abrogation of a treaty and acts of the enemy in the war? For instance, under the terms of this treaty the mere fact of a war does not justify us in violating its terms. But a treaty is only a contract which is mutual, and when we enter into a war, assuming that the war itself did not abrogate the treaty, if the enemy country violates the terms of the treaty, which are mutual, why have they any right to insist upon our complying with the terms which they have violated?

Mr. MILLER. That is a perfectly good argument. The Congress or any legislative assembly can abrogate the terms of a treaty, whether there is war or not war, by subsequent legislation. Of course, if that is between two countries and Congress abrogates the treaty by legislation, there is likely to be trouble which may grow into a war. Take the Spanish-American war-that was a "gentlemen's" war, so to speak, where very little was done by either side outside the so-called rules of civilized warfare. In this war everybody got mixed up in the conflagration, and there were things done in this war that were never throught of when these treaties were negotiated.

Mr. LEA. Yes. In other words, the point I was trying to make is that war itself might not justify the abrogation of a treaty, but the violation of the specific terms of the treaty would justify the abrogation of the treaty.

Mr. MILLER. Suppose we had gone to war with Germany and there had been no trading with the enemy act and we had a gentlemen's war, so called, as we had with Spain, then this situation would have arisen, but the Congress did see fit in this war with Germany to pass a trading with the enemy act which superseded the treaty. I am informed that Germany did take over bank accounts in Germany before the trading with the enemy act in this country was passed.

Mr. NEWTON. As I gathered from your statement just a moment ago, with reference to a question from Mr. Lea, there was something like $140,000,000 worth of marks. Mr. MILLER. The total value of property taken under the German alien property custodian was 453,117,630 marks, which, on the gold basis, is around $100,000,000. Mr. NEWTON. There was about 140,000,000 marks that was cash seized or property that was thereupon immediately converted into cash.

Mr. MILLER. Yes.

Mr. NEWTON. That is correct.

Mr. MILLER. Yes; according to this report.

Mr. NEWTON. So that would mean approximately 140,000,000 marks in American valuation at the time of seizure, or $40,000,000.

Mr. MILLER. About that.

Mr. NEWTON. The American claimants now want, of course, that $40,000,000 paid back to them, and the German Government proposes to pay it back in marks at a value of one-third of one cent.

Mr. MILLER. It had been offered to them.

Mr. NEWTON. That was their proposal. That is the way they propose to settle. So that we have the American claimants requesting what was taken, $40,000,000, and we have the German Government proposing to pay on the basis of one-third of one cent as a settlement.

Mr. MILLER. Yes.

Mr. NEWTON. The difference then is the difference between $40,000,000 and $133,000.

Mr. MILLER. That is putting it in figures; yes, sir, and I understand that this class of American claims are the ones that are going to receive the first consideration. Mr. NEWTON. I do not know that I understand you about that.

Mr. MILLER. Our Government wants to see that particular class of claims cleared up first, if possible the ones we have just been discussing.

Mr. NEWTON. That is, by the German Government.

Mr. MILLER. Yes, sir.

Mr. NEWTON. They want to have them cleared up first?

Mr. MILLER. Yes; this cash of Americans for which is now being offered the depreciated value of the mark.

Mr. NEWTON. And it is that proposition put forth in that way that accounts for the proposal upon the part of the executive branch of our Government to retain in part this trust fund and retard its payment so as to insure to the Americans payment of what was taken away from them and not have them paid back $133,000 for $40,000,000. Mr. MILLER. That was one of the purposes of the retention clause in the peace reso lution, and one of the reasons why, bearing those instructions in mind, I am not recommending that a larger amount be returned at this time.

Mr. HAWES. Just as a matter of history, our trading with the enemy act was passed in this country prior to similar action being taken in Germany, was it not?

Mr. MILLER. Í understand, Mr. Hawes, that Germany took over some American property prior to the passage of our trading with the enemy act. Our trading with the

enemy act was based on the trading with the enemy act of Great Britain and France, and all nations then at war or all nations at war when we entered the war had trading with the enemy acts except Austria-Hungary.

Mr. HAWES. But we did pass our act before any enemy property was taken over by the Germans except possibly some industrial plants.

Mr. MILLER. American property in Germany had been taken over prior to the passage of our trading with the enemy act. As to whether all of it was taken over, I am not prepared to say.

Mr. WEBSTER. Colonel Miller, following Mr. Newton's idea expressed a moment ago, that same disparity would exist as to all property now held by the Government custodian unless it was returned to its American owner in kind?

Mr. MILLER. Yes, sir; if it had ever been liquidated.

The CHAIRMAN. Colonel Miller, there appears to be nothing further. We are obliged to you for your testimony and will excuse you subject to call, if necessary. Mr. MILLER. Thank you, sir.

(The committee thereupon adjourned until Wednesday, January 3, 1923, at 10 o'clock a. m.)

X

ALIEN PROPERTY.

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,
HOUSE OF REPRESENTATIVES,
Wednesday, January 3, 1923.

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

The CHAIRMAN. If the members of the committee will come to order, we will proceed with the consideration of H. R. 13496. The first witness we will call on will be a representative of the War Department. Colonel Hull, if you will kindly qualify, we will ask you to proceed.

STATEMENT OF COL. JOHN A. HULL, ACTING JUDGE ADVOCATE GENERAL, UNITED STATES ARMY.

The CHAIRMAN. Colonel, would you like to make a story without interruption and then be questioned later.

