THE QUESTION OF ALIEN PROPERTY.

What shall be done with the private property of those who during the late war were our enemies is the question of the hour now under discussion in commercial, congressional and governmental circles. While the proceeds of private While the proceeds of private properties confiscated through the Courts during the rebellion amounted according to the letter of Mr. Shaw, Secretary of Treasury to Nott Ch. J. of the Courts of Claims dated February 18, 1902-to less than two hundred thousand dollars, the funds in the hands of the present U. S. Alien Property Custodian amount to nearly four hundred million dollars. The interests involved, however, are also entirely unlike those of the Civil War times. Then practically all of the property seized consisted of raw cotton, while the property seized and sold by the successive alien. property custodians, during the late war consisted of stocks and shares, valuable patent and trade marks, buildings and steamships as well as goods belonging to residents in enemy countries. Assuming that all the transactions for the sale of private properties seized by the United States during the late war would be upheld in the U. S. courts, the injury caused to the owners remains irreparable even though the U. S. government may refund to them the proceeds of these sales.

In the case of the raw cotton the owners of such, receiving the proceeds of the sales of their products sold by the special Treasury agents appointed by the Secretary of Treasury under the act of Congress of March 12, 1863 lost either their profits alone or their profits plus some of their expenses incurred while cultivating their plantations during the previous plantation season. In the present war valuable trade marks which had been brought into prominence by their owners through decades of effort and the expenditure of large sums of money, patents which could not be duplicated by their assignors, secret processes of the utmost importance to various great industries, all were confiscated and disposed of to new owners by the government of the United States. Would it now be proper and in accordance with the established principles of American policies to hand over the proceeds of these sales to the former enemy owners telling them to consider it as a fair settlement of mutual obligations?

In the Civil War as Chase Ch. J. explained it in U. S. vs. Klein 13 Wall 128, 137:

"No titles were divested in the insurgent states unless in pursuance of a judgment rendered after due legal proceedings. The government recognized to the fullest extent the humane maxims of the modern law of nations, which exempt private property of noncombatant enemies from capture as booty of war."

In other words, the U. S. government at that period adopted the principle that unless private property of an alien enemy was one of the actual necessities of the war it should not be considered a war booty. For example, the court in Lamar v. Browne 92 U. S. 187 said, with reference to the cotton seized by U. S. from the private citizen of the Confederacy:

The contents herein are based on the "Commerce Reports" of U. S. Department of Commerce, publications of foreign governments and original contributions by our collaborators.

"It is not too much to say that the life of the Confederacy depended as much upon its cotton as it did upon its men. It (cotton) was the foundation upon which the hopes of the rebellion were built."

Such were the avowed principles with which the government of the United States started the second half of the nineteenth century. The settlement of Civil War claims arising from the confiscation of private property is best described in the above letter of Mr. Shaw which we will quote here in part:

"The rebellion had not been suppressed in all parts of the south when, on the 29th of May, 1865, the President of the United States issued a proclamation granting "to all persons who have, directly or indirectly, participated in the existing rebellion restoration of all rights of property, except to slaves." There were excepted cases in the proclamation, but the parties were afterward pardoned, either by the President or by acts of Congress. "It is true in some cases private property was taken and used by the Union armies, without compensation at the time, but Congress, by the act of March 3, 1871, provided a commission to adjudicate those claims.

"You are aware that the act of March 3, 1863, which provided for the appointment of special agents to collect captured and abandoned property, provided also that "any person claiming to have been the owner of any such property may at any time within two years after the suppression of the rebellion, prefer his claim to proceeds thereof in the Court of Claims."

"The rights to file claims in Court of Claims having ceased August 20, 1868, Congress provided another remedy- and passed the act of May 18, 1872, which provided that the secretary of the Treasury should return the proceeds derived from the sale of cotton illegally seized after June 30, 1875." (Moore's Digest of International Law, vol. VII, pp. 298-300.)

By article VII of the Peace treaty with Spain concluded at Paris on December 10, 1898 it was provided that:

"The United States and Spain mutually relinquish all claims for indemnity, national and individual, of every kind, of either government, or of its citizens or subjects, against the other government, that may have arisen since the beginning of the late insurrection in Cuba and prior to the exchange of ratifications of the present treaty, including all claims for indemnity for the cost of the war.

