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TRADING WITH THE ENEMY ACT

THURSDAY, JULY 9, 1959

U. S. SENATE,

SUBCOMMITTEE ON TRADING WITH THE ENEMY ACT,
OF THE COMMITTEE ON THE JUDICIARY,

Washington, D.C.

The subcommittee met, pursuant to notice, at 10:30 a.m., in room 6202, New Senate Office Building, Senator Olin D. Johnston (chairman of the subcommittee) presiding.

Present: Senators Johnston and Keating.

Also present: Harlan Wood, counsel for Subcommittee on Trading With the Enemy Act; James A. Tawney, minority counsel for subcommittee; Richard W. Riley, attorney for subcommittee; Milton Eisenberg, Administrative Assistant to Senator Keating; and Mrs. Mabel A. Downey, clerk for the subcommittee.

Senator JOHNSTON. The subcommittee will come to order.

As you will recall, the subcommittee held a meeting on the 18th of June and we had to suspend the hearings at that time. We are back again now to take up where we left off.

You will notice this list of witnesses for today. We have a great many witnesses to be heard. We hope that many of them will hand in their statements.

As I say, due to the number of witnesses on the bills before us at this time, I will appreciate it very much if each witness will be as brief as he can and stay within the allotted time just as much as possible.

Our first witness today is from the Department of Justice, the Honorable Dallas S. Townsend, Director of the Office of Alien Property. Will you please come forward, Colonel Townsend, and bring with you anyone whom you may have with you.

STATEMENT OF HON. DALLAS S. TOWNSEND, DIRECTOR, OFFICE OF ALIEN PROPERTY; ACCOMPANIED BY SOL LINDENBAUM, SIDNEY GROSS, AND PAUL V. MYRON

Mr. TOWNSEND. Mr. Chairman, I appreciate the invitation of the committee to be here.

I would like to have the record show that I have with me Mr. Paul Myron, Deputy Director, Mr. Sidney Gross of our legal staff and also Mr. Sol Lindenbaum of our legal staff. They are here for the convenience of the committee and to save time and also for the convenience of the committee I should like to suggest that we incorporate in the record our exchange of letters, Mr. Chairman, in regard to this

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further hearing; that is to say your letter of June 24 and my letter of July 1 and your reply thereto, Mr. Chairman, of July 2, 1959. Senator JOHNSTON. That will be done. All of the letters and correspondence will be made a part of the record at this point. (The letters referred to are as follows:)

U.S. SENATE,

June 24, 1959.

Col. DALLAS TOWNSEND,

Director, Office of Alien Property,

Washington, D.C.

DEAR COLONEL: The subcommittee expects to resume hearings on the Senate bills now pending before it, and of which you have heretofore been notfied, on July 9, 1959, at 10:30 a.m. Members of the subcommittee wish your latest views on certain of the bills in addition to what is contained in your written statement. A question has been raised as to the constitutionality and practically

of the provisions of S. 1103.

If you are not familiar with the items in your annual report of June 30, 1958, as reflected in tables 2, 5, and 6, please bring such of your assistants with you who may be questioned concerning them.

As an accommodation to you, I shall ask that you be heard as the first witness. Very truly yours,

Hon. OLIN D. JOHNSTON,

OLIN D. JOHNSTON, Chairman.

Chairman, Subcommittee on the Trading with the Enemy Act, Committee on the Judiciary, U.S. Senate, Washington, D.C.

DEAR SENATOR JOHNSTON: I have your letter of June 24, 1959, advising that the Subcommittee on the Trading With the Enemy Act intends to resume hearings on July 9, 1959, on the various Senate bills which were the subject matter of previous hearings held on June 18, 1959. You state that members of the subcommittee wish my latest views on certain of the bills in addition to what was contained in my written statement.

The Department of Justice reported to the Senate Judiciary Committee on all of these bills on the dates set forth below.

S. 105: June 5, 1959.

S. 531: June 5, 1959.

S. 664: June 10, 1959.
S. 672: June 17, 1959.
S. 744: June 5, 1959.

S. 1103: April 14, 1959.

S. 1963: June 17, 1959.

S. 2005: June 15, 1959.

S. 2012: June 17, 1959.
S. 2093: June 17, 1959.

You will observe that, with the exception of the report on S. 1103, all the reports were submitted during the month of June 1959. The statement which I submitted to be read into the record at the June 18 hearing dealt principally with S. 1103. Accordingly, the subcommittee now has before it the Department's very latest views which, of course, are also my views on all these Senate bills. You state that a question has been raised, presumably in testimony before the subcommittee, as to the constitutionality and practicality of the provisions of S. 1103. Similar questions were presented to the Attorney General in your letter of May 13, 1959, which was referred to by John J. Wilson in his statement at the June 18, 1959, hearing. I call your attention to the Attorney General's reply dated May 29, 1959, which was quoted at length in my statement. You will note that in his reply the Attorney General states:

"The proposed legislation amply fulfills constitutional requirements and in my view the enactment of such legislation would be a valid exercise of congressional authority."

In addition to commenting on the constitutionality of S. 1103 as indicated above, the Attorney General also pointed out that the agent of the United States: before the International Court of Justice, rather than assuring that Court that the General Aniline property would remain intact until the litigation was resolved, advised the Court of the prohibitions against the disposition of that property under our present law. Indeed, the Attorney General, in his letter of May 29 to you, concluded:

"Thus the enactment of legislation by the Congress of the United States which would permit the sale of the 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."

