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THE PLANTING FRENZY AND ITS THREAT TO PROFITABILITY THE UNDERLYING ISSUE in the expansion—and the contraction—of Palestine citriculture was its current and expected profitability. There are no confirmed and detailed data on the topic. One may, however, get a general picture from contemporary testimonies in the journals of the time, reports of experts who visited Palestine, internal documents that were not meant for publication, disputes among personalities and sectors in the Yishuv that burst into the open, and en passant statements made on various occasions. As stated above (chapter 1), the period of concern in this study may be divided into four main subperiods in terms of the profitability of citriculture: 1890–1919—the beginning of the industry, its initial expansion, and the crisis during World War I; 1920–1929—post-war rehabilitation and strong profitability; 1930–1934—reasonable profitability; 1935–1939—crisis and steep decline in profitability. As stated in previous chapters, all the statistics indicate that citriculture was a very profitable industry during the Ottoman era. Its rapid expansion is perhaps the best evidence of this. According to our computation, profitability at the end of the Ottoman era stood at 24–58 percent of capital invested (see Table 4.3). Between 1920 and 1925, as the industry was in its initial phases of recovery and reconsolidation after the devastation inflicted on it during World War I, new planting was relatively scanty. However, the profitability level began to rise in 1926. Journals of the time spoke of very strong profitability— 167 SEVEN Pursuit of Profit 15–56 percent net profit to the grower—and the incentive to invest in citriculture increased tenfold. The Pardess reports, too, described the results of first postwar export season (1920/21) in “very glowing” terms. A year later, too, they stated that “the auspicious results of the 1921/22 season far exceed[ed]” those of the previous season. Two years later, in the 1923/24 season , the directors of Pardess wrote that the average price received had attained “the highest level in the history of the cooperative.” The 1925/26 season, according to the Pardess reports for that year, was “one of the most successful that the orange industry has known since our cooperative was established.”1 Thus, it is no wonder that the press of the time, taking a cue from the biblical account of Joseph in Egypt, termed the seven years between 1921 and 1928 the “seven good years of Jewish citriculture.” The 1929/30 season marked the transition from strong profitability to reasonable profitability. The “on the tree” price of a case of oranges fell by 30 percent during that season (from seven shillings per case in previous seasons to five shillings). The profitability decline was worse for dealers than for growers, since the “on the tree” method gave growers a pre-assured price and subjected dealers to greater risk. This season marked the beginning of the end of the “seven good years,” since the factors that would push citriculture profitability down in succeeding years were already evident by then, as the industry leaders knew. A sudden bountiful harvest surpassed the preseason forecast by about a million cases (40 percent more). Sorting and packing were poorly done, causing a high rate of fruit rot upon arrival at the port of destination. Spain turned out a large harvest. Finally, the great economic crisis that struck the Western world at the time vitiated purchasing power in the target markets . It is true that growers again received seven shillings per case of oranges “on the tree” in several shipping seasons after 1929/30, but in other seasons they received only the 1929/30 level or slightly less.2 Importantly, however, citriculture was still considered a safe and sound investment at this time, especially since the high prices in previous years had “cemented the image [of citriculture] as a very successful and profitable industry .”3 Thus, it comes as no surprise that during the reasonable profitability years, which, as stated, coincided with strong economic growth in the Jewish sector at large—a surge that was fueled mainly by impressive Jewish immigration and a massive inflow of private capital—the incentive for private investment in citriculture was strong. Citriculture was still thought to assure a higher rate of return than alternative investments. Indeed, the “planting frenzy” in Palestine citriculture largely overlapped the reasonable-profitability years. Two years after the watershed 1929/30 season, a gradual but constant decrease in prices ensued: from between six...

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