560 FIRST SUPPLEMENTAL APPROPRIATION BILL, 1945 SATURDAY, DECEMBER 9, 1944 UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, D. C. The committee met at 10 a. m.; Senator McKellar, chairman of the subcommittee presiding. Present: Senators McKellar, Hayden, Thomas of Oklahoma, Gurney, and Brooks. OFFICE FOR EMERGENCY MANAGEMENT OFFICE OF ALIEN PROPERTY CUSTODIAN STATEMENTS OF FRANCIS J. MCNAMARA, DEPUTY ALIEN PROPERTY CUSTODIAN; JOHN WARD CUTLER, ASSISTANT GENERAL COUNSEL; WILLIAM H. MOORE, EXECUTIVE OFFICER; AND R. F. LINEHAN, COMPTROLLER LETTER REQUESTING CERTAIN AMENDMENTS Senator MCKELLAR. I will place in the record a letter from Mr. McNamara. (The letter referred to follows:) Hon. KENNETH MCKELLAR, OFFICE OF ALIEN PROPERTY CUSTODIAN, Chairman, Deficiencies Subcommittee, Committee on Appropriations, Washington, D. C. DEAR SENATOR MCKELLAR: The First Supplemental Appropriation Act, 1945, as passed by the House, contains the following provision relative to the Office of Alien Property Custodian : "OFFICE FOR EMERGENCY MANAGEMENT "OFFICE OF ALIEN PROPERTY CUSTODIAN "The Alien Property Custodian is hereby authorized to pay out of any funds or other property or interest vested in him or transferred to him not to exceed $4,000,000 for the entire fiscal year 1945 for all necessary expenses incurred by the Office of Alien Property Custodian in carrying out the powers and duties conferred on the Alien Property Custodian pursuant to the Trading With the Enemy Act of October 6, 1917, as amended (50 U. S. C. App.): Provided, That after June 30, 1945, the Office of Alien Property Custodian shall not incur any obligations for the administrative expenses of said Office except pursuant to an annual appropriation by the Congress specifically therefor." M506388 For reasons hereinafter stated, we believe it to be of the utmost urgency that this provision be amended in certain respects. We respectfully suggest the following language: "OFFICE FOR EMERGENCY MANAGEMENT "OFFICE OF ALIEN PROPERTY CUSTODIAN "The Alien Property Custodian is hereby authorized to pay out of any funds or other property or interest vested in him or transferred to him all necessary expenses incurred by the Office of Alien Property Custodian in carrying out the powers and duties conferred on the Alien Property Custodian pursuant to the Trading with the Enemy Act of October 6, 1917, as amended (50 U. S. C. App.): Provided, That not to exceed $4,000,000 shall be available for the entire fiscal year 1945 for the general administrative expenses of the Office of Alien Property Custodian, including the objects as specified in section 201 of the National War Agency Appropriation Act, 1945 (Public Law 372, 78th Cong., 2d sess), printing and binding, rent in the District of Columbia, and all other necessary general administrative expenses." The most urgent reasons for our suggested amendment are the following: First. The present text of the House bill may prevent the Agency from paying salaries in the District of Columbia (5 U. S. C., sec. 45), where approximately 45 percent of its personnel is located, rent in the District of Columbia (40 U. S. C., sec. 34), where its major activities are located, or any other items requiring specific authorization under a fixed monetary ceiling. Second. The present text of the House bill would limit all necessary expenditures (as distinguished from general administrative expenditures) to a $4,000,000 ceiling, contrary to the intention of the House committee. I The specification which we have proposed as to objects for which the funds authorized for administrative expenses may be expended is deemed important in order to insure compliance with the various provisions of law requiring particularization as to certain categories of expenditures. Our reference to section 201 of the National War Agency Appropriation Act, 1945, is utilized as a concise method of encompassing most of our basic requirements, through reference to an enactment which has already received congressional approval for application during 1945 to other war agencies within the Office for Emergency ManageThe two additional items requiring particularization are spelled out in our draft and consist of printing and binding (44 U. S. C., secs. 111, 116) and rent in the District of Columbia (40 U. S. C., sec. 34). II In writing into the bill a "ceiling" of $4,000,000 for the Office of Alien Property Custodian for the fiscal year 1945, the House Appropriations Committee, as stated in its report (p. 11), intended to include a ceiling "which agrees with the projected fiscal year 1945 expenditures contained in the Budget for such fiscal year." The information as to the projected Budget for this Agency for the fiscal year 1945, as conveyed to the House committee, indicated that $4,000,000 constituted the total projected expenditure for administrative expenses. the case