The position of the administration with regard to the return of vested assets is reflected in the State Department's letter to you of July 3, 1958, a copy of which is attached. In that letter the State Department recommended that consideration of any return legislation be deferred pending the enactment and completion of the American war damage claims program now embodied in S. 2005. In accordance with that recommendation this Department is of the view that priority should be given to the enactment of the latter bill and that no legislative consideration should be given to the return provisions of S. 744. For the reasons set forth above, the Department of Justice is unable to recommend the enactment of S. 744. The Bureau of the Budget has advised that there is no objection to the submission of this report. Sincerely, LAWRENCE E. WALSH, [S. 1103, 86th Cong., 1st sess.] A BILL To amend section 9(a) of the Trading With the Enemy Act, as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 9(a) of the Trading With the Enemy Act, as amended, is amended by striking out the period at the end thereof and inserting in lieu thereof a colon and the following: "Provided further, That upon a determination made by the President, in time of war or during any national emergency declared by the President, that the interest and welfare of the United States require the sale of any property or interest or any part thereof claimed in any suit filed under this subsection and pending on or after the date of enactment of this proviso the Alien Property Custodian may sell such property or interest or part thereof, in conformity with law applicable to sales of property by him, at any time prior to the entry of final judgment in such suit. No such sale shall be made until thirty days have passed after the publication of notice in the Federal Register of the intention to sell. The proceeds of any such sale shall be deposited in a special account established in the Treasury, and shall be held in trust by the Secretary of the Treasury pending the entry of final judgment in such suit. Any recovery of any claimant in any such suit in respect of the property or interest or part thereof so sold shall be limited to the net proceeds of such sale, or, if more than one claimant, then to each claimant's proportionate share of the net proceeds of such sale, unless such claimant, within sixty days after receipt of notice of the amount of net proceeds of sale, or, if more than one claimant, then notice of the amount of claimant's asserted proportionate share of the net proceeds of sale, serves upon the Custodian and files with the court an election to waive all claims to the net proceeds and to claim just compensation instead. If the court finds that the claimant has established an interest, right, or title in any property in respect of which such an election has been served and filed, it shall proceed to determine the amount which will constitute just compensation for such interest, right, or title, and shall order payment to the claimant of the amount so determined. An order for the payment of just compensation hereunder shall be a judgment against the United States and shall be payable first from the net proceeds of the sale in an amount not to exceed the amount the claimant would have received had he elected to accept his proportionate part of the net proceeds of the sale and the balance, if any, shall be payable in the same manner as are judgments in cases arising under section 1346 of title 28, United States Code. The Alien Property Custodian shall, immediately upon the entry of final judgment of the claimant's interest and right to proportionate part of the net proceeds from the sale, and the final determination by judgment of the amount of just compensation in the event the claimant has elected to recover just compensation for the interest in the property he claimed." Hon. JAMES O. EASTLAND, DEPARTMENT OF STATE, Washington, April 14, 1959. Chairman, Committee on the Judiciary, U.S. Senate. DEAR SENATOR EASTLAND: Reference is made to S. 1103 to amend section 9(a) of the Trading With the Enemy Act, as amended. S. 1103 is designed to enable the U.S. Government to sell vested property in time of war or national emergency without regard to pending litigation. Successful claimants would be entitled to the proceeds of sale or to just compensation. It is our understanding that the principal purpose of S. 1103 at the present time is to enable the Attorney General to sell the shares of the General Aniline & Film Corp., which are vested in the United States. While the Department of State supported bills similar to S. 1103 which were introduced in the 84th and 85th Congresses, but failed of enactment, the recent proceedings in the Interhandel case before the International Court of Justice have resulted in a certain change of circumstances from those which existed in prior years, and which the Department believes should be taken into account by the Congress. On October 1, 1957, the Government of Switzerland filed an application in the International Court of Justice, requesting the restitution by the United States of the shares of General Aniline & Film Corp., which, at the time of their vesting, had been held in the name of Interhandel, a Swiss corporation. On October 3, 1957, the Government of Switzerland requested the International Court of Justice, pending a final decision in the proceedings instituted in the application of October 1, 1957, to indicate to the United States that the United States take