be compensated for hardships, et cetera, suffered in enemy prison camps and religious organizations would be compensated for property damage caused by enemy aggression. These war claims are presently administered by the War Claims Commission.'

THE OFFICE OF ALIEN PROPERTY CUSTODIAN AND THE OFFICE OF ALIEN PROPERTY

Pursuant to the provisions of the Trading With the Enemy Act, the President, on March 11, 1942, by Executive Order 9095, established the Office of Alien Property Custodian, and authorized the Custodian to vest in himself any property or interest therein of any foreign country or national.

The Office of Alien Property Custodian was from that date until March 27, 1944, headed by Leo T. Crowley. James E. Markham succeeded Mr. Crowley as Custodian and served until October 15, 1946.

During October 1946 the Office of Alien Property Custodian was abolished and its functions and property were transferred to the Office of Alien Property on October 15 of that year. The Office of Alien Property was designated as a division of the Department of Justice with the Director of the Office holding the title of Assistant Attorney General. The administration of the Trading With the Enemy Act has since been carried out by that Office under the direct supervision and control of the Attorney General of the United States.

Donald C. Cook was appointed Director of the Office of Alien Property with the title of Assistant Attorney General on October 15, 1946. He served until June 1, 1947. Mr. Cook was succeeded by David L. Bazelon, who resigned October 31, 1949. Harold I. Baynton then served as Acting Director until October 1951, being succeeded by Dr. Rowland F. Kirks.10

On February 11, 1953, Dr. Kirks resigned to return as dean of the school of law, National University, Washington, D. C. The first and present Director under the Republican administration is Mr. Dallas S. Townsend, prominent New York attorney.

VESTING POLICY OF THE OFFICE OF ALIEN PROPERTY CUSTODIAN AND THE OFFICE OF ALIEN PROPERTY-WARTIME VESTING POLICY-MARCH 11, 1942, TO JUNE 8, 1945

As early as the year 1940, the United States Government took steps to immobilize or freeze assets in the United States, owned by nationals of foreign countries, in order to prevent their use by Nazi Germany. The Secretary of the Treasury, Henry A. Morgenthau, Jr., was delegated authority to administer this freezing program.

With the passage of the First War Powers Act of December 1941, Congress granted the President wide powers, including authority to vest the property of foreign nationals, and, as a result thereof, President Franklin D. Roosevelt delegated his authority to vest property to the Alien Property Custodian by Executive Order 9095, dated March 11, 1942.

62 Stat. 1216.

10 United States Government Organization Manual, 1952-53. Annual Reports, Office of Alien Property Custodian and Office of Alien Property.

42379-54- 3

To settle a conflict which then arose as to the authority of the Alien Property Custodian, under Executive Order 9095, and the Secretary of the Treasury, under Executive Order 8389, it was proposed to the President that Executive Order 9095 be revised to distinguish clearly between the types of property to be vested and the types to merely remain frozen.

On July 6, 1942, the President issued Executive Order 9193 which defined in detail the powers and duties of the Alien Property Custodian and the separation of authority between the Custodian and the Secretary of the Treasury in the field of foreign- and enemy-owned property.

Under this order the Alien Property Custodian was given authority to direct, manage, supervise, control, and vest the following properties: 1. Any business enterprise within the United States which is a national of a designated enemy country.

11

2. Any other property within the United States owned or controlled by a designated enemy country or national thereof, not including in such other property, however, cash, bullion, moneys, currencies, deposits, credits, credit instruments, foreign exchange and securities, except to the extent that the Alien Property Custodian determines that such cash, bullion, moneys, currencies, deposits, credits, credit instruments, foreign exchange and securities are necessary for the maintenance or safeguarding of other property belonging to the same designated enemy country or the same national thereof.

3. Patents, patent applications, trade-marks, and so forth, in which any foreign country or national thereof has any interest. 4. Any ship or vessel, or interest therein, in which any foreign country or national thereof has any interest.

5. Any property of any nature whatsoever which is in the process of administration by any person acting under judicial supervision or which is in partition, libel, condemnation or other similar proceedings and which is payable or deliverable to, or claimed by, a designated enemy country or national thereof. It is important to note that this order withheld from the Custodian the authority to vest all "cash and securities," and that these remained under the blocking controls of the Treasury Department, under Executive Order 8389, as amended.

The reason for this distinction is well phrased in the Report of the Alien Property Custodian submitted June 30, 1943, to the President and to the Congress by Mr. Leo T. Crowley. In the report, Mr. Crowley stated:

Wartime control over enemy-owned property serves the double purpose of eliminating any benefit to the enemy from these assets and of making available productive enterprises and strategic materials to promote our own war effort. In addition, wartime control is essential to prevent property from becoming derelict.

