Home / Contents
Assets in the United States
Before, during, and after the United States entered the war, the U.S. government endeavored to deny Germany control over economic assets in, or being brought into, the United States.1 Because the United States took control over so many assets, it undoubtedly seized some that belonged to Holocaust victims, though unintentionally. While U.S. officials were not oblivious to the intensity of Nazi persecution, it would take until the end of the war before policy began to accord special status to victims and their assets. Even in the immediate postwar period, other issues took priority, and it seemed consistently more important to fight the enemy than to aid the victims.
When the Germans invaded a country, the U.S. government assumed that the assets of that country, including those located in the United States, would be used to help the Axis powers and acted to block them. The Treasury Department immobilized foreign-controlled assets while the Alien Property Custodian (APC) seized assets. While the former practice left title with the original owner, the latter transferred title to the U.S. government.
Foreign Funds Control and the "Freezing" of Assets
Freezing Foreign-owned Assets
Germany invaded Denmark and Norway on April 8, 1940, and the United States quickly responded to the aggression. In an attempt to keep the Germans from taking control of Danish and Norwegian assets held in the United States, Executive Order 8389 "froze" all financial transactions involving Danes and Norwegians. The freezing order prohibited, subject to license, credit transfers between banking institutions within the United States and between the United States and foreign banks, payments by or to banking institutions in the United States, all transactions in foreign exchange, the export of gold or silver coin or bullion or currency, and all transfers, withdrawals or exportations of indebtedness or evidences of ownership of property by any person within the United States. It also prohibited acquiring, disposing, or transferring any security bearing foreign stamps or seals, and gave the Secretary of the Treasury the power to investigate, regulate, or prohibit the mailing or importing of securities from any foreign country.2 The executive order provided that willful violation could carry a $10,000 fine, 10 years imprisonment or both.3
The rapid U.S. response was possible only because of long preparation. In issuing Executive Order 8389, the President acted on the basis of the Trading with the Enemy Act of 1917, as amended by Congress in 1933, which provided him with the authority to:
investigate, regulate, or prohibit...by means of license or otherwise any transactions in foreign exchange, transfers of credit between or payments by banking institutions...and export, hoarding, melting, or earmarking of gold or silver coin or bullion or currency by any person within the United States or any place subject to the jurisdiction thereof.4
The U.S. government had first considered the use of such economic weapons in 1937. In response to the Japanese bombing and sinking of the American gunboat Panay in Chinese waters, Herman Oliphant, General Counsel in the Treasury Department, suggested to Treasury Secretary Henry Morgenthau that foreign exchange controls and a system of licenses for financial transactions could be instituted against the Japanese.5 Tensions with Japan subsequently eased and Oliphant's proposals were shelved. But in 1938, after the German annexation of the Sudetenland, reports circulated that the Germans were forcing Czechs to turn over all assets they held in the United States. Such information prompted the Treasury to revisit Oliphant's proposals.
Subsequent German actions, including the occupation of the Czechoslovakian lands of Bohemia and Moravia, further increased support within Treasury for the imposition of freezing controls. Treasury also took the step of verifying with the Justice Department the legality of such controls in the absence of a state of war.6 Although the United States ultimately decided not to respond to Germany's actions in 1938 and 1939, Treasury was prepared to act quickly in April 1940.
As Germany continued its invasions, the U.S. government successively froze assets, country by country, over the European continent. Thus, on May 10, 1940, FFC extended freezing controls to cover the Netherlands, Belgium, and Luxembourg.7 The assets of France and Monaco (June 17), Latvia, Estonia, and Lithuania (July 10), and Romania (October 9) were subsequently frozen that year.8 By the end of April 1941, the United States added Bulgaria, Hungary, Yugoslavia, and Greece to the list.9
The further extension of controls to belligerents and neutrals remained controversial. While Treasury favored a rapid extension of controls, the State Department, concerned about maintaining America's status as a neutral as well as U.S. diplomatic privileges, objected.10 Assistant Secretary of State for Economic Affairs Dean Acheson noted that "from top to bottom our [State] Department, except for our corner of it, was against Henry Morgenthau's campaign to apply freezing controls to Axis countries and their victims."11
Eventually, the course of the war dictated a shift in U.S. policy. On June 14, 1941, through Executive Order 8785, the United States extended freezing controls to cover all of continental Europe, including "aggressor" nations and annexed or invaded territories (Germany and Italy; Danzig, Austria, and Poland) as well as neutral nations, small principalities, and countries not previously included (Spain, Sweden, Portugal, and Switzerland; Andorra, San Marino, and Liechtenstein; Albania and Finland). Turkish assets were never blocked, and Soviet assets were only blocked for a relatively short time until Germany invaded Russia in June 1941.12 As the United States moved from being a neutral to a belligerent, the role of FFC, an administrative agency within the Treasury Department, expanded.
