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The custodian has stated that there is a matter of over $24,000,000 of accumulated interest at least I so understood him to say, and see page 11 of his statement.

We think that either this bill or some other bill eventually to be passed should provide for the payment of interest to claimants whose money is to be or has already been returned to them, to the extent that such money either earned interest while it was in the possession of the custodian or relieved the United States from paying interest on funds borrowed by it during the period of the retention.

I will cite an instance. Two hundred thousand dollars and over in cash was taken rom an American who was in Germany at the time of the seizure. He returned, and under section 9 filed his claim and obtained his money.

That money had been deposited in the Treasury of the United States for over two years and interest at 4 per cent would have amounted to about $16,000.

He was not allowed a dollar of interest; but, meanwhile, the United States, which has been, and still is, a heavy borrower and paying an average of over 4 per cent interest, was relieved from borrowing that much money for that much time, and, therefore, the money actually earned over $16,000.

There are many of such cases.

Where the property taken was securities which earned interest, the interest, I understand, has been put to the credit of the claimant, and in many cases has been, or will be, turned over to the claimant with the principal; but where it was taken in cash instead of being put out at interest for the benefit of the claimant, it was simply deposited in the Treasury of the United States and restored to the claimant without interest.

To cover this point, I therefore suggest the following amendment. Add:

"Wherever any property taken by the custodian was cash or was sold and the custodian received cash therefor and such cash was deposited in the Treasury of the United States, the person to whom such cash has been returned or shall hereafter be returned shall be entitled to interest thereon at and after the rate of 4 per cent per annum for the period that such cash remained or shall remain in the Treasury of the United States. Claims for payment under this section can be made in manner similar to claims for the principal of the amount taken, but wherever a claim has been heretofore allowed and paid without interest the proof already filed by the claimant and on which the claim was allowed shall be deemed, in the absence of fraud, sufficient proof for the allowance of interest and no claim for interest shall be denied by reason of the claimant having executed any instrument releasing the United States from, or any officer thereof, or in any manner waived, the right to the payment of such interest." Undoubtedly, the Knox-Porter resolution and the treaty of peace with Germany have settled the question that the United States can hold this fund as security so far as German nationals are concerned.

Neither the resolution nor the treaty, however, can or have attempted to make any provision in regard to persons who are not German nationals and whose property has been taken and is now held.

For many years Germany has had laws by which its citizens who have not resided in Germany for a specified period have lost their rights as German nationals. In cases of that kind the money should be returned to the persons from whom it was taken.

To cite a particular instance: A partnership of three brothers, none of whom resided in Germany for over 15 years before the war, carried on business in Amsterdam, Paris, and New York, and at the time of the war had about $1,000,000 worth of jewelry at the three places.

Owing to their prolonged absence from Germany and their avowed and continued relations with British, American, and French interests, they were regarded by Germany as alien enemies, and what little property they had in Germany (only accounts due to them from Germans for they carried no business, nor had any office in Germany) was seized by the German custodian.

The United States and Great Britain also regarded them as alien enemies. Their jewelry in New York was seized and sold out at a heavy loss, and the proceeds are now held by the custodian.

They have had no relations with Germany for years, and are now in Amsterdam resuming their business with what little they have been able to get together and which was not seized by the custodians of the different countries.

There seems to be no reason why the United States should require a Dutch-EnglishAmerican-French partnership to pay a part of the national debt of Germany simply because the partners were born in Germany, and although they had had no relations with that country for many years.

To cover this point I therefore suggest the following amendment: "or who at some time prior to April 6, 1917, had been a citizen of Germany, but not on April 6, 1917, residing in Germany and had not resided there since April 6, 1907, and who has not

since April 6, 1917 reestablished his residence or reacquired citizenship in Germany, and who, during the period that the United States was at war with Germany, did not commit any act adverse to the interest of the United States; or."

(Thereupon the committee adjourned until Monday, January 8, 1923, at 10 o'clock a. m.)

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,
HOUSE OF REPRESENTATIVES,
Monday, January 8, 1923.

The committee met at 10 o'clock a. m.,Hon. Samuel E. Winslow (chairman) presiding.

The CHAIRMAN. Gentlemen, if you will come to order, we will proceed with the further consideration of the so-called alien property bill, and we will call on Mr. Ewing to make such statement as he chooses.

STATEMENT OF MR. OSCAR R. EWING, OF NEW YORK, N. Y.

The CHAIRMAN. State your name and any representation you have to indicate. Mr. EWING. Oscar R. Ewing. We have a large number of clients interested in the bill.

