There was a different version of the story reported by wire services:
Jews have burned 28 Arab villagers alive at Eltera, near Haifa, according to a telegram which is reported to have been sent to the UN Security Councll by the Secretary-General of the Arab League (Azzan Pasha).The telegram declared that during the present cease-fire an eyewitness saw Jews saturate villagers' clothing with petrol and set them alight. The names of 14 of the victims are known.
And the lurid, lying accusations sometimes became headlines with no caveats (Caneberra [AU] Times)
Needless to say, this never happened and it is not even clear that the complaint was really sent to the UN Security Council. The accusation was enough to make it into the newspapers and make people think that Jews are monsters, which was the intent.
Just like today, baldfaced lies are an effective propaganda technique, because people simply do not want to believe that someone has the gall to make up such extravagant lies.
Meanwhile, there was real terrorism done by the Arab side, meant to cut off any supply of water to Jews in Jerusalem (August 13):
Interestingly, the Jews in Jerusalem had planned for such an event, and had built their own small but important emergency alternative water pipeline to Jerusalem
The Jews could not rely on anyone else (especially the UN) to solve any problems, not only the water problem.
Which is something that Israel needs to keep in mind today as well.