The United States will adjudicate and settle the claims of its citizens against Spain relinquished in this article."

towards the private property of its enemies may be exTo sum up, the previous conduct of the United States pressed in the following principles:

(1 Only property comprising an actual necessity of the war is subject to confiscation.

(2) Proceeds of such seized property are returned to the owners thereof.

(3) The claims of private citizens between themselves remained to be settled privately amongst themselves. (4) The United States renounced all claims of its citizens against the enemy government.

(5). The United States accepted upon itself the liability and adjudicated all the claims of its nationals against the enemy government.

On July 11, 1799 John Quincy Adams affixed his signature to an American treaty with Prussia, XXIIId article of which stated:

"If war should arise between the two contracting parties. the merchants of other country then residing in the other shall

be allowed to remain nine months to collect their debts and settle their affairs, and may depart freely, carrying off all their effects without molestation or hindrance."

Since then one hundred and twenty-two years have passed, making it possible for mankind to transact its business affairs without residing in one another's country. We have telephones, telegraphs, wireless, corporations, international conventions for protection of copyright, inventions and trade-marks. While the forms have changed the principles remained and were closely followed in Civil and Spanish wars.

Why should there be any hesitation as to the right disposition of the alien property held by the United States? If any new steps are necessary or desirable they should be taken towards enlarging the principle and not towards narrowing the same. How such proposal as that of paying the damages arising out of the sinking of the Lusitania by the proceeds of the sales of the alien property could have ever originated on this side of the Atlantic is inconceivable. Such a step would be nothing else than an attempt to deprive the business interests who have dealt with the aliens, allowed them credits or otherwise counted on their financial and business standing of all security for the debts to them, no matter where such debts were incurred. The effect might be equal to the confiscation of the debts. Mr. Hamilton, arguing on the 10th article of the British treaty of 1794, said in reply to those

"who represent the confiscation or sequestration of debts as our best means of retaliation of coercion, as our most powerful and sometimes as our only means of defense.

So degrading an idea will be rejected with disdain by every man who feels a true and well informed national guide; bv every man who recollects and glories, that in a state of still greater immaturity we achieved independence without the aid of this dishonorable expedient. The Federal Governmnet never resorted to it." (Hamilton's Works vol. VII. p. 329, Camillus No. XVIII.)

The merchants and traders in their mutual relations usually take and are entitled to take the reputation of a country and its inhabitants and their previous course of dealings as indicative of their future policies. Our civilization rests on a repetition of acts which are a result of many years of experience. The American people and their government through a long course of historic events established certain principles of dealing with the private property of enemy aliens seized during the war. These American principles logically developed would have been the best antidote to all the war-mongers particularlly when they saw that even in the best case they had nothing to gain. Confiscation of private property during the war was the only business that U. S. as a nation could not and did not try to make a success of. Why then shall this course be swerved from today? The path is well trodden and no new or better principles need be searched for.

It may be argued that this country had on former occasions dealt with a certain set of circumstances which would not tally with those of today.

However, the government of the United States made repeated efforts to make private property of non-combatants immune from seizure by belligerent forces an inviolate rule of international law. At the first Hague conference of 1899 the following resolution was presented by the American delegation:

"The private property of all citizens or subjects of the signatory Powers, with the exception of the contraband of war, shall be exempt from capture or seizure on the high seas of elsewhere by the armed vessels or the military forces of any of the said signatory Powers. But nothing herein contained shall extend exemption from seizure the vessels and their cargoes which may attempt to enter a port blockaded by the naval forces of any of said Powers,"

At the second Hague Peace Conference of 1907 the subject matter of the above resolution was considered by the Fourth Committee and submitted for the consideration of the conference at Seventh plenary meeting. The resolution was not passed, but that in no way affected the standpoint of the United States. The resolution in its entirety was approved by the Congress of the United States on April 28, 1904.

It is clear, therefore, that we not only insisted on the adoption of the principle of absolute freedom of private property from any capture or seizure anywhere, but carried the matter so far as to exclude even the case of military necessity of the actual combatant armies-a right of seizure well conceded to the fighting armies in the field by all the leading authorities on international law.