Colonel HULL. It is immaterial to me, Mr. Chairman.

There is maintained in the War Department in connection with the work growing out of the war a central patent section, which was organized to study the patent situation as far as it affects the War Department. It was formerly a branch of the General Staff, P. S. & T., and this last year was transferred under the supervision of the Judge Advocate General, Lieutenant Colonel McMullen being in charge. Colonel McMullen is now absent in Europe. When his attention was brought to the bill

The CHAIRMAN (interposing). Is he absent in Europe studying the conditions which surround the matters involved in this bill?

Colonel HULL. No, sir; he is there in connection with settlement of claims arising out of the so-called Bolling agreement

The CHAIRMAN. I just wanted to know whether it was in connection with the matters involved here.

Colonel HULL (Continuing). Which was an agreement between Great Britain and the United States regarding the use of airplane patents. That commission is meeting in London right now, and he is representing the War Department at that meeting. He prepared a memorandum to the Secretary of War inviting attention to the fact that the patent situation had not yet been solved and that the return of all property now in the hands of the Alien Property Custodian to enemy aliens would include patents as patents constitute property. The patent situation is rather unusual in that the underlying principle involved in the monopoly that is granted by a patent, you might say, involves the development of civilization. Germany, in her plan of warfare, used the patent situation in connection with the doctrine of "dreadfulness," and after we got into the war or before we got into the war, we saw that she was using patents to strangle the life and the health of the country that were either opposed to her or would not be friendly to her. As a result of the war, there was probably a billion and a half dollars invested by business men at the instigation of the Government in industries that involve patents.

Mr. MERRITT. How much did you say?

Golonel HULL. It is variously estimated from one billion and a half to two billion dollars invested in industries of this country that are dependent primarily upon basic German patents. There is, in addition the question of public health through medicines such as "606" or Salvarsan. If the patents are returned without limitation at this time, those industries and those questions of public health are dependent to a great degree upon the temper of the owners of the patents. The War Department has no solution to suggest. It simply recognizes the magnitude of the problem and thought it was its duty to call it to the attention of the committee.

Mr. MERRITT. Were those medical patents you speak of taken over by the Chemical Foundation?

Colonel HULL. I do not know where they are now, sir. They may be in the Chemical Foundation somewhere. I presume the Salvarsan patent is because, at the time we seized those patents in the United States, the price of a dose of Salvarsan was in the neighborhood of about $30. I understand the cost of the production of a dose, as developed, is less than one-half a dollar and it is being retailed, or was, through the Government, in the neighborhood of $1 or $1.25 a dose.

Mr. DENISON. Colonel, as a representative of the War Department, are you for or against this legislation?

Colonel HULL. I think personally that the patents when returned should be returned with limitations so that we will never get into the same situation that we were in in 1916 or 1917.

Mr. DENISON. There is, of course, an exception in this bill so far as patents are concerned.

Colonel HULL. The War Department is in favor of that exception until the problem can be further studied and a proper course of action determined upon by Congress. Mr. DENISON. Can you give me some idea how it happened that the War Department has this activity in charge?

Colonel HULL. Patents?

Mr. DENISON. Yes.

Colonel HULL. We have claims growing out of the activities of the War Department in the war, in the Court of Claims to-day, amounting to $400,000,000 involved in suits against us.

Mr. DENISON. Against the Government?

Colonel HULL. Against the Government due to War Department activities in patent infringements.

Mr. DENISON. They grow out of patent infringements?

Colonel HULL. Yes.

Mr. DENISON. Of course, those suits involving patents would have some direct bearing on this legislation, would they not?

Colonel HULL. I do not know that any of the patents that are involved here are directly involved as a basis of the suits now pending in the Court of Claims, but if you turn these patents over without any limitation whatsoever, whether the owners of those patents will then sue the Government for our operations under those patents, is another question.

Mr. DENISON. At any rate, Colonel, the bill as we have it here fully protects the interests of the War Department and the Government in patent matters?

Colonel HULL. Yes, sir.

The CHAIRMAN. Colonel, would you have it understood that you are directing your testimony practically entirely in respect of the provision covering patents, trade-marks, etc.?

Colonel HULL. Yes, sir; section (G) I think it is.

The CHAIRMAN. And you do not voluntarily suggest a discussion of the other provisions on your part?

Colonel HULL. I know very little about the other provisions, and I do not think a discussion on my part would be helpful to the committee.

Mr. SANDERS. Colonel, with reference to these suits that you refer to in the Court of Claims, in a general way, who are the claimants?

Colonel HULL. Americans are the major portion, but there are other countries represented.

Mr. SANDERS. In other words, you mean American citizens have claims against the War Department upon the ground that the War Department infringed upon American patents.

Colonel HULL. Yes, sir.

Mr. SANDERS. Are these claims connected with patents held by the Alien Property Custodian?

Colonel HULL. No, sir; but they may furnish us a defense so long as we hold them. Mr. SANDERS. So far as the $400,000,000 worth of claims are concerned, that has not anything to do with this matter except that you judge from the fact that claimants have filed claims in the Court of Claims against the Government because of infringement of patents, that if those were released without restrictive legislation, the owners of these patents might likewise file claims in the Court of Claims.

Colonel HULL. That is correct, and it was also an answer as to why this work was in my office.

Mr. SANDERS. Yes; I understood that. Have you given serious consideration to the right of one of the former owners of the patents to bring suit because of the infringement, when the patent was taken over by the United States Government and held by the Alien Property Custodian?