era sales, see Stein, Kenneth, The Land Question in Palestine, 1917–1939 (Chapel Hill, NC: University of North Carolina Press, 1984)Google Scholar.

13 Al-Faruqi to Joseph, 16 June 1941, 854/10פ, ISA.

14 Although Arab Palestinian institutions such as the Arab Bank and, later, the Arab National Fund, also made concerted efforts to buy distressed Palestinian estates during the 1930s to prevent them from being transferred to Zionist buyers (see section 5, “Shuman's Decision,” below, on the Arab Bank's efforts to buy the al-Ghusayn estate).

15 I am grateful to Alex Winder for this formulation.

16 Khalaf, Issa, Politics in Palestine: Arab Factionalism and Social Disintegration, 1939–1948 (Albany, NY: State University of New York Press, 1991), 28Google Scholar.

17 Stein, Question, 72.

18 See the overarching argument and categorizations offered by Cohen, Hillel, Army of Shadows: Palestinian Collaboration with Zionism, 1917–1948 (Berkeley, CA: University of California Press, 2008)CrossRefGoogle Scholar.

19 An indication that too much has been made of these factional rivalries can be found in Ahmad Hilmi ʿAbd al-Baqi's (known as Hilmi Pasha) own political trajectory: although opposed to Hajj Amin al-Husayni's domination of Palestinian politics for much of the 1930s and 1940s, Hilmi eventually reconciled his position sufficiently to join the newly reconstituted Arab Higher Committee under al-Husayni's leadership in 1947 (upon the latter's return to Palestine after a lengthy period of exile). He later served as prime minister under al-Husayni in the short-lived, wistfully titled “All Palestine Government” in Gaza in 1948. For more on Hilmi's political career, see Khalaf, Politics, 98–104, 130.

20 Owen, “Economic Development,” 17. For Zionist land purchases, see Stein, Question, 70–76.

21 A recent example can be found in the US government–sponsored Peace to Prosperity workshop in June 2019, which included no Palestinian participants and made no mention of Palestinian sovereignty. US White House, “Peace to Prosperity: The Economic Plan, a New Vision for the Palestinian People,” accessed 25 July 2019, https://www.whitehouse.gov/wp-content/uploads/2019/06/MEP-narrative-document_FINAL.pdf.

22 Shuman, al-Muhami, 89–90; author interview with Salih ʿAbd al-Jawwad, June 12 2010, Ramallah, Palestinian Territories.

23 Shuman, al-Muhami, 89–90.

24 Shuman, al-Muhami, 90–100; Jawad, Saleh Abdel, “Landed Property, Palestinian Migration to America and the Emergence of a New Local Leadership: al-Bireh 1919–1947,” Jerusalem Quarterly 36 (2009): 19Google Scholar.

25 Jawad, “Landed Property,” 21–25.

26 For names and details of these companies, ibid., 23–25. For scholarly examples of the view that Palestinians lacked investment capital, see Metzer, Jacob and Kaplan, Oded, “Jointly But Severally: Arab-Jewish Dualism and Economic Growth in Mandatory Palestine,” Journal of Economic History 45, no. 2 (1985): 334CrossRefGoogle Scholar; Stein, Question, 64-66. For a corrective, see Seikaly, Capital, 8.

27 Seikaly, Capital, 45.

28 Himadeh, Saʾid B., “Industry,” in Economic Organization of Palestine, ed. Himadeh, Saʾid B. (Beirut: American Press, 1938), 230Google Scholar.

29 Khalaf, Politics, 46.

30 Directory of the Arab Chamber of Commerce (Jerusalem: Arab Chamber of Commerce, 1937)Google Scholar. The Directory is a primary source, the property of the Bishara family in Tarshiha, Israel.

31 For economic conditions of peasantry from late 19th century through the early Mandate, see Anderson, “Petition,” 344–498.

