Pavilions in the Levant Fair, an international trade gathering in Tel Aviv in the 1930s. Photo scanned by Ilan Shchori, via the Israeli Pikiwiki Project and Wikimedia Commons.

By Jake Beckert

Tel Aviv, 1932. The usual bustle of Rothschild Boulevard comes to a halt as Sir Arthur Wauchope, the British High Commissioner of Palestine, strolls past the barricades and becomes the first official visitor to enter the Levant Fair. Inside, he walks through a sprawling showcase of Middle Eastern goods and displays — each exhibit crafted to tell a story of regional promise and modern progress.

But it’s not the grand pavilions or exotic wares that hold his attention. Like many visitors after him, Wauchope lingers at a modest three-room house. Plainly furnished and unassuming in appearance, the structure seems almost out of place among the bustle. Yet this house was no ordinary model home — it was something of a weapon. A weapon built to end the kibbutz.

For more than fifty years, Israel’s iconic collectivist farms, known as kibbutzim [singular: kibbutz] have been in slow decline. Social commentators cite shifting cultural norms, economic inefficiencies, and the increase in individualism as the cause. Obituaries for the kibbutz have become commonplace.

But almost no one has traced the roots of this unraveling to that unremarkable house at the 1932 fair — or to the group of American Jewish investors who quietly funded it, hoping to create a viable alternative to communal farms and collective land ownership in Palestine. Today, their plan, long overlooked, appears to have reached fruition.

The origins of the kibbutz in Israel

The kibbutz was first established over 100 years ago in a joint effort between Labor Zionists, a loosely allied collection of Zionist parties which emphasized Jews working the land in Palestine, and the European-based Zionist Organization. The collective farms were designed to combine collectivist ideals with Labor Zionists’ insistence on Hebrew labor, the principle that Jews must work the land directly.

Kibbutz Tel Yosef, 1946. Via the National Photo Collection of Israel and Wikimedia Commons.

The model of collective farming, communal property, and absence of wage labor were partially fueled by utopian ideals, but also by practical necessity — few of the Eastern European farmers arriving in Palestine in the 1920s and 30s had the capital to start a private farm, to say nothing of purchasing land or a home.

While fewer than 3 percent of the Jewish population of Israel ever lived on a kibbutz, the institutions became an iconic symbol for the State of Israel and the Zionist movement, and were a central incubator for many of the country’s military and political leaders.

American Jewish criticism of kibbutzim & promotion of private alternatives

To American Jewish elites in the 1930s, however, that vision looked dangerously communist. Men like Felix Warburg and Louis Marshall, both leading philanthropists and community leaders, worried that Palestine’s socialist experiments would stain the global image of Jews. In the U.S., where Jews were already associated with radical politics, the kibbutz threatened to reinforce antisemitic claims that Jews were anti-capitalist and un-American.

In the late 1920s, Warburg and other members of the American Jewish elite partnered with European Zionists on a joint fact-finding mission to Palestine. The resulting report did not mince words when it came to kibbutzim. The collective farms, it argued, were economically unsound and ideologically out of step with the needs of modern Jewish settlement.

Labor Zionists were outraged. But Warburg didn’t stop at criticism. He brought the issue before the Palestine Economic Corporation (PEC), a powerful American investment company founded to promote capitalist development in Jewish areas of Palestine. Rather than merely attack the kibbutz model, PEC leaders proposed something more subversive: they would outcompete it.

Their plan was to offer Jewish settlers a viable capitalist alternative to kibbutzim — one built around private homes, mortgage-backed construction, and the dream of individual prosperity. While Palestine already had a modest capitalist class in its Jewish urban centers and citrus plantations, most Jewish immigrants arrived without the means to obtain land or build homes. The PEC believed that by lowering the barriers to ownership — especially for working-class settlers — they could make private rather than collective labor the foundation of Jewish life in Palestine.

The PEC’s design competition and financing options

The PEC believed that if it could introduce a low-cost, privately owned home to Jewish settlers, it could wean them off the kibbutz and into small-farm-based capitalism. To do so, the corporation launched a design competition among architects in Palestine, offering cash prizes for blueprints that met strict affordability and construction standards. Once winning designs were selected, the PEC partnered with engineers and contractors to build model homes — homes they hoped would inspire a new vision of Jewish life in Palestine grounded in property rather than collectivism.

