American Express Says It Does Not Boycott Israel: Explains Position

The American Express Company, which has been charged with closing its office in Israel under pressure of the Arab boycott against Israel, issued a statement today declaring that the office was closed in 1956 because it “did not create sufficient revenues to become self-sustaining. “

The statement stressed that “American Express now offers to the traveling public a full range of travel services to Israel, including transportation, hotel and sightseeing” and has Israeli agents to service the needs of its travel clients at port and air terminals. It claimed that this form of representation through selected agents is practiced by the company in 48 other countries. It added that through local agents in Israel, American Express “continues to promote export and import shipping business with Israel” and is equipped to arrange the sale of drafts payable through Israeli banks.

(The Israeli Consulate in New York, commenting on the American Express statement, said: “The statement fails to answer the main question. It is and remains strange that American Express should have closed their own office in Israel in Spring 1956, a few months after a peak year for Israeli tourism. The alleged commercial considerations for this action make even stranger reading in the light of the record breaking tourism to and in Israel, stimulated by Israel’s tenth anniversary, when almost every shipping and air line has increased their services to Israel. “)

American Express emphasized in its statement that in order to maintain a profitable office in any foreign country, the firm must be able to develop travel business of local origin. “In the case of Israel, business arising from this source was negligible in view of restrictions imposed by the Israeli Government on its nationals (i. e, , 40 percent travel tax, a travel allowance of only $10 per person per trip, and a mandatory exit permit)” the statement said. “As a result, travel business originating locally was almost completely confined to a few foreign tourists and representatives of American institutions who booked return passage through American Express, Tel Aviv.

“In the final analysis,” the statement continued, “the office of American Express in Tel Aviv did not create sufficient revenues to become self-sustaining; consequently, it functioned merely to provide non-revenue producing services for American Express clients visiting Israel from other countries. In the course of five and one-half years, American Express was unable to put the office on a paying basis despite substantial investments in the world-wide promotion of services to Israel, Cumulative losses from the operation continued to rise; staff salary and wage expenses increased by approximately 30 percent in terms of dollars–and this despite the reduction otherwise expected from depreciation of the Israeli pound from $2.80 to 56 cents. “

The statement went on to explain that “American Express, in accordance with accepted business procedure, maintains an established policy to close out unprofitable offices when it appears there is no reasonable prospect that such enterprises can be run profitably and when clients of the company can be serviced efficiently by locally appointed agents. ” It concluded by stating that “American Express will continue its efforts to develop tourism to Israel and to promote sales of financial and shipping services for that country” and that “a full range of American Express services for Israel will always be offered within the limits of demand for such services. “