We do not desire here to stir up past memories. What has been done need not be lamented. The Alien Property Custodian Act had been passed and is a valid law of the land (Stoehr v. Garvan 41 S. Ct. 293). But we do regret that the Alien Property Custodian was permitted to dispose of any of the properties seized by him other than perishable goods, if any. However, the question today is how to remedy the past actions and to harmonize them with the avowed American principles as analyzed here by us.

Any thought of offsets or counter accounts, such as the Lusitania damages or the like is repugnant in its very conception to the just disposition of German, Austrian and Hungarian properties now in our hands.

We raise our voice in favor of perpetuating the principles endorsed by our Congress, by John Quincy Adams, by Benjamin Franklin, by Thomas Jefferson. by William McKinley and Theodore Roosevelt. We believe that the alien properties should be returned to their rightful owners. that the alien property owners whose property was sold by the U. S. Alien Property Custodian and American citizens who suffered financial losses through any acts of enemy governments shall be entitled to the compensation to be fixed by the Court of Claims. This is the only course, in our opinion, which is in accord with our traditional policy in respect to enemy private property and to do otherwise is to destroy confidence, violate good faith, iniure the interests of our commerce and adversely affect our prestige as a nation leading the crusade against the brutality of human warfare.

INCORPORATION AND TAXATION OF AMERICAN CONCERNS IN FRANCE.

By Shaun Kelly of New York Bar.

France as a field for commercial enterprises is attracting more and more business men of today. It is important, therefore, that Americans should know how they can establish a branch office in France or form a French corporation, what the cost and taxes will amount to.

This following article refers to all corporations banking or otherwise with the exception of insurance companies and quasi-public companies which are subject to special regulations: according to proposed legislation corporations exploi ing mines and oil will also be subject to special regulations.

Formalities for Opening Branch Office in France.

An American corporation opening a branch office in France must before doing any business obtain the necessary authorization from the Minister of Finance. In order to

fore wise to always have the capitalization as large as circumstances render possible.

The expense of forming a French corporation outside of the cost of publication and attorney fees is as follows:registration fee of 1% of the nominal capital; notary's fee based on sliding scale: one half per cent of the nominal capital up to 500,000 francs; one quarter per cent from 500,000 to 1,000,000 francs; one eighth per cent above 1,00,000 up to 3,000,000 francs; one sixteenth per cent above 3,000,000 francs.

Taxes Payable by Societe Anonyme.

The taxes due by a French company are the same as those due from a branch office viz: a.-tax due to the Department and Commune; b.-tax of 8% on net annual profits; c.-sales tax also called tax on Turn-Over: d.tax of 10% on distributed dividends and on interest for sums borrowed.

It will be noticed that the only difference in the taxes which have to be paid by the branch of a foreign corporation and a French corporation is item (d) that is the tax of 10% on distributed dividends and on interest for sums borrowed.

The foreign corporation has to pay 10% upon a proportion of the dividends paid in America, whether it earned any dividends in France or not, while the French corporation pays this 10% only on such dividends as it may have distributed during the year.

American corporations that distribute large dividends find this 10% tax on dividends very burdensome. The simplest way of avoiding this tax is to form a French corporation and thereby pay a tax on only such dividends as are declared by the French corporation. On the other hand some American corporations have organized a small American corporation so managed as to make but small net profits and consequently small dividends, if any. Such small corporation entirely owned by the larger one then opens a branch office in France. Corporations who have followed this method of procedure have often done so, more to simplify their bookkeeping rather than to avoid French taxation. Those corporations that have branches in many countries consider it simpler to have one corporation organ ized in America whose sole purpose is to manage its foreign branches rather than to have a corporation in each country organized under the laws of those countries. Nevertheless some very large industrial companies have organized English, French, Italian etc., corporations instead of branches and seem to have no difficulty over details of administration.

Whenever it is possible Americans are advised to form French corporations for their incorporation is simple, expeditious and is subject to minimum taxes.

Such French corporation can be incorporated very quickly (some having been constituted within ten days), while the opening of a branch office takes considerably longer due to the fact that the consent of the Minister of Finance is necessary. The taxes, as explained above, are less than those paid by foreign branches when the parent corporation is declaring dividends. Lastly, the French tend to be suspicious of foreign corporations organized under laws concerning which they know nothing and consequently prefer to deal with corporations organized under the French law. The national feeling is now especially strong in France and it is not good policy to ignore this by forming foreign brarches when it is so simple and more advantageous to form a French corporation.