Assets within the United States
Census of Foreign-owned Assets in the United States (1941)
On June 14, 1941, amended regulations under Executive Order 8389 called for a census of foreign-owned assets.13 Every person in the U.S. (including corporations and foreign nationals) was required to report all property held for or owned by a foreign country or national. The Treasury Department reasoned that no one could foresee which nations might yet be overrun, that title changes could occur anywhere, and that compiling comprehensive records of who controlled which assets was vital.14 Treasury was subsequently unwilling to share the information it had gathered even with friendly foreign governments or American creditors.15
The census form listed some thirty types of property: bullion, currency and deposits; domestic and foreign securities; notes, drafts, debts, claims; miscellaneous personal property such as bills of lading, commodity options, merchandise for business use, jewelry, machinery, objects d'art; real property and mortgages; patents, trademarks, copyrights, franchises; estates and trusts; partnerships; and insurance policies and annuities. The value of each asset both in June 1940, and in June 1941, had to be provided, as did extensive information about the persons with an interest in the property (including citizenship, address, date of last entry into the United States, visa type, and alien registration number), to enable the government to trace transfers and changes in the assets. Property whose total value was less than $1,000 did not have to be reported unless its value could not be ascertained, but even assets with values difficult to assess in dollar terms, such as patents or interests in partnerships, had to be reported as did the contents of safe deposit boxes.16
The census revealed that earlier U.S. government estimates, which have been destroyed, had often been inaccurate.17 Generally, Axis holdings had been underestimated while the holdings of German-occupied countries (particularly France and the Netherlands) had been overestimated. A sizeable portion of foreign-owned assets proved to be in the hands of British and Canadian investors. The census showed as well how dominant New York was as a financial center: two-thirds of all reports, and more than three-quarters of all bank and broker reports were filed in the New York district.18
Overall, the 565,000 reports submitted showed the total value of U.S. assets owned by foreign persons or entities in 1941 was $12.7 billion. About two-thirds, or $8.1 billion, of the $12.7 billion total reported belonged to 84,000 persons located in European countries,19 and other than the large United Kingdom ($3.2 billion) holdings, the only other European countries with holdings near $1 billion were Switzerland ($1.2 billion), France ($1 billion), and the Netherlands ($977 million). 20
But Treasury Department fears that Germany might be able to exploit the assets from occupied territories were warranted. The total value of foreign-controlled U.S. assets just from West European countries that were overrun or defeated in 1940--Denmark ($48.1 million), Norway ($154.7 million), the Netherlands ($976.7 million), Belgium ($312.7 million), Luxembourg ($33.4 million), France ($1 billion), and Monaco ($15.5 million)--amounted to $2.5 billion, or more than twelve times Germany's 1941 U.S. holdings of $198 million.21 The following table shows the geographic origin of the funds, according to the census:
Table 5: Value of Foreign-Owned United
(by continent and country of reported address of the owners, as of June 14, 1941, in millions of dollars)
|With largest countries in region|
|of this, United Kingdom||
|of this, Switzerland||
|of this, France||
|of this, Canada||
|of this, China||
|of this, Philippine Islands||
|of this, Japan||
|of this, Argentina||
|of this, Brazil||
|of this, Panama||
|of this, Mexico||
|West Indies and Bermuda||306|
|of this, Cuba||
|of this, South Africa||
|of this, Belgian Africa||
|of this, Australia||
Only 21 percent of the foreign-owned U.S. assets were owned by individuals: corporations owned 63 percent, and governments 16 percent. Among individuals, securities ($808 million), estates and trusts ($799 million), and deposits ($505 million) predominated, though all three combined amounted to only 16.5 percent of all foreign-owned assets. Corporate holdings in deposits ($2.8 billion), interests in enterprises ($2 billion), and domestic securities ($1.8 billion) were far larger. Of the foreign-owned American securities 75 percent were held by persons in only five countries (the United Kingdom, Canada, Switzerland, the Netherlands, and France), with the majority (70 percent) in common stock, and far less (12 percent and 8 percent, respectively) in preferred stock and corporate bonds. Only about 30 percent of these securities belonged to individuals, while 65 percent belonged to corporations. 22
At the wealthy end of the spectrum, 9,255 "persons" (including corporations), who held total assets greater than $100,000 each, accounted for fully 88 percent ($11.2 billion) of the $12.7 billion total. At the other end, the Census reported 112,399 "persons" with a range of assets of less than $10,000 each, accounted for only 3.3 percent ($427 million) of the total foreign-owned assets counted. In fact, "small holdings of less than $5,000 accounted for...58 percent of the number of persons, and close to 90 percent of them were individuals." 23
Looted Assets and the U.S. Market
Though FFC wanted to prevent the enemy from using assets in the United States, it did not want to hinder legitimate business, and therefore developed a licensing system to monitor and regulate transactions. Controlling readily convertible and transportable assets, in particular securities, currency, and gold, called for different measures.