In contrast with the method of handling enemy property that was followed during the last war, a distinction has been drawn this time between two broad classes of property. Cash and investment securities not involving control over specific productive assets, have been placed within the jurisdiction of the Treasury Department. Other types of property, particularly productive assets, which must not only be kept from the enemy but which also must be positively controlled if they are to continue as parts of our economy system, have been placed under jurisdiction of the Office of Alien Property Custodian.12

11 Italic supplied.

12 Annual Report, Office of Alien Property Custodian, March 11, 1942, to June 30, 1953, page 2.

Mr. Crowley explained the policy of the Office of Alien Property as follows:

It remains for Congress to determine the ultimate disposition of enemy property subjected to the control of this office. In the meantime, the functions of the Custodian are twofold-to search out and seize enemy property and property interest, and to administer these and supervised properties in such a way that the American economy and the American war effort will derive the maximum benefits of control.13

The distinction in policy was further discussed in the Annual Report of the Alien Property Custodian for the year ending June 30, 1944, in which the then Custodian, James E. Markham, stated:

There are two main types of possible objectives of the control of enemy property in the United States in time of war. Wartime objectives, which include the exploitation to the full of all enemy property in this country in the interest of the United States for the duration of the war; and postwar objectives, which involve the disposition of this property or its proceeds after the war.

The postwar objectives involve an undecided question of national policy which is within the competence of the Congress and not of the Custodian.

RECOMMENDATION FOR THE DISPOSITION OF VESTED PROPERTY MADE DURING THE PERIOD 1942-45

Morgenthau plan

Senate Document No. 123, 81st Congress, entitled "A Decade of American Foreign Policy, 1941-49," reports on page 502 thereof the Morgenthau plan, 1943. The plan, under the caption "Restitution and Reparation," provided:

Reparations in the form of future payments and deliveries, should not be demanded. Restitution and reparation shall be effected by the transfer of existing German resources and territories, e. g.:

(a) by restitution of property looted by the Germans in territories occupied by them;

(b) by transfer of German territory and German private rights in industrial property situated in such territory to invaded countries and the international organization under the program of partition;

(c) by the removal and distribution among devastated countries of industrial plants and equipment situated within the International Zone and the north and south German States delimited in the section on partition; (d) by forced German labor outside Germany; and

(e) by confiscation of all German assets of any character whatsoever outside Germany.14

The publication states that the Morgenthau plan was taken to Quebec by President Roosevelt and Mr. Morgenthau in August 1943 and there provisionally approved by President Roosevelt and Prime Minister Churchill. The plan was never adopted as the policy of the United States nor issued as an official document of the United States. Nevertheless, as shown hereinafter, the Treasury Department under Mr. Morgenthau was instrumental in making that part of the plan concerning German external assets the policy of the United States. Bentley testimony on the Morgenthau plan

The Senate Judiciary Subcommittee To Investigate the Administration of the Internal Security Act and other Internal Security Laws issued a report dated July 30, 1953, entitled "Interlocking Subversion in Government Departments."

13 Annual Report, Office of Alien Property Custodian, March 11, 1942, to June 30, 1953, page 3.

14 Italic supplied. The plan is also reported under the classification of "Top secret" in the book Germany Is Our Problem, by Henry Morgenthau, Jr., copyrighted.

On page 30 of the report, it is stated that Miss Elizabeth Bentley in her testimony gave the subcommittee an extraordinarily revealing glimpse of how the hand of Harry Dexter White, Assistant Secretary of the Treasury Department, played with the inner levers of American policy.

The following is quoted from the report:

Miss BENTLEY. No; the only Morgenthau plan I knew anything about was the German one.

Senator EASTLAND. Did you know who drew that plan?

Miss BENTLEY. Due to Mr. White's influence, to push the devastation of Germany because that was what the Russians wanted.

Senator FERGUSON. That was what the Communists wanted?

Miss BENTLEY. Definitely Moscow wanted them completely razed because then they would be of no help to the allies.

Mr. MORRIS. You say that Harry Dexter White worked on that?

Miss BENTLEY. And on our instructions he pushed hard (IPR, p. 419).

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Senator EASTLAND. What you say is that it was a Communist plot to destroy Germany and weaken her to where she could not help us?

Miss BENTLEY. That is correct. She could no longer be a barrier that would protect the Western World. * * *

Report of the American Bar Association

On March 29, 1943, the house of delegates of the American Bar Association approved the recommendations of its committee on custody and management of alien property, which reported as follows:

Confiscation is contrary to the principles of law. It is contrary to our constitutional law principles, and to the principles of international law. When the reign of law for which we are fighting returns, parties injured by confiscation may be expected to seek just redress; and a just administration of law may be expected to award such redress. It has been so in the past, and if the basic traditional concepts of justice have meaning, it will be so again.15

The same report of the committee on the custody and management of alien property also set forth the United States historic policy of nonconfiscation of enemy private property. The report states:

From the inception of our history as a nation it has been a tradition to regard the private property of citizens of enemy states as immune from confiscation. Alexander Hamilton, in defense of article X of the Jay Treaty of 1794 (Works of Alexander Hamilton, Lodge's edition, vol. V., pp. 412 et seq.), wrote as follows: "No powers of language at command can express the abhorrence I feel at the idea of violating the property of individuals, which in an authorized intercourse in time of peace has been confided to the faith of our government and laws, on account of controversy between nation and nation. In my view, every moral and every political sense unite to consign it to execration."