U.S. TARIFF ACT, 1921.

TITLE 1.-EMERGENCY TARIFF.

That on and after the day following the passage of this Act, for the period of six months, there shall be levied, collected, and paid upon the following articles, when imported from any foreign country into the United States or into any of its possessions (except the Philippine Islands, the Virgin Islands, and the Islands of Guam and Tutuila), the rates of duty which are prescribed by this section, namely: 1. Wheat, 35 cents per bushel.

2. Wheat flour and semolina, 20 per centum ad valorem. 3. Flaxseed, 30 cents per bushel of fifty-six pounds.

5. Beans, provided for in paragraph 197 of the Act entitled “An act to reduce tariff duties and to provide revenue for the Government, and for other purposes," approved October 3, 1913, 2 cents per pound.

6. Peanuts or ground beans, 3 cents per pound.
7. Potatoes, 25 cents per bushel of sixty pounds.

8. Onions, 40 cents per bushel of fifty-seven pounds. 9. Rice, cleaned, 2 cents per pound, except rice cleaned for use in the manufacture of canned foods, on which the rate of duty shall be I cent per pound; uncleaned rice, or rice free of the outer hull and still having the inner cuticle on, 134 cents per pound; rice flour, and rice meal, and rice broken which will pass through a number twelve wire sieve of a kind prescribed by the Secretary of the Treasury, one-fourth of 1 cent per pound.

10. Lemons, 2 cents per pound.

II. Oils: Peanut, 26 cents per gallon; cottonseed, cocoanut, and soya bean, 20 cents per gallon; olive, 40 cents per gallon in bulk, 50 cents per gallon in containers of less than five gallons.

12. Cattle, 30 per centum ad valorem.

13. Sheep; One year old or over, $2 per head; less than one year old, $1 per head.

14. Fresh or frozen beef, veal, mutton, lamb, and pork, 2 cents per pound. Meats of all kinds prepared or preserved, not specially provided for herein, 25 per centum ad valorem. 15. Cattle and sheep and other stock imported for breeding purposes shall be admitted free of duty.

16. Cotton having a staple of one and three-eighths inches or more in length, 7 cents per pound.

17. Manufactures of which cotton of the kind provided for in paragraph 16 is the component material of chief value, 7 cents per pound, in addition to the rates of duty imposed thereon by existing law.

18. Wool, commonly known as clothing wool, including hair of the camel, angora goat, and alpaca, but not such wools as are commonly known as carpet wools: Unwashed, 15 cents per pound; washed, 30 cents per pound; scoured, 45 cents per pound. Unwashed wools shall be considered such as shall have been shorn from the animal without any cleaning; washed wools shall be considered such as have been washed with water only on the animal's back or on the skin; wools washed in any other manner than on the animal's back or on the skin shall be considered as scoured wool. On wool and hair provided for in this paragraph, which is sorted or increased in value by the rejection of any part of the original fleece, the duty shall be twice the duty to which it would otherwise be subject, but not more than 45 cents per pound.

19. Wool and hair of the kind provided for in paragraph 18, when advanced in any manner or by any process of manufacture beyond the washed or scoured condition, and manufactures of which wool or hair of the kind provided for in paragraph 18 is the component material of chief value, 45 cents per pound in addition to the rates of duty imposed thereon by existing law.

20. Sugars, tank bottoms, sirups of cane juice, melada, concentrated melada, concrete and concentrated molasses, testing by the polariscope not above seventy-five degrees, one and sixteen one-hundredths of 1 cent per pound, and for every additional degree shown by the polariscopic test, four onehundredths of 1 cent per pound additional, and fractions of a degree in proportion; molasses testing not above forty degrees, 24 per centum ad valorem; testing above forty degrees and not above fifty-six degrees, 32 cents per gallon; testing above fifty-six degrees, 7 cents per gallon; sugar drainings and sugar sweepings shall be subject to duty as molasses or sugar, as the case may be, according to polariscopic test.

21.

Butter, and substitutes therefor, 6 cents per pound. 22. Cheese, and substitutes therefor, 23 per centum ad valorem.