EXPENDITURES FOR PENALTY MAIL Mr. WIGGLESWORTH. Will you put in the record a statement showing the expenditures for penalty mail for the last two fiscal years and the current fiscal year, and also what you may have spent for publicity work, if anything? I do not suppose you spend much in publicity work; you do not have anything of that kind, do you? Mr. MCNAMARA. No. Mr. WIGGLESWORTH. Will you give us a statement in reference to expenditures for penalty mail? Mr. MOORE. I have an estimate here of penalty mail for fiscal years 1945 and 1946. We will be glad to submit that for the record. Mr. WIGGLESWORTH. That will be satisfactory. (The statement referred to is as follows:) 1 Envelopes for general correspondence purposes; bid invitations on sales, some of which run to 7.000 items per individual sale; estimate of sales for 1945 is approximately 400, with a similar estimate for 1946; patent program calls for extensive use of penalty mail to make material relating to patents, copyrights, and trade-marks available to American business. The 1946 program includes an increase in this activity. 2 Mailing of mechanical abstracts, chemical abstracts, and electrical abstracts. Class lists to purchasers; for mailing packages, forms, supplies, and files between Alien Property Custodian unit offices. Tags used for light bulky mail as required. VALUE OF PROPERTY NOW HELD (See p. 97) Mr. WIGGLESWORTH. What is the value of the property which is now subject to your control? Mr. MCNAMARA. Approximately $450,000,000. The net equity in vested property was approximately $223,000,000. Mr. WIGGLESWORTH. How does that compare with a year ago? Mr. MCNAMARA. $223,000,000 is on the basis of our valuation as of December 31, 1944. As of June 30, 1944, the estimated value of the equity in vested property was $212,000,000. Mr. WIGGLESWORTH. Do you estimate an increase in the coming fiscal year? Mr. MCNAMARA. We do. I may say that we are about to embark upon a program in the Philippines now that that area has been liberated by our forces; and in cooperation with the Department of the Interior, the Secretary of the Interior being the Acting High Commissioner, we are preparing our program now for taking some action in regard to property in the Philippines, and we expect that we will acquire additional property in that area. Mr. WIGGLESWORTH. Is the amount of $223,000,000 gross or net, so to speak? In other words, have you disposed of any property in the last fiscal year? Mr. MCNAMARA. That includes any property which we have acquired. We have sold properties and converted them into cash, and the cash was deposited in the Treasury of the United States. It includes the properties that have not yet been sold, plus the cash in the Treasury to our account. Mr. WIGGLESWORTH. How much does that cash amount to? Mr. MCNAMARA. As of June 30, 1944, the amount of our cash actually in the Treasury derived from completed liquidations and income from vested property was $26,649,000. There was also cash in the process of collection amounting to $597,000, and the remainder is our interest in business enterprises and other items. Mr. WIGGLESWORTH. Does the increase from $212,000,000 to $223,000,000 result from the vesting of additional properties, or is it due to additions through estates and other different operations? Mr. MCNAMARA. It includes both of those categories. In addition, there is some increase in cash value because of the sale of the property, because we have maintained our sales program in such a way that we get practically the appraised value of our properties, and in some cases we receive more than the valuation in our books. Then we have a decrease in the value of some of our properties. LICENSING OF FOREIGN PATENTS Mr. WIGGLESWORTH. Have you licensed any foreign patents taken over? Mr. MCNAMARA. Yes; we have. Mr. WIGGLESWORTH. Does that appear anywhere in the justifications you have furnished us? Mr. MCNAMARA. As to the number of licenses issued? Mr. WIGGLESWORTH. Yes. I would like to have in some detail a statement about the number you have taken over, the number you have licensed, and the license fees. Mr. MOORE. That is on page 29 of the justifications, with the number of licenses granted between July 1, 1944, and December 31, 1944, a total of 371. (Supplemental information:) Prior to December 31, 1944, a total of 45,858 patents and patent applications had been vested, 1,339 licenses issued involving 8,469 patents, and $125,625 collected in license application fees. Mr. WIGGLESWORTH. What is the general legal picture in regard to those patents? When you seize a patent are you in the clear to dispose of the patent, or is there any danger of a come-back after the war from the original holder? Mr. MCNAMARA. There is no danger of any come-back. Where the Alien Property Custodian seizes any property, including a patent, the former owner is divested of any legal right or title in the property. The policy of the agency in reference to these licenses is to issue, upon application, to any person qualified as an American citizen, a