The economic and industrial soundness of Palestine in the face of the present crisis and the progress of the work of the Palestine Economic Corporation were stressed Tuesday night at a meeting of the corporation held at Temple Emanu-el.
Palestine development has reached such a stage, Felix M. Warburg, honorary president of the corporation, who presided, declared that it has commanded for us the respect of the outside world.
The soundness of the investments of the Palestine Economic Corporation was stressed as well in the reports delivered by Julius Simon, President of the Corporation; Bernard Flexner, chairman of the Board of Directors; Emanuel N. Mohl and Harry Viteles, the latter two representatives of the Corporation in Palestine.
The company, according to Mr. Flexner, has no indebtedness and has an amount of $2,000,000 as a reserve fund for contingencies, operating surplus and a contributed surplus.
Immediately after the meeting, Mr. Simon sailed for Palestine on his annual visit, in accordance with the policy of the corporation to keep its directors in New York informed at first hand with actual developments in Palestine.
“During the past year the Palestine Potash Corporation, the Palestine Hotel and Bayside Land Project, have all developed further and it is amazing that, when industrial enterprises and unemployment conditions have worried nearly all other countries, Palestine should be able to proceed forward and upward,” Mr. Warburg said. “It is no doubt due to the careful selection and watchfulness of our people that this is the case. And not only in achievement, but in the way in which things were done and the standard which we have set up, we have raised the respect of the outside world as well as the confidence of those who have money invested in Palestine, because that little country can stand on its own feet, disregarding race, color or creed. And I have no doubt that, with its further development, the relationship between the different parts of the population will be favorably affected by the genuine desire of our people to establish cooperation with the Arab population working in the same fields.
“I am referring especially to the efforts to create better marketing facilities for oranges. I should like to say in that connection that it is very much to be regretted that our Palestine fruit products are not permitted to be landed in the United States, owing to a fruit disease which is claimed to be dangerous. I speak feelingly, because my investment in an orange grove in Palestine has been most satisfactory from the financial standpoint. I have actual profits to show there, which is better than a good many of my American investments. But the one great pleasure that I look forward to â€” to have these oranges brought here and to enjoy them â€” has not come true. I hope, however, that this will soon change. Palestine oranges are so good and transportation nowadays is relatively reasonable so that under ordinary circumstances we might be able to create a market over here”.
Bernard Flexner, Chairman of the Board (upon whose initiative the Company was formed in 1926 by merger of the Palestinian assets of the American Jewish Joint Distribution Committee and the Palestine Co-operative Co.) after referring to the increase in the assets of the Company since its formation from $783,000 to almost $3,000,000, and its operating surplus of $90,000, said:
“I believe that the Corporation has made good the statement in its prospectus of 1926 when it stated that the Corporation would be content if by means of a conservative administration, it might keep its funds intact, and accumulate sufficient reserves to enable it to provide against possible losses and other contingencies.
“Not only,” continued Mr. Flexner, “has the Corporation kept the original capital intact, but the capital which has been subsequently added, is also intact and a modest operating surplus has been accumulated in addition. The full story of the results of our operations during the first six years of our existence can only be told when a number of our investments in major industrial projects in Palestine, which are not yet fully developed, begin to bring returns. I am referring to our investments in the King David Hotel, in the Palestine Potash, Ltd., and in the Haifa Bay land.
“The total reserve for contingencies, operating surplus and a contributed surplus, amounts to over $2,000,000 and the Company has no indebtedness.”
Mr. Flexner referred briefly to the economic progress in Palestine since the formation of the Corporation. He referred to the shipment of 3,452,000 cases of oranges during the last season having a value of Â£1,639,000 as compared with 2,857,000 cases in 1930 having a value of Â£857,000; the revenue of the Palestine Department of Customs, Excise and Trade which amounted to Â£1,169,000 in 1931â€”a small decline compared with 1930, but larger than for the years 1927-29.
The Palestine Potash, Ltd., which has followed the policy of reducing the burden of indebtedness incurred by borrowers as far as possible. In loans for building houses, the amounts authorized for individual borrowers were therefore reduced after giving due consideration to aesthetic and social requirements.
The prime purpose of the Corporation in undertaking the small industrial credits’ experiment was to assist those individuals who had come to Palestine with knowledge and practical experience in various arts and crafts and had exhibited persistence, initiative and energy in beginning and developing various small enterprises in the country over a period of several years. From the beginning, ordinary commercial discount credits were excluded and the loans were confined to cases where increased productivity could be reasonably expected to result, with consequent additional employment of labor.
