The office of Alien Property Custodian was filled by the appointment of the President on October 22, 1917, so that the office has been. in operation about 16 months. At the close of business on February 15, 1919, 35,400 reports of enemy property had been received. The property of each enemy person is treated in the office as a trust and administered by an organization which is built upon the general lines of a trust company. The number of separate trusts now being administered amounts to 32,296, and have an aggregate value of $502,945,724.75. About 9,000 of these cases are covered by reports in which the administration has not yet reached the stage of valuation. When the entire number of trusts reported shall have been finally opened on the books and the readjustment of values consequent upon appraisal shall have been completed, it is safe to say that the total value of the enemy property in the hands of the Alien Property Custodian will reach $700,000,000.

The total amount of Government funds expended by the office of the Alien Property Custodian from the time of its organization to February 15, 1919, is about $1,000,000. Thus, it will be seen that the cost to the Government of administering nearly 33,000 trust estates of a total value of $700,000,000, located in every State in the Union and in every insular possession, is only about one-seventh of 1 per cent of the principal of the trust estates for a period of 16 months; a record of economical administration which has never been approached by any trust company in the world. In one sense, indeed, this office has cost the Government less than nothing, for through the efforts of the Alien Property Custodian unreported and concealed income and excess profits taxes have been collected from corporations and other taxpayers controlled by the enemy during the same period to the amount of $1,604,539.76. Without the activities. of this office and the careful scrutiny and examination made of the affairs of all corporations with which the enemy had any connection, it is most likely that none of these taxes would have been revealed to the Government or collected by it. The amount thus collected through the efforts of the Alien Property Custodian is over 60 per cent greater than the entire cost of operating the office.

And, furthermore, after taking over enemy-owned corporations the Alien Property Custodian has endeavored, wherever he could consistently do so, to make them a part of America's great fighting machine. He instructed his representatives to give the Government the first call on the products of these enemy-owned corporations with the result that he soon found himself supplying the Government with many of the most important things used in the war. It is indeed a suggestive thought that the principal German investments in this

country were found to be in the production of the essentials of warfare.

When the armistice was signed the Alien Property Custodian was supplying the Government with magnetos for aeroplane and automobile motors, with cloth to make uniforms for the soldiers and the dyes with which the cloth was dyed, with medicines, surgical instruments and dressings, with musical instruments, with ball bearings, telescopes, optical instruments and engineering instruments, with coconut charcoal for the making of gas masks, with glycerin for the making of high explosives, and a large number of other and varied products. In some instances the enemy-owned corporations under the Alien Property Custodian's supervision were running 100 per cent of their capacity on Government business.

In addition to enemy-owned corporations, the Alien Property Custodian took over a large amount of enemy-owned commodities which were in warehouses and various other places in this country. Whereever possible these commodities were turned over to the Government. More than 1,500,000 pounds of nickel and several hundred thousand pounds of ferrovanadium were turned over to the Ordnance Department, 98,000 bags of coffee and 10,000 bags of rice were sent to the Food Administration, while chronometers, binoculars, and various astronomical instruments were turned over to the Navy Department. A few of the things supplied to the Government by enemy-owned corporations under the Alien Property Custodian's supervision follow:

Bosch Magneto Co., magnetos to Army and Navy aeroplanes and autos

Botany Worsted Mills, cloth, shirting, and yarn__.

New Jersey Worsted Spinning Co., yarn, etc.

Passaic Worsted Spinning Co

Gera Mills.---.

Norma Co., ball bearings.

Bayer Co.. aspirin tablets, dyes, etc..

Heyden Chemical Works, acids, etc..

$2,561, 492

5,950, 669 8, 651, 130

1,851, 111 8, 003, 492 1,100,000

1, 160, 000 753, 423

431,376

Werner & Pfeiderer Co., machines for mixing powder, etc_---
Kny-Scheerer Corporation, surgical instruments and supplies______ 2, 107, 155

The magnitude of the work in building up an organization and accumulating within a year's time a trust business of these proportions can hardly be appreciated by any other than experienced trust company officials. No trust company in the world handles so many trusts as the Alien Property Custodian, and none has been compelled to handle even a fraction of the number while in the process of building an organization to take care of the work. Starting without a single clerk or a foot of oflice space, only a little more than a year ago, the

organization rapidly thrown together for the purpose of providing for the torrent of business which flowed into it, has grown until 549 persons are now upon its pay roll at its two offices in Washington and New York, and agents, representatives, and depositaries are serving it in every State in the Union and in every insular possession.

The most careful and painstaking investigation has been required to disclose the fact of enemy ownership in thousands of cases. The commonest device resorted to by the enemy owners was the transfer of their property to their friends or agents in this country without valid consideration or upon consideration to be fixed after the war, and payable out of the business itself at a time when the parties conceived that normal business conditions would be restored. Businesses individually owned were frequently transferred to hastily formed corporations; the transfer often being made by the American agent of the German owner under his general powers. Not infrequently the agent undertook to sell the property of his principal to corporations whose stock was held by himself or his friends, the corporation converting the enemy ownership into a liability to the enemy for a fraction of its value, payable after the war, or in 1920, and in one case as late as 1937.