Chief Justice Marshall, in United States v. Percheman (7 Pet. 51, 86), said that, even in case of conquest, "the modern usage of nations, which has become law, would be violated; that sense of justice and of right which is acknowledged and felt by the whole civilized world would be outraged, if private property should be generally confiscated."

John Bassett Moore, in his Digest of International Law, volume 7, pages 312 and 313, says that the correct modern view is that enemy private property ought never to be confiscated and that the exercise of the right is both ancient and barbarous.

In Techt v. Hughes (229 N. Y. 222), where the plaintiff was an Austrian, Judge Cardozo stated (pp. 244-245) as follows:

"The plaintiff is a resident; but even if she were a nonresident, and were within the hostile territory, the policy of the nation would not divest her of the title where acquired before the war or later. Custody would then be assumed by the Alien Property Custodian. The proceeds of the property, in the event of sale, would 15 Annual Report of the American Bar Association, 1943, p. 454. Italic supplied.

be kept within the jurisdiction. Title, however, would be unchanged, in default of the later exercise by Congress of the power of confiscation (40 Stat., ch. 106, pp. 416, 424), now seldom brought into play in the practice of enlightened nations (2 Westlake Int. L. 46, 47; Brown v. U. S., 8 Cranch, 110)."

When the Trading With the Enemy Act of October 6, 1917, was originally enacted, the report of the Committee on Commerce (65th Cong., 1st sess., Řept. No. 113) contained the following statement:

* * Under the old rule warring nations did not respect the property rights of their enemies, but a more enlightened opinion prevails at the present time, and it is now thought to be entirely proper to use the property of enemies without confiscating it."

Secretary of State Hughes in his address at Philadelphia, November 23, 1923 (the American Journal of International Law, vol. XVIII, 1924, p. 531), declared: "A confiscatory policy strikes not only at the interest of particular individuals but at the foundation of international intercourse, for it is only on the basis of the security of property, validly possessed under the laws existing at the time of its acquisition, that the conduct of activities in helpful cooperation, is possible * * *. Rights acquired under its laws by citizens of another state (a state) is under an international obligation appropriately to recognize. It is the policy of the United States to support these fundamental principles."

Secretary Hull, on May 27, 1935 (the American Journal of International Law, vol. 37, January 1943, p. 94), said as follows:

"Such action would not be in keeping with international practice and would undoubtedly subject this Government to severe criticism. Moreover, the confiscation of these private funds by this Government and their distribution to American nationals would react against the property interests (some very large) of American nationals in other countries. It would be an incentive to other governments to hold American private property to satisfy claims of their nationals against this Government and to pass upon such claims in their own way. It is important from my point of view, therefore, that the United States should not depart in any degree from its traditional attitude with respect to the sanctity of private property within our territory whether such property belongs to nationals of former enemy powers, or to those of friendly powers. A departure from that policy and the taking over of such property, except for a public purpose and coupled with the assumption of liability to make just compensation, would be fraught with disastrous results."

The historic policy of nonconfiscation of enemy property is traced in detail in Senate Document No. 181 (69th Cong., 2d sess.), entitled, "American Policy Relative to Alien Enemy Property," by Warren F. Martin, former special assistant to the Attorney General, and J. Reuban Clark, Jr., former Solicitor of the State Department.

On March 10, 1928, the Settlement of War Claims Act was enacted (45 Stat. 254), which, as the title indicates, provided "for the settlement of certain claims of American nationals against Germany, Austria, and Hungary, and of nationals of Germany, Austria, and Hungary against the United States, and for the ultimate return of all property held by the Alien Property Custodian."

The Settlement of War Claims Act was a recognition of the policy of nonconfiscation and directed the immediate return to the foreign owners of 80 percent of their property held by the Alien Property Custodian on condition that said owners consent to the retention and use by the United States of the remaining 20 percent for the purpose of paying claims of American nationals against Germany. When the Settlement of War Claims Act was under consideration before Congress, the report of the Committee on Finance (70th Cong., 1st sess., S. Rept. No. 273) stated that Congress not only had refused to exercise the power of confiscation but "has clearly by legislation asserted its policy to be the very contrary of confiscation."

The policy of nonconfiscation was recognized by the United States Supreme Court in the case of Cummings v. Deutsche Bank and Disconto Guesellschaft (300, U. S. 115, 57 S. C. 359), in which case although the Court held that the title acquired by the United States by its seizure under the Trading With the Enemy Act was complete, it said as follows (p. 362):

"Legislative history and terms of measures passed in relation to alien enemy property clearly disclose that from the beginning Congress intended after the war to deal with former owners and, by restitution or compensation in whole or part, to ameliorate hardships falling upon them as a result of the seizure of their property."