WAR CLAIMS AND RETURN OF ENEMY ASSETS MONDAY, APRIL 30, 1956 HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D. C. The committee met at 10 a. m., pursuant to notice, in room 1334, New House Office Building, Hon. J. Percy Priest, chairman, presiding. The CHAIRMAN. The committee will come to order. This morning the Committee on Interstate and Foreign Commerce would like to give all sponsors of bills to amend the Trading With the Enemy Act and the War Claims Act an opportunity to explain the bills which they have introduced, and to indicate briefly the background of and the reasons for these bills. This hearing will enable the committee to determine how to proceed with regard to the 36 bills and resolutions which have been referred to this committee involving the Trading With the Enemy Act and the War Claims Act. These hearings will also enable the Members of the House to gain an appreciation of the problem which confronts this committee in dealing with these bills. be As far as I can see, the bills with which we are concerned may divided basically into two groups-those bills which would continue in force the principle of no return underlying the War Claims Act and which would increase benefits payable to the classes of beneficiaries to whom benefits are payable under the War Claims Act. On the other hand, the second class of bills would abandon the principle of no return of enemy property and would authorize either a full or a limited return of enemy property to former owners. Several bills couple with the reversal of the no return principle provisions for compensating American citizens-up to a certain amountfor losses incurred by them on account of enemy action during World War II. As the members of the committee and the sponsors of the bills can easily see, these two groups of bills are in a basic philosophic conflict. If the United States returns vested enemy property, there will be no additional funds available for the war-claims fund to pay increased benefits to existing beneficiaries or to pay benefits to additional classes of beneficiaries under War Claims Act. On the other hand, if we provide for the payment of such additional benefits or provide for the payment to new classes of beneficiaries, the amount of enemy property which can be returned will be diminished to the zero point. The committee, therefore, is faced with a difficult decision which involves resolution of a basic philosophic conflict. I think I might underscore that problem confronting the committee by reading a paragraph or two from a letter under date of April 26, 1 1956, from Miles Kennedy, director of the American Legion legislative commission. A portion of the letter reads as follows: Referring to the hearings now being conducted by the House Committee on Interstate and Foreign Commerce relative to the return of alien property, etc., I would advise that at the 1953 national convention of the American Legion our organization went on record as favoring the return of the seized properties except in those cases where the owners were behind the Iron Curtain, etc. However, the matter again came up for consideration at our 1954 national convention, at which time the American Legion reversed its position and adopted the following statement of policy in connection therewith: "War Claims Act: Believing that the American veteran has a vested interest in enemy assets seized by the United States and that such assets should continue to be devoted to the purpose provided by the War Claims Act, the American Legion opposes any effort to return these assets to their former owners or their governments." I shall ask permission to include the remainder of this letter in the record along with other letters I have. (The letters referred to follow :) Hon. J. PERCY PRIEST, THE AMERICAN LEGION, NATIONAL LEGISLATIVE COMMISSION, Chairman, House Committee on Interstate and Foreign Commerce, House Office Building, Washington 25, D. C. DEAR CONGRESSMAN PRIEST: Referring to the hearings now being conducted by the House Committee on Interstate and Foreign Commerce, relative to the return of alien property, etc., I would advise that at the 1953 National Convention of the American Legion our organization went on record as favoring the return of the seized properties except in those cases where the owners were behind the Iron Curtain, etc. However, the matter again came up for consideration at our 1954 National Convention, at which time the American Legion reversed its position, and adopted the following statement of policy in connection therewith: "WAR CLAIMS ACT. Believing that the American veteran has a vested interest in enemy assets seized by the United States and that such assets should continue to be devoted to the purposes provided by the War Claims Act, the American Legion opposes any effort to return these assets to their former owners or their governments." I understand that the action taken at the 1954 National Convention was based largely on the theory that the governments of Germany and Japan were responsible for the commencement of World War II and as a result of their actions many United States citizens suffered in internment camps or sustained property losses. Furthermore, that Germany defaulted upon similar claims in World War I and the retention of property seized in World War II is considered an assurance that the just claims of American citizens will be paid. In view of the foregoing, we respectfully request that the subcommittee reject the bills which would provide for the return of seized enemy property. While we are not asking for the privilege of a personal appearance, I respectfully request that the American Legion's position be given consideration by the subcommittee and this letter be incorporated in the record of the hearings. Thanking you for your consideration, I am Sincerely yours, MILES D. KENNEDY, Director. The CHAIRMAN. I read that simply to emphasize the problem that the committee faces in dealing with what we might term this philosophic conflict. To complicate matters somewhat further, there are several bills which do not fit into either of these two groups but which deal with procedural questions. These bills, however, are not necessarily unimportant. On the contrary, the questions raised by them are funda