Israel Bonds Are Glue That Bind Jewish State and Diaspora

Financial Instrument Proves Unifying Force for a People


By Dan Lainer-Vos

Published June 04, 2013, issue of June 07, 2013.
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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.


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