no legislative, judicial, administrative, or executive step "to part with the property" which was claimed to be "Swiss property" in the application of October 1, 1957. At that time, there was outstanding a U.S. district court mandate dismissing the Interhandel suit for return of the shares, which had been filed under section 9(a) of the Trading With the Enemy Act, as amended, and there was also pending a petition for a writ of certiorari in the Supreme Court of the United States to review this dismissal. The United States opposed the Swiss application for provisional measures, and filed, as a preliminary objection, a statement that the United States had determined that the sale or disposition of the shares of the General Aniline & Film Corp. was a matter essentially within the jurisdiction of the United States, and that, accordingly, under the so-called Connally reservation to the U.S. acceptance of the compulsory juridiction of the International Court of Justice, the Court had no jurisdiction with respect to the issuance of provisional measures affecting the sale of the shares. On October 16, 1957, the Supreme Court of the United States granted the petition for certiorari which had been filed by Interhandel in the U.S. litigation. The United States called to the attention of the International Court the fact that the Supreme Court had granted certiorari, and on October 24, 1957, the International Court, adverting to the fact that "according to the laws of the United States, the sale of those shares can only be effected after termination of a judicial proceeding which is at present pending in that country in respect of which there is no indication as to its speedy conclusion," refused to indicate the provisional measures requested by the Swiss Government. Thereafter, on June 16, 1958, the Supreme Court reversed the dismissal of the Interhandel suit under section 9(a), and returned the case to the U.S. district court with wide discretion in the district court with respect to further proceedings, including a trial on the merits. Meanwhile, the proceedings before the International Court of Justice on the Swiss application of October 1, 1957, continued. The United States filed a number of preliminary objections to the jurisdiction of the International Court of Justice. Hearings were held from November 5-17, 1958, before the Court on the U.S. preliminary objections, and on March 21, 1959, the Court handed down its judgment. The first preliminary objection of the United States was that the Court had no jurisdiction because the United States had accepted the compulsory jurisdiction of the International Court of Justice only for disputes arising after the date of the acceptance, August 26, 1946. The United States argued that the dispute between Switzerland and the United States revolved about whether Interhandel was Swiss or German-owned or controlled, and that this dispute existed between the two Governments prior to August 26, 1946. However, the International Court held, by a 10 to 5 vote, that the "subject of the present dispute" was the "return to Interhandel of the assets vested in the United States" and that a request to this effect had only been formulated by Switzerland on May 4, 1948, which of course was after the U.S. acceptance of compulsory jurisdiction. The United States also urged as a preliminary objection that in view of the fact that the Supreme Court had reversed the dismissal of the Interhandle suit under section 9(a) of the Trading With the Enemy Act, Interhandel had a complete remedy in U.S. courts, under U.S. law, to secure a return of the shares of General Aniline & Film Corp. should Interhandel prevail in such litigation, and that, consequently, under the well-recognized doctrine that a country cannot espouse the claim of its national until that national has exhausted local remedies available to it in local courts, the International Court was without jurisdiction over the Swiss application. The Court, considering the U.S. objection on this score to be directed against the admissibility of the application of the Swiss Government, upheld the U.S. objection by a vote of 9 to 6, pointing out that it was open to Interhandel to avail itself of the "remedies available to and under the Trading With the Enemy Act, and to seek restitution of its shares in U.S. courts", adding that "the Court must have regard to the situation thus created". Pointing out that the two actions-the International Court action and the action in the United States-were "designed to obtain the same result: The restitution of the assets of Interhandel vested in the United States", the Court stated that it "must attach decisive importance to the fact that the laws of the United States make available to interested persons who consider that they have been deprived of their rights by measures taken in pursuance of the Trading With the Enemy Act, adequate remedies for the defense of their rights against the executive." With respect to the U.S. preliminary objection to the Court's jurisdiction as to the sale or disposition of the General Aniline & Film Corp. shares, as to which the United States had invoked the Connally reservation, the agent for the United States had stated to the Court that pending the final decision of the U.S. courts, the shares could not be sold under U.S. law, and that, consequently, the preliminary objections of the United States had become "somewhat academic" in view of the decision of June 16, 1958 by the U.S. Supreme Court. Noting this, the International Court