mental and troublesome and involve problems of evidence, procedure, and judicial review similar to the problems encountered in the Federal employees' loyalty program. Instead of amplifying my analysis of pending legislation any further, I believe it will be preferable for the committee to listen to the explanations which the sponsor of these bills may care to make. May I say that following the hearing of sponsors of these bills it is the intention of the committee to proceed with more detailed hearings after we have worked out a program toward that end. We are happy to have Mr. Younger, a former member of this committee, who will discuss his own bill, H. R. 2233 and H. R. 10549. We will be happy to hear you at this time, Mr. Younger. Before you proceed, may I state that we hope to accommodate Members of the House who are present just as rapidly as we can without crowding anybody so everybody will have an opportunity to explain before the committee the purpose and the background of the bill that he has introduced. You may proceed, Mr. Younger. (H. R. 10549 follows:) [H. R. 10549, 84th Cong., 2d sess.] A BILL To amend the War Claims Act of 1948, as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the War Claims Act of 1948, as amended, is further amended by inserting after section 1 thereof, the following: "TITLE I" SEC. 2. The word "Act", wherever it appears in title I in reference to the War Claims Act of 1948, as amended, is amended to read "title". SEC. 3. The War Claims Act of 1948, as amended, is further amended by adding at the end thereof the following: "TITLE II "GERMAN AND JAPANESE CLAIMS FUND "SEC. 201. As used in this title the term or terms "(a) ‘Albania', 'Austria', 'Czechoslovakia', 'Germany', 'Greece', 'Poland', 'Yugoslavia', and 'Japan', when used in their respective geographical senses, mean the territorial limits of each such country in Europe or Asia as such limits existed, in the case of European countries on December 1, 1937, and in the case of Japan on July 1, 1937. "(b) 'Japanese occupied territory' means any territory occupied by the military or naval forces of Japan. "(c) 'Commission' means the Foreign Claims Settlement Commission of the United States, established pursuant to Reorganization Plan Numbered 1 of 1954 (68 Stat. 1279). "(d) The term 'national of the United States' includes (1) persons who are citizens of the United States, and (2) persons who, though not citizens of the United States, owe permanent allegiance to the United States. It does not include aliens. "SEC. 202. (a) There is hereby created in the Treasury of the United States a fund to be known as the German and Japanese Claims Fund. The Secretary of the Treasury is authorized and directed to cover into this fund $200,000,000 from any payments, which, after the enactment of this title, are received by the United States through the Export-Import Bank of Washington, or otherwise, from the Federal Republic of Germany under article I of the Agreement Between the United States of America and the Federal Republic of Germany Regarding the Settlement of the Claim of the United States of America for Post-war Economic Assistance (other than Surplus Property) to Germany, dated February 27, 1953, or from Japan under any similar agreement entered into with such country. Subject to the deduction authorized by subsection "b" of this section one-half of the moneys covered into this fund shall be used to pay awards authorized by section 203 which arose as a consequence of military action by Germany and the other one-half of the moneys covered into such fund shall be used to pay awards authorized by section 203 which arose as a consequence of military action by Japan. "(b) There shall be deducted from the German and Japanese Claims Fund 5 per centum thereof as reimbursement to the Government of the United States for the expenses incurred by the Commission and the Treasury Department in the administration of this title. All amounts so deducted shall be covered into the Treasury to the credit of miscellaneous receipts. "SEC. 203. The Commission is authorized and directed to receive and to determine according to the provisions of this title the validity and principal amount of claims for "(a) physical damage to, or physical loss or destruction of property located in Albania, Austria, Czechoslovakia, Germany, Greece, Poland, or Yugoslavia which occurred during the period beginning September 1, 1939, and ending May 8, 1945, or of property located in Japan or Japanese occupied territory during the period beginning July 7, 1937, and ending September 2, 1945, as a direct consequence of military operations of war, or of special measures directed against property during the war because of the enemy or alleged enemy character of the owner, which property was owned, directly or indirectly, by the claimant at the time of such loss, damage, or destruction. The sale, transfer, or assignment of such property subsequent to such damage, loss, or destruction shall not operate to extinguish any claim of the transferor otherwise compensable under this subsection. If a claim otherwise compensable under this subsection has been assigned for value the assignee shall be the party entitled to file a claim under this subsection; "(b) damage to, or loss or destruction of, ships or ship cargoes directly or indirectly owned by the claimant at the time such damage, loss, or destruction occurred, which was a direct consequence of military action by Germany during the period beginning September 1, 1939, and ending May 8, 1945, or of military action by Japan during the period beginning July 7, 1937, and ending September 2, 1945. The sale, transfer, or assignment of such ships or ship cargoes subsequent to such damage, loss, or destruction, shall not operate to extinguish any claim otherwise compensable under this subsection. If a claim otherwise compensable under this subsection has been assigned, the assignee shall be the party entitled to file a claim under this subsection. No award shall be made under this subsection in favor of any insurer or reinsurer as assignee or otherwise as successor in interest to the right of the insured; "(c) net losses by insurances companies under warrisk insurance or reinsurance policies or contracts, incurred in the