A statement reviewing the work of the Palestine Economic Corporation in Palestine during the past year, relating to the various phases of the economic development of the country, was issued by Bernard Flexner, President of the Corporation. The statement summarizes the first annual report of the Corporation which is to be issued shortly.
The Palestine Economic Corporation was organized in February 1925, by the Non-Partisan Palestine Conference, held under the chairmanship of Louis Marshall. Besides the president, the officers are Louis Marshall, Herbert Lehman, and Robert Szold, vice-presidents; Walter E. Mayer, treasurer, and Joseph C. Hyman, secretary.
The Corporation took over at the time of its creation loans and investments in Palestine amounting to $620,000. During the first year of its existence the Corporation has added $575,000 to its investments and commitments in Palestine. Of this amount $155,000 was appropriated for agricultural and cooperative credits, $235,000 for mortgage credits, and $155,000 for public works’ credits, the statement declares.
In reviewing the work of the Palestine Economic Corporation it must be borne in mind that the means at its disposal were limited. It was, therefore, essential to concentrate on those enterprises which gave promise of standing by themselves regardless of temporary conditions. In accordance with the established policy of the Palestine Cooperative Company, an institution granting building loans principally in Jerusalem and Haifa, which was taken over by this Corporation at the time of its formation, it was not possible to participate in the financing of building activities in Tel-Aviv under the abnormal conditions then prevailing. As soon, however, as a more sober judgment and an economic basis appeared, action was taken to improve housing facilities. The financing of a number of small houses in Hazafon, a suburb north of Tel-Aviv, was authorized on a basis which would improve the existing unsanitary conditions in the hut settlements around Tel-Aviv.
The plan provides that the land owned by the applicants as sites for the houses is to be sold to the Jewish National Fund in order that the funds invested by the borrower in land should be released for building purposes. In this way the necessity for additional financing is eliminated whether in the form of second mortgage credits or in the form of credit by contractors and dealers in building materials a practice which necessarily increases the cost of construction and is burdensome to the borrower.
The project has reached the stage where an architectural contest for suitable house designs has been arranged. The Corporation has also interested itself in the erection of houses in colonies, the first step in which has been the financing of houses in Rehoboth. The sum of $190,000 has been set aside for such housing and building loans. In these matters the Corporation is acting through the Palestine Building Loan and Saving Association, which it entirely owns and controls. The funds of this institution are invested in loans to individual home builders. During the last fiscal year loans amounting to $53,000 were issued.
The economic difficulties in Palestine have presented a particularly complex problem to the Corporation. Although fully alive to the necessity for alleviating the distress caused by the economic difficulties in Palestine, the Corporation remained firm in its policy that its financial support must be restricted to schemes required primarily on economic grounds.
The sum of $20,000 was loaned for the construction of a road connecting the Jewish colony of Hedera with the railroad station. The Corporation loaned the Jewish National Fund $75,000 to proceed with the drainage of the malarial marshes on the Western Kishon. These public loans have been granted at relatively low rates of interest with amortization spread in small installments over a long period of time. A loan of $15,000 granted by the Corporation to increase the working capital to the Loan Bank, Ltd., and the short term credits advanced by the Central Bank of Cooperative Institutions in Palestine were of indirect aid in this connection.
In accordance with the policy announced at the time of the formation of the Corporation, it has not hesitated to devote funds for constructive purposes, even though there was some doubt as to the safety of the investments. Acting through the Central Bank of Cooperative Institutions of Palestine, it has participated in a Consortium established for the purpose of extending a long term loan of $100,000 to the Solel Boneh, the Jewish Workers’ Cooperative Association for Public Work Building and Manufacture. Ltd., the largest Jewish contractors of public works, house building, and road building in the country. Our share in this Consortium is $50,000. A short term advance of $20,000. which has been repaid, was made to the Workers’ Bank, Ltd.,in connection with this loan, to enable it to participate in the Consortium. Reorganization of the Solel Boneh on a sound basis, which was the purpose of our loan, is now threatened by its serious financial and other difficulties.
Of particular significance has been the work of the Central Bank for Cooperative Credits, which this Corporation is directing in cooperation with the PICA and the London Economic Board. We have contributed three-quarters of the long term resources of $500,000 of this institution and have granted a one year’s loan of $75,000 for working capital.
In addition we have placed at its disposal for long term agricultural loans to cooperatives an additional sum of $80,000. The largest portion of these long term loans were granted for orange growing and for planting of vineyards. The orange industry is the most successful branch of primary production in Palestine. It has flourished in spite of unsystematic methods of cultivation and the damage done during the war. Orange exports constitute over 46 percent of the total value of exports from Palestine.
The principal market is in the United Kingdom which imports about 10 percent of its supply from Palestine. Expert opinion is unanimous in thinking that this market can be considerably extended. The British Imperial Economic Committee on Fruit has, however, stated that the reputation of the Jaffa orange was being jeopardized by the falling off in quality of some of the recent consignments.
Among the other agricultural loans granted, a small loan of $4,500 to the colony Artuf may be noted. It was granted to enable the settlers, who are poor but experienced and hardy individuals, to purchase sheep in order to make full use of their land which cannot produce the valuable crops.
Negotiations are pending for participation by the Corporation in several public utility projects, the consummation of which will require the use of all of the Corporation’s unused funds and much of the anticipated future resources.
While the Corporation has proceeded with great care in the investment of its funds, it has not been prompted by over-anxiety to invest its funds safely or to assure itself of the highest monetary returns. Although the funds are administered on a business basis the Corporation does not merely function as one of the financial agencies of the country. Its principal concern has been to serve the sound social development of the country.