PALESTINE is a most interesting international phenomenon. For one thing, it is the last colonial land -- and the only land to be colonized since the world became more or less set in its new industrial form. Further, it is populated by two races of unequal numerical strength and governed by a third, appointed by the League of Nations and therefore in the position of world trustee, which has little direct interest but overwhelming indirect interest in the country's orderly administration and peaceful development.

Any study of the present problems of Palestine must start from the Balfour Declaration of 1917, and at the outset we had better remind ourselves of its terms: "His Majesty's Government view with favor the establishment in Palestine of a National Home for the Jewish People, and will use their best endeavours to facilitate the achievement of that object, it being understood that nothing shall be done which may prejudice the civil and religious rights of existing non-Jewish communities in Palestine, or the rights and political status enjoyed by the Jews in any other country."

This historic declaration was embodied in the Treaty of Sèvres and in the League of Nations Mandate under which the country is governed. Particular attention should be drawn to Article 6 of the latter document, couched in the following terms: "The Administration of Palestine, while ensuring that the rights and position of other sections of the population are not prejudiced, shall facilitate Jewish immigration under suitable conditions and shall encourage . . . close settlement by Jews on the land, including State lands and waste lands not required for public purposes."

A study of the pronouncements of the Arab Executive will show that their views could not be met without infringing the terms of the Balfour Declaration and of the Mandate. For what the Arab extremists object to is the establishment of a Jewish National Home in Palestine. Extremes breed extremes. And so we find Jewish extremists, the so-called Revisionists, the adoption of whose views would require an abandonment of the principles which protect Arab interests in Palestine. The Revisionists are relatively few in number, and like most extremists vocal out of proportion to their real strength and importance; they find no support in the large body of Jewish inhabitants, and no considerable accession of strength to their ranks need be feared provided that the Mandatory Power not merely carries out its duties impartially but manages to impress all concerned with the fact that it is doing so.

One sometimes hears the suggestion that the British Government is influenced in its treatment of Palestinian problems by its position as the greatest Moslem Power in the world, and the consequent necessity of being specially tender -- and by implication unduly tender -- of Arab susceptibilities. If this view were accepted it would lead to the conclusion that the administration of Palestine under the Mandate was incompatible with major British interests and should be surrendered. There is no reason to accept it; nothing in the policy which has been pursued in really difficult circumstances cannot be quite simply explained without looking for illegitimate motives. The overriding duty of the Mandatory Power is to maintain law and order. Unless it is successful in doing so it clearly cannot carry out the terms of the Mandate.

Palestine is a small country -- about the size of Wales -- with about one million inhabitants, of whom roughly three-quarters are Arab and one-quarter Jewish. Its natural resources are very limited, and its economic development will necessarily be slow -- inevitably too slow to satisfy either the perfervidum ingenium of the minority of its inhabitants, or the sympathies of those of us outside Palestine who would be glad to see the country absorbing larger numbers for whom many parts of Europe have become prisons of cruelty and humiliation. A country of its size and character cannot support a sudden and unlimited influx of new inhabitants; the urgency of the external Jewish problem merely accentuates the necessity for controlling immigration. But plainly if the terms of the Mandate are to be observed the maximum number possible must be allowed entry, and the formula devised to meet the situation is contained in the principle that immigration will be permitted within the limits of the economic absorptive capacity of the country.

The formula is an elastic one; there are no tests by which the absorptive capacity of a country can be exactly computed. Can a better criterion be chosen than the varying shortage or excess of labor available? If we adopt it, however, we have not automatically disposed of all our difficulties. When there is great unemployment, immigration will certainly be stopped for the time being. This must not be taken as an acceptance of the view that the existence of a considerable number of unemployed is a clear indication of excess immigration; it is easy to imagine circumstances in which unemployment might be caused by a shortage of immigration, and could only be decreased by an increase in the flow. However that may be, it may be regarded as certain that unemployment would be considered by the Administration as a danger signal calling for a restriction of immigration, even if there were plausible grounds for supposing that unemployment had been caused by a precedent restriction; we may be satisfied if the Administration will adopt the converse of that attitude and allow greater freedom of immigration when the labor demand exceeds the supply.

That the Administration does not whole-heartedly adopt this view is evident from a consideration of the existing situation. What are the salient facts? First, that there was a large wave of immigration in 1933, followed by general prosperity in a time when the rest of the world has been in the doldrums. Secondly, that there is no Jewish unemployment, but a pronounced shortage of labor, evidenced by rising wages. Thirdly, that the Administration has refused to admit for the moment more than a relatively small fraction of the immigrants for whom permits are demanded by the Jewish Agency.

