Foreign check control.-In accordance with the provisions of the Executive Order No. 8389, of April 10, 1940, as amended, and Public No. 828, approved October 9, 1940 (see annual report for 1941, p. 106), disbursing officers had withheld as of June 30, 1942, from delivery to payees residing in occupied territories 243,895 checks aggregating $9,949,318.29, of which the proceeds of 147,821, checks aggregating $5,956,156.57 were deposited in the special deposit account entitled, 'Secretary of the Treasury, Proceeds of Withheld Foreign Checks"; 6,749 checks aggregating $377,858.30 were released to payees; and 2,059 checks aggregating $91,974.39 were canceled on advice of administrative agencies who authorized the issue of such checks to the payees. On June 30, 1942, a balance of 87,266 checks aggregating $3,523,329.03, the proceeds of which were subject to deposit in the special deposit account, were held by disbursing officers pending disposition.

Of the $5,956,156.57 deposited in the special deposit account, $14,906.16 has been paid to individual claimants; $4,379.35 has been returned to the appropriations from which payments were made; and $276,724.58 has been covered into the Treasury as miscellaneous receipts on account of the $1,000 limitation on veterans' payments. On June 30, 1942, the proceeds of 143,276 checks aggregating $5,660,146.48 remained in the special deposit account to the credit of approximately 17,500 individuals.

Section of Investments

The Section of Investments supervises the collections of principal and interest on foreign obligations and on railroad obligations owned by the United States and held by the Treasury; collects on other obligations owned by the United States, which have been turned over to the Treasury by other departments for collection; handles matters relating to the investments and securities held in the custody of the Treasurer of the United States and the Federal Reserve Banks for which the Secretary is responsible, other than those related to public debt operations; and makes payments on awards under the Settlement of War Claims Act of 1928, under the claims agreement of October 25, 1934, between the United States and Turkey, and under the act of April 10, 1935, covering claims against the Republic of Mexico. In connection with these activities, accounts are kept and various related matters are handled by the Section.

Obligations of foreign governments

The United States received during the year a payment from the Government of Hungary in the amount of $19,656.32 on account of its indebtedness, which applied on interest due.

The following statement shows the payments due during the periods July 1 to December 31, 1941, and January 1 to June 30, 1942.

Amounts due and payable, July to Dec. 31, 1941, and Jan. 1 to June 30, 1942

1 Postponed under authority of Public Law 110, approved June 12, 1941. 2 The German Government has been notified that the Government of the United States will look to the German Government for the discharge of this indebtedness of the Government of Austria to the Govern ment of the United States.

A statement showing the principal of the funded and unfunded in debtedness of foreign governments to the United States, the accrued and unpaid interest thereon, and payments on account of principal and interest as of November 15, 1942, appears as table 66 on page 600. The total amounts previously due from foreign governments on account of their indebtedness to the United States under the funding and moratorium agreements and not paid as of November 15, 1942, according to contract terms, are shown in the following statement.

Total amounts due and not paid, as of November 15, 1942

The German Government has been notified that the Government of the United States will look to the erman Government for the discharge of this indebtedness of the Government of Austria to the Governent of the United States.

The Hungarian Government has deposited with the foreign creditors' account at the Hungarian National ank an amount of Hungarian currency equivalent to the interest payments due from Dec. 15, 1932, to ne 15, 1937. The debt funding and moratorium agreements with Hungary provide for payment in dollars the United States.

Excludes the amount of $100,000 which the Rumanian Government paid to the United States Treasury June 15, 1940, as "a token of its good faith and of its real desire to reach a new agreement" covering manian indebtedness to the United States.

Receipts from Germany

During the fiscal year 1942 the United States received no payments om the Government of Germany under the debt funding agreement June 23, 1930, covering the costs of the American Army of Occupaon and the awards of the Mixed Claims Commission, United States id Germany. The status of the indebtedness of Germany to the nited States as of June 30, 1942, under the funding and moratorium greements is summarized in the following tables.

Amount of indebtedness of Germany to the United States, June 30, 1942

Includes interest accrued under unpaid moratorium agreement annuities. Includes 4,027,611.95 reichsmarks deposited by the German Government in the Konversionskasse für eutsche Auslandsschulden and not paid to the United States in dollars as required by the debt and morarium agreements.

Amounts not paid by Germany according to contract terms, June 30, 1942

1 Includes 4,027,611.95 reichsmarks deposited by the German Government in the Konversionskasse für Deutsche Auslandsschulden and not paid to the United States in dollars as required by the debt and mors. torium agreements.

Treasury administration of alien and mixed claims

The Settlement of War Claims Act of 1928 (45 Stat. 254) authorized the Secretary of the Treasury to make payments on account of (1) awards of the Mixed Claims Commission, United States and Germany, for claims of American nationals against the Government of Germany, (2) awards of the War Claims Arbiter for claims of German, Austrian, and Hungarian nationals against the Government of the United States, and (3) awards of the Tripartite Claims Commission for claims of American nationals against the Governments of Austria and Hungary. For a more detailed discussion of these awards and payments see pages 123 to 128 of the annual report for 1941.

Mixed Claims Commission and Private Law No. 509: Claims against Germany. During the fiscal year 1942 additional payments aggre gating $1,553.28 were made on account of the Class 2 awards on the so-called sabotage claims against Germany. One Class 2 award has not yet been paid, as satisfactory evidence as to the persons entitled to receive payment has not yet been received. This award plus interest to January 1, 1928, amounts to $3,850.68. The Class 3 claimants received payments aggregating $21,763,576.77, placing them on the same basis as the Class 3 claimants who received awards prior to October 31, 1939.

Total payments made on the additional sabotage awards to Sep-mber 30, 1942, are as follows:

1 Payments completed prior to Sept. 30, 1941.

? One award (plus interest to Jan. 1, 1928), amounting to $3,850.68, not yet paid. Payments completed during 1942.

After the Class 3 additional sabotage claims were satisfied by payent of the same percentage payments made on this class of awards ertified for payment prior to October 31, 1939, they shared in the istributions of 5 percent and 4.4358855 percent authorized on March 9, 1941, and September 17, 1941, respectively, to be paid to all Class 3 claimants. No segregation of these payments has been ade as the sabotage claimants and the claimants whose awards were ertified prior to October 31, 1939, are receiving payments on an qual basis.

The payments to American and German nationals on account of the wards of the Mixed Claims Commission and the War Claims Arbiter re made out of the German special deposit account established under he provisions of section 4 of the Settlement of War Claims Act of 928. The priorities established in the act and the status as of Sepember 30, 1942, of such priorities up to the seventh priority are as ollows:

Applications for payment of these amounts to claimants were not received or approved as of Mar. 11, 40, or Sept. 30, 1942.

Up to September 30, 1942, the Treasury has made payments in the ggregate amount of $163,536,276.22 on account of awards of the Mixed Claims Commission, from which there has been deducted 817,879.69 representing one-half of 1 percent authorized by the ettlement of War Claims Act of 1928, making net payments to laimants of $162,718,396.53. Of the deductions $770,233.47 has een covered into the Treasury as miscellaneous receipts in accordance with the provisions of the act as reimbursement to the United States or expenses incurred, and $9,029.18 of the deductions have been withheld and not yet covered; and the balance of $38,617.04 is payable