Securities. Treasury's General Ruling 2, "Transfer of Stock Certificates and Custody of Securities," issued nine days after the proclamation of Executive Order 8389, prohibited transfers of securities involving Danish or Norwegian nationals. The ruling had limited impact since the combined value of U.S. domestic securities held by Danes and Norwegians amounted to only $16.6 million. 24 However, the German invasion of the Netherlands, Belgium, and Luxembourg in May 1940 substantially increased the stakes, as securities worth $358.2 million were in danger of falling under German control. Dutch owners held 89 percent of these securities, and as many as half of the securities were thought to be in the form of readily convertible corporate bearer bonds. 25 "Unless a way could be found to prevent the liquidation of securities seized by the invaders," a Treasury Department summary noted in mid-1942, "tremendous losses would accrue to their legitimate owners, and a tremendous asset would be given to the war effort of the Axis." 26
Initially, FFC recommended the destruction of securities that were at risk of German seizure. In the Netherlands, many owners resisted this approach, for fear of not being able to replace the securities at a later date. The Dutch government also informed the State Department that owing to the military situation it was simply too late to undertake any financial measures at all and that not enough personnel was available to destroy all the securities. In desperation, FFC sent a cable with the instruction to take the securities and "dip them in red wine," 27 thereby making them immediately identifiable in case they were looted.
Such expedients were insufficient to keep Germany from exploiting looted securities registered in the name of an individual. On June 3, 1940, the Treasury Department issued General Ruling 3, extending the freezing control to prohibit the acquisition, transfer, disposition, transportation, importation, exportation, or withdrawal of any securities that were registered in the name of a national of a blocked country. The ruling prohibited U.S. registrars or transfer agents from changing the name in which the security was registered, even if a legitimate transfer of title had taken place before the German invasion. 28
While General Ruling 3 blocked the transfer of enemy-captured registered securities, it did not fully address the direct importation of bearer securities into the United States. To attack this problem, FFC determined that an import inspection system was necessary. On June 6, 1940, it issued General Ruling 5 on the "Control of Imported Securities," prohibiting "the sending, mailing, importing, or otherwise bringing into the United States" of securities. If any securities were physically brought into the country, they were to be immediately turned over to a Federal Reserve Bank.
For implementation, FFC relied heavily upon other agencies, in particular on the Customs Service and the Post Office. Customs inspectors met, questioned, and searched incoming passengers to determine whether they were carrying securities, while postal inspectors examined the incoming mail to make sure that stocks and bonds did not enter the country surreptitiously. 29 Once the Federal Reserve Bank took possession of securities, "they could be released only upon proof, judged sufficient by the Treasury Department, that no blocked country or national thereof had any interest in such securities since the date of the freezing order." 30
Imported securities that could not be released remained in the custody of the Federal Reserve Bank. Yet to prevent undue hardship, the Treasury Department issued General Ruling 6 on August 8, 1940, allowing such surrendered securities to be moved from the Federal Reserve Bank into special blocked accounts (called "General Ruling 6 Accounts") in domestic U.S. banks. This arrangement permitted the completion of certain basic transactions. Dividends from these securities, for example, and even the proceeds from the sale of these securities, could be accrued in these blocked bank accounts, as well as taxes and bank charges deducted.
Unregistered (or bearer) securities falling into enemy hands were particularly troublesome, not only because they had been used extensively before the war by German cartels as a means to hide ownership, but also because General Ruling 3 did not apply to them and General Ruling 5 only applied to blocked countries. Thus, between the time General Ruling 5 was issued in June 1940 and the extension of freezing controls to the neutrals in June 1941, it was possible for Swiss, for example, to continue to export securities to the United States. Then there were the issues of controlling foreign securities that had been issued in and were payable in the United States, and preventing blocked nationals from acquiring controlling interests in U.S. corporations by buying their stocks and bonds.