The CHAIRMAN. You come then as an attorney?

Mr. EWING. As an attorney; yes, sir.

The CHAIRMAN. A New York firm?

Mr. EWING. Yes; Rounds, Schurman & Dwight.

Mr. Chairman and gentlemen of the committee, I have an argument mostly legal which I have written out, but I also will probably want to interpolate somewhat and I would like to ask permission of the committee to go through it consecutively, and then I would be very glad to answer any questions that may occur to anyone.

We are here on behalf of clients who have had large amounts of property sequestered by the Alien Property Custodian. Among other clients we have one particularly who has had money and securities valued at about one and a half million dollars seized by the Alien Property Custodian. This man is now 78 years old. He is a German by birth and resided in Berlin throughout the war. For several generations his family have been international factors and commission merchants, and about 1845 they established a branch of their business in New York. The property of this client held by the Alien Property Custodian represents the accumulations and additions which have been made to that capital during all the years intervening since 1845. Before the war fully 90 per cent of this man's entire fortune was invested in New York, or London, or Canada, or other of the countries outside of Germany. It is needless to say that this man had no part in bringing on the Great War, as his every interest was opposed to it. Indeed, it was inconceivable to him that there could be such a war. During the last week of July, 1914, he was buying British consols in London. Even at that time, when the war clouds were gathering so rapidly, he did not believe there would be war. But, as we know, the crash came. This man's property in London and Paris was seized, and when the United States entered the war his property in this country was taken. Fully 90 per cent of his fortune the result of a lifetime of work and saving-was taken from him.

I preface my remarks with this recital with no desire to excite your sympathy, but simply in order that the committee may know the character of some of the men from whom the sequestered property was taken.

We are appearing before the committee to express our approval of the particular bill under discussion in so far as it goes with one exception, to which reference will be made later on. Our chief point, however, is that the bill does not go far enough We believe, with all sincerity, that the time has come for an unconditional and an immediate return to the owners of all the property held by the Alien Property Custodian.

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The war between the United States and Germany officially ended July 2, 1921, or approximately 18 months ago. The Knox-Porter resolution ending the war expressly required the retention of alien property until Germany and Austro-Hungary should satisfy American claims except that property might be returned "as shall have been heretofore or specifically hereafter shall be provided by law. Thus that resolution in no way tied the hands of this Congress in dealing with this question and Congress is now absolutely free to return all this property if it so desires. A year and a half have passed since the Knox-Porter resolution and nothing more has been done with respect to this property. The present bill is the first announcement of any sort of a policy.

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Now, I realize fully the conflicting interests that are pressing upon the committee their respective claims and the high purposes that animate the committee in this difficult situation. On the one hand, you are urged by the American claimants to use this alien property to pay their claims. On the other hand, the owners of the alien property ask you to return it to them, asserting that the continued retention of this property is a violation of accepted principles of international law. The present bill is an attempt to make some sort of a compromise between these opposing demands. If I may do so, I should like to present to the committee the reasons, which seem to us conclusive, as to why the committee should not adopt a compromise program but should end this conflict, once and for all, by standing uncompromisingly for those principles of right and justice which have been recognized for centuries in international law.

With the particular provisions of the proposed amendment the committee is, of course, familiar. In substance, it provides that the Government shall continue to hold that portion of all claims which exceeds $10,000. It is stated that this property which we are to continue to hold is not to be confiscated but is to be held merely as security for the payment by the German Government of the claims which American citizens have against the German Government.

The argument that such action does not constitute confiscation is, of course, entirely specious. It is recognized by everyone who is not prejudiced by interest that it is a flagrant violation of international law for one nation to seize the property of a citizen of another and use it to pay a debt owed by his government. If there is no justification for seizing the property of a citizen and using it in order to pay the debts of his government, a fortiori, there is no justification for taking the property of a citizen and holding it as security for the debts of a government. Since the first is confiscation, so is the second. Holding the property as security is merely a postponement in point of time of the ultimate act of confiscation, because if the Government fails to pay the liability, then foreclosure upon the property of the citizen held as security constitute confiscation.

Mr. GRAHAM. Mr. Chairman, does the witness want to be interrupted.

The CHAIRMAN. The witness asked to be allowed to continue without interruption. Mr. EWING. I have some citations from court opinions, from Magna Charta and other documents, but I do not believe I will take the time of the committee to go over those.

Mr. SANDERS. I wonder, Mr. Chairman, if Mr. Ewing will put those in his remarks., Mr. EWING. I will be very glad to.