nonexclusive, royalty free license, for the life of the patent, if it is a patent which was formerly owned by an enemy national. Mr. WIGGLESWORTH. You have given us an over-all statement of everything you have taken in and everything you have disposed of or licensed, in the justification which you have presented? Mr. MCNAMARA. I believe so. I might say this-that our annual report was expected to be out before these hearings, but it is now in the Government Printing Office. We expect to have it within 2 weeks. I will be glad to see that copies are in the hands of the committee. That gives a complete detailed report of all of our activities. TRANSACTIONS REGARDING THE GERMAN LEICA CAMERA CO. Mr. WIGGLESWORTH. Have you taken over the interests in this country of the German Leica Camera Co.? Mr. MCNAMARA. Yes. Mr. WIGGLESWORTH. Will you put in the record a little statement about that that will show the value of those interests and what you realized on them by way of sale or otherwise? Mr. MCNAMARA. I will be glad to do that. You would like to have something about patent interests as well as any of the other properties? Mr. WIGGLESWORTH. Yes. (The statement requested is as follows:) STATEMENT WITH RESPECT TO (A) E. LEITZ, INC.. 730 FIFTH AVENUE, NEW YORK, N. Y., AND (B) LEICA PATENTS PROPERTY VESTED Under vesting orders Nos. 107, 108, and 3300, the Alien Property Custodian vested the following property: 1. All of the outstanding capital stock, common and preferred, of E. Leitz, Inc. (a 1916 corporation), in dissolution. 2. All of the outstanding capital stock, common and preferred, of E. Leitz, Inc. (a 1941 corporation), successor to the 1916 corporation. 3. All right, title, interest, and claim of any name or nature whatsoever of the 1916 corporation, Dr. Ernst Leitz, and E. Leitz G. m. b. H., in and to all indebtedness owed to either/or all of them by the 1941 corporation, including 5-percent debentures due April 5, 1961, in the face amount at the time of vesting of $52,300. 4. A claim of E. Leitz G. m. b. H. against the 1916 and/or the 1941 corporation in the amount of $31,668.85, represented on the books and records of said companies as an account payable. In addition to the foregoing, the Alien Property Custodian, under various vesting orders, vested all United States patents owned by Ernst Leitz Optische Werke G. m. b. H. and the interest of the latter in certain of its agreements with United States nationals involving the use of some of these patents. PRESENT MANAGEMENT STATUS Since the 1916 corporation is in dissolution, all information hereinafter reported, unless otherwise noted, will refer to the 1941 corporation. The present board of directors of the subject is now composed of persons designated by the Custodian and does not include anyone who served as a director at the time of vesting. The president of the company, John W. Slacks, was also appointed at the Custodian's direction, and all of the prevesting personnel now emploved have been retained only because of the need of their technical knowledge and skill with respect to the corporation's operations. PRESENT OPERATIONAL STATUS During the year 1944, a majority of the corporation's operations was devoted to the manufacture and sale of article considered essential to the national interest, as is reflected by the following: (a) Deliveries to various Government agencies, for lend-lease, indus- Total sales (100 percent) - $348, 051. 38 349, 566. 02 89, 706. 24 787, 323. 64 In addition, the corporation, during the current year, is fulfilling a contract for cameras and related equipment awarded by the United States Army Signal Corps in the approximate amount of $600,000. A portion of the order is manufactured directly by the corporation, while another portion is being manufactured by outside interests under subcontracts. The items so manufactured include Leica cameras, lenses, and accessories, all of which are produced in the United States under the original patents covering the manufacture of the Leica camera and accessories. These patents have been vested as previously described, and in accordance with the Custodian's general policy involving enemy-owned patents, certain of the patents have been licensed for use to United States nationals on a nonexclusive royalty-free basis. CURRENT FINANCIAL INFORMATION As of December 31, 1944, the balance sheet of the 1941 corporation discloses assets in excess of $331,000; liabilities, including the 5-percent debentures, of approximately $139,000; and a proprietorship net worth, represented by 1,750 shares of preferred stock, 50 shares of common stock, and surplus, in the amount of approximately $192,000. During the year 1944 the 1941 corporation earned a little over $20,000, after provision for taxes. THE REASON FOR CONTINUED OPERATION OF THE ENTERPRISE BY THE CUSTODIAN In view of the fact that the subject is devoting most of its operational facilities to the manufacture of strategic material, it would, normally, be deemed inadvisable to take any steps which might upset the production program. However, another