they should rightly be eligible for return on the same basis as the residents of Western Germany or other non-Communist states or areas,

The second area of difference between S. 600 and S. 1302 is as to the type and amount of property to be returned.

S. 600 (at p. 24) provides for an immediate return of vested property in kind irrespective of its value, providing such a return is consistent with certain prescribed national security safeguards, and for a staggered return of liquidated vested assets. Section (c) of S. 600 provides in subdivision (1) for a ceiling of $10,000 on immediate return of liquidated assets and in subdivision (2) semiannual returns of pro rata shares of the entire claim in proportions to be determined by the Foreign Claims Settlement Commission.

This

S. 1302, on the other hand, provides for no corporate return to former enemy aliens based on stock ownership in vested corporate assets. We believe that any program of return of vested corporate property, because of the complicated issues involved, should be the subject matter of separate legislation. would aid immeasurably in the speedy passage of enabling legislation as to return to natural foreign citizens. Furthermore, we believe that there should be no return to any foreign corporate stockholder of any vested corporation in any event, whenever the vested corporation was charged by the United States with a violation of the Federal antitrust laws. A striking example of such a situation is the case of the vested capital stock of a corporate entity known as American Potash & Chemical Corp. This corporation was organized under Delaware law in 1926 to exploit potash and borax deposits in the United States. This corporation had recorded most of its capital stock in the names of English and Dutch companies but all of it had been actually and secretly held for the benefit of two German firms, Salzdetfurth, A. G., and Wintershall, A. G. (See the 1944 Annual Report of the U.S. Alien Property Custodian, p. 65). This German-controlled corporation attempted to ruthlessly destroy its American corporate competitors by flagrant violations of our Federal antitrust laws and succeeded in at least one instance; that of Burnham Chemical Co., the latter being a potential borax and potash producer. In the fiscal year ending in June of 1946 the Alien Property Custodian sold the assets of American Potash & Chemical Corp. for a selling price of $15,531,000. (See p. 47 and pp. 64-65 of 1946 Annual Report of the U.S. Alien Property Custodian). In addition the custodian held $2,718,993.16 representing dividends on this stock prior to vesting. S. 1302 properly provides that the proceeds of sale of such vested corporations in the case of American Potash & Chemical Corp. such realized assets amount to upward of $18 million-shall be held in trust by the Office of Alien Property or the Treasury to satisfy any judgment obtained by the aggrieved victim of such predatory practices. (See pp. 8 and 9 of S. 1302 and Senator Young's proposed amendment of S. 600).

By contrast with S. 600, S. 1302 places no ceiling on return of vested assets to natural persons, whether liquidated or unliquidated, nor does it countenance staggered return of liquidated vested assets.

Another area of divergence between S. 600 and S. 1302 relates to the manner of filing claims for return. S. 600 provides that the Foreign Claims Settlement Commission, not the Office of Alien Property, i.e., the Attorney General, shall prescribe the rules as to filing claims for return of vested assets. This could, and probably would, result in a requirement that an entirely new proof of claim must be filed. By contrast, S. 1302 provides (p. 12) that if a claimant has previously filed a claim for return no additional claim need be filed unless the claimant desires to supplement his previously filed claim. This provision is very necessary to avoid obvious injustice to claimants and their attorneys who have previously filed hundreds of claims with the Office of Alien Property only to have them dismissed en masse on the ground of technical ineligibility under present statutes. Are the attorneys for such claimants to be forced to start all over again and obtain new powers of attorney to replace those already filed with OAP? Such a requirement would seem to be harsh, unjust, and unnecessary. Another area of divergence between S. 600 and S. 1302 relates to the finality of administrative decisions. S. 600 provides that the administrative decisions of the Foreign Claims Settlement Commission shall be final. S. 1302, on the other hand, properly provides, we believe, that those decisions shall be subject to judicial review in the same manner as other administrative decisions of administrative officials, boards, or commissions as provided in section 1009 (a) of the Administrative Procedure Act. This will not delay in any respect the return of vested property to those claimants who elect to accept the administrative decision. 44467-59-12

(See secs. 40n, 141 (a), 210, and 215 of S. 1302 as to the provision of an adequate reserve in the Treasury in the amount of the claim as to which judicial review is being availed of.)