The Treasury Department addressed many of these problems through certification, an expedient somewhat similar to the European practice of affixing tax stamps to legitimately acquired securities. Treasury's certification (using Form TFEL-2) could be attached to securities "if the owners could prove that they were free from any blocked interest." 31 Treasury also applied this device to securities issued in blocked countries but payable in the United States. 32 Because securities looted abroad might be sold to persons resident in the United States, the freezing order prohibited such acquisitions or transfers as long as these securities were not in the United States. By 1943, this prohibition was relaxed so as to permit the acquisition of securities in Great Britain and Canada, as well as to a more limited extent from within the generally licensed trade areas. 33
Currency, Dollar Checks, and Drafts. In the process of trying to prevent securities from entering the country, U.S. Customs also discovered that currency, particularly dollars, was being brought into the United States, amounting to $3 million worth in Fiscal Year 1943 alone. 34 In 1940 and 1941, the United States was still neutral and no mechanism was in place to impound currency. Foreign Funds Control therefore asked the Collector of the Customs simply to keep a record of the amount of currency arriving and to send a monthly report to the Treasury Department listing sender and recipient. By 1942, the United States was a belligerent and General Ruling 6A, issued in March 1942, added "currency" to the definition of "securities or evidences thereof," thereby enabling FFC to apply similar controls.35 The operating presumption of the Treasury Department was that dollars imported directly from Europe had been looted. 36 Only currency imported from Canada, Great Britain, Newfoundland, or Bermuda escaped the wartime currency import restrictions.37
Controlling the direct importation of securities or currency did not address yet another problem: censorship offices in both the United States and Great Britain were discovering that "substantial amounts of funds" were flowing between Europe and the Western Hemisphere in the form of dollar-denominated checks and drafts. 38 U.S. funds were entering blocked European countries, and dollar checks were being resold in neutral countries. The U.S. Legation in Switzerland, for example, reported that Germany had obtained about $12 million in this fashion, noting that German agents were trying to sell such checks and drafts in neutral countries at a discount in order to acquire Swiss francs and Portuguese escudos. 39 General Ruling 5A (July 7, 1943) thus required a license to collect payment on these kinds of checks, a control that worked in both directions. 40 Checks, drafts, notes, securities, or currency could not be exported to any blocked country unless under license, and all checks or drafts imported after August 25, 1943, had to be sent to the Federal Reserve Bank of New York. There they were held indefinitely, with licenses for their release only granted in very unusual circumstances. 41
Gold. Whether the U.S. government knowingly traded in gold looted from victims begs the prior question of the nature of the gold trade. U.S. policies on gold long predated the war, and the war did not substantially alter them. Until 1934, U.S. currency could be redeemed in gold coin, and by statute the Treasury had to maintain a minimum amount of gold to make redemptions possible. Economic expansion in the 1920s had increased the domestic demand for currency, which increased the purchase of gold from abroad, and turned the United States into "a gigantic sink for the gold reserves of the rest of the world." 42 Having gold (in Fort Knox, for example) helped maintain public confidence in the currency. 43
The economic crisis of the Depression led to passage of the Gold Reserve Act of January 30, 1934, prohibiting the private trade in gold and giving the Treasury Secretary the authority to control all future dealings in gold, including setting the conditions under which gold could be held, transported, melted, treated, imported, and exported, as well as allowing him to "purchase gold in any amounts, at home or abroad...at such rates and upon such terms and conditions as he may deem most advantageous to the public interest." 44 Immediately after passage of the act, President Roosevelt revalued gold, fixing its price at $35/oz. (substantially up from its previous $20.67/oz. price). In effect, this gave the Treasury a paper profit of almost $3 billion, $2 billion of which went into a Stabilization Fund authorized to deal in gold and foreign exchange with an eye to influencing the value of the dollar by buying and selling on the open market.45 The Treasury Secretary thus was given both full power to buy gold and substantial funds to do so.
The consequences of the Gold Reserve Act and the revaluation were immediate. Gold held privately (and by banks) in the United States was turned in to the Treasury Department and added $2.4 billion to its ledgers in 1934 alone, 46 and the increase in the price the United States would pay stimulated mining to such an extent that during the six years after 1934, world gold production rose by two-thirds and U.S. domestic production more than doubled. 47
More importantly, these U.S. changes drew capital from Europe, perhaps in part due to the new price, but certainly because of "the growing threat of Nazism in Hitlerite Germany." 48 In only six weeks from February 1 to March 14, 1934, more than half a billion dollars' worth of gold was imported by the United States, and by 1936, an estimated $3 billion worth of gold had come from France. 49 Gold hoarded in England came onto the London market in 1936 and 1937, and from August 1938 to May 1939 alone, about $3 billion worth of gold came to the United States, $2 billion of which was from the United Kingdom, and perhaps $670 million of that U.K. gold had been transshipped from other countries. 50 In fact, from February 1934 until October 1942, "a phenomenal gold movement" to the United States began, with gold stock increasing "every single month for 8 years" (an average yearly increase from 1934 to 1938 of $1.5 billion worth of gold) in the end amounting to $16 billion worth of gold flowing into the United States. 51
The following table, prepared by the Treasury Department in answer to an inquiry from Senator William Knowland in 1952, lists yearly gold flows to and from the United States:
Table 6: U.S. Gold Flows, 1934 - 1945
millions of dollars at $35/oz.)