This situation is dangerous, politically and economically. Jews both inside and outside Palestine are tending to feel that the formula of economic absorptive capacity is being misinterpreted against them, at a time when Jewish difficulties are such as to command the sympathy of all humane persons. There may be difficult problems of administration in face of Arab unrest, but the situation will not be eased if Jewish unrest is created by what are considered to be concessions extorted by Arab opposition to the key principles of the Mandate. From the economic standpoint, a persisting shortage of labor will result in competition for the existing supply, which will drive wages, already high enough, up to a point at which existing enterprises will find it scarcely possible to make both ends meet, while new enterprises for which there is room will be definitely excluded. This process might continue until the present momentum had spent itself, when a general loss of confidence and slowing down of activity would ensue; there might be general unemployment, caused, if the above analysis is correct, by the Administration's restrictions -- but accepted by the Administration as a proof that they were right on economic grounds to restrict immigration. If unemployment supervenes when immigration is restricted, it is hard not to argue that unemployment would have attained even more serious dimensions if more people had been allowed in.

What, so far as an outside observer can judge, are the considerations which have actuated the Administration in determining its present policy? In the first place, the problem of law and order does exist. There was a serious outbreak in 1929, which originated in a religious question, but was undoubtedly political in its real nature; it was accompanied by a serious loss of life. There was a minor outbreak, fresh in public recollection, towards the end of last year, for which Arab agitators were alone to blame and for which Jewish immigration was the pretext. It is for the Administration to ensure that there is no repetition of the events of 1929, and the responsibility is a heavy one. It is probably more keenly felt owing to the significant fact that the last outbreak was much more a demonstration against the authorities than against the Jews. This is not intended to imply that the authorities are more anxious about their own safety than about the safety of the Jewish population, which would be the reverse of the truth. It is impossible, however, not to believe that Arab violence directed specifically against the Administration policy must tend to make that policy more conservative. But in any case there is force in the argument that Jewish interests will not be advanced, or not most quickly advanced, if the feelings of the Arabs inside and outside Palestine are inflamed to such a pitch that the maintenance of peace becomes impossible without the imposition of a régime of repression which would bring both Mandate and Mandatory into discredit and put back the Jewish clock.

That is perhaps the political background to the policy now being pursued by the authorities. From the economic standpoint, we may surmise that they are not unnaturally alarmed at the prosperity which they see around them; it seems too good to be true. We have so long been obsessed with the idea that the world is suffering from over-population -- an idea which many of us believe to be entirely erroneous -- that it is almost impossible not to have the feeling that the prosperity which Palestine has been enjoying as a direct result of the importation of labor and capital will be imperilled if that importation continues uninterruptedly. We are always tempted to think of such economic questions in terms of a static world; we minimize the extent to which an enlarged population, owing to its interchange of services as well as of commodities, tends to be self-supporting. And it is easy, and within limits true, to argue that the economic absorptive capacity of the country cannot be judged on the basis of immediate needs alone; in certain circumstances there might be a temporary need for more labor, the satisfaction of which would lead to a subsequent surplus.

Considerations of this character are probably operating subconsciously on the Administration mind. There are three other factors which have influence.

The first is the number of illicit immigrants, that is to say of Jews who come to Palestine as tourists with a three months' permit which does not entitle them to accept work, but who find an opening during their visit and settle down without permission. Illicit immigration is a very real problem, and it is exceedingly difficult for an outside observer to make up his mind on its rights and wrongs. There is no excuse for evading the law -- except, perhaps, that successful evasion shows that the law was harsh and unduly restrictive, and that the administrative machinery for regular admission is sometimes like the mills of the gods -- grinding slowly and exceeding small. If only there could be a conspiracy of silence -- of course there cannot -- one can imagine few more satisfactory ways of dealing with the problem than of conniving at illicit immigration. You would have a constant trickle of immigration, and fewer recurrent and ostentatious waves; and no perplexing question of absorptive capacity would be involved, as an illicit immigrant only remains because he has been absorbed. As things are, we must expect the Administration to set its face against illicit immigration, and to create considerable soreness by acts of expulsion which have no strictly economic justification.