Of course, designing affordable houses was only part of the battle. Without financing, even the cheapest home was beyond the reach of most Jewish immigrants, many of whom arrived in Palestine with little more than a suitcase. So, the PEC created something else: a mortgage system. They offered low-interest loans to settlers looking to buy a home or start a farm, placing capitalist tools in the hands of Jewish pioneers.

PEC model homes built in Hazafon (today the Old North) in Tel Aviv

Soon, PEC-backed private homes were springing up across the region. North of Tel Aviv, these homes formed what would become the neighborhood known today as the Old North. Around Haifa, they formed the suburban ring known as the Krayot. And in rural areas like Binyamina, Hadera, and Pardes Hanna, new agricultural neighborhoods emerged — not as collectives, but as clusters of independent small farms with privately owned homes.

Advertising private ownership: The 1932 Levant Fair and the PEC’s model home

Despite their substantial wealth, these American investors knew they couldn’t single-handedly reshape the Jewish economy in Palestine. Instead, they aimed to spark a transformation by presenting their new communities as inspiring examples for others to follow. To broadcast their vision broadly, the PEC launched an ambitious advertising campaign — which brings us back to the Levant Fair.

Sections of the Levant Fair in Tel Aviv in 1932. Photo via the G. Eric and Edith Matson Photograph Collection, Library of Congress.

The modest PEC home on display at the fair was the lynchpin of the PEC’s effort, an opportunity to vividly demonstrate the tangible comforts and individual freedoms afforded by private home ownership. 10,000 pamphlets featuring photos and floor plans of the affordable houses were widely distributed across Palestine, and the house itself toured fairs in Europe, promoting abroad the capitalist promise of Palestine.

According to (admittedly biased) PEC sources, the model home was the undisputed star of the Levant Fair — so popular, in fact, that fair staff had to be on hand to prevent bottlenecks from forming and disperse the large crowds gathered to catch a glimpse inside. The PEC even held competitions among owners of their homes with cash prizes for the best-kept kitchens and gardens.

The present day: Private homeownership wins out over collective models

Despite the model home’s initial buzz and the gradual rise of private housing in the region, the kibbutz did not immediately crumble. Collectivist farms endured for decades, continuing to shape the State of Israel’s political and cultural landscape.

Nevertheless, the PEC’s capitalist vision and the promise that home ownership could be obtainable to all had planted a powerful seed. Its promise — that even newcomers with minimal resources could aspire to private homeownership rather than collective living — slowly reshaped perceptions and aspirations across Jewish centers in Palestine and later in Israeli society.

Today, fewer Israelis than ever live on kibbutzim, and many of the remaining ones have privatized. In contrast, neighborhoods created by the PEC, such as Tel Aviv’s now-fashionable Old North, rank among Israel’s most desirable and vibrant areas. Private homeownership has become a distinctly Israeli aspiration, echoing the American ideal.

Although the dream of homeownership in both nations now faces mounting affordability crises, it was the PEC’s quiet, strategic push nearly a century ago that first revealed capitalism’s seductive potential to shape not only landscapes, but dreams.

Jake Beckert is a doctoral candidate in the Department of History at the University of Washington. His research delves into the dynamics of American investment in Mandatory Palestine, scrutinizing the interplay between capitalism, development, and inter-ethnic conflict within the region. Central to his dissertation is an examination of the Palestine Economic Corporation (PEC). Established by American non-Zionists in the 1920s, the PEC was a for-profit entity dedicated to investing in Jewish industries in Palestine, while adhering to a principle of operating on a “strictly business” and “non-political” basis. Beckert’s project sheds light on the intricate ways the PEC’s leadership became increasingly involved in the Jewish-Arab conflict, and how they attempted to maintain their claims of “apoliticism” despite their increasing entanglements. When he is not doing work, Jake loves climbing in the mountains, and hiking with his pet chihuahua, Appa. Jake is the Stroum Center’s 2024-2025 Robinovitch Family Fellow in Jewish Studies.