of the Reconstruction Finance Corporation (e. g., 57 Stat. 292) and the Federal Housing Administration (e. g., Public Law 358, 78th Cong., 2d sess., pp. 18-19), this agency necessarily incurs both administrative expenses and expenses resulting from the direct operation, maintenance, repair, disposition, etc., of specific properties vested in the custodian. Such expenses, of course, are not susceptible of specific delineation in advance. The necessity for a specific repair to a vested building cannot be determined until the exigency arises. Accordingly, it is evident that the ceiling of $4,000,000 should not include such "direct" expenses. It was, we believe, the intent of the House, as well as a result of the necessities of the situation, that the $4,000,000 be used for the general administrative expenses of the Office. It will be readily apparent that the agency might be completely hamstrung were it required to speculate as to unforeseen and unforeseeable repairs or other general expenses arising out of the operation or liquidation of specific properties and to include such items within the $4,000,000 administrative expense fund now being authorized by the Congress. Accordingly, our suggested language, leaving unchanged the principle of the House bill, would clarify it by moving the $4,000,000 ceiling into a proviso which will clearly indicate that this sum is expendable for administrative expenses. We have not burdened the proposed legislation by detailed specification of what constitutes administrative as distinguished from nonadministrative expenses. The Agency has, however, consistently drawn a distinction between the two, under the supervision of the Bureau of the Budget and pursuant to Executive Order No. 9325. It is believed that the present practice in this respect may properly be continued. For the information of the committee, it may be stated that the following are typical examples of nonadministrative or "direct" expenses, which are paid directly out of cash identified with a specific alien account: 1. Real and personal property taxes and other taxes related to a particular property. 2. Storage, moving, rental, maintenance, conservation, repair, and operating charges directly related to a particular property. 3. Costs of sale relating to a particular property, including appraisal costs, advertising, auditing charges, and other sales expenses. III The proviso in the House draft to the effect that no obligations for administrative expenses of the Agency shall be incurred after June 30, 1945, without an express appropriation was contained in the draft provision submitted by the President (House Document No. 748), in which no ceiling was proposed for the period up to June 30, 1945. Now, however, the express authorization contemplated by the proviso is in the bill for the current fiscal year. The proviso accordingly appears unnecessary, although we have no substantive objection to its retention if it is preferred not to delete it. IV In full realization of the pressure of time involved in the work of your committee, we have limited this communication to the shortest possible compass. We cannot emphasize too strongly, however, the vital importance of our suggested changes to the successful continuation of the work of this Agency. I am authorized to state that the Bureau of the Budget has no objection to the submission to the Congress of the revised provision herein proposed. Respectfully, FRANCIS J. MCNAMARA, Deputy Alien Property Custodian. Senator MCKELLAR. All right, gentlemen, you may proceed. Mr. MCNAMARA. Mr. Chairman and gentlemen, as a consequence of section 213 of the Independent Offices Appropriation Act of 1945, the so-called Russell amendment, the Office of Alien Property Custodian, having been created in part by Executive order, felt that it should present an authorization to expend money out of the properties or the proceeds thereof which the Alien Property Custodian has vested, or out of the funds transferred to the Alien Property Custodian. That has a historical precedent; from 1923 up to the present time, under the Trading with the Enemy Act and the administrative procedure in the Office of Alien Property Custodian, expenses of administration have been paid out of the properties rather than out of a specific appropriation therefor. We have a proposed amendment to the bill as passed by the House, changing slightly the provision as contained in the bill. I have here Mr. John Ward Cutler, assistant general counsel of the Office of Alien Property Custodian, who is prepared to make an explanation of the proposed change. Senator MCKELLAR. Let us get that right. You are asking here that the Alien Property Custodian be authorized to pay out of any funds or property or interest vested in him, not to exceed $4,000,000 for the entire fiscal year 1945, for all necessary expenses incurred by