The CHAIRMAN. I understood he proposed to outline a brief that he would submit. Mr. SANDERS. I do not care whether he reads them, but I just wondered if he would not incorporate them in the record with his remarks."

Mr. EWING. They are very short. I have only put a very few of the most pertinent ones in, and I will be very glad to read them.

The CHAIRMAN. You do not intend to submit any written matter for entry in the record?

Mr. EWING. No, sir.

The CHAIRMAN. Very well.

Mr. EWING. Moreover, even a temporary holding of the property is a confiscation of the use of this property during the time it is so held, which in many cases means almost unbelievable suffering on the part of the owners.

As long ago as 1215 our forefathers expressed their disapproval of the practice of confiscating the property of an enemy national in Magna Charta, that imperishable corner stone of the liberties of all English-speaking peoples, including our own. Referring to foreign merchants, this great document said:

"If they be of a land making war against us, and be found in our realm at the begin ning of the war, they shall be attached without harm of body or goods until it be known unto us, or our chief justice, how our merchants be entreated, then in the land making war against us, and if our merchants be well entreated there, theirs shall be likewise with us."

While the doctrine here proclaimed by the English people in Magna Charta was limited for foreign merchants residing in England, that doctrine has long since been extended to foreigners residing without the realm, and, as so extended, has received the support and approval of Congress and of our own courts since the founding of the Republic.

Marshall, the great Chief Justice of the United States Supreme Court, in Brown v. The United States (8 Cranch, 123), says:

"It is not believed that the modern usage would sanction the seizure of the goods of an enemy on land which were acquired in peace in the course of trade. Such a proceeding is rare, and would de deemed a harsh exercise of the rights of war."

One of the latest judicial statements to this same effect is that of Court of Appeals of New York in the recent case of Techt v. Hughes (229 New York, 222), where, in referring to the trading with the enemy act, the court said, on page 244:

"Title, however, would be unchanged, in default of the later exercise by Congress of the power of confiscation, now seldom brought into play in the practice of enlightened nations."

There are so many other citations to the same effect that it would only encumber the record to give them.

It will be remembered that at the time the United States entered the war it was stated that we had no quarrel with the German people, but only with the military autocracy, which was in control of their government.

It will likewise be remembered that at the time Congress enacted the trading with the enemy act statements were made which would indicate that it was not the purpose of Congress to confiscate the property to be seized thereunder. Assistant Attorney General Warren, in the hearings before the subcommittee which was considering the bill, stated:

"The theory of the bill is that enemy property in this country shall not remain in the hands of the enemy's debtor or agent here; but that, if the President so directs, it shall be temporarily conscripted by the Government to finance the Government through investment in its bonds and to be paid back to the enemy or otherwise disposed of at the end of the war as Congress shall direct. In other words, we fight the enemy with his own property during the war; but we do not permanently confiscate it. Moreover, this temporary conscription of enemy property is also conservation of enemy property."

Senator Ransdell, in reporting the bill to the Senate, stated:

"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." It must be plain from these quotations that the confiscation of the property of enemy nationals is contrary to the accepted principles of international law as recognized by enlightened nations and that when Congress enacted the trading with the enemy act the intention of permanently confiscating the property was expressly disclaimed.

But it might be said that no matter if Germany does not make provision for the payment of the so-called American claims, we do not intend to confiscate this property, but we are merely retaining it to use as a weapon of negotiation with which to compel Germany to do the right thing. If the retention of this property is only a bluff, no one knows that fact better than the German Government, and then what conceivable aid will it be to our negotiations with respect to payment of the American claims? A bluff only works when the other party does not know you are bluffing; not when he knows you do not mean what you say. Moreover, if this is only a bluff, if we never intend to foreclose on the security, then are we not unjustified in using it as a nere weapon of negotiation when such action involves in many cases untold hardships on the owners who are thus deprived of their property?

Of course, no one argues that we do not have the power to confiscate this property. It is physically in our possession, and there is no one strong enough to come and take it from us. If we choose to disregard and violate accepted principles of international law and confiscate the property of these German nationals, there is no one who can stop us, but if we do so let us recognize clearly that we are violating international law in so doing.

Now, if I can, in a few words, I should like to show you why we believe even the compromise position which is proposed in the resolution under discussion ought not to be adopted.

