entring 8 bit characters

[Hary]

I have insralled Red-Hat 7.3 and using the GNU emacs that is installed with
it.
I am trying to write hebrew characters in emacs and I get the character
masked to 7 bits.
how do I tell emacs not to mask the entered character?
I am using emacs through telnet and I am sure my telnet client is not doing
the masking since in VI or in the shell, I can insert hebrew characters.
(Hebrew characters start from 224 or 0xE0)