the Office of Alien Property Custodian in carrying out the act pursuant to the Trading With the Enemy Act of October 6, 1917. What was the appropriation in the general bill, the present law? Senator MCKELLAR. There is no appropraition, or there is no authorization for you to use the money? Mr. MCNAMARA. The authorization was under Executive Order 9325, and the expenses were paid out of the properties, under supervision of the Bureau of the Budget and pursuant to the Executive order. PURPOSE OF PROVISION IN BILL IS TO COMPLY WITH THE RUSSELL AMENDMENT Senator HAYDEN. What you are trying to do is to comply with the Russell amendment? Mr. MCNAMARA. That is right. Senator HAYDEN. Which said that anything of that kind could run for 1 year, and then you would have to come to Congress? Mr. MCNAMARA. That is right. Senator MCKELLAR. This is simply coming to Congress for authority to use it? Mr. MCNAMARA. That is right. AMOUNT OF EQUITIES OF OFFICE OF ALIEN PROPERTY CUSTODIAN Senator MCKELLAR. How large are the funds of the Alien Property Custodian? Mr. MCNAMARA. The total amount is around $200,000,000. Senator MCKELLAR. What do you mean by equities? Mr. MCNAMARA. By equities we mean that the aggregate value of properties or interests owned by the United States as a result of vesting, represents that amount of money. For example, in a corporation, if we vested 40 percent of the stock, and 60 percent was owned by American citizens, we would consider our 40 percent interest in that as being the equity. Senator MCKELLAR. And you are simply holding that stock. It has not been converted into money. Mr. MCNAMARA. Some has. In some cases we hold public sales of properties and the cash is deposited in the Treasury, in accordance with the provisions of the Trading with the Enemy Act. ADVISABILITY OF DISPOSING OF PROPERTIES Senator MCKELLAR. Isn't this a good time to sell such properties? Mr. MCNAMARA. We have a program of sales, sir. We are trying our best to dispose of our properties, except those being used in the war effort, and our policy as to those is to continue their use and increase production until such time as we can get them back into private industry and private hands. Senator MCKELLAR. Take a corporation in which you own 40 percent, or aliens owned 40 percent, and the remainder is carried on by the majority stockholders. Even if it is engaged in war business, why wouldn't it be a good time to sell your interest in it? Mr. MCNAMARA. In a 40 percent case, that would be true. Senator MCKELLAR. Are there cases where more than half of it belongs to aliens? Mr. MCNAMARA. The outstanding example, I think, is the General Aniline & Film Corporation, where we own 98 percent of the stock. Senator MCKELLAR. And that you are running? Mr. MCNAMARA. We are running that. Senator MCKELLAR. Have you made a report concerning the affairs of the Alien Property Custodian? If so, when was the last report? Mr. MCNAMARA. The last report was as of June 30, 1943, and a new report is in process of preparation now. That report is submitted to Congress by the President. Mr. CUTLER. May I add, sir, that a statement summarizing our activities was presented to the House committee and is printed in the House hearing on this bill. Senator MCKELLAR. I am glad you referred to it. Mr. CUTLER. That begins on page 56 of the House hearings. Mr. MCNAMARA. I have a copy of the justification of estimate for the fiscal year 1945, which was introduced before the House subcommittee, which I will be glad to introduce in the record and make a copy available to the members of the committee. It is contained in the report. Mr. CUTLER. It is in the House hearings. EXPENDITURES FOR GENERAL ADMINISTRATIVE EXPENSES IN 1944 Senator MCKELLAR. There is no use printing it a second time. How much did you expend on Alien Property Custodian matters last year, 1944? Senator MCKELLAR. How much for administration? Mr. CUTLER. May I refer you to page 61 of the House hearings? Senator MCKELLAR. I have it before me. The budget was $5,301,000 and you actually spent $4,643,000; is that correct? Mr. CUTLER. That is correct for general administrative expenses. CASH ON HAND JUNE 30, 1944 Senator MCKELLAR. How much money have you on hand now? Mr. MOORE. This cash is the result of a process of liquidation which Mr. McNamara indicated was in progress a few minutes ago. The balance of cash as on June 30, 1944, the beginning of the fiscal year which is the last date I have here is some $31,000,000. Senator MCKELLAR. Thirty-one million? Mr. MOORE. That is the result of the sale of properties and their gradual conversion into deposits in the Treasury. Senator MCKELLAR. How is that money kept? Is it kept to your credit in the Treasury, or paid into the general fund of the Treasury? Mr. MCNAMARA. It is kept in a special deposit account, carried in the name of the Alien Property Custodian. |