AS TO WAR DAMAGE CLAIMS

The first area of divergence between S. 600 and S. 1302 on war damage claims relates to the citizenship requirements necessary to qualify as a claimant. S. 600 requires (p. 5) U.S. citizenship "on the date of the injury, death, loss, damage or destruction for which claim is made by such individual" and secondly "at all times thereafter until the filing of such claim by such individual." We believe this requirement is too restrictive and would result in a grave injustice to many otherwise deserving claimants. S.1302, by contrast, properly enlarges the class of claimants to include those who are U.S. citizens at the time of passage of the act. Thus, it permits those to claim who had filed intention to become U.S. citizens. Thereby deserving claimants who were formerly citizens of countries allied with the United States in World War II or who fought in the Armed Forces of the United States in World War II would not be unjustly excluded from the category of claimants. Obviously, former nationals of certain countries allied with the United States in World War II (Albania, Czechoslovakia, Poland and Yugoslavia) cannot reasonably expect to recover war damages from the governments of such countries since they are all presently Communist dominated.

The next area of divergence between S. 600 and S. 1302 relates again to the finality of administrative decisions. S. 600 provides in section 213 (p. 14) that the decisions of the Foreign Claims Settlement Commission shall be final. S. 1302, on the other hand, provides in section 210(a) at page 24 that there may be judicial review by appeal to the U.S. Court of Appeals for the District of Columbia just as in the case of other administrative decisions under section 1009 (a) of the Federal Administrative Procedure Act.

This is a check against administrative absolutism or as the Supreme Court termed it "against arbitrary official encroachment on private rights." (U.S. v. Morton Salt Co. 338 U.S. 632.) There is no more reason why these decisions of the Commission should be final than those of the 56 other administrative bodies, bureaus, and commissions sprawled over our Federal system.

This will not delay at all the payment of awards to those who wish to accept the decisions of the Commission. Reserves need only be maintained in the Treasury in the amount of the claims as to which judicial review is being availed of.

The next divergence of statutory treatment as between S. 600 and S. 1302 relates to the type of property damage claim which may be asserted. S. 600 in our opinion unduly narrows the types of property damage claims which may be asserted by omitting "nationalization" claims and "loss of income" claims. S. 1302 on the other hand, in section 203 (a)(3), includes "nationalization" claims on the theory that these property losses of a U.S. citizen by taking, confiscation, seizure or dispossession by purported governmental process or decree have been just as real as in the case of physical damage to or loss of property as a direct consequence of military operations. "Loss of income" claims are also expressly authorized under section 203 (a) of S. 1302.

The next area of divergence relates to administrative procedural methods. S. 600 provides no procedural criteria by which the decisions of the Foreign Claims Settlement Commission are to be rendered. S. 1302 provides, on the other hand, that (a) preference shall be given to the claims of natural persons who are over 60 years of age or who have not been able (as in the case of corporate claimants) to avail of section 127 of the Internal Revenue Code of 1953 in deducting war losses in computing their Federal income taxes, (b) that the claimants shall be entitled to the replacement cost of the lost or destroyed property as of the date of the award or judgment and (c) evidence from the spoliators of the property is rightly excluded.

The next area of divergence relates to possible and harmful administrative delays. S. 600 provides no relief for the war damage claimant if the Foreign Claims Settlement Commission sits on a claim for 2 years and fails to act. S. 1302 provides that, in such a contingency, the claimant may then commence an action de novo in the U.S. District Court for the District of Columbia or in the U.S. Court of Claims, with the additional right to judicial review of those decisions.

