CHAPTER I.

GENERAL.

The office of Alien Property Custodian was created by an act of Congress known as the trading-with-the-enemy act, approved October 6, 1917. Under this law and Executive orders issued in pursuance thereof, it became the duty of all persons in this country having the custody or control of any property of whatsover nature belonging to, held for, or owing to an enemy person, to make report thereof to the Alien Property Custodian, by whom it was to be administered with all the powers of a common-law trustee. The act in defining enemy persons, following existing precedents, makes residence and not nationality the test of enemy character. All persons of whatever nationality, including partnerships and corporations, residing or doing business in the territory of enemy nations, or in the territory occupied by the armed forces of the enemy, are enemy persons. The act also puts allies of enemies in the same class with enemies, so that the Alien Property Custodian was empowered to demand and take over all property located or having its situs within this country which is owned by, held for, or owing to persons, partnerships or corporations resident or doing business in Germany, Austria-Hungary, Bulgaria, and Turkey, and in those portions of Belgium, France, Russia, and the Balkans which were occupied by the armed forces of the enemy at the time the property was reported to the Alien Property Custodian.

The right to demand and take over such enemy property is primarily vested in the President and need only be conveyed, transferred, assigned, delivered, or paid over to the Alien Property Custodian when the President, after investigation, shall determine it is enemy-owned, and then only “if the President shall so require"; thus giving to the Executive the fullest discretion as to what enemy property shall be taken and what shall be left in the hands of its private custodians. The power and discretion vested in the President by the section of the act just referred to were delegated by Executive order to the Alien Property Custodian, and he has exercised the discretion lodged in him through various general rules and regulations, rather than in

individual cases. Thus, the property of subjects of Bulgaria and Turkey, which countries are in the class of allies of the enemy, has not been demanded at all, except in a few cases of Bulgarian property whose particular circumstances seemed to demand its sequestration.

It was felt that the likelihood of unfair and even barbarous reprisal upon American citizens and American property which would have been inflicted by Turkey, if we had interfered with the Turkish property in this country, was sufficient reason for not disturbing the small amount of such property here. The property of American citizens resident in enemy territory was demanded only when the American's residence there had been so long continued, or his social and business relations with Germany were such as to indicate a preference on his part for living in Germany, rather than in his home country. Generally speaking, none of the property of American citizens has been taken over where such Americans were detained in Germany by eircumstances or conditions beyond their control, preventing a reasonable exercise of their duty to return to their home country upon the outbreak of the war.

The right to take property of persons resident or doing business in the territory of allied nations occupied by the enemy has been sparingly exercised, and, so far as possible, only in the case of persons whose loyalty to the allied nations has been doubted. Doubtless there will be found cases where the property of persons in occupied territory, whose loyalty to the allied cause can not be questioned, has been taken over because of our inability to determine the facts. But this will cause no loss or expense and very little inconvenience to the owner, for when a person has lost his enemy character by reason of the enemy forces evacuating the territory of his residence, he may file a claim under the act and have his property restored to him. Similarly, American citizens may divest themselves of their technical enemy character by removing from enemy territory into neutral countries, or into the United States, and thereupon the Department of Justice, to which has been delegated the right to pass upon claims of non enemy persons, will take jurisdiction of their claims and upon a proper showing order their property to be released.

No property belonging to persons who were adjudged to be enemies solely on account of residence has been sold or authorized to be sold. The property of American citizens taken over because they were residents of enemy territory or territory occupied by the enemy, and the property of allied citizens and subjects demanded and received because they were resident or doing business in occupied territory, is being conserved and administered without thought or intention of sale or other disposition thereof.