32 Ibid., 444.

33 For rising land prices, see Stein, Question, 65; Anderson, “Petition,” 437.

34 Nadan, Amos, “No Holy Statistics for the Holy Land: The Fallacy of Growth in the Palestinian Rural Economy, 1920s–1930s,” in Britain, Palestine and Empire: The Mandate Years, ed. Miller, Rory (Surrey, UK: Ashgate Publishing, 1998), 101–17Google Scholar.

35 Shuman, al-Muhami, 118.

36 Shuman, al-Muhami, 111–16.

37 Six foreign banks operated in Palestine in 1930: Barclays, Ottoman, Banco di Roma, Anglo-Palestine, Holland, and Polish Guardian. The last two had only Jewish customers. The Anglo-Palestine was the financial arm of the Jewish Agency (although it had a few Arab customers). There were thirty local banks, which, apart from the Arab Bank, all had exclusively Jewish customers. Quotation from Ottoman Bank, Jerusalem, to Ottoman Bank, London, no. 136, 1 July 1929, 11/113, Barclays Bank Archive, Manchester, UK.

38 Ibid.

39 O'Connor to Hammond, “Proposed Formation of Anglo-Arab Bank,” 6 March 1933, CO 733/348/7, National Archives of the United Kingdom, London, UK (hereafter NA).

40 Ibid.

41 Shuman, al-Muhami, 118.

42 Ibid., 119.

43 Government of Palestine, “Control of Banking in Palestine 1932–1933,” CO 733/227/23, NA.

44 Hakim and al-Husayni, “Monetary and Banking,” 460–61, 498. See also Anglo-American Committee of Inquiry on Jewish Problems in Palestine and Europe, A Survey of Palestine, Vol. 2 (Jerusalem: Government of Palestine, 1946), 553–60.

45 Government of Palestine, “Control,” CO 733/227/23, NA.

46 Shuman, al-Muhami, 143–50.

47 Arab Bank, “Memorandum of Association under the Companies Ordinances No. 18 1929,” 6 May 1929, 179/32פ, ISA.

48 Shuman, al-Muhami, 143–50.

49 Arab Bank, “Memorandum,” 179/32פ, ISA.

50 District Commissioner to Municipal Council, Hebron, July 1935, 210/29, מISA.

51 F. G. Horwill, The Banking Situation in Palestine with a Commentary of the Cooperative Societies Movement (Government of Palestine, July 1936), 101.

52 Crossley, Barclays, to Colonial Office, December 1932, CO 733/227/23, NA.

53 The participating institutions were Barclays, Ottoman, Anglo-Palestine, Prudential, Guardian, and the Palestine Corporation.

54 Nadan, Amos, The Palestinian Peasant Economy under the Mandate: A Story of Colonial Bungling (Cambridge, MA: Harvard University Press, 2006), 219–20Google Scholar; and el-Eini, Roza I. M., “The Agricultural Mortgage Bank in Palestine: The Controversy over Its Establishment,” Middle Eastern Studies 33, no. 4 (1997): 751–76CrossRefGoogle Scholar.

55 Hakim and al-Husayni, “Monetary,” 498.

56 Nadan argues that Shuman refused to participate in the scheme because of the “tendency of Arab banks to not give loans to farmers,” but in reality it was because Shuman viewed the new bank as a Zionist-backed competitor to his bank. Nadan, Peasant Economy, 220.

57 Author interview with Nachum Gross, 15 November 2009, Jerusalem, Israel; Hakim and al-Husayni, “Monetary,” 500.

58 Halevi, Nadev, Gross, Nachum, Kleiman, Ephraim, and Sarnat, Marshall, Banker to an Emerging Nation: The History of Bank Leumi le-Israel (Tel Aviv: Bank Leumi le-Israel, 1981)Google Scholar.

59 Gross, interview.

60 Arab Bank, Twenty-Five Years, 13.

61 Arab Bank Balance Sheets 1933–1936, S90/2003/1, Central Zionist Archives, Jerusalem, Israel (hereafter CZA).

62 For effects of global depression on commodity prices, see Owen, “Economic Development,” 21; for effects of agricultural crisis on peasantry, see Anderson, “Petition,” 402–98.