stated that this objection was "without object at the present stage of the proceedings," and did not adjudicate upon it. As can be seen from the above recitation, a fundamental basis for the Court's upholding of the U.S. preliminary objection on the ground of failure to exhaust local remedies was the fact that, under U.S. law, Interhandel could secure a return of the vested General Aniline & Film Corp. shares if it were successful in its section 9(a) suit. Accordingly, if S. 1103 were to be enacted into law, and the Attorney General were to take steps to sell the vested General Aniline & Film shares, it could be expected that Switzerland would file a new application in the International Court of Justice, and seek a new indication of provisional measures requesting the United States not to sell the shares until a final decision on the new application was rendered by the International Court of Justice. If the International Court acceded to the Swiss request, and there is basis in the Court's judgments of October 24, 1957, and March 21, 1959, to believe that it would do so, the sale of the General Aniline & Film shares would be held up pending final determination of the Interhandel case by the International Court, since it is not to be expected that such an indication from the International Court of Justice would be lightly regarded by the United States. In the view of the Department of State, the question of whether further proceedings in the Interhandel case in the International Court of Justice, if any, should be deferred until after final decision in the case in the U.S. courts (as would be the case if there is no change in the provisions of section 9(a) of the Trading With the Enemy Act, as amended), or whether such proceedings in the International Court should proceed simultaneously with those in the U.S. courts (as might well be the case if the provisions of section 9(a) are changed and action is taken with the view of selling the General Aniline & Film shares) is not one for decision by the Department of State, so long as notice is given to the Swiss Government to enable it to make such application as it may see fit to the International Court of Justice. The Department of State is of the opinion that the Congress will wish to consider carefully, in connection with its consideration of S. 1103 the circumstances which have resulted from the litigation in the Interhandel case in the International Court of Justice. On the assumption that such consideration will be given, the Department of State does not interpose objection to S. 1103. The Department has been informed by the Bureau of the Budget that there is no objection to the submission of this report. Sincerely yours, WILLIAM B. MACOMBER, JR., Assistant Secretary (For the Acting Secretary of State.) Hon. JAMES O. EASTLAND, U.S. DEPARTMENT OF JUSTICE, Chairman, Committee on the Judiciary U.S. Senate, Washington, D.C. DEAR SENATOR: This is in response to your request for the views of the Department of Justice concerning the bill (S. 1103) to amend section 9(a) of the Trading With the Enemy Act, as amended. Section 9 (a) of the Trading With the Enemy Act (40 Stat. 419; 50 U.S.C. App. 9(a)), as amended, permits any person other than an enemy or ally of an enemy claiming interest in any vested property to institute a suit for the return of such property. It also expressly enjoins the Attorney General (successor to the Alien Property Custodian) from disposing of any such claimed property prior to final judgment in any such suit. This bill would amend section 9(a) to provide that upon a determination by the President, in time of war or national emergency that the interest and welfare of the United States require the sale of any property or interest claimed in any suit filed under the subsection and pending on or after the date of enactment of the bill, the Alien Property Custodian may sell the same, with the proceeds of such sale being deposited in a special Treasury account pending the entry of final judgment in the suit. Successful litigants would have the right to elect to accept the net proceeds of a sale or to waive their claim to such proceeds and seek just compensation instead. If just compensation is sought, and an order for its payment is entered, such order shall be a judgment against the United States, to be satisfied first out of the net proceeds of the sale, with any balance being paid in the same manner as are other judgments in cases arising under section 1346 of title 28, United States Code. Insofar as the legislation will affect property vested during World War II, its principal purpose is to authorize the Attorney General to effect the sale of approximately 93 percent of the outstanding shares of stock of General Aniline & Film Corp. These shares, which were vested by the Alien Property Custodian in 1942 under the provisions of the Trading With the Enemy Act, are presently the subject of a suit for their return under section 9(a). General Aniline & Film is engaged in the manufacture and distribution of a variety of products in the photographic, dyestuff and chemical industries. It is the second largest producer of photographic materials in the United States, one of the largest dyestuff producers and a leader in the manufacture of copying machines and allied products. The corporation has total assets of approximately $168 million, and employs over 8,200 people, being extremely important to the welfare of the areas in which its plants are located. A significant portion of its output goes to the