registration statement which will be issued prior to sale. This procedure is the one which has been followed in the cases of other vested assets disposed of by the Office of Alien Property. At no time has any consideration been given, and none will be given, to a negotiated sale of the stock of General Aniline & Film Corp., now owned by the United States." Sincerely, WILLIAM P. ROGERS, Attorney General. U.S. SENATE, COMMITTEE ON THE JUDICIARY, Hon. WILLIAM P. ROGERS, The Attorney General of the United States May 13, 1959. DEAR MR. ATTORNEY GENERAL: Your testimony before the subcommittee of the House Committee on Appropriations, for 1960 fiscal appropriations, released on May 11, 1959, and reported in the press yesterday, so far as it relates to an early sale of General Aniline & Film Corp., astonishes me. When referring to your effort to get legislative permission to sell this corporation and hold the proceeds in escrow, you testified: "It does not make sense for the Government to control companies like this for such a long period. ** ́* "We think it would be much more desirable to permit the sale of these properties at competitive bidding while the market is good and do it then rather than to wait until later on and have to sell it. The market is particularly good now and General Aniline & Film has had a very successful period, and it would be an excellent time to sell it." You then proceeded to detail the status of the litigation now pending in the courts of the United States over the title to the vested shares of the General Aniline & Film Corp.'s stock. You then made a general reference to the pending action before the International Court of Justice by the Government of Switzerland against the United States without advising the subcommittee of the specific representations made by the General Counsel of our Department of State, which representations resulted in the latter Court's deferment of a hearing and final decision. Those representations in substance were that the vested stock would not be sold until the dispute over its title shall have been settled in our Federal courts. To me it makes good sense and fortifies the integrity of our friendly diplomatic relations to stay a sale until the domestic litigation is concluded. Regardless of the present price of the stock, there is a cloud on its title, which, when removed, any layman, much less a lawyer, should expect the stock's value to increase. Then, too, as a lawyer, one should have grave doubt as to the constitutionality of such a sale in view of the pertinent provisions of the fifth amendment to the Constitution. In addition, I feel the Congress should not preempt the court from its responsibility in determining for parties litigant the basic controversy in the pending suit. Moreover, it is an anomalous situation for you, as the Attorney General of the United States, to permit the Swiss Government to be lulled into a feeling of security through representations by our Government that there would be no sale of the stock on the one hand, and for you to now actively urge such a sale on the other hand. I regret that I cannot come to any other conclusions from your testimony. OLIN D. JOHNSTON, Chairman. OFFICE OF THE ATTORNEY GENERAL, Hon. OLIN D. JOHNSTON, Chairman, Subcommittee on the Trading With the Enemy Act, Committee on the Judiciary, U.S. Senate, Washington, D.C. DEAR SENATOR: I have your letter of May 13, 1959, in which you refer to my testimony of February 2, 1959, before the Subcommittee of the House Committee on Appropriations as it relates to pending legislation which would permit an early sale of General Aniline & Film Corp. You state that the legal adviser of the Department of State in his capacity as agent of the United States before the International Court of Justice in the Interhandel case (Switzerland v. United States of America) represented to the court, in substance, that the vested stock would not be sold until the dispute over its title shall have been settled in our Federal courts. You state further that these representations resulted in the court's deferment of a hearing and final decision. The representations to which you refer were made with respect to the U.S. preliminary objection to the court's jurisdiction as to the sale and disposition of the General Aniline & Film Corp. shares. The statements made by the agent of the United States clearly were intended to advise the court of the prohibitions against the sale or disposition of vested assets under our present law. Indeed, the judgment of the court and the statements of the several judges indicate that the agent's remarks were so understood. In fact, the dissenting opinion of one of the judges alluded to the possibility of a change in our present law which now prevents a sale. Moreover, the court noted that despite the fact that the agent for the United States had stated to the court that the preliminary objection had become "somewhat academic" in view of the decision of June 16, 1958, by the U.S. Supreme Court, the United States nevertheless continued to maintain the objection. Thus, the enactment of legislation by the Congress of the United States which would permit the sale of vested assets notwithstanding the pendency of a suit for return is not in any way inconsistent with or contrary to the representations made or the position taken by the U.S. Government before the International Court of Justice. You refer to a cloud on the Attorney General's title to the vested General Aniline & Film Corp. stock. As a matter of well recognized law, upon vesting, former owners of vested property are divested of every right in such property and the title acquired by the United States is absolute. Upon the sale of vested property, absent a pending suit for its return under section 9, the purchaser acquires good title. It follows that if pending legislation were enacted and the statutory prohibition against the sale of vested property subject to a section 9(a) suit were removed, a