In 1949, Arthur Hertzberg, a young Zionist who later became a renowned historian and an important communal leader, decided to witness with his own eyes the wonders that were taking place in Israel. He traveled to Israel, but to his
In 1949, Arthur Hertzberg, a young Zionist who later became a renowned historian and an important communal leader, decided to witness with his own eyes the wonders that were taking place in Israel. He traveled to Israel, but to his surprise, instead of a warm welcome his hosts nagged him with a barrage of demanding questions.
“Why don’t you stay in Israel? Why didn’t more Americans come to fight? Why don’t you send us more money?” As he later explained in an article in Commentary magazine: “Mine was not an isolated experience. Every fellow tourist from America had comparable tales to relate. Perhaps we brought much of the discussion upon ourselves. We were all rather pathetically eager to hear a word of commendation for our past efforts.”
Hertzberg’s recollection illustrates an important point. American Jews were the main financial backers of the Zionist movement, and their support solidified following the Holocaust and the establishment of Israel. Yet, securing American Jewish dollars was anything but simple.
Believing that their donations were a sign of generosity, American Jewish leaders felt entitled to retain a part of the United Jewish Appeal’s collection for their communal needs, and demanded some control over how the funds were to be used in Israel. Israeli leaders, in contrast, saw the American Jewish donations as an inadequate contribution to the national cause.
To overcome the impasse, in 1951 the Israeli government floated the first issue of its Diaspora bonds, commonly known as Israel bonds. Given Israel’s shaky economic standing and their modest interest rate, these bonds were not financially attractive. But by combining ethical and pecuniary appeal, David Ben-Gurion and his allies in the United States hoped to raise more money than possible through regular philanthropy and on better political and moral terms.
The American Jewish leadership, especially the leaders of the country’s various federations, strongly opposed the bond initiative. They feared that American Jews would simply take the money they previously donated to UJA and use it to buy bonds.
If such a scenario materialized, they cautioned, Israel would not get more money but only be burdened by a crippling debt. Even worse, the federations would be deprived of their main source of income, putting the whole structure of the community at risk.
Selling the Israel bonds, often against the opposition of community leaders, was not easy. Nevertheless, in the first three years of the drive, Israel sold more than $145 million worth of bonds to almost 700,000 subscribers.
Israeli and American Jews viewed the bonds differently. Israeli leaders treated the bonds mostly as an investment and enjoyed an increased stream of American dollars, free from the restrictions associated with regular philanthropy. Abba Eban, the Israeli ambassador in Washington, proudly explained that the bonds “expressed in the field of economic thinking the idea of independence and sovereignty.”
American Jews, in contrast, saw the bonds mostly as a gift to Israel. This orientation can be gleaned from the long-term trends of the sales. The Israel bonds’ sales surged during wartime. In contrast with typical investors, Israel bonds subscribers were not deterred by the risk associated with wars. At the same time, Israeli leaders never failed to thank subscribers for their generosity, and American Jews, for the most part, remembered to redeem their bonds upon maturation.
Both parties realized that the bonds were a bit of a gift and a bit of an investment, but by sustaining some kind of willful partial misunderstanding, American and Israeli Jews were able to cooperate and secure an increased flow of funds to the national project. After the first drive, others followed, and the sale of Israel bonds continues even today. Over the years, Israel bonds have provided Israel with more than $35 billion — roughly a third of Israel’s external debt.
Things could have gone very differently. In 1920, facing similar struggles over the distribution and control of philanthropic funds, the nascent Irish government issued Diaspora bonds in the United States. Like the Israel bonds, the Irish bonds combined elements of a gift and an investment. The first issue of the Irish bonds won considerable success, raising more than $5 million from more than 300,000 subscribers.
But in the Irish case, the sale of the bonds only intensified tensions between Irish American organizations and the Irish government. Irish American leaders treated the bonds exclusively as a gift. Accordingly, they demanded a voice on matters of national importance in exchange for 