The thing which we call "civilization" is absolutely dependent on law, domestic law and international law. Before there was any civilization, when men were savages and the rule of club and fang determined men's rights, physical might made right. The physically strong were the ones who could impose on the physically weak. Those laws which we have, the civilization which we have, have resulted from men banding together and creating the modern State which can protect the physically weak from the physically strong and insure to every one life, liberty, and the pursuit of happiness. There is thus a sovereign which can enact laws and protect the physically weak. But in international law no such sovereign exists. The rule of physical force still prevails. The strong can oppress the weak. That thing which we know as international law, so slowly and painfully built up through all the centuries is merely those rules so manifestly fair that all States, weak and strong alike, have recognized as such that they must, in good conscience, be followed. By slow and painful steps has each advance in international law been made. It has been a question of develop

ing international public opinion, so that the various nations would recognize and regard themselves as morally bound to observe certain obligations.

The proposition that the property of an individual enemy shall not be confiscated for the purpose of paying the debts of the enemy government is one of those rules of international morality that has long been recognized as binding on the conscience of enlightened nations. Now, if our Government repudiates this doctrine, as the proposed resolution would have us do, we strike a blow at the very foundations of international law. If a great strong nation like ours refuses to be bound by accepted and time-honored principles of international law merely because some of our citizens may possibly have difficulty in collecting claims from the German Government, then we simply toss aside international law and go back to the rule of savage men. We do whatever our physical strength permits us to do, rather than what international morality says is right.

This is the fundamental reason why we urge you not to adopt the compromise contained in the proposed resolution, but rather to return this property at once to its owners. If our Government refuses to be bound by international law, we can not ask others to obey it. We would take a step toward international anarchy, we would be helping to shatter the none-too-strong civilization that we have.

To our mind there seems to be no answer to this argument and I might perhaps stop here. However, there are certain other phases of the situation to which I should like to refer. It seems to us that the committee might well make more detailed inquiries regarding the nature of so-called American claims for the payment of which this property would be held as security. The chief talk in the newspapers and elsewhere is regarding the so-called Lusitania claims. The newspapers have reported that these amount to approximately $190,000,000. If experience in the past is to count for anything, it is reasonable to suppose that these claims will probably be cut down to from 5 to 10 per cent of the original amount of the claims. This would mea n that these Lusitania claims finally will probably amount to from ten to twenty millions of dollars. Who, then, are the owners of the other claims for which Congress is asked to hold the property of German nationals as security and what is the nature of these claims?

All of the facts with which to answer these questions are in the possession of the Mixed Claims Commission now sitting here in Washington and can easily be ascertained by the committee. It is generally understood that the great bulk of these claims, in dollars at least, have been presented by the large corporate interests of this country who had plants in Belgium and northern France which were sequestered by the German Government or destroyed in the German invasion. For instance, the New York Times of December 27, 1922, reports the consideration by the Mixed Claims Commission of the claim of the Pittsburgh Plate Glass Co. for $2,000,000 for damages claimed to have been suffered by this great corporation by reason of the seizure by the Germans of its plant in Belgium. It has also been reported that, among others, Standard Oil Co. of New Jersey, the Standard Oil Co. of New York, and the E. I. du Pont de Nemours Co., the Western Electric Co., the Singer Sewing Machine Co., the Remington Typewriter Co., and other similar corporations have filed large claims with the commission. As to this class of claims and the Lusitania claims, we do not for one moment argue that they are not entitled to be paid. We believe that whatever is fair and just to these claimants should be paid, and I have no doubt that this Government will be able to find a means strictly in accordance with the principles of international law of securing the full satisfaction of these claims by Germany. But what we do hope and believe is that Congress will not violate accepted principles of international law and take the property of German nationals in order to pay these obligations of the German Government, for which these nationals are legally no more responsible than you or I.

But for the sake of the argument, let us assume the worst. Let us assume that Congress will sanction the violation of international law and authorize the holding of property belonging to German nationals as security for the debts of the German Government. Nevertheless, we do not see any reason in justice or equity for drawing any such arbitrary line as is provided for in the proposed bill and merely returning up to $10,000 and holding property in excess of that amount. It would certainly be more fair to return a specified percentage of all claims. Then, at least, the burden would be more fairly distributed. Moreover, it seems to us that the proposed bill would retain as security for the American claims an amount of property vastly in excess of the amount needed to secure adequately the American claims. I understand that Colonel Miller estimates that the total of the American claims will probably not exceed $100,000,000, while the property which will still be in his hands after allowng for the payments provided for in the present bill will be about $275,000,000. In addition to this, he estimates that the value of the ships seized by the Shipping Board and Navy are worth at least $300,000,000 more, so that this Government would be

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