Finally, S. 600 contains no protective provision to prevent payment of German vested property claims at an accelerated pace faster than payment of U.S.

war damage claims. S. 1302, on the other hand, explicitly provides in section 214 that payment of U.S. war damage claims shall be effectuated as rapidly in terms of aggregate amounts in any calendar year as return of German vested assets.

Mr. Chairman, on April 24, 1956, you informed the U.S. Senate in a striking statement that a survey of the sums advanced by the United States to foreign governments in the form of loans, grants and gifts aggregated the stupendous sum of over $114 billion. In addition, you pointed out that private U.S. investments abroad totaled over $25 billion, and U.S. Government installations abroad cost additional amounts exceeding another $20 billion. There is now requested an additional sum of over $42 billion in foreign aid. In citing these "astounding" figures, you remarked, Mr. Chairman, that they alarmed you and you very properly added "they should alarm every thinking American" for "these totals press everyone of us for we carry on our shoulders the back breaking load of taxes which have made such gifts possible."

Practically every other foreign country has paid or arranged to pay the war damage claims of its own citizens.

As against this background, the proponents of S. 1302 and H.R. 5647 feel that it is about time, at long last, that some program of compensation of the war damage claims of U.S. citizens should be effectuated.

WASHINGTON, D.C., April 4, 1957.

Senator JOHNSTON. I certainly thank you for coming before us. Is Senator Hruska here? Apparently Senator Hruska is not here. We will proceed with the list of witnesses. The Department of Justice, represented by the Director of the Office of Alien Property, will be heard next.

Mr. WOOD. We have a letter, a communication that came in this morning from the Assistant Attorney General who is also the Director of the Office of Alien Property, a one-sentence letter which says—

DEAR SENATOR JOHNSTON: There is enclosed a written statement, in lieu of testimony on my part at the hearings of June 18, 1959, which I request be read into the record of the hearings.

Mr. Chairman, I wonder if we might have a representative from the Office of Alien Property, if one is present, read this for the record. I see Mr. Lindenbaum of that Office is here.

STATEMENT OF SOL LINDENBAUM, REPRESENTING COL. DALLAS TOWNSEND, DIRECTOR, OFFICE OF ALIEN PROPERTY, DEPARTMENT OF JUSTICE

Mr. Wood. Mr. Lindenbaum, may we interpret the words "read into the record” to mean "insert into the record”?

Mr. LINDENBAUM. At your pleasure.

Mr. WOOD. No, it is not a question of pleasure but would we offend anyone if we inserted it in the record and interpreted "read into the record" that way.

Mr. LINDENBAUM. I don't think Colonel Townsend, the writer, would be offended, but he would like to have you read it.

Mr. WOOD. Suppose you come up and read it. That will afford us an opportunity to ask you some questions about it.

Mr. LINDENBAUM. I am not authorized to answer questions. As far as the Colonel is concerned he won't feel insulted if it is placed in the record.

Senator JOHNSTON. We will put the statement in at this point. We will have Colonel Townsend come down later so that we may ask him some questions.

Mr. LINDENBAUM. He is out of town.

Senator JOHNSTON. We will postpone it until next Wednesday, or later until we can get him in. We will take it up with him and cooperate with him to see when he can come. We will try to set another date that will be acceptable to all of us.

Mr. LINDENBAUM. I think he is not anticipating appearing.

Senator JOHNSTON. We would certainly want him, representing the Department of Justice, to give us information possibly in addition to that in the statement. There probably will be some questions arising upon which we would like him to give us further information. Mr. LINDENBAUM. I will carry your message to him as soon as he gets back from out of town. I will tell him what your thoughts are. Senator JOHNSTON. You tell him we will resume the hearings at a later date. We will cooperate with him in setting the day. In the meantime, we will incorporate the statement in the record.

