early treaties entered into by the United States and Great Britain, Germany, and other European countries, and in a number of legal decisions of which the most important was rendered by Chief Justice Marshall. (Brown v. The United States, 8, Cranch, 110, 1281, 1814.) Of course, Congress has reserved to itself the right in accordance with the provisions of Article XII of the "trading with the enemy act," to dispose of the seized property as it deems best.

It is therefore in the province of Congress to decide what shall be done with this property, and the question is whether or not Congress, in view of the policy heretofore adhered to by the United States, will change such policy and retain the property held in trust by the Alien Property Custodian-not merely as a pledge to secure the payment of legitimate American claims, but to confiscate such property and apply the proceeds to the payment of such claims.

The principle of the security of private enemy property developed gradually, and was uniformly adopted during the latter part of the eighteenth century, particularly subsequent to the French Revolution by most of the European countries. During the wars up to that time, particularly during the wars of the seventeenth and early part of the eighteenth centuries, private enemy property belonged to the victor and was a part of the spoils of the war. But prior to the outbreak of the Great War of 1914 it was the law and the policy of the civilized nations of the world that warfare was waged not between the nationals of the respective belligerents, but between the armed forces of one government against those of another government, and that therefore the private rights and property of enemy nationals would be respected and not be affected by a state of war, except where military measures justified the use and seizure of private property of nationals and enemies alike.

Soon after the outbreak of the European war this modern principle was disregarded and a reversion to the old maxim took place when Great Britain and subsequently other allied powers adopted exceptional war measures which may be summed up as sequestration, liquidation, and confiscation of private property belonging to enemies situated within the respective jurisdictions. The Central Powers enacted similar measures, professedly in retaliation.

Not content with having deprived private persons of their property and rights during the war, the victorious nations, meeting at Paris to draft the conditions of peace, inserted provisions in the treaty of Versailles which affirmed and continued the exceptional war measures affecting private property of enemies, thus continuing the policy of regarding an enemy individual as a person with no rights whatever. Under the provisions of the treaty of Versailles, particularly under article 297, each allied and associated power is authorized to retain and liquidate all property interests belonging to German nationals within its territory and to apply thereto exceptional war measures until the completion of the liquidation thereof.

Soon after the armistice of November, 1918, and particularly after the treaty of Versailles had become legally effective, that is, on January 10, 1920, it became apparent that all war measures directed against private property had had and were having a most detrimental effect on the resumption of pre-war international trade relations. The fact that moneys deposited in international banks and investments made in different industrial undertakings had been seized and were, under the provisions of the treaty of peace, permanently to be withheld from the rightful owner on the ground that his government had entered into war with the government of the country in which such moneys had been deposited and investments had been made did not encourage those who had been affected by these measures to again make deposits and investments in such countries and to again place anything of value in the hands of the banks of such countries.

Therefore moneys were deposited in neutral countries and investments were made there or in countries where such measures had not obtained during the war and which had signified their intention not to avail themselves of the rights under the treaty of peace. Long-existing business relations were not renewed because confidence and faith in the security of private property had been absolutely destroyed. Naturally, neutral countries and those countries which had not resorted to seizure and liquidation during the war and after the war made the most of the situation to extend their business relations all over the world by proclaiming that only they could be relied upon as secure and trustworthy. One by one of the allied countries whose international, commercial, and financial relations were thus adversely affected, and particularly the financial circles of such countries, came to the conclusion that something had to be done to stop the propaganda by the neutral countries directed against their interests and to regain the former trade by reestablishing faith and confidence.

While in England in the summer of 1921 I had the opportunity of observing the attitude of English banks toward this question and their alarm as to their future business. I learned from authoritative sources that the London banks had, chiefly

in the interests of international trade and finance, appealed to the British Government to restore private property of enemy seized during the war, and to reestablish pre-war conditions with regard to such property. The British Government, after lengthy negotiations, were not in a position to accede to the desire of the great banks. The reasons given for that Government's declination in the first place was that it was impossible to reinstate enemies in their former rights as the process of seizure and liquidation had already been carried out too far; secondly, because the financial condition of the country and its proclaimed economy would not allow the release of the large assets in the hands of the Public Trustee; and thirdly, it was pointed out that the heavy indebtedness of Great Britain to the United States made it impossible for the British Government to pay out such sums as would be requisite in case the proposed banks' plan were carried out. However, I personally believe that those three reasons given were not the underlying reasons of the British Government's inability to act as the banks had requested.

