Palestinian Studies

2014 Workshop

Sreemati Mitter

PhD Candidate, Harvard University

A History of Money in Palestine: The Case of the Frozen Bank Accounts of 1948

On June 20, 1948, a month after the termination of the British Mandate for Palestine, the new government of the new state of Israel ordered all the commercial banks operating within its territory to freeze the accounts of all their Arab Palestinian customers and to stop all transactions on Arab accounts. The Israeli government gave the banks one month to comply with this order, and threatened to revoke the banking licenses of all banks found to be in non-compliance with it. By December 1948 every bank operating in Israel had complied with the order, and thus, just six months after the creation of the state of Israel, all Arab Palestinian refugees, who were already homeless and scattered in refugee camps throughout the Arab world, had lost access to the money and financial assets which they had deposited for safekeeping in their bank accounts and safe-deposit boxes.

This talk will discuss this episode in Palestinian history, which has never before been written about, and use it as a prism through which to explore how the fact of statelessness, which is generally thought of as political condition, directly affects the economic and monetary lives of ordinary people. The talk will fit in with the larger theme of the political economy of Palestine by posing the following questions: what happens to the economic lives of ordinary people when there is no state? And how does the absence of a sovereign currency, and of a central bank of “one’s own,” affect the ordinary person’s relationship to the monetary-and-banking apparatus of the state in which he lives and functions as an economic actor?

Using the story of the frozen bank accounts of 1948, this talk will make two broad arguments about the relationship between economic behavior and statelessness. The first is that not having a state, and state institutions of their own, and, especially, not having a central bank and a sovereign currency of their own, rendered the Palestinians particularly vulnerable to being dispossessed of their financial and monetary assets in 1948. The second argument is that: despite this vulnerability to dispossession, and despite not having a state, or state-like institutions of their own, the Palestinians also showed themselves capable of fighting for their economic rights, and of defending their assets from various colonial monetary and banking institutions and policies. The surprising, and hitherto little-known, extent to which the Palestinians turned to the law to seek protection and redress from the threat of financial dispossession in 1948 will be a recurring theme in the talk, and will provide the evidence for my second argument about Palestinian economic agency in the face of dispossession and statelessness.

This talk will engage with the broad field of economic history by highlighting the economic dimensions of statelessness. While questions of statehood and sovereignty are generally understood as political problems – and are treated as such in all the scholarly literature – the episode of the frozen bank accounts of 1948 shows how statelessness also deprives people of the ordinary financial protections that are afforded by the state, while denying them a “seat at the table” at international forums such as the United Nations or the International Criminal Court, thereby rendering them particularly vulnerable to dispossession of their financial and monetary assets.

The talk will also appeal to those interested in financial and banking history, as it will provide a narrative of the actions and motivations of the three most important banks in Palestine in 1948: Barclays Bank DC&O; the Ottoman Bank; and the Arab Bank. While financial histories tend to present large commercial banks as monolithic institutions with single-minded aims, this talk will show how these three banks were, in fact, managed by conflicted and vacillating individuals who felt themselves frequently trapped, in the conduct of their Palestinian operations, between the dictates of the state on one hand, and the needs of their customers on the other. In addition to illuminating the complex relationship between these banks, the state, and their Palestinian customers, which has largely been overlooked by scholars of Palestinian history, this talk will also contribute to international financial history by “writing Palestine into” the story of international banking history in the 20th century, from which it has, thus far, largely been absent.

Finally, and most importantly, this talk will contribute to Palestinian historiography by telling a story which has never yet been told: of how the Israeli government ordered banks to “freeze” Palestinian bank accounts in 1948, and how the Palestinians fought, by suing the banks, to get their assets back. This story ought, I feel, to be told, and known, and spread; and the desire to make it so animates my work, and provides me my chief motivation in submitting this proposal for your consideration.

Sreemati Mitter is an Ernest May Fellow in History and Policy at the Harvard Kennedy School’s Belfer Center, and the College Fellow in Middle Eastern History at Harvard’s History Department. She is working on a book based on her doctoral dissertation, titled "A History of Money in Palestine: From the 1900s to the Present." Her work examines the economic and monetary dimensions of statelessness. Her broader academic interests include the economic, social, and political history of the modern Middle East. Miss Mitter will receive her Ph.D. in history from Harvard University’s history department this fall. She has a Master's in Public Policy from the Harvard Kennedy School and a B.A. in Economics and French from Middlebury College. She previously worked for the Palestine Investment Fund, the investment arm of the Palestinian Authority, in Ramallah, Palestinian Territories and at Credit Suisse in New York, at the Energy and Project Finance Group of the Investment Banking Division.