63 Jaber, Adil, “Revival of Arab Economic Activities in Palestine,” in Directory of the Arab Chamber of Commerce (Jerusalem: Arab Chamber of Commerce, 1937)Google Scholar; Hakim and al-Husayni, “Monetary,” 500, n2.

64 The British Agricultural Mortgage Bank also lent mostly to prosperous Jewish and Arab famers, despite its stated goals. Nadan, Peasant Economy, 221.

65 Shuman, al-Muhami, 156.

66 Ibid.; Seikaly, Capital, 2–11.

67 Shuman, al-Muhami, 156.

68 Ibid. On citrus see Seikaly, The Color Orange: Citrus, Business, and Meaning in Palestine (unpublished manuscript 2018, quoted with permission of author); Karlinsky, Nahum, California Dreaming: Ideology, Society, and Technology in the Citrus Industry of Palestine, 1890–1939 (Albany: State University of New York Press, 2005), 155–56Google Scholar; Schölch, “European Penetration,” 17–18.

69 In 1930 Jews and Arabs owned roughly equal numbers of citrus lands; by 1934 Jews had slightly edged out the Arabs, owning 145,000 dunams versus the Arabs’ 105,000. Owen, “Economic Development,” 22; Karlinsky, California, 158–68.

70 Karlinsky, California, 158.

71 Peel, W., et al. , Report of the Palestine Royal Commission (London: His Majesty's Stationery Office, 1937), 129Google Scholar, accessed 4 January 2020, https://ecf.org.il/media_items/290; Karlinsky, California, 170.

72 Arab Bank v. al-Faruqi, 858/5פ, ISA; Arab Agricultural Bank v. al-Faruqi, 858/10פ, ISA.

73 al-Hadi, Mahdi ʿAbd, Palestinian Personalities: A Biographic Dictionary (Jerusalem: Passia, 2006), 108, 222Google Scholar.

74 Chief Justice Michael McDonnell, Convening the Court of Discipline, Supreme Court Jerusalem, 30 August 1928, 858/10פ (ISA).

75 Supreme Court Jerusalem to al-Faruqi, 28 March 1929, 858/10פ (ISA).

76 Porath, Yehoshua, The Emergence of the Palestinian-Arab National Movement, 1918–1929 (London: Cass, 1974), 29, 108–9, 131, 138, 210, 214, 222Google Scholar.

77 Al-Hadi, Personalities, 108, 222.

78 Ibid.

79 Author interview with Fuʾad Shahada, 15 June 2010, Ramallah, Palestinian Territories.

80 Karlinsky, California, 167–69; Jaber, Adil, “Future of the Citrus Industry,” in Directory Arab Chamber of Commerce (Jerusalem: Arab Chamber of Commerce, 1937)Google Scholar.

81 Karlinsky, California, 169; Owen “Economic Development,” 22.

82 Graham Brown, “Nablus,” 95; Karlinsky, California, 169.

83 For relations between strike committees and citrus growers see Anderson, “Petition,” 694, 738–39.

84 Karlinsky, California, 169–70.

85 Jaber, “Citrus.”

86 District Court Jerusalem, Judgment, Arab Bank v. al-Faruqi, 15 July 1939, 162/23פ, ISA.

87 A promissory note is essentially a bond in reverse: the issuer promises to pay the full amount due at a later date, and the receiver collects interest until the note is due. These were popular in Palestine during the Mandate as they allowed people to obtain short-term loans without having to attach property or other assets as security.

88 District Court Jerusalem, Judgment, Arab Bank v. al-Faruqi, 15 July 1939, 162/23פ, ISA.

89 The Palm House “comprised an area of 1 standard dunam and 724 square meters” located in the heart of Jerusalem, bounded by properties owned by two elite Arab Palestinian families, the al-Husaynis and the al-Nashashibis. American Colony, “Palm House Mortgage,” 15 June 1933, 2/14, American Colony Hotel Archives, Jerusalem, Israel.