The second factor is the alleged existence of Arab unemployment. The word "alleged" is employed advisedly. It is not intended to suggest that there is no Arab unemployment, but that it cannot be estimated with any approach to scientific accuracy, and that the question of what constitutes unemployment for an Arab is not easy to answer, in the absence of statistics of employment over many years, without falsifying the terms of the problem. If the suggestion is that any proved surplus of Arab labor should be absorbed before further Jewish labor is allowed to immigrate, that would be impossible of acceptance. It brings us, however, to the crux of the Arab-Jewish question, and it is worth while to dwell upon its implications. There is one final answer to the argument that it is the duty of Jews in Palestine to fill a declared shortage of Jewish labor by recruiting Arab labor -- whether surplus or not. It is that to admit the argument would be to abandon all hope of developing a Jewish National Home. There is a constant infiltration of Arab labor, on which there can scarcely be a practical check, from neighboring Arab lands. It will increase as the country's prosperity increases. The crossings of the River Jordan are barred for eastward Jewish traffic; but there is traffic westwards for the Arabs of Transjordan. Now Transjordan, while it is part of the mandated territory and under the same Administrator, does not fall within the terms of the Balfour Declaration. The Jews are not permitted to develop Transjordan; its Arab inhabitants are free to come into Palestine to take advantage of opportunities of employment which do not exist in their own country and which have only been created in Palestine by Jewish capital and Jewish enterprise. The one-way traffic across the Jordan is a more than sufficient set-off against illicit Jewish immigration.

The third factor which moulds the Administration policy, we may suspect, is the purchase of Arab land by Jews. The "landless" Arab is a good political counter, and a real social and economic difficulty which can only be solved by social and economic measures. He is probably not an avoidable difficulty, though he should be a curable one. If the authorities feel that the development of Palestine as a Jewish National Home connotes further purchase of land, they are almost certainly right. So long as land is more valuable to a Jew than it is to an Arab, land will be sold to the Jews. There must be innumerable cases where land which was worth a couple of pounds a dunum in Arab hands is now worth anything up to twenty in Jewish hands. Its transfer could be generally prohibited only in terms which would be tantamount to a repudiation of the terms of the Mandate. If we assume that this difficulty did not exist, can it be supposed that in the long run mere economic forces would permit of a régime which left land in the possession of those who can wring a single pound per dunum out of it, if scientific exploitation can make it yield anything up to twenty times as much? Granted that the economic test is not necessarily final in social questions. But -- and this is a more general reflection -- we are not faced here with a conflict between one form of civilization which is worth preserving and a more material one which can only win at the sacrifice of higher non-economic values. The clash in Palestine between Jew and Arab is not analogous, for instance, to the conflict between an industrial and an oriental civilization which is being fought out in the Far East.

In considering the question of land transfers we must distinguish between the large landowner and the small cultivator. The former has no objection to selling his land to Jews at a price which makes him rich beyond his wildest dreams before the Promised Land was fertilized by Jewish capital. This does not mean that he will not a few days later be propagating hate and unrest. If he is a man of enterprise he invests the proceeds of his sale either in the more intensive cultivation of part of the land which he has retained or in some industrial undertaking. He discovers that he has to pay for Arab labor much more than he was accustomed to in the good old days before the country was prosperous, and finds to boot that it is not so docile. This economic ground is the explanation of much of the political unrest fomented by the richer class of Arab. It is entitled to no sympathy, for it is a rebellion against the one tendency which promises salvation -- a raising of the Arab standard of living.

The smaller cultivator is a more difficult problem. Even though he also obtains a high price for land, the proceeds often leave him with little surplus by the time he has paid off the burden of past debts. The most ardent Arab sympathizer will admit that the Arab usurer is a canker in Arab economic life, and that it will take years of education in habits of thrift and enterprise to eradicate him or at least make him socially innocuous. Individuals will therefore suffer until something of the same spirit of communal coöperation and enterprise as is found in the Jewish community has been instilled into the Arab population. It would plainly be unreasonable to expect the existing Jewish population, struggling to establish itself, to devote any of its present limited resources of energy and capital to the direct and conscious education of the Arab. In the meantime, if the problem is looked at not in terms of individuals but of classes, it must be admitted that the opportunities of work available to the Arab and the economic return for it have increased immeasurably in the last ten years. The prosperity of a Jewish settlement overflows its boundaries and fertilizes all the Arab communities in its neighborhood; Jewish enterprise and labor give rise to secondary demands for labor and services from which Arabs largely benefit, even though individuals may be the victims of what is now called technological unemployment.

How are the difficulties to be resolved? It is hard to escape the conviction that in the end the Jewish population of Palestine will mould the country's destinies. But that does not give us any very clear picture of the road to be travelled. What are the processes by which the Jewish National Home will be built on the rock? The answer given will depend on one's conception of the ultimate economic relationship of Jew and Arab.

Let us begin by taking two extremes which must, on a cool calculation of probabilities, be rejected. It is conceivable, though improbable, that the Arab will gradually be ousted from Palestine, and that at the end of the process it will be a purely Jewish country. Again, it is possible, and it is actually suggested as probable by some whose opinion is entitled to great respect, that there will ultimately be a complete fusion between the two races -- a racial fusion reached through intermarriage. This idea will be received skeptically even by those who believe that intermarriage is one of the solutions of the Jewish problem so far as it exists in the world at large. The cultural differences between the two races in Palestine are too great to permit of fusion, which would, moreover, effectively defeat the ideal of a national home.