Gold Stock 3
in Gold Stock
1. purchases of foreign gold (1933 - 1944) include gold from foreign governments, private holders, mines, refiners and others
2. sales data (1934
- 1939) include some made to non-governmental buyers in the UK
and French gold markets
3. discrepancies between the sum of purchase minus sales and the total listed under Change in Gold Stock are due to omission of data on domestic net receipts (newly mined domestic gold, domestic coin, and secondary gold, less sales to domestic industry). Prewar, the mean value was +176, range +118 (1934) to +231 (1940); during the war the mean value was +45, range -66 (1945) to +196 (1941)
4. total gold stock
includes gold in the Exchange Stabilization Fund
Unmistakably, gold was fleeing Europe before the war, and Europeans were receiving dollars for it. However, most gold was not coming directly from the Axis powers. A table prepared in connection with Stabilization Fund hearings in 1941 showed that from 1934 through 1940, the U.S. imported only $94,000 worth of gold from Germany, $60.5 million from Italy and $692.5 million from Japan.53 Relative to the increase in the U.S. gold stock from 1934 to 1940, all gold imported from Germany, Italy and Japan combined ($753 million) accounted for less than 5 percent of the total increase in the U.S. gold stock. In fact, three-quarters of the gold imported by the U.S. in 1940 came from only three countries: Canada (55 percent), the United Kingdom (14 percent) and France (5 percent).54
The volume of gold coming in troubled Treasury, which held internal discussions about embargoes or other means to stem the flow. But Henry Dexter White, head of the Division of Monetary Research, wrote to Secretary Morgenthau in May, 1939, that "there is very little we can do to reduce gold imports--except promote recovery here."55 White himself regarded gold as "the best medium of international exchange yet devised," one that served to insulate the U.S. domestic economy from foreign economic changes, and the medium of exchange par excellence since "every country in the world will sell goods for gold and no country will refuse gold in settlement of debt or in payment for services rendered."56
White was well aware that it was "the fear of war abroad with its concomitant likelihood of depreciation, strict exchange controls, and possible inflation or confiscation" that was prompting the massive inflow, and that people wanted to protect assets abroad from sequestration or wanted to buy American currency since that allowed them to "have funds in the form that can be easily hidden" from their governments.57 Eighty percent of the inflow was being put into short-term balances, suggesting that the dollars received for gold were being temporarily parked in U.S. accounts, some of which were probably then frozen.
The German invasion of France, Belgium and the Netherlands in May of 1940, prompted Mr. Pinsent, Financial Counselor at the British Embassy, to send a note to the Treasury Department to inquire of Mr. Morgenthau "whether he would be prepared to scrutinize the gold imports with a view to rejecting those suspected of German origin," as Pinsent explicitly feared that the private hoards of Dutch and Belgian gold might fall into German hands.58 In a June 4, 1940 memo, Henry Dexter White explained why the U.S. Treasury did not raise questions about the origin of "German" gold.
First, such gold could readily lose its identity by being used as payment in third countries. If Germany looted gold and resold it, the global cooperation needed to stop this movement simply did not exist. Second, Treasury had consistently taken the position before Congress that "it cannot effectively distinguish gold originating from any one foreign country."59 Third, Germany could claim its gold shipments were of its own prewar stocks, meaning gold would have to be refused not for its title but for political reasons. Fourth, discriminating against gold from Germany "will intensify Germany's propaganda against the usefulness of gold." The most effective contribution the United States could make to keep gold as an international exchange medium, White argued, "is to maintain its inviolability and the unquestioned acceptance of gold as a means of settling international balances."60
Indeed, six months later White would scornfully write of his "adamant opposition to give even serious consideration to proposals coming from those who know little of the subject that we stop purchasing gold, or that we stop buying the gold of any particular country, for this or for that or for any particular reason."61 In early 1941, White was asked again, through an internal Treasury memorandum, to consider the question "whose gold are we buying?"62 but from his memos it is clear that the answer was an "unquestioned acceptance of gold," regardless of origin.
Following application by an individual or business, Treasury issued licenses that could be either Specific (governing a particular transaction) or General (covering broader categories of transactions). General Licenses removed the need for FFC to investigate every transaction, and such licenses were functionally differentiated to apply to persons, geographic regions, or particular types of transactions. Entire categories of transactions were deemed acceptable, such as the payment of interest on securities, managing or liquidating property to meet expenses and taxes, servicing life insurance policies, and even sending remittances to persons in territories occupied by the enemy, though Treasury placed restrictions on those remittances and the amounts could not come from blocked accounts.63
Under "persons," Treasury designated individual nationals of blocked countries who had been residents of the United States for a certain period of time as "generally licensed nationals." These persons, as well as all residents in the United States, regardless of nationality or length of residence, could obtain a certain amount of money for living expenses, even from blocked accounts.64 Treasury also designated certain regions as "generally licensed trade areas." Such a designation permitted transactions to occur without restriction. In a modified example of this approach, Treasury granted general licenses to the four neutral countries (Switzerland, Sweden, Spain, Portugal), with provisos that transactions be certified by government, central bank, or designated agent, and that these transactions were not carried out on behalf of a blocked country or national. Under such a license, a Swiss national in Switzerland could
transfer funds from his account in a bank in New York to Credit Suisse in Switzerland to be used for the payment of goods which he is going to purchase in Switzerland. On the other hand, a German citizen in Switzerland...cannot...transfer funds in this manner for the same purpose.65
Yet Treasury wanted to disrupt economic life as little as possible, and during the war it approved 83 percent of all applications to conduct financial transactions under the freezing order.66 According to the Treasury Department, "from January 1942 to March 1945, transactions in assets totaling over $10 billion were authorized by specific license."67 This $10 billion represented 78 percent of the total amount of foreign-owned assets reported in the 1941 Census ($12.7 billion), and suggests Treasury's main concern was for the 20 percent or so of assets that were suspected of being under enemy control.