90 For income and debt estimates, see Hakim and al-Husayni, “Monetary,” 497; Owen, “Economic Development,” 21.

91 Al-Faruqi to Joseph, 24 January 1939, 854/10פ, ISA.

92 Al-Faruqi to Joseph, 1 March 1941, 858/5פ, ISA.

93 Joseph to Supreme Court, 8 April 1943, 858/5פ, ISA.

94 Al-Faruqi, Affidavit, 8 November 1940, 854/10פ, ISA.

95 Shuman, al-Muhami, 187.

96 For the revolt's effects on the economy as of summer 1937 see Anderson, “Petition,” 784–847.

97 Ibid., 787.

98 Arab Bank Ltd., Balance Sheet, 31 December 1936, S90/2003/1, CZA (see Table 2).

99 The Arab Bank issued December reports, and its 1936 balance sheet reflected the effects of the strikes and revolt, whereas the foreign banks issued reports in March, so theirs did not. To adjust for this, I have included the Arab Bank's numbers for 1935 as well (Table 3, column 4).

100 Arab Bank, Twenty-Five Years, 10.

101 Horwill, “Situation,” 106–110.

102 Ibid.

103 Maffey, Colonial Office, 10 March 1937, CO 733/335/7, NA.

104 Peel et al., Report, 125–28.

105 Anderson refers to a bridge loan the Arab Bank received from Barclays, but I found no evidence of this. Anderson, “Petition,” 787, n115.

106 All quotations in this paragraph are from Shuman, al-Muhami, 186–87, 236–38.

107 The National Bank is sometimes confused with the Agricultural Bank, but it was a separate entity. Arab Bank, Twenty-Five Years, 44. For more on Hilmi's subsequent political and business career, see Khalaf, Politics, 98–130 and note 18 of this article.

108 Khalaf, Politics, 97–98.

109 Shuman, al-Muhami, 238; Khalaf, Politics, 98–99.

110 As detailed earlier (see note 19), these factional positions were hardly set in stone: some members of Hajj Amin al-Husayni's own family came to oppose him in the 1940s, and Hilmi, an opponent throughout the 1930s and early 1940s, eventually joined Hajj Amin in various political schemes in the late 1940s.

111 Seikaly, Capital, 11, 126, 178.

112 Colonial Office Correspondence, “Local Banks Palestine,” 1936, CO 733/299/8, NA.

113 Horwill, “Situation,” 100–101.

114 Shuman, al-Muhami, 198–203, 209–24.

115 District Court Jaffa, Arab Bank v. Keren Kayemeth le-Israel, 179/32פ, ISA.

116 Kenneth Stein notes that “an unspecified amount of land in Jaffa and Gaza” was sold by the al-Ghusayn family to the JNF in 1942. Stein, Question, 230.

117 Arab Agricultural Bank v. Nusseiba, 1938, 177/14פ, ISA.

118 Shuman, al-Muhami, 186–87.

119 Facts on al-Faruqi lawsuits gathered from Arab Agricultural Bank v al-Faruqi (1938); Arab Bank v. al-Faruqi (1939); and Banco di Roma v. Al-Faruqi (undated), all court documents in 858/5פ and 858/10פ (ISA).

120 Al-Faruqi to Joseph, 24 January 1939, 854/10פ, ISA.

121 Bernard Joseph (later, Dov Yosef) was already a prominent Zionist when al-Faruqi contacted him: a member of the Mapai and legal advisor and deputy head of the Jewish Agency's political department, he later became the military governor of Jerusalem during the occupation of the city in 1948. Upon the establishment of Israel, he was elected member of the first Knesset on the Mapai list and continued to serve in various ministerial and administrative capacities in Israel until the 1960s. Jewish Virtual Library, “Dov Joseph (Yosef): (1899–1980),” American-Israeli Cooperative Enterprise, accessed 4 January 2020, https://www.jewishvirtuallibrary.org/joseph-yosef-dov.