settlement of claims for insured losses of ships or ship cargoes owned (1) by natural persons who were nationals of the United States at the time of the loss, damage, or destruction of such ships or ship cargoes and at the time of the settlement of such claims, or (2) by corporations, partnerships, associations, unincorporated bodies, or other entities in which at least 50 per centum of the outstanding capital stock or other proprietary interest therein was beneficially owned, directly or indirectly, by nationals of the United States at the time of such loss, damage, or destruction and at the time of the settlement of such claims, which insured losses were a direct consequence of military action by Germany during the period beginning September 1, 1939, and ending May 8, 1945, or of military action by Japan during the period beginning July 7, 1937, and ending September 2, 1945. Such net losses shall be determined by deducting from the aggregate of all payments made in the settlement of such insured losses the aggregate of all amounts received by any such insurance companies on all policies or contracts under which the insured was a national of the United States or, in the case of an insured corporation, partnership, association, unincorporated body or other entity, at least 50 per centum of the outstanding capital stock or other proprietary interest therein was beneficially owned, directly or indirectly, by nationals of the United States; "(d) Loss or damage on account of the death or injury of any person who, being then a civilian national of the United States and a passenger on any vessel engaged in commerce on the high seas, was injured or killed as a result of military action by Germany during the period beginning September 1, 1939, and ending December 11, 1941, or of military action by Japan during the period beginning July 7, 1937, and ending December 11, 1941, or for the loss of, or damage to the property of any civilian national of the United States, passenger on such vessel, during such period, resulting as a direct consequence of such action. Awards under this subsection on account of the death or disability of any one person shall not exceed $7,500. An award on account of the death of any such person shall be made only to or for the benefit of the following persons: "(1) Widow or husband if there is no child or children of the deceased; "(2) Widow or husband and child or children of the deceased, one-half to the widow or husband and the other half to the child or children of the deceased in equal shares; "(3) Child or children of the deceased (in equal shares) if there is no widow or husbands; and "(4) Parents (in equal shares) if there is no widow, husband, or child. An award on account of disability shall be made only to the person so disabled, or, in the event of his death at any time prior to the making of the award, to the persons specified in paragraphs (1) through (4) of this subsection in the order so specified; and "(e) Losses resulting from the removal of industrial or other capital equipment in Germany owned directely or indirectly by the claimant on May 8, 1945, and removed for the purpose of reparations including losses from any destruction of property in connection with such removal. If a claim which could otherwise be allowed under this subsection has been assigned for value, the assignee shall be the party entitled to claim hereunder. "SEC. 204. (a) No awards shall be made pursuant to section 203 with respect to the following classes of property: "(1) Accounts receivable, bills, receivable, records, files, plans, drawings, formulas, currency, deeds, evidences of debt, securities, money, bullion, furs, jewelry, stamps, precious and semiprecious stones, works of art, antiques, stamp and coin collections, manuscripts, books and printed publications more than fifty years old, models, curiosities, objects of historical or scientific interest, and pleasure watercraft and pleasure aircraft, except that awards may be made with respect to such of the foregoing items of property as may have constituted inventories, supplies, or equipment for carrying on a trade or business. "(2) Intangible property. "(b) In determining the amount of an award there shall be credited all amounts the claimant has received or is entitled to receive from any source on account of the loss or losses with respect to which the award is made. "SEC. 205. No claims shall be allowed under this title unless the claimant and all predecessors in interest were— "(a) in the case of a natural person, one who, on the date of loss, damage, destruction, or removal and continuously thereafter until the date of filing his claim with the Commission pursuant to this title, was a national of the United States, including any person, who, having lost United States citizenship solely by reason of marriage to a citizen or subject of a foreign country, reacquired such citizenship prior to the date of enactment of this title if such individual, but for such marriage, would have been a national of the United States at all times on and after the date of such loss, damage, destruction, or removal until the filing of his claim; and "(b) in the case of a corporation, partnership, association, unincorporated body, or other entity, one which on the date of loss, damage, destruction, or removal and continuously thereafter until the date of presentation of its claim was incorporated or otherwise organized under the laws of the United States or of any State or Territory thereof, or of the District of Columbia, and with respect to which, at all times between the date of such loss, damage, destruction, or removal and the date of presentation of its claim, at least 50 per centum of the outstanding capital stock or other proprietary interest in such entity was beneficially owned, directly or indirectly, by natural persons who could qualify as individual claimants under subsection (a) of this section. "SEC. 206. (a) A claim based upon an interest, direct or indirect, in a corporation or other entity which could qualify as a claimant under the provisions of section 205 shall not be allowed. "(b) A claim based upon an interest, direct or indirect, in a corporation or other entity which could not qualify as a claimant under the provisions of sec |