In spite of its generally positive approach, Treasury was ready to exert more onerous controls particularly over businesses owned by or which had close ties to enemy companies. Before 1933, German companies had commercial arrangements with American companies, such as exclusive sales contracts and patent-sharing, or had established subsidiaries in the United States, and while some of these involved legitimate business practices, others used mechanisms that lent themselves to concealment.68 For example, shares of stock that represented majority ownership and control of an American company would be transferred to holding companies in various countries in the form of bearer shares. Because the holding company's stock was both frequently traded, including to other holding companies, and ownership was anonymous, it was not possible to establish who actually controlled the shares.69 The Treasury Department also feared that German interests might use Swiss or Dutch companies as fronts for clandestine operations inside the United States.
Treasury possessed a variety of means to control blocked businesses. Its reporting requirements obliged such businesses to file affidavits containing detailed information about their organization, directors and officers, their relationships to other enterprises, their principal customers and their capital structure. Armed with this information, Treasury could determine whether or not to license a given business to continue operations. As a condition for granting such licenses, Treasury could mandate changes in organizational structure, require that executives or employees be dismissed, or make the enterprise break off relations with certain customers. Treasury could also deny the renewal of a license.70 More intrusively, government "intervenors" could be placed directly inside firms to supervise or reorganize the business, including severing contracts and preventing trades, or liquidating stock. By withholding a license, Treasury could prevent a company owned or controlled by an Axis power from operating at all and could force a sale of its assets: government representatives would be placed on the premises to supervise the liquidation. By mid-1942, Treasury had liquidated about 500 enterprises, many of them banks and insurance companies,71 and the funds remaining from the sales, after creditors had been paid, went into blocked accounts.72
In short, exerting control over foreign funds entailed a variety of discrete if interconnected acts. The basic policy decision to freeze assets predated the U.S. declaration of war, but each German act to invade or control new territory engendered a new response from Washington as well as an additional presidential executive order. For Treasury to exert control over foreign-controlled assets necessitated first gathering detailed information about the extent and ownership of such assets through a census. Then a licensing system to allow scrutiny of asset transactions had to be devised and implemented. In practice, the vast majority of transactions were permitted, albeit Treasury had at its disposal intrusive control measures when it suspected enemy interests might be involved in a transaction.
Readily fungible assets like bearer securities and gold were particularly troublesome, as the U.S. wartime expedient of certifying the legitimacy of transactions in such assets obscured their looting by Germans, or the duress under which such assets had changed hands (or been converted to cash) in Europe. The restitution of such assets even to their countries of issue would remain a contentious matter long after the end of the war. Yet in all of this, the U.S. concern was to keep property out of the hands of the enemy, and if possible even to preserve the property and rights of legitimate asset holders. Legitimate asset holders may well have included victims, though the focus was on the enemy, and explicit distinctions between victim and non-victim were rarely drawn during the war.
Aliens, Nationals, Enemies, Friends
The specific concern for victims was obscured, though not entirely absent, during the war because political interests and overlapping definitions were at play in domestic law and policy. Treasury was concerned about foreign enemies trying to liquidate assets in the United States, but the Justice Department cared about enemies in (or trying to enter) the country to subvert the U.S. war effort. As one consequence of these differing concerns, definitions of "enemy" varied from one act to another, in turn creating contradictory regulations that had the effect of increasing the discretionary power of government.73
Victims and non-victims alike faced a patchwork of policy and regulations. For an individual, much depended upon whether he or she was classified as enemy or friendly alien, naturalized or non-naturalized, resident or refugee, or as domiciled in the United States or abroad. Yet cutting through these categories were high-level political and legal judgments that certain groups posed no threat, that demonstrated loyalty meant more than formal citizenship, and that even stateless refugees had legal rights. In short, those who had been victimized abroad found themselves categorized in the United States in ways that limited their liberty, including access to their assets, but they could equally well find that some of the very distinctions that were drawn for other wartime purposes worked to their benefit.
Numbers and Definitions
The U.S. government's 1940 Alien Registration Program found 4.9 million aliens in the United States, more than 70 percent of whom (or 3.4 million) had arrived before 1924. About 73 percent of these 4.9 million were from "Europe." 74 The five largest nationality groups, accounting for 60 percent of the European total were, in descending order, Italians, Poles, Russians, Germans, and British. Thus, at the beginning of World War II there was a substantial cohort of long-term resident aliens who had come from Europe.
As for those from Axis countries, the 1940 Census found 1.2 million residents of German birth, 1.6 million of Italian birth, and 127,000 of Japanese birth. In each group, only a minority were not naturalized American citizens. 75 The same was true of individuals from Axis-invaded countries: a 1942 tally found that only 36 percent of the 2.3 million foreign-born residents from these countries were still aliens. 76 A 1942 estimate put the number of refugees from Europe who had arrived in the United States since 1933 at 250,000. 77 Within the United States, of those born in Axis countries, only about one-third still had Axis citizenship.