purchaser of such property would receive the same good title unencumbered by any cloud as would a purchaser of vested property not subject to suit. You also express grave doubts as to the constitutionality of such legislation in view of the pertinent provisions of the fifth amendment to the Constitution. The proposed legislation amply fulfills constitutional requirements and in my view the enactment of such legislation would be a valid exercise of congressional authority. There is attached a copy of a letter dated April 14, 1959, addressed to Senator James O. Eastland, chairman, Committee on the Judiciary, by Judge Lawrence E. Walsh, Deputy Attorney General, expressing the views of the Department of Justice on S. 1103. These views also apply to H.R. 404 and H.R. 1345 which are identical with S. 1103. These bills constitute the pending legislation referred to above. Sincerely, WILLIAM P. ROGERS, Attorney General. JUNE 3, 1959. Hon. WILLIAM P. ROGERS, The Attorney General of the United States, MY DEAR MR. ATTORNEY GENERAL: In reply to your letter of May 29, I am still of the opinion that a sale of the General Aniline & Film Corp. stock would result in a breach of faith with Switzerland. Moreover, I cannot follow your reasoning that a sale would be advantageous with title to the asset in question. With title cleared one could reasonably expect a much larger sales price for the asset. Then, too, suppose the Swiss conclude they wish the asset instead of the proceeds from its sale, should Interhandel be successful in either of the two pending cases, a disposition of the asset would place the United States in an embarrassing situation. There is still another fact to bear in mind. The two courts have the question of title under consideration as the fundamental basis of each case. Should the Congress, acting upon Executive recommendation, preempt the court in its decision on this basic question? Should S. 1103 become law and a sale of the General Aniline & Film Corp. stock were advertised. I have no doubt that such action would invite additional litigation which would cause still further delay. Hence, I believe that we should be practical about the matter. Sincerely yours, OLIN D. JOHNSTON, Chairman. Senator JOHNSTON. Call the next witness. STATEMENT OF CHARLES C. PEARCE, WASHINGTON, D.C. Mr. PEARCE. Mr. Chairman and gentlemen of the committee, my name is Charles C. Pearce. I am an attorney at law and a member of the New York and Washington bars. Among the six Senate bills listed for consideration at these hearings are your own bill, S. 672, and the bill known as S. 744, introduced on January 28, 1959, by Senator Milton R. Young of North Dakota. As you know, I am a supporter of Senator Young's bill, S. 744, as an embodiment of more desirable features than the other proposed bills. S. 744 is identical in phraseology with S. 1302, which was introduced by Senator Young in the 85th Congress. I appeared before you and your subcommittee on Saturday, April 6, 1957, and testified at some length in support of S. 1302. The bulk of my testimony at that time consisted of a comparison between the basic provisions of S. 1302 and S. 600. Since the transcript of your subcommittee's prior hearing in April of 1957 contains my detailed analysis of S. 1302, there is no need for me now to repeat this testimony orally in support of S. 744, which is an identical bill. Consequently, may I request that my testimony on pages 559-566 of your prior hearing on April 6, 1957, be incorporated physically or by appropriate reference in support of Senator Young's present bill S. 744 in the transcript of record of your new public hearings on the proposed Senate bills. May I also take this opportunity to congratulate you on your brilliant and statesmanlike summary, in your Senate speech of April 28, 1959, as to the historical background and responsibilities and duties of your subcommittee with respect to legislation pending before it. My congratulations are also extended to Senator Hruska, who delivered a powerful Senate speech on May 15, 1959, analyzing the problems of return of vested assets and payment of proper U.S. war damage claims. In my opinion, these two devastating speeches of yourself and Senator Hruska completely annihilated the arguments of those presuming to oppose proper return of vested assets and payment of appropriate U.S. citizens war damage claims. There is no fundamental difference in principle between the Young bill S. 744 and your bill S. 672. The Young bill provides for full return to natural citizens but omits corporate vested property return since the latter has created such a controversy in prior public hearings. Consequently, for practical reasons and to circumvent such diversionary tactics, the supporters of the Young bill believe that corporate vested return should be the subject matter of separate legislation. However, there is a fundamental difference between the Young bill and your bill, S. 672, in this respect: The Young bill provides (pp. 14 and 34) for judicial review of all administrative decisions as to both return and war damage claims. There is no valid reason in our opinion why these administrative decisions under this act should be immune from judicial review as provided under section 1009 (a) of the Administrative Procedure Act. This is an appropriate check against administrative absolutism or as the U.S. Supreme Court termed it "against arbitrary official encroachment on private rights". (U.S. v. Morton Salt Co., 338 U.S. 632.) There is ample authority for the provision in your bill (sec. 203 of S. 672) for crediting to a claimant all amounts received by way of tax deductions with respect to the loss claimed as war damage. Apropos of section 203 in your bill, see the remarks of Senator Humphrey on May 12, 1959 (Congressional Record, p. 7145), proposing amendment of Public Law 285 as provided in his bill S. 1918 introduced on that date. The supporters of the Young bill S. 744 do not believe there is any