In April 1936, followers of Sheikh Izz al-Din al-Qassam, who lived and worked in Haifa and had been killed a year earlier by British troops near Jenin, organized a general strike in Jaffa and Nablus. Al-Qassam had been the leader of the Black Hand (al-Kaff al-Aswad), a Palestinian resistance group that the British considered a terrorist organization. The call for a strike was adopted by Palestinian political parties, which had been formed from all sides in recent years. Amongst them were the Independence Party (Hizb al-Istiqlal), the National Bloc (al-Kutla al-Wataniya), the National Defence Party of the influential Nashashibi family from Jerusalem, the Palestine Arab Party of its rival the Husayni family, and the Palestine Communist Party. They formed an Arab Higher Committee to coordinate the strike and other actions of protest, such as the non-payment of taxes and the closing down of municipal governments. The Arab Higher Committee, presided over by Hajj Amin al-Husayni, the British appointed mufti of Jerusalem, demanded an end to Jewish immigration, a ban on the sale of land to Jews, and national independence for Palestine. At the same time, armed Palestinian rebels attacked Jewish villages and settlements and Jewish neighbourhoods in the cities with mixed populations.
The British fortified their armed presence with 20,000 troops and officially allowed the Jewish military organization Haganah to arm. Notwithstanding the presence of the enlarged British armed forces, violence on both sides continued. London sent a royal commission under Sir Robert Peel. In its conclusions, published in July 1937, the commission recommended that the British Mandate for Palestine should be ended, and Palestine should be partitioned in a Jewish and an Arab state. As for the Holy Places, an enclave should be demarcated extending from north of Jerusalem to south of Bethlehem, and access to the Mediterranean for the Palestinians should be provided by a corridor, including the towns of Lydda (Lod) and Ramla, terminating at Jaffa.
Treaties should be negotiated under British supervision with the government of Transjordan and representatives of the Palestinians on the one hand and with the Zionist Organization on the other. These treaties should contain the proviso that two sovereign independent states were to be established: an Arab State, consisting of Transjordan united with part of Palestine, and a Jewish State. The boundaries of the Jewish State would include an area of about 5,000 square kilometres (15 percent of the total area of Palestine, but much larger than the land the Jews were holding at the time). The Arab State would include the rest of Palestine, excluding the above mentioned enclave around Jerusalem, and there would be a transfer of land and possibly an exchange of population between the two states to avoid the continuation of conflict between the Palestinians and Jews.
Mainstream Zionists – unlike their revisionist opponents – reluctantly accepted the proposals (it was the first time that a Jewish state had been brought up in an official British document). The Palestinians, however, directly rejected the report of the Peel Commission and the Palestinian revolt flared up. In September 1937, the British declared martial law. The Arab Higher Committee was dissolved, many Palestinian leaders were imprisoned, the mufti of Jerusalem fled first to Lebanon, then to Iraq (he ended up in Berlin, where he tried to incite the Arabs to make common cause with Nazi Germany, but to no avail). The losses on the Palestinian side as a result of the insurrection were great. According to some estimates, when the revolt had faded out at the end of 1939, more than 5,000 Palestinians had been killed, 15,000 wounded and at least 5,600 imprisoned.