The average loans was Â£P203 with a maximum of Â£P500 and a minimum of Â£P50. The period of repayment of the loans ranged between nine months and 3Â½years, with an average of 2Â½ years. Interest at the rate of 8% was made payable simultaneously with the instalment on principal, in accordance with a policy maintained by the Corporation, wherever possible, to prevent additions to the effective interest rate paid by borrowers through payment of interest in advance.
The other activities outlined by Mr. Mohl were loans granted to agricultural workers, household farming loans, erection of workers’ suburbs (photographs of some of which have appeared in the Annual Reports of the Corporation) and the Haifa Bay land project, which is held by the Bayside Land Corp., Ltd., for which purpose this subsidiary company was incorporated in 1928.
Mr. Mohl also described the housing activities which this subsidiary had carried out for the Emergency Fund for Palestine, the organization which had been created shortly after the riots of August, 1929.
THE WORK OF THE CENTRAL BANK OF COOPERATIVE INSTITUTIONS
Harry Viteles of Philadelphia, one of the Company’s representatives in Palestine and General Manager of the Central Bank of Cooperative Institutions, stressed the agricultural development in Palestine in recent years, and the part played by the Central Bank in the development of the cooperative movement. Although it was feared in 1922 that difficulties might arise in the marketing of increased quantities of milk, eggs and vegetables produced by Jewish colonists, there was since been an increase of 4,500,000 quarts of milk, either in liquid form, or in the form of dairy products, and the imports of eggs into the country have decreased from 20,000,000 to less than 7,000,000. Mr. Viteles stated that Palestine was in a position to export eggs to Europe in the Fall when prices were most favorable.
Exports of grapefruit amounted to 150,000 cases during the last season as compared to less than 5,000 cases six years ago. Because of the favorable climatic conditions, he thought it likely that Jewish Agency settlements in the Nuris district of the Jordan Valley would be in a position to bring their grapefruit to European markets about one month before the grapefruit from other countries would arrive.
More than 50 percent of the vegetables consumed by the Jews in Palestine is produced locally by Jewish farmers and successful experimental shipments have been made to England and France of potatoes and tomatoes. Fresh vegetables are available now during all seasons of the year. Srawberries, which were practically unknown in the country seven years ago, are now available 5 months during the year. The quality and size of some of the bananas sold in foreign markets are said to be as good, even at this early date, as the product of the Canary Island and the West Indies. The P.E.C.’s part in this development was referred to by Mr. Viteles.
The Central Bank granted short term loans amounting to $900,000 to various types of cooperative enterprises in the last year, as compared with $150,000 in 1922-23. In the past decade, $6,000,000 of short term loans have been advanced, of which about $4,000,000 were for agricultural purposes. The cash repayments during the last year amounted to 90 percent of the amounts issued. In addition to the short term loans, the Central Bank also granted long term loans with funds supplied by the P.E.C. in the amount of $775,000. The interest rates charged by the Bank are still the lowest charged by any Bank in Palestine.
Mr. Viteles concluded with a brief summary of the status of the cooperative movement in Palestine today.
Mr. Simon outlined the policy of the organization which he characterized “to strengthen the economic foundations of Jewish settlement in Palestine”. “The most important enterprise of the country is the Citrus Industry”, he said. “Therefore we have encouraged better packing and marketing methods. The orange industry in turn is dependent on water â€” therefore we undertook, together with the P.I.C.A., the establishment of a water drilling unit which we hope will not only result in reducing the cost of water but also lead to its more economic use”.
Next to the Orange Industry in importance, are the valuable minerals of the Dead Sea. The P.E.C. has therefore participated in the Palestine Potash, Ltd., he said.
The future industrial center of Palestine,” Mr. Simon added, “is Haifa, We have therefore assisted in preventing the valuable Haifa Bay land from reverting to the absentee Arab speculator, who originally owned the land and we are holding 5,000 dunams of the most valuable part in reserve for industrial development”. Mr. Simon further added, “we have supplemented our policy of participating in major enterprises of the country by a carefully laid out credit policy which is especially directed to strengthen the economically weaker part of the Jewish population. This policy originally led to the establishment of the Central Bank of Cooperative Institutions in Palestine, Ltd., about which Mr. Viteles has reported, and has made us pace-makers in various credit operations undertaken by the Palestine Mortgage & Credit Bank, Ltd., about which Mr. Mohl has reported. We are not looking for the best risk, but for the most productive work and desire especially to grant such financial assistance as is not met by the ordinary banking facilities. In agriculture we have dealt with the problem of how to gradually convert the agricultural worker into a small-holder. It is true that the collateral security offered in these credit operations is slender. We have therefore tried to supplement this security by introduction of proper business methods.”