legal, reasonable, or moral justification for the ceiling of $10,000 imposed on awards on war claims as provided in S. 2005 and H.R. 2485. May I ask that my letter to you of June 10, 1959, incorporating in fuller detail these reasons be incorporated physically in the transcript and that my statement of April 6, 1957, in behalf of S. 1302 be likewise incorporated in the record. Senator JOHNSTON. We will be glad to incorporate your statement in the record at the conclusion of your remarks. Mr. WOOD. It will be incorporated by reference because we have it bound already. Mr. TAWNEY. For the information of the committee, Mr. Pearce, I notice that S. 744 differs in many detailed respects from similar bills, that is, technical language differences. The basic purpose of course I think we all understand, but I was just wondering if there would be any objection if the language of the bill might be modified in the course of consideration of the legislation so as to remove any possible technical difficulties that might arise from the choice of words here and there. You know what I mean. As long as the basic purpose is carried out I don't imagine you would have any objections. Mr. PEARCE. No objection whatsoever and I would like to say specifically on this point that S. 1302 was drawn for practical reasons to coordinate it as much as possible with the then administration bill and therefore while the preliminary paragraphs read like technical gobbledygook in many respects they represent a physical appropriation in the terminology of the administration bill so that that would reduce the area of conflict and get right down to the basic questions that divided the proponents of the different bills. That is frankly the reason and I think your question was directed in that direction. Mr. TAWNEY. That is correct and I think the committee would appreciate knowing it in case they modified the language of any bill that the sponsor would understand why they were doing it. Mr. PEARCE. I think S. 672 is a much more readable bill, but S. 1302 was born in a legislative crisis when we were trying to accommodate, from the administration's point of view, as much as we could so that we could get this legislation passed and we took what we could of the administration bill and put in the features that we thought should go into the administration bill as to judicial review, as to lack of ceilings and so forth. There is one major difference between S. 744 and S. 672 and some of the other bills in that it does not provide for corporate return. We believe that should be the subject of separate legislation because every time this committee holds hearings or the House holds hearings on this legislation there is a violent reaction on the matter. It doesn't seem to me that the owners of this property should be deprived of their private property because there is a conflict between certain small special corporate groups over whether there should be a corporate return or a noncorporate return, and complicating that picture is the further feature that there is a responsible group of opinion that there should never be any corporate return of corporate vested enemy assets to those groups that have violated our antitrust laws. Probably part of their profits were arrived at by reason of their antitrust and monopolistic practices and those moneys should be earmarked and made a trust fund out of he vested property to pay the victims of their antitrust practices. I don't say that there should be a pooling of all the assets, of all the vested corporations so that each one can reach his hand in the till and take out to satisfy his particular judgment. I think that the company that was victimized would have to show by filing a claim with the Court of Claims by a suit in the Federal court that it had been damaged by the monopolistic practices and then it should hold the bested funds of that particular German entity responsible for the amount of judgment for the claim asserted. Thank you, Mr. Chairman. STATEMENT OF CHARLES C. PEARCE, ATTORNEY, ON BEHALF OF S. 1302 (IDENTICAL TO PRESENT S. 744) I wish to thank you, Mr. Chairman, and the members of the subcommittee, for the privilege of testifying on behalf of Senator Young's bill, S. 1302, and its counterpart, Congressman Burdick's bill H.R. 5647. There is fundamental agreement in principle between the provisions of S. 600 and S. 1302. They both reveal a nonpartisan approach, the issues are not political. Both bills seek to answer the long-crying need for a sound program of return of vested enemy assets and a similarly sound program for payment of U.S. war damage claims. My only purpose in making this statement is to point out the basic differences in some respects between the two proposed acts and why we believe that, where there are such divergences, the provisions of S. 1302 are preferable to those of S. 600. AS TO RETURN OF VESTED ASSETS This subject is dealt with in title II of S. 600 and in pages 1-22, inclusive, of S. 1302. The first area of disagreement is with respect to the definition of these natural foreign citizens who shall be entitled to return. S. 600 provides that no return shall be made to natural persons who reside in the Soviet Zone of Occupation of Germany, or in Albania, Bulgaria, Communist China, Czechoslovakia, Estonia, Hungary, Latvia, Lithuania, North Korea, Poland, Rumania, or the Soviet Union. S. 1302, on the other hand, because of the escape of more than 100,000 refugees from Hungary and other Russian satellite countries during the recent revolts against Russian domination, provides that a return may be made to such an escapee provided he has established a bona fide residence in a country not now Communist controlled and further provided that he can prove to the satisfaction of the Attorney General that he is a bona fide refugee from communism. We believe that such heroic refugees from communism should not be penalized merely because they were once residents in a Communist satellite state but. |