462.11 W 892/48

The Secretary of State to the Chairman of the Senate Judiciary Committee ( Nelson )

Dear Senator Nelson: I beg to acknowledge the receipt of your letter of July 21, 1922, enclosing a copy of a Bill (S. 3852) “To amend an Act entitled ‘An Act to define, regulate and punish Trading with the Enemy and for other purposes’ approved October 6, 1917, as amended,” and requesting in behalf of the Committee on the Judiciary of the Senate an expression of my opinion as to the advisability of the legislation contemplated by this measure.

For the purpose of indicating my views regarding the Bill, it is unnecessary at this time to enter into a detailed discussion of its provisions. I understand that its general purpose is to provide for a commission composed of American citizens which is to pass on certain classes of claims of American citizens, and also on claims of the Government of the United States, for damages sustained as a result of the acts, during periods described in the Bill, of either the former German Government or the former Austro-Hungarian Government, or their authorities, respectively.

In addition to the claims of the citizens of the United States, the Bill embraces provision for claims made by the Government of the United States for “all its pensions or compensation in the nature of pensions to its naval and military victims of war (including members of its air force), whether mutilated, wounded, sick or invalided, and to the dependents of such victims”; also for “the cost of assistance” by the Government of the United States “to prisoners of war and to their families and dependents; and also for “allowances” by the Government of the United States “to the families and dependents of mobilized persons or persons serving with its forces.”

Provision is made for the satisfaction of these claims, in accordance with a stated order of priority, out of the property of German and Austrian nationals held by the Alien Property Custodian.

It is hardly necessary for me to say that I am most anxious that a settlement of the claims of American citizens should be promptly effected. You undoubtedly appreciate that in addition to the difficulties which, as a result of political and economic conditions, have [Page 253] confronted the nations with which the United States was associated in the war in effecting settlement of claims against former enemy countries, the Government of the United States was obliged to deal with conditions incident to the conclusion of treaties with Germany, Austria and Hungary to reestablish friendly relations with those nations.

Following the conclusion of such treaties, negotiations were entered into with Germany looking to the adjustment of the claims of our citizens pursuant to the rights of the United States recognized under the Treaty concluded August 25, 1921, with that country. It is contemplated that a mixed commission on which Germany will have representation will be established to determine the amounts of these claims in accordance with the procedure usually governing matters of this kind.

I am glad to say that despite the recent difficulties in Germany which apparently have delayed the completion of the arrangement, gratifying progress has been made and I believe that a satisfactory convention will shortly be signed. The negotiations with the German Government indicate a desire on its part to move as expeditiously as possible with a view to the consummation of the plans under consideration. It is manifest that legislation such as that contemplated by the Bill in question would be embarrassing to the Executive in dealing with the matter of these claims, since the enactment of the Bill into law would make it necessary to abandon present plans.

Apart from this effect of the passage of the Bill, I may say that it seems to me entirely appropriate that the usual practice should be followed in the determination of international claims, and that Germany should have appropriate representation upon a mixed claims commission by which the amount of these claims shall be assessed. The Bill seems to deal with the settlement of claims as if it were purely a domestic affair. But the claims are those of American citizens against Germany, Austria and Hungary and it has hitherto been contemplated, as the Joint Resolution of Congress approved July 2, 1921, makes clear, that these Governments shall make suitable provision for the satisfaction of these claims. But if these Governments are to make such provision, I should regard it as proper that they should have the opportunity of being represented on the claims commission by which the amount of the claims is to be fixed. I do not see that any different principle should be applied because we hold the private property of former enemies in pledge, but this situation, I should suppose, would rather make the course to which I have referred, if possible, still more important before resort were had to such property for satisfaction. To undertake to [Page 254] exclude a nation in a case like the present from any participation or voice in matters thus vitally affecting its interests and to deal with such matters by ex-parte action would be, in my judgment, at variance with the principles and practice generally observed by nations in their relations with each other, and I should think it unfortunate if such a course were initiated by this Government.

I do not speak of the situation which would be disclosed if Germany refused to make an arrangement for a commission to act in the assessment of claims in a manner which would be reasonable and satisfactory to our Government. I am, however, speaking of the present situation in which negotiations are pending and where there is every reason to believe that they will shortly be concluded.

I shall not discuss the plan which the Bill sets forth of confiscating the property in the hands of the Alien Property Custodian by providing for its application not only to the payment of the claims of American citizens but also to the claims of this Government for pensions and allowances as described in the Bill. While the latter class of claims is to be postponed in payment to the former, all are to be satisfied under the provisions of the Bill, and it is manifest that the entire private property of former enemy nationals in the hands of the Alien Property Custodian will not be sufficient for the purposes stated.

Up to this time Congress has not committed itself to a confiscatory policy. In the Joint Resolution, of July 2, 1921, Congress provided that the property should be retained by the United States and no disposition thereof should be made except as had been or might be provided by law, until such time as Germany and Austria and Hungary “shall have respectively made suitable provision for the satisfaction of all claims against said Governments respectively” of American citizens who have been damaged through the action of these Governments as stated, and until compliance with the other provisions of the Resolution. In other words, so far as the claims of American citizens are concerned, the properties in the hands of the Alien Property Custodian, or their proceeds if liquidated, are to be held virtually in pledge until Germany, Austria, and Hungary respectively make suitable provision for the satisfaction of these claims.

As I have said, this implies a fair opportunity to make the required provision. When the amount of these claims has been determined, the question of the satisfaction can be taken up at once, Congress of course reserving its authority to deal with the question in the light of the event. I am of the opinion that this course can be followed quite as expeditiously as the course contemplated by the Bill, and I should hope that in any case no measure of confiscation [Page 255] would be adopted until there had been a failure, after reasonable opportunity, to provide for the satisfaction of the claims of American citizens, duly ascertained.

I remain [etc.]

Charles E. Hughes