In many cases shares of stock enemy owned, whose certificates were in the enemy country, were treated as lost and new certificates issued to the American friends of the enemy owner, thus making this stock record of the corporation bear the appearance of American ownership. In some instances enemy owners of stock, whose certificates had been sequestered by the public trustee of Great Britain, undertook to sell their interest in the corporation to friends in America, to whom new certificates were issued, leaving the public trustee of Great Britain high and dry with only a piece of paper as the result of his operations under the British trading-with-the-enemy act. If we had permitted these fake transfers to stand, and if the American purchasers had been able after the war to maintain the validity of the transactions in a contest with the enemy owners, some Americans would have picked up bargains which would have yielded fabulous profits obviously never contemplated. Cases were not uncommon where American purchasers seriously contended they had bought stock at $100 per share whose book value ran into thousands of dollars.

Property, whose sale or exchange in times of peace would have required months of negotiation and reams of paper on which to write the instruments necessary to protect the parties in their contracts, was sold under stress of the imminent war conditions about the time Von Bernstorff received his passports, by the mere exchange of 10

word cablegrams. Conversations held years before in the beer gardens of Berlin, or in Fifth Avenue restaurants, when German owner and American friend casually discussed their American businesses, were suddenly resurrected to serve as foundation and justification for the most amazing transfers and alleged sales of enemy property in America. Great industrial institutions here, almost by word of mouth, traded their holdings in Germany for the property of Germans here, leaving balances to be adjusted when the war might permit either a confirmation of the transfer or a resumption of the former business status of the parties. Every device known to the law, as well as many unknown to the law, served the purpose of evading the consequences of the war between Germany and the United States, which German business men at least seemed to have foreseen from the time the world war started.

In working out their plans, the German owners frequently had the assistance of capable American counsel, who in most cases carried out the details of the transaction in entire good faith and without ulterior motive, being without knowledge of the underlying purposes of the parties. Most of these lawyers, feeling that the interest of their country was paramount to those of their clients, assisted us in developing the real facts from which we were able to draw conclusions as to the actual ownership of the property. In very few cases have we discovered American lawyers active parties to conspiracies to defeat the belligerent rights of the United States, or to hide the property of enemies from the governmental authorities.

In approaching all these cases we have been guided constantly by the standard set up by the Supreme Court of the United States in similar cases, generally involving seizure and condemnation of vessels at sea in time of war. As stated in a recent case, referring to a transfer of enemy property during the Spanish war

The opportunities for fraud being great, the circumstances attending a sale are severely scrutinized and the transfer is not held to be good if it is subjected to any condition or even tacit understanding by which the vendor keeps an interest in the vessel or its profits and control over it, a power of revocation, or a right to its restoration at the close of the war.

Wherever the facts seem to justify the conclusion that the transfer of property has been made in contemplation of the war to defeat the belligerent rights of the United States, to avoid the effects of an anticipated trading-with-the-enemy act, or with a view of resuming the ante bellum status at some time in the future, we have not hesitated to cut through the contracts, conveyances, obligations, and trust agreements by which the parties have sought to conceal their real purposes and have declared the property to be enemy owned. In

most cases, after our thorough investigation, confessions of the parties have verified our suspicions and fortified our conclusions. In other cases sturdy resistance has been met all along the line and delivery made to the Alien Property Custodian only under proteset. In but one or two cases, however, did this protest reach the stage of litigation before the armistice was signed.

With the cessation of hostilities something of a new fighting spirit has developed, and lawyers who, while the war was on, would have been unwilling to play any part in resisting the just demands of the Government in the taking of enemy property, have not hesitated to throw all sorts of obstacles in the path of the Alien Property Custodian and to invoke the aid of the courts to sustain transactions, which as patriotic Americans they would have been first to condemn while the war was being fought. It seems not improper for me to say that lawyers ought to be no less loath now than heretofore to involve themselves in the machinations of enemy persons seeking to prevent the agencies of the Government from carrying out the expressed will of the Congress.

The legislative intent was plainly that all enemy property, concealed as well as disclosed, should be placed entirely beyond the control or influence of its former owners, where it can not eventually yield aid or comfort to the enemy directly or indirectly. Until the peace terms are finally signed and the ultimate disposition of enemy property determined by the act of Congress, it shall be the firm purpose of the Alien Property Custodian to carry out the will of the Congress in respect thereto. Neither litigation nor threat of litigation ought to be interposed to stay that purpose. The trading-withthe-enemy act makes ample provision for the full protection of American citizens whose just claims or property rights may be affected by the administration of the Alien Property Custodian's office. Proprerty in his hands is in custodia legis in a large sense, and the Government can be relied upon at the conclusion of the war to make adequate provision for the just disposition and distribution of all this property.

The enemy investments in America divide themselves into two classes. In the first class are the private investments of individual German subjects, who, attracted by the possibilities in America, invested their funds in a small way in this country in real estate, in mortgages, and in securities, chiefly of industrial and transportation companies. In the second class are the investments which have been made by combined capital in Germany having close affiliations with the great political and financial powers of the Empire.