Palestine Stock Exchange in the Making

Palestine appears to be ripe for development of a Wall Street of its own–that famous little New York lane with a river at one end and a cemetery at the other.

While a street with those particular geographic characteristics is not available as the setting, Wall Street’s principal ornament — the Stock Exchange — seems to be in the making.

An embryo ‘Chance is already functioning, its birth having been stimulated by the recent Ethiopian war scare. With the financial tensity that accompanied the arrival of war clouds over East Africa, representatives of the ten most important banks in Tel Aviv, chief financial and trading center in the Holy Land, began gathering daily at the Anglo-Palestine Bank. The purpose of this meeting was to set and publish the current exchange rate.

Whether this unofficial market, already dubbed the “substitute stock exchange,” will become permanent and branch out into the first securities market in the history of the Holy Land remains to be seen.

Palestine’s fundamental economy has changed so radically in the past fifty years–a change that has been accentuated with the influx of Jewish immigrants in the past few years–that economists today are urging a securities exchange as a vital aid to industry.

Private banking houses, especially those founded by refugees from Germany, have indicated the need of an exchange by publishing regular exchange and financial reports. But these are semi-private and not binding.

Building operators in particular feel the need of a securities market. They argue that such a market would give Palestine securities the feature that makes American and other foreign securities so attractive–disposability. This, they contend, would make it possible for them to secure backing for building operations and free them from their dependence on individual entrepreneurs.

The need for an exchange, business analysis points out here, marks the entrance of Palestine definitely into the capitalist phase of its development. Previously, they write, there were two phases; private endowment era, characterized by colonization work carried on by such philanthropists as the late Baron Edmond de Rothschild; and the national endowment era (still in progress) carried on by Zionist funds.

In the two last-named phases there could be little concern for private profit, and so there was no real need to provide for the movement of private capital. Gradually, however, the promotions of those two periods began to show profit in the capitalistic sense, these writers point out, and the influx of capitalistic elements brought the need for investment opportunities and for the regulated distribution of capital.

With the beginning of the third period a few years ago, the economists state, there came an influx of private capital from the United States, Great Britain and other countries. This influx of capital is steadily on the increase as witnessed by the fact that more than 4,500 capitalists entered last year compared to 3,500 in 1934.