It is more probable that it was the French Government which prevented the British Government from taking steps, and which would have viewed the return of private property by Great Britain to the Germans as a departure from the provisions of the Versailles treaty. One important step, however, was taken upon the insistence of the British banks. The British Government renounced its right under the treaty (Pt. VIII, Annex II, par. 18) to seize enemy property which might come into the country after conclusion of peace if Germany willfully defaulted in the fulfillment of its treaty obligations. Similar action was taken by Belgium, Italy, Czechoslovakia, and some of the other allied and associated powers, because they foresaw the probable effects of seizure of alien private property during time of peace.

Some of the allied and associated powers, though not openly renouncing their treaty right of liquidation of enemy property seized during the war, have released to a certain extent such enemy property during the past two years. They were able to do this because their war measures with respect to enemy property were not so stringent as those of other countries, so that there remained an opportunity and a possibility of readjusting relations formerly existing between the banks of these countries and their pre-war depositors. Release of property in this way has been accomplished, I am reliably informed, in China and Japan. Other countries have absolutely renounced their right of liquidating enemy property, such as the Cuban Republic, which proclaimed by decree of April 30, 1920, the return of all properties seized, because that Republic entered the war not for selfish purposes and did not want to gain by any seizure of private property. It was said that whatever damages Cuban nationals suffered during the war the Cuban Government expected to have satisfied under the other provisions of the treaty relating to reparations.

The Commonwealth of South Africa thought it aavisable to return all enemy property for the purpose of establishing pre-war relations, and the result is that the banks in South Africa have noted an increase in business which formerly belonged to branches of British banks established there. As I am informed, British banking interests in England continue to suffer heavily in consequence of the British wartime policy and the effects of the treaty of Versailles. The Bank of England which, before the war, was regarded as the safest place in the worla for money or other valuables, is no longer regarded in that light, because non-British depositors have no assurance that the measures adopted during the Great War might not be repeated in some future war. Thus the general opinion prevailing in English banking circles is that a great mistake was made by Great Britain when the British Government revertea to the old English common law principle that the "King's enemy" has no rights and that his property is forfeited. The great prestige enjoyed by the British banks has immensely suffered, and with it, British world power, particularly in finance.

To urge the adoption of the Winslow bill on the ground that it will provide relief to a great number of people in distress is very appealing, and I shall also urge its adoption for this reason. But in view of the detrimental effect which the exceptional war measures and the provisions of the treaty of Versailles had and still have on the reestablishment of pre-war commercial and banking relations throughout the world, to which I have alluded, I strongly recommend, Mr. Chairman, the enactment of the bill on the ground that its enactment will tend to reestablish faith and confidence in international business and banking relations. This bill, if passed by Congress and signed by the President will, in my opinion, cause the greatest benefit to the United States for years to come, because it implies that the United States recognizes the security of private property, even in time of war. It will announce to the world that the property rights of aliens are safe in the United States and that investments and money deposits are secure. The neutral countries, particularly the Latin-American countries, have been awaiting an announcement of the policy of the United States with regard to the disposition of the alien property. Though the bill contemplates

only a partial return of the seized property, its enactment will create a justified hope that ultimately the balance of the enemy property will be restored. Even if the balance of the property were restored before the just American claims have been completely satisfied, even then, I contend the benefits to be derived by the United States generally from such policy, will be far more than the benefit that might be gained by paying such claims with the proceeds of the liquidation of enemy property, pursuant to measures which might be similar to the provisions of the treaty of Versailles.

Mr. DENISON. Your firm represents a number of these claimants who have claims against the German Government?

Mr. THIESING. Yes, sir.

Mr. DENISON. Are you speaking for them when you recommend that we release all this property to the owners?

Mr. THIESING. I recommend, or I favor, an act of Congress returning all property on the general principles of law and economy. The benefits the United States would derive from such action would far outweight any benefit that would be derived from the confi cation of such a fund as, say, $500,000,000 in the hands of the Alien Property Custodian. In other words, the United States in passing such an act would restore confidence and faith in international business and banking. The neutral countries are looking to the United States to take action, and are anxious to know what the United States is going to do.

Mr. DENISON. Then you are more anxious about restoring confidence in general business circles than you are in collecting claims that are owed by the German Government to your clients?

Mr. THIESING. I am most anxious that those clients who have claims against the German Government growing out of the sinking of vessels, for loss of life, and loss of and d mage to property, as well as debts owed by German citizens-I am most anxious that those claims be paid. And I am confident those claims will be paid regardless of of the fact whether or not this property may be released now.