Let us now consider in more detail what appear to be the only two practicable alternatives. We can envisage a Palestine in which the races will be divided horizontally -- the Jews directing and owning such industry as the country proves capable of developing, and intensively exploiting part of the land, but leaving most of the manual work and almost all the heavy unskilled work to the Arabs. This division of labor was to be found in the earliest stages of colonization. But it would be fatal to the development of the Jewish National Home, and the leaders of Jewish opinion in Palestine are absolutely right in setting their faces against such a differentiation of function. It would not be fusion but a perpetuation of a division in its worst possible form; it would be racial division coinciding with, and therefore intensified by, a social class division. It is the recognition of this danger which explains, and largely justifies, the Jewish unwillingness to employ Arab labor on a large scale, or at any rate to accept the view that it is a Jewish duty to absorb Arab labor before importing further Jewish labor. Reasons were given above for believing that the acceptance of this view would put an end to further immigration. The construction of a national home requires that those who live in it should be prepared to supply part of the menial labor required to run it. Are not the architects of that home wise and farsighted when they insist that the Jewish population of Palestine shall not be a facsimile of the Jewish population in Europe and America, but shall contain farmers and laborers and all sorts of people who work with their hands as well as those who work mainly with their heads?

We are thus brought to the other practical alternative -- a complete economic fusion, in which both Arabs and Jews, according to individual capacity and taste, fill indifferently all the various functions required by modern economic life. Such complete economic fusion is not attained simply by Jews consenting to do all kinds of manual work; that might lead to a complete Jewish economy and a complete Arab economy existing side by side, touching but never becoming an integrated whole. If this danger is to be obviated, we ought now to consider from another angle the question of the employment of Arabs by Jews. It was stated earlier that it was no Jewish duty to employ Arabs; but it might be to their interest. There has been and still is a tendency on the part of Zionism not merely to discourage but actively to obstruct the employment of Arabs in Jewish industry and agriculture. An attempt has been made to show the reasons which went far to justify this attitude in the early stages; when Jewish labor was scarce and dear out of all proportion to Arab labor, the only way both to attract Jewish labor and make openings for future inhabitants of the home was to resist the temptation to make greater immediate profits by utilizing the cheapest labor. But the dilemma is clear; if an artificial restriction of the employment of Arab labor is required, that is a plain indication that it is more economic to employ Arab than Jewish labor; in the long run, however, no industrial undertaking can continue indefinitely to exist under competitive conditions if it persists in swelling the costs of production by paying more than the market requires for its labor. It is a standing invitation to others to exploit the situation by employing the cheaper labor. There is no hope for Jewish labor in the last resort unless Jewish wages (allowance being made for differing efficiencies) are in a natural equilibrium with Arab wages. How is this equilibrium to be established? Not, if Jewish opinion can help it, by depressing the Jewish workman's standard of living to that of the Arab workman. The alternative is to raise the Arab standard. Histadruth, the official labor organization, is alive to the problem, and though not encouraging the direct employment of Arabs, does all that it can to organize Arab labor in unions as one way of improving its wages and working conditions. More, however, is needed; the Arab standard of life can never be raised by refusing to employ Arabs. It would be asking too much to suggest that Jewish leaders in Palestine should conduct an active campaign for the employment of Arab labor. On the other hand the time has come when they can with safety remove one obstacle which they have deliberately erected against such employment. The Jewish National Fund owns a large amount of land, including a considerable area in the potentially industrial part of Haifa Bay. Leases of any part of this land contain a clause absolutely prohibiting the employment of Arab labor by the lessee. The policy which dictates this clause seems, as a permanent policy, quite impracticable. In the meantime it gives Arab agitators a convenient stick with which to beat Zionism. From the Jewish point of view, coöperation with Arabs will be easier when the Jews are numerically stronger and feel their future better assured, but the time has already come when they can be more active in helping the operation of a process which should ultimately lead to the economic, and thus to the political, integration of the two peoples.

It is perhaps fitting to conclude with a reflection of a rather different character, respecting the duty and interest of the Mandatory Power. If the Jews are debarred from developing purely Arab lands, it is surely a duty of others to make an effort to ensure that somewhere, and above all in Transjordan, economic life shall be made attractive to Arabs in a country of their own, so that Palestine shall cease to be so powerful a magnet. The Mandate presents the Mandatory with inherently difficult tasks; this seems to be one of the obvious ways of simplifying them.

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  • SIR ANDREW McFADYEAN, General Secretary to the Reparation Commission, 1922-1924, and to the Dawes Committee, 1925; Commissioner of Controlled Revenues, Berlin, 1924-1930.
  • More By Andrew McFadyean