But executive orders made it unclear whose assets were meant to be controlled. The first freezing order in 1940, applied to "nationals" of a blocked foreign country, with "national" defined as "any person who has been domiciled in, or a subject, citizen, or resident of a foreign country at any time on or since the effective date of this Order." 78 German Jews and some other refugees made stateless by the Nazis did "not cease to be nationals of such country merely by reason of such cancellation or revocation of citizenship," at least so far as Treasury was concerned. 79 But the freezing order also gave the Secretary of the Treasury full power to determine "that any person is or shall be deemed to be a 'national' within the meaning of this definition." 80 Thus a "national" by the first two statements might be defined by the criteria of former or present foreign domicile and foreign citizenship (even if revoked), yet by the third statement a national could be defined simply through the discretionary power of the Secretary. Subsequent executive orders did not clarify matters. They defined "national" to include foreign nationals who were resident in the United States as in June 1941, or, as in July 1942, defined "national" as "any person in any place under the control of a designated enemy country" with which the U.S. was at war. 81 The first appeared to make citizenship key regardless of domicile, while the second seemed to make both citizenship and domicile irrelevant since it was enemy control that mattered. By contrast, Treasury's General License No. 42 declared that any individual residing in the United States as of February 23, 1942 (including a stateless refugee) was a generally licensed national. Not only did this allow for liberties over assets, it meant that domicile rather than citizenship mattered. 82
There are several explanations for this apparent arbitrariness. First, definitions are confined to the act or regulation in which they appear, and Treasury's interpretations do not appear to have tracked executive orders. Second, contradictions in definitions permitted a kind of "ad hoc blocking" to be imposed if necessary. 83 Third, the point of freezing was to control a potential problem rather than to prohibit all trade. Foreign Funds Control "never intended to subject all individuals within the United States who were nationals as defined in the Order" to its control but rather to draw a distinction between the smaller group of those suspected of "carrying on activities inimical to the public interest" and the much larger group of those "whose activities were clearly above suspicion." 84
Alien Enemies: Restrictions and Rights
The freezing orders and Treasury interpretations define "nationals"--not "enemies." Understanding the difference prompted one commentator in 1943 to note that "Congress may want to make a distinction in favor of those German nationals who are the enemy's most cruelly persecuted victims and to whom it must seem a bitter irony to find themselves treated as our enemies." 85 The reason for this assertion was that the Alien Enemy Act of 1940 had declared that all resident natives, citizens, denizens, or subjects of a country with which the United States is at war and who are not naturalized are liable to be apprehended, restrained, secured, and removed as "alien enemies" in or from the United States. 86 That included Germany's "most cruelly persecuted victims" who had fled to the United States as refugees. The Trading with the Enemy Act had by contrast defined an "enemy" as a person resident within the territory with which the United States is at war, which meant that "enemy" was defined as a nonresident of the United States. 87 As a consequence, "alien enemies in this country [U.S.] are not considered enemies for the purpose of trading with the enemy measures." 88
In December 1941, President Roosevelt issued three proclamations placing restraints on aliens of German, Italian, and Japanese nationality. The restrictions included prohibitions on owning cameras, short wave radios, firearms and explosives, exclusion from living in certain areas, travel restrictions (alien enemies were not permitted to take airplane flights and needed written authorization for trips outside their district), restrictions on changing name, residence, or employment, and a requirement to apply for and carry identification certificates at all times. 89
Though the intent of these restrictions was clearly to restrict subversion, the difficulty, as the Commissioner on Immigration and Naturalization Earl Harrison noted in April 1942, was that "alien enemies" thereby included
persons who have actually fought in battle against Hitler forces; it includes a great many who have bitterly opposed Hitler and Nazism and Fascism in civilian life for years; it includes many who have been in foreign concentration camps, had their property appropriated and their German citizenship revoked; it includes some who...[have] been classified as friendly aliens in England; it encompasses many who do not recall any country other than the United States and whose American born children are now serving in the American army. 90
Others, too, reiterated Harrison's point at the time. 91 The implication was that nominal citizenship mattered much less than loyalty to the United States, particularly if it was "honestly-determined loyalty of the individual rather than his assumed loyalty." 92
The category of "enemy alien" also was not as comprehensive as it might have been. Austrians, Austro-Hungarians, and Koreans, for example, were not defined as alien enemies, nor were former Germans, Japanese, or Italians who had become naturalized citizens of neutral or friendly countries. 93 Executive Order No. 9106 (March 20, 1942) excepted persons Attorney General Francis Biddle had certified, after investigation, as loyal to the United States, specifically for the purpose of allowing such persons to apply for naturalization. 94 On Columbus Day (October 14) in 1942, Biddle also announced that the more than 600,000 resident Italian aliens would henceforth be exempt from the restrictions placed on enemy aliens, and subsequently issued the relevant orders making it so. 95
Soon after Pearl Harbor, Attorney General Biddle made several strong statements in favor of tolerating "all peaceful and law-abiding aliens," reassuring non-citizens that the U.S. government would not interfere with them "so long as they conduct themselves in accordance with the law." 96 Common law and legal precedent established the general rule that for aliens, "lawful residence implies protection, and a capacity to sue and be sued" unless that right was expressly withheld by law. 97 This general rule was reaffirmed in the case of Kaufmann v. Eisenberg and City of New York (1942) 98 with the words "the right of a resident enemy alien to sue in the civil courts like a citizen has been accorded recognition under the generally accepted rule," a ruling reaffirmed by Attorney General Biddle who stated in a Justice Department press release that "no native, citizen, or subject of any nation with which the United States is at war and who is resident in the United States is precluded by federal statute or regulations from suing in federal or state courts." 99 Thus, even those formally designated as "enemy aliens" could have their day in court. 100
Despite long residence in the U.S. or demonstrated loyalty, even some "friendly aliens" saw their property confiscated. 101 However, their right to just compensation, in keeping with the Fifth Amendment, had been affirmed several times by the Supreme Court in the 1930s and was reiterated after World War II. 102 Lower courts clearly affirmed the right of friendly aliens to be given the same treatment as citizens, to recover their property in kind or sue for its return, 103 or be provided administrative means to do so. 104 Thus, being defined as "friendly" rather than "enemy" was important for the recovery of assets, and all "aliens" had recourse to the courts.