Mr. DENISON. You say they will be paid?

Mr. THIESING. I say I think so.

Mr. DENISON. How do you think they will be paid?

Mr. THIESING. I do not know. It is up to the Mixed Claims Commission.

Mr. DENISON. Do you mean that you think it will be done or that you hope it will be done?

Mr. THIESING. Well, I hope and believe it will be done. But I have no assurance of it.

Mr. DENISON. At any rate you are willing and advocating the release of all property

Mr. THIESING (interposing). Yes, sir.

Mr. DENISON (continuing). Notwithstanding the fact that you represent a number of claimants who have claims against the German Government, is that your position? Mr. THIESING. Exactly.

Mr. DENISON. How many of those claims do you represent?

Mr. THIESING. Not very many, say a dozen, for loss of life, debts, and so on.

Mr. DENISON. In connection with the sinking of the Lusitania?

Mr. THIESING. Not the Lusitania, but some vessels that were sunk in 1918 off the coast on one Sunday afternoon when a German submarine came here and sunk several vessels.

The CHAIRMAN. Off Cape Cod?

Mr. THIESING. No; off the Jersey coast, I think.

Mr. DENISON. Have you filed those claims with the Mixed Claims Commission? Mr. THIESING. Yes, sir.

Mr. DENISON. Do you know what they aggregate?

Mr. THIESING. I will say, several hundred thousands of dollars.

The CHAIRMAN. Have you any clients whose property is held in trust by the Alien Property Custodian?

Mr. THIESING. Yes, sir.

The CHAIRMAN. How much does that represent?

Mr. THIESING. Well, I can not give you any exact figure.

The CHAIRMAN. More or less, as to all other claims, of every character?

Mr. THIESING. More than that.

The CHAIRMAN. You had not mentioned those before, had you?

Mr. THIESING. Yes, sir. However, I should like to say that our attitude with regard to this question is not influenced by the fact that we may have more claims on one side or on the other, but we are guided by the principles of law, equity, and economy.

25789-23-PT 4- -3

The CHAIRMAN. I wanted to see how really altruistic you were as to the matter of passing over this property and funds, and also to note your attitude on one side as contrasted with your attitude with respect to the other side.

Have you anything more to say, Mr. Thiesing?

Mr. THIESING. No, sir; I think not.

The CHAIRMAN. Ány further questions? [After a pause.] Very well, we are obliged to you.

STATEMENT OF MR. CHARLES HENRY BUTLER Resumed.

Mr. BUTLER. Before you adjourn for the day, Mr. Chairman, may I say a word or two by way of explanation?

The CHAIRMAN. Very well.

Mr. BUTLER. I have before me the transcript of my statement, and I would like to say by way of explanation—but I do not think the stenographer need take this down. This need not be made a part of the record.

(Thereupon the stenographer ceased writing until a member of the committee began asking questions regarding Mr. Bulter's suggestions that interest be paid on cash funds taken and returned.)

Mr. DENISON. Do you think the Government ought to pay a profit on property or money taken over during the war?

Mr. BUTLER. In this case it was paid over to the Alien Property Custodian, and it lay in the Treasury of the United States for two years until the owner could get back and put in his claim. Then they handed it over to him, but without interest. Here is the case of an American who happened to be in Germany, and who had $200,000 taken over, and it was afterward returned but without interest.

Mr. DENISON. Do you mean that your claim for interest would apply to only that one instance?

Mr. BUTLER. It would apply to the class of claims where actual money was taken. Understand at the same time we got that back in another case we got back from the Alien Property Custodian $200,000 in securities, on which interest had been earned, and they gave that interest back to us. But where the money lay in the Treasury of the United States there was no interest paid. I think where the United States was relieved from borrowing for a period and the amount of money laid there for that period, and American who simply by force of circumstances had been in Germany, and when he got back had the money paid to him but was refused any interest, should get interest on the money that the Government had and was using.

Mr. DENISON. Well, of course, the Government of the United States did not take over that money for the purpose of relieving it from the necessity of borrowing money. It was a mere incident.

Mr. BUTLER. It was more an incident, of course, but it seems to me when the Government had the use of that money it might very well pay interest on it. (Mr. Butler referring to his written memorandum continued:)

Another point which relates to a class of people, though I do not think to a great many, who were known as expatriates from Germany. We have a case where Germany took over their property in the way of accounts due them--they had no business in Germany, but Germany grabbed certain accounts due them on the ground that they were alien enemies. The United States and Great Britain grabbed their property on the ground that they were alien enemies. We think if Germany regarded them as being expatriates that their money should not be taken, and we have filed a claim for them.

