The Jewish Agency was originally formed to represent the Jewish community in Palestine. The Jewish Agency was established by the British who had a League of Nations mandate to administer Palestine. The agency also had the support of the League.
The makeup of the Jewish Agency was only finalised in 1929. By this time, nearly 50% of the members of the Agency came from outside of Palestine - the World Zionist Organisation effectively masterminded this. The Jewish Agency was responsible for promoting Jewish settlement within Palestine. It was also responsible for administering the funds needed by the Jewish community in Palestine. This set-up enabled the Agency to gain some limited experience in self-government.
How did the Arab Palestinians react to the Jewish Agency? Throughout the 1930's and up to 1948, they resented the fact that the British government was deemed to have a closer relationship with the Jewish Agency than with any organisation that represented the Arab Palestinians in the region. The first British High Commissioner to British-controlled Palestine was Herbert Samuel. He was concerned about the apparent one-sided nature of the agreement and set-up. Samuel suggested that to get a balance in the region, an Arab Agency should be created to give the Arabs in the region a say in how their lives should be run. Samuel believed that this would give Palestine a “fair balance” between both communities. His idea was overruled in London. This left a situation whereby the Jews could turn to the Jewish Agency when they needed to, whereas the Arab Palestinians had no equivalent. Such a situation was a cause for resentment.
When the state of Israel was created in May 1948, the Palestinian members of the Jewish Agency became an embryonic government. Members of the Agency who lived outside of Israel at this time, played their part by encouraging foreign investment in Israel and encouraging Jews to move to Israel.