Of course, my views are consistent with those of the Attorney General. The threat to litigate the constitutionality of S. 1103, if enacted, should not, it seems to me, deter the Congress from taking proper legislative action. If the fear of attack on constitutional grounds had deterred the Congress from acting favorably on legislation in the past, many of our recent statutes which were enacted in the best interests of the United States and have resulted in great public benefit, would never have been passed.

As you know, I am most anxious, as I have always been in the past, to cooperate in every way possible with you and the other members of the subcommittee by either appearing before you or otherwise furnishing you with all the information at my disposal to assist you in the consideration of pending alien property legislation. Accordingly, in submitting a written statement at the June 18 hearing I was adhering to your wishes as expressed in the notices of May 18, 1959, and June 3, 1959, requesting that testimony or record evidence "be limited to new matters rather than a repetition of prior evidence already of record before the subcommittee. Needless repetition will cause delay. Written briefs and statements in the absence of personal appearances and oral presentations will be greatly appreciated by the subcommittee."

Having in mind the request of the subcommittee just quoted, I believe I can best serve your subcommittee and suggest that consideration of pending measures may be thereby facilitated if you will advise this Office by letter prior to the hearings what additional information is desired. We shall then be able to prepare and submit it.

Let me assure you again that we are most anxious to cooperate with your subcommittee in every possible way.

Sincerely yours,

DALLAS S. TOWNSEND,

Assistant Attorney General, Director, Office of Alien Propery.

U.S. SENATE, July 2, 1959.

Hon. DALLAS S. TOWNSEND,

Assistant Attorney General, Director, Office of Alien Property,
Department of Justice, Washington, D.C.

DEAR COLONEL TOWNSEND: I thank you for your letter of July 1, 1959, the contents of which are most helpful.

The notice of our hearings was for the purpose of restricting witnesses who sometimes wish to use the opportunity to testify as a forum for many long, drawnout, irrelevant statements. In nowise was it intended to restrict Government officials, for as a rule I have never known any of them to offend the proprieties in testifying.

I am certain that the subcommittee will require your presence for only a short duration on July 9. It is my plan to call you as the first witness, thereby permitting you to be excused rather shortly thereafter.

With kind regards, I remain

Sincerely yours,

OLIN D. JOHNSTON, Chairman.

Mr. TOWNSEND. I assume, Mr. Chairman, that the statement I sent up to you has been incorporated in the record already?

Senator JOHNSTON. It has been incorporated in the record at our previous hearing.

Do you appear today to make any additional statement?

Mr. TOWNSEND. No, sir; I don't care to make any additional state

ment.

I think our position on the different bills under consideration has been stated in the reports of the Department of Justice and the statement that I have referred to.

Senator JOHNSTON. Colonel Townsend, are you familiar with an article in Newsweek of July 13, 1959, in regard to alien property? Mr. TOWNSEND. I saw Newsweek, one paragraph relating to alien property or something of the sort.

Senator JOHNSTON. There are four or five short paragraphs. There is maybe a short sentence comprising each paragraph. But anyway they made five paragraphs out of it.

Mr. TOWNSEND. My attention was called to that this morning. Senator JOHNSTON. Did you note what the writeup was about? Mr. TOWNSEND. Yes, sir; I saw that.

Senator JOHNSON. Do you agree with the contents?

Mr. TOWNSEND. It it all news to me. I don't know any more about that than I do about outer space.

Senator JOHNSTON. I notice here the statement is made that the Republicans and Democrats are ready to compromise on what to do with the $600 million in German and Japanese assets seized in the United States during World War II. Is that so?

Mr. TOWNSEND. Well, there is no accounting for the imagination of Newsweek reporters.

Senator JOHNSTON. It also says that the administration has long wanted to return this money as a form of indirect aid to the West German and Japanese Governments.

Mr. TOWNSEND. I hope that will sell the magazine. I don't know anything about the contents.

Senator JOHNSTON. But it has been blocked, the magazine article says, by Democratic Senator Smathers, of Florida, who advanced a plan to use $100 million for science scholarships and the rest to pay off American war claims.

Mr. TOWNSEND. Well, Senator Smathers never mentioned the matter to me, Mr. Chairman.

Senator JOHNSTON. I guess you have gathered that every one of the departments of Government are opposed to this bill as it is drawn up at the present time. I quote again:

Now the compromise will favor the Smathers plan, including scholarships.
Have you any comment on that?

Mr. TOWNSEND. No, sir; I don't know anything about that.
Senator JOHNSTON. One other question on this.

"One big reason," it states here, "is that Smathers convinced Ike that his plan has merit."

Do you know anything about the President endorsing Smathers' plan?

Mr. TOWNSEND. No, sir; I do not.

Senator JOHNSTON. I just wanted to get it clear in the record. It seems as though this Newsweek article was gotten up by someone and I know it was not gotten up by my subcommittee. We didn't know anything about it. It took us completely by surprise, and from your statement it has taken you by surprise also, isn't that true?

Mr. TOWNSEND. I don't know a thing in the world about it.
Senator JOHNSTON. Have you some questions, Mr. Wood?

Mr. WOOD. I have one or two very brief questions. I might refer to this article, Colonel, which the Senator has read and ask you several questions.

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