(The attached statement of Colonel Townsend follows:)

STATEMENT OF DALLAS S. TOWNSEND, ASSISTANT ATTORNEY GENERAL, DIRECTOR, OFFICE OF ALIEN PROPERTY, Department OF JUSTICE, TO THE SENATE JUDICIARY SUBCOMMITTEE ON THE TRADING WITH THE ENEMY ACT

Mr. Chairman and members of the subcommittee, I wish to express the appreciation of the Department of Justice for your invitation to present its views on the bills which have been listed for hearing by your subcommittee.

The Department's position with respect to the bills is set forth in separate reports submitted to Senator Eastland, the chairman of your committee. In the interest of brevity requested in the notice of these hearings, I shall make supplementary comments principally with regard to only one bill, S. 1103.

S. 1103, which has the full support of the Department of Justice, would amend section 9(a) of the Trading With the Enemy Act (50 U.S.C. App. 9(a)) to permit the sale of vested property despite the pendency of a suit for the return of that property under section 9(a). Sale would be authorized in time of war or national emergency declared by the President upon the latter's determination that the interest and welfare of the United States requires the sale. The proceeds of sale would be substituted for the property in the suit, subject to the right of election of any claimant therein to obtain just compensation instead of his proportionate part of the proceeds of sale. Such election may be made within 60 days from the date on which claimant receives notice of the amount of the proceeds.

The principal purpose of S. 1103 is to permit the Government to sell the vested General Aniline & Film Corp. (GAF) stock presently held subject to a suit for return by a Swiss enterprise known as Interhandel. The Government has been the owner of over 97 percent of GAF's outstanding stock at all times since February 1942 and as majority stockholder has exercised supervision of the corporation since that date. Owing to the complexity of the pending section 9(a) litigation, which has not yet reached the point of a trial on the merits after 11 years of proceedings, the Government may be compelled to continue its ownership and supervision of GAF indefinitely unless the law is changed in the manner proposed by S. 1103.

The principal problems which Government ownership and control create for GAF have frequently been called to the attention of both Houses of Congress and are set forth in detail in the Justice Department's report on S. 1103. They need be stated here only briefly as follows:

Inability to obtain the equity capital which is needed to maintain a strong competitive position.

Difficulty in recruiting and holding topnotch research and executive personnel. Impediments to long-range planning.

The board of directors of GAF recently took note of the disadvantages of the company's present status when it voted unanimously at a meeting on May 27, 1959, to record its support of S. 1103. The board is composed largely of leading members of the industrial and financial communities and is, of course, in a position to assess at firsthand the adverse effects of extended Government ownership on the company. The statement of the board's action reads as follows: "The board discussed the bills pending in the Congress relating to the disposition of vested property and, on the ground that it is in the interest and welfare

of the company that the Government's stock in the company be sold as soon as it becomes possible to do so, unanimously voted to record its support of S. 1103, H.R. 1345 and H.R. 404, comparable bills sponsored by Senator Keating, Representative Robison, and Representative O'Brien, respectively, which would amend the Trading With the Enemy Act to make it possible for the Government to sell its stock and deposit the proceeds of sale in the U.S. Treasury, without the necessity, as the law now requires, of delaying such sale until a final judgment in the Interhandel litigation."

Moreover, the responsibilities inherent in the majority stockholding position in an important industrial enterprise competing in the private marketplace are an undesirable burden on the Government. The public interest would truly be served by the sale of the vested GAF stock to private American citizens.

I take this opportunity to repeat what the Attorney General has stated in connection with the Government's offering of the vested GAF shares whenever a sale becomes possible. There will be no negotiated sale. The stock will be offered at public sale to the highest bidder after a full and adequate public advertisement.

Certain questions have arisen in connection with the proceedings before the International Court of Justice arising out of Interhandel's claim. These and other questions are discussed in the Attorney General's letter of May 29, 1959, to the chairman of this subcommittee, which reads:

"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 United States 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 17, 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 Law