defense agencies of the Government. The strength of this enterprise and its continued existence as a competitive force in the important fields in which it is engaged are unquestionably matters affecting the national interest. Although the suit, instituted in 1948, has been before the Supreme Court of the United States on four different occasions, it has not yet reached the point of a trial on the merits. It has been returned to the U.S. District Court for the District of Columbia, where it began, pursuant to a decision of the Supreme Court in 1958 reversing a dismissal by the district court for failure of the plaintiff to comply with the court's order to produce certain documents. Under present law, General Aniline & Film may well be continued under Government control indefinitely. The inflexibility inherent in such control has hampered its operations. The company's management believes that new capital, difficult to obtain in adequate amounts so long as Government control continues, is necessary to maintain the corporation in a strong competitive position. Fear of insecure tenure makes it difficult for the company to attract and hold a qualified research and executive personnel which are vital to the advancement of a business in today's economy. These and other disadvantages of Government ownership make the task of maintaining this enterprise on a sound basis a most formidable one. Since the maintenance of General Aniline & Film as a strong, productive organization is important to the public interest and welfare, the promotion of the national interest is the most important aspect of the legislation. It should be noted, however, that the measure contains safeguards for the interests of the private claimants to the vested stock. All of these claimants are given the choice of attempting to recover the proceeds of sale or of seeking the just compensation guaranteed by the Constitution. Finally, it should be added that the proposed legislation offers the additional advantage of ending the Government's unnatural role of owner of a private competitive business. Accordingly, the Department of Justice urges the enactment of this bill. The committee may wish to consider the following amendments, none of which are substantive but all of which would appear to constitute technical improvements. First, since there is no longer an Alien Property Custodian, it is suggested that following the word "Custodian” on line 1 of page 2 and line 10 of page 3 there be added the words "or any successor officer or agency". Second, since it is the net proceeds of the sale of vested property with which the measure is concerned at various other parts of its text, it is suggested that the word "net" be inserted following the word "The" on line of page 2. Finally, the following sentence is suggested as a clearer, more easily read and understood substitute for the sentence beginning on line 10 of page 2: "Any recovery of any claimant in such suit in respect of the property or interest or part thereof so sold shall be satisfied from the net proceeds of such sale unless such claimant, within sixty days after receipt of notice of the amount of net proceeds of sale serves upon the Alien Property Custodian, or any successor officer or agency, and files with the court an election to waive all claims to the net proceeds, or any part thereof, and to claim just compensation instead." The Bureau of the Budget has advised that there is no objection to the submission of this report. Sincerely yours, LAWRENCE E. WALSH, Deputy Attorney General. [S. 1963, 86th Cong., 1st sess.] A BILL To authorize the Secretary of Health, Education, and Welfare to make grants from funds obtained under the Trading With the Enemy Act to assist the States and local communities to provide facilities for older persons including the surviving parents of veterans of World War II and the Korean conflict Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SHORT TITLE SECTION 1. This Act may be cited as the "Older Persons Community Center Act". DECLARATION OF PURPOSE SEC. 2. It is the sense of the Congress that a portion of the funds resulting from the wartime confiscation of enemy property should be made available on a matching basis to the States to assist local communities to provide urgently needed community facilities and housing for older persons, including, first, the surviving parents of veterans who died in, or as a result of disabilities incurred in, World War II, and second, those parents of veterans who died in the Korean conflict, or as a result of disabilities incurred in such conflict. FINDINGS SEC. 3. The Congress hereby finds and declares (1) That there are many older persons in the United States who are not adequately housed or cared for because the children upon whom they would normally depend were killed or disabled in World War II or the Korean conflict, and these persons, having only a stringent pension, need assistance in making necessary adjustments; (2) That the overall number of persons sixty-five years of age and over has increased from approximately three million in the year 1900 to approximately fourteen million in 1955, and this number is expected to reach approximately twenty-one million in 1975; (3) That changes in the national economy have created many new general problems, particularly for older persons who, because of age, are being deprived of their opportunity for gainful work and the maintenance of an adequate standard of living, and, consequently, many older persons, in addition to veterans' |