reason exists which makes it inappropriate for the Custodian to sell his vested interest in the 1941 corporation, or to liquidate and dissolve such corporation. The common stock therein at the time of vesting was registered in the names of two United States citizens who allegedly acquired these shares at the time the 1941 corporation was organized. As a result of an extensive investigation by this Office, it was determined that the registration of the common shares in the names of American citizens was for the purpose of cloaking their ownership by German interests and to prevent their seizure by our Government in the event of war. The United States citizen registrants of the vested common stock are disputing the determination of the Custodian as to the enemy ownership of such shares and have filed a suit in the United States district court under section 9 of the Trading with the Enemy Act, as amended, for a return of the shares. Section 9 of the act, in permitting the filing of such suits by nonenemies who allege that they have an interest in property vested in or seized by the Custodian, contains the following provision with respect to the property claimed: (* * * If suit shall be so instituted, then such money or property shall be retained in the custody of the Alien Property Custodian, or in the Treasury of the United States as provided in this Act, and until any final judgment or decree which shall be entered in favor of the claimant shall be fully satisfied by payment or conveyance, transfer, assignment, or delivery by the defendant, or by the Alien Property Custodian, or Treasurer of the United States on order of the court, or until final judgment or decree shall be entered against the claimant or suit otherwise terminated." Mr. WIGGLESWORTH. Who has handled that transaction for you? Mr. MCNAMARA. We have a Division of Business Operations and Liquidation which handles all matters pertaining to business enterprises which we have vested and all the business properties. We also have a Patent Division which deals with patent features. Mr. WIGGLESWORTH. Who is in charge of that? Mr. MCNAMARA. The New York office, where the Liquidation Division is located, and Mr. Frank Garvey, the manager of the New York office, is in charge. In the Patent Division Mr. Howland Sargent is in charge. Mr. WIGGLESWORTH. Is Mr. Basil O'Connor connected with that set-up in any way? Mr. MCNAMARA. Not that I know of. ADMINISTRATIVE HISTORY OF WAR PROJECT Mr. WIGGLESWORTH. I notice here a statement about the administrative history of the war that the Budget Bureau has apparently called upon you to make. What is that? Mr. MCNAMARA. Our Research Section was assigned the project of writing a history of the Office of Alien Property Custodian, particularly with respect to the origin and development of the program for the seizure and disposition of alien property, and it is my understanding that this request was for the purpose of having in some central place in the Government a statement showing what had been done by various war agencies so that we would have that for future reference and as a guidepost for similar activities in the event that they may have to meet a similar situation, which we hope we never will have to meet. Mr. WIGGLESWORTH. Has that been completed? Mr. MCNAMARA. I think the draft of certain portions is completed, and that of some others the final statements are almost ready. Mr. WIGGLESWORTH. Will you put in the record something about the cost of the preparation of that publication? Mr. MCNAMARA. I will be glad to do that. (The statement requested is as follows:) The estimated cost of the "Administrative History of War" project for the fiscal year 1946 is $5,000. In this estimate consideration has been given to the cost of developing research data for current use which would normally be incurred whether or not the historical project was undertaken. The above estimate does not include funds for such purposes. Mr. MCNAMARA. I might say that it is not being printed; it is just a typewritten statement of the history. DISCUSSION OF FOREIGN INVESTIGATIONS Mr. WIGGLESWORTH. What about these foreign investigations that you are contemplating; is that foreign investigations in other countries? Mr. MCNAMARA. In the operations of our office the procedure has been to investigate as far as possible in this country with respect to enemy ownership of property. Many of the properties do not stand in the records in the names of alien enemies, but in the names of "cloaks." Sometimes we have to infer from a certain document that certain other documents exist, in order to prove title to the property. That evidence of title or ownership may be in Switzerland or in France, or in Holland, or in Germany, or in Japan. At the present time we are cooperating with other agencies who are engaged in similar investigations, or preparing for them in foreign countries in order to tie up that proof so that we will have in our files the evidence which will enable us to prevail in the event of litigation thereafter. For example, |