Officials
in the newly formed Ministry of Finance drew from a talented pool of
economists from the Hebrew University in Jerusalem. Privileged positions
were filled from within the bureaucracy and were obtained through
exceptional performance instead of cronyism or nepotism. Of great
importance to their autonomy, officials were able to disconnect themselves
from total reliance on local funding thanks to financial assistance from
the international community and reparations from Germany. Two figureheads
within the government guaranteed a decisive and coherent economic policy:
Levi Eshkol of the Ministry of Finance, and Pinhas Sapir of the Ministry of
Commerce and Industry. They worked hand-in-hand to formulate a unifying
agenda that bureaucrats from both departments could pursue towards a single
common goal.
The end-product of this labor in both nations was a financial
structure in which banks, and by extension the government at large,
controlled the flow of capital. On one hand, banks...
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