Mr. SWEET. Have you suggested an amendment to cover that?

Mr. BUTLER. Yes, sir. And I want to say to Mr. Sanders, if I may speak to him, in regard to confiscation of debts by governments, that about 20 years ago I wrote a little book on the subject. I think you will find I do not expect you to read this book through; nobody has ever done it a list of cases in which governments have taken over debts of their citizens. A man named Lawrence, who was Comptroller of the Currency at one time, wrote a very elaborate treatise, which was published as a document of Congress, on this subject. I have marked where that is. I thought it might be interesting for you to refer to the actual cases.

I do not think this time we are confronted so much with the legal proposition as with the moral proposition. I do think, as Mr. Huddleston says, that the treaty of Berlin has taken it out possibly from any claim on which arbitration could be demanded, or make it go to The Hague Court. I think, as has been said by several members here, we are confronted by a great question of policy, what should be the policy of this Government in this really epoch-making situation.

As to representing persons before the Mixed Claims Commission and the Alien. Property Custodian, I am in exactly the same situation as these other gentlemen, as is nearly every attorney who practices before the departments. Naturally our correspondents send to us, to all of us, who do a correspondence business, claims to be filed, and those claims have to be considered. Sometimes they apparently conflict.

I think this committee to-day is confronted with the proposition exactly as I stated it before you the other day, of how much can safely be released from this fund and at the same time protect this question which is in the air and which eventually has got to be decided. The awards will not require all of these funds. As a matter of policy, I think it is perfectly safe to release anywhere from $50,000,000 to $100,000,000 of this fund.

Mr. DENISON. What is the title of your books?

Mr. BUTLER. The title is "Butler's Treaty-Making Power of the United States." I especially refer to page 286, volume 2, relating to the right of Governments to deal with claims of their citizens against foreign countries.

Mr. MAPES. Will you also give the reference to the Government document that you referred to?

Mr. BUTLER. It is in this book.

on Claims Against Governments."

Reference is also made to the "Lawrence's Treatise

Mr. LEA. Mr. Butler, have any taxes been collected on income of property in the hands of the Alien Property Custodian?

Mr. BUTLER. We have collected back a number of claims against the Alien Property Custodian, and there is a regulation of the Treasury Department that within 90 days thereafter you must render a statement. On a recent amount of several hundred thousand dollars we had to allocate it to the various years as accrued income, and account for it in the various years for which it was held. The trustee from whom it was taken, holding it for the account of an American woman who had married a German and under the act of 1920 was entitled to have it back, had to make an accounting. During that period the trustee had accounted regularly to the custodian and paid him the income. It was paid back in a lump sum. Within 90 days thereafter the trustee had to file annual income tax returns for each year.

I understand, but I am not sure of it, and counsel for the custodian could probably tell you better about it-that on what goes back to Germans there is a tax imposed by Germany which this property has to bear. I am not familiar with those rules.

Mr. LEA. If that property were to remain in America would it be free from German tax?

Mr. BUTLER. That is a very important question now pending in my office and in regard to which I am expecting a fee for my answer. A very large sum of money is involved in that matter, and I am not ready now to express my opinion.

Mr. LEA. Very well, I will not ask you to make an answer now.

The CHAIRMAN. The committee will now stand adjourned until to-morrow morning at 10 o'clock.

(Whereupon, at 12.45 p. m., the committee adjourned until to-morrow, Wednesday, January 10, 1923, at 10 o'clock a. m.)

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,
HOUSE OF REPRESENTATIVES,
Wednesday, January 10, 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.

STATEMENT OF MR. WILLIAM I. LEWIS, PATERSON, N. J.

The CHAIRMAN. Mr. Lewis, give your name, address, and the interests which you represent or the nature of them.

Mr. LEWIS. My name is William I. Lewis; my address is 9 Colt Street, Paterson, N. J.; and I appear here as the attorney of Amelia Janner.

Mr. Chairman, and if it please the committee, I desire to present to the committee a concrete case and then to present a proposed remedy for the condition which that case reveals, and then, with the kindly permission of the committee, I propose to make a few comments upon the underlying and fundamental law touching the situation; and, first, to my concrete case.

In 1878, one Louis Schaefer, known as Dr. Louis Schaefer, by reason of the fact hat he was a graduate of a German institution and particularly learned in chemistry.