122 Cohen, Shadows, 115–20.

123 Cohen, Shadows, 35.

124 Stein, Question, 37.

125 Al-Faruqi to Joseph, 30 June 1941, 854/10פ, ISA.

126 Stein, Question, 207. It is worth noting that Anderson argues that Stein's figures are exaggerated: Anderson, “Petition,” 442, n111.

127 Anderson, “Petition,” 118; Stein, Question, 69, 203.

128 Joseph to al-Faruqi,18 June 1941, 854/10פ, ISA.

129 Al-Faruqi to Joseph, 5 Nov 1940, 858/5פ, ISA.

130 Al-Faruqi to Joseph,16 June 1941, 854/10פ, ISA.

131 District Court Jaffa, Judgment al-Faruqi, 22 Dec 1942, 858/5פ, ISA.

132 Al-Faruqi to Joseph, 16 June 1941, 854/10פ, ISA.

133 Al-Faruqi to District Court Jerusalem, 177/14פ, ISA.

134 Ibid.

135 District Court Jaffa, Judgment al-Faruqi, 22 Dec 1942, 858/5פ, ISA.

136 Al-Faruqi, Affidavit, 854/10פ, ISA.

137 Other members of al-Faruqi's family are listed as selling land in an earlier period, but al-Faruqi is not. Stein, Question, 230.

138 Al-Faruqi to Joseph, 10 November 1939, 854/10פ, ISA.

139 Lockman, Zachary, Comrades and Enemies: Arab and Jewish Workers in Palestine, 1906–1948 (Berkeley: University of California Press, 1996), 266Google Scholar; Gross, Nachum and Metzer, Jacob, “Palestine in World War II: Some Economic Aspects,” in The Sinews of War: Essays on the Economic History of World War II, ed. Mills, Geofrey T. and Rockoff, Hugh (Ames, IA: Iowa State University Press, 1993), 63Google Scholar; Al Faruqi to Joseph, 5 November 1940, 854/10פ, ISA.

140 Shuman, al-Muhami, 233.

141 Anglo-American Committee of Inquiry, Survey, vol. 2, 555–56.

142 Shuman, al-Muhami, 233.

143 Anglo-American Committee of Inquiry, Survey, vol. 2, 555–56.

144 Shuman, al-Muhami, 233.

145 Anglo-American Committee of Inquiry, Survey, vol. 2, 555–56.

146 Shuman, al-Muhami, 233; Arab Bank, Twenty-Five Years, 44.

147 Lockman, Comrades, 266; Gross and Metzer, “World War II,” 63.

148 Anglo-American Committee of Inquiry, Survey, vol. 2, 559; Metzer, Jacob, The Divided Economy of Mandatory Palestine (Cambridge, UK: Cambridge University Press, 1998), 111CrossRefGoogle Scholar.

149 See, for instance, the view offered in Stein, Question, 215–17.

150 Shuman, al-Muhami, 233–36.

151 Khalaf, Politics, 49–57.

152 Ibid.

153 As quoted in Seikaly, Capital, 106. For wartime conditions, see Lockman, Comrades, 266.

154 I am grateful to Professor Roger Owen for suggesting this line.

155 Stein, Question, 202–8.

156 This was originally a criticism offered by a colonial office official of the (British-sponsored) Agricultural Mortgage Bank, but it applies equally to the Arab Bank. Anderson, “Petition,” 470–71.

157 Ltd., Arab Bank, The Indomitable Arab: The Life and Times of Abdul Hameed Shoman (1890–1974) Founder of the Arab Bank (London: Third World Centre for Research and Publishing, 1984), 140Google Scholar.

158 Al-Faruqi, n.d., 854/10, פISA.