Aliens and Real Property
Though the Treasury Department granted "generally licensed" status to resident aliens in February 1942, New York and some other states reserved to themselves the power to escheat property, which meant the state took control over real property upon the death of the owner, particularly if there were no heirs to claim it. 105 Under Section 10 of New York's Real Property Law (1913), a statutory provision held that "alien friends are empowered to take, hold, transmit and dispose of real property within this state in the same manner as native-born citizens," 106 and Judge Benjamin Cardozo in Techt v. Hughes (1920) subsequently defined "alien friends" as "citizens or subjects of a nation with which the United States is at peace." 107 That explicitly excluded citizens of countries with which the United States was at war, 108 so that a real property title held by an "alien enemy" in 1942 would "upon his death immediately escheat" as long as there were no heirs. 109 The New York Public Lands Law had "provided machinery whereby the putative 'heirs' of an alien enemy may secure, at a very favorable price, a release of escheated lands." 110
But all was not as it appeared, and key political figures were quite aware of predicaments stateless refugees could face. Already on July 1, 1942, New York State Attorney General Bennett, in an informal letter opinion to the Jewish Agricultural Society, Inc., suggested that those deprived of German citizenship by German law should be regarded as "alien friends." 111 By March 22, 1944, the New York State Legislature had abolished the disabilities "alien enemies" had under the New York Real Property Law by the simple expedient of deleting the word "friends" from the statute. 112 In making this change, the legislature may have been responding to the many long-term resident aliens in the state who "were unquestionably 'alien friends' " but were facing an inheritance law that was at best "only a dubious means of enriching the state at the expense of harmless and innocent people." 113 The result of the legislative change was to permit all aliens to hold and will to heirs real property in the same manner as citizens. 114 While this may not have prevented the escheating of Holocaust victim property when there were no heirs, it also indicates that even during war, states removed some of the legal disabilities aliens faced. Inheritance, of course, became complex when it was a matter of alien heirs resident in the United States from decedents who were citizens of enemy or enemy-occupied countries, though authentication systems for foreign records were developed even in the New York State court system. 115
Victims in Europe
FFC took positive steps to assist victims in Europe. In 1942, initial inquiries about licenses were made
for the purpose of providing funds for getting persons out of enemy or enemy occupied areas....Thereafter we [FFC] approved applications for licenses to effect remittance in reasonable amounts to neutral areas on behalf of prospective emigrants from enemy territory....During 1943, we were receiving reports of the character of the German treatment of refugees, particularly Jews, throughout the areas under their control. 116
Despite Treasury restrictions under General Ruling 11 that explicitly prohibited communication with enemy territory as well as financial transactions with those in enemy territory, FFC "re-examined our general trading with the enemy policy...to permit operations designed to bring relief to particularly oppressed groups in enemy territory." 117 These included funding underground organizations, supporting U.S. organizations that could conduct relief operations in enemy territory, and establishing safeguards to keep funds from falling into enemy hands. "In view of the policy of the enemy to annihilate certain minority groups either by slaughter or starvation, operations to bring relief [would further the] fundamental objectives of the United Nations." Accordingly, FFC decided it "should permit certain responsible groups to enter into arrangements to bring some relief to groups in enemy territory." 118 FFC thus authorized the Legation in Bern to give the World Jewish Congress a license permitting it to obtain local currency to help in the evacuation of refugees, and allowed it to communicate with enemy territory. This license was subsequently amended to permit acquiring currency "from persons in enemy or enemy-occupied territory against payment in free currency rates" in order to "assist in the evacuation of victims of Nazi aggression," a policy cleared through "Treasury and other Departments of the [U.S.] government." 119 The Treasury Department deliberately made an exception to its restrictive policies in order to provide aid to victims.
"Vesting" Assets and the Office of Alien Property Custodian
Creation of the Office of Alien Property Custodian
Congress considerably expanded the President's regulatory power when it passed the First War Powers Act on December 18, 1941, giving the Chief Executive the power to "vest" (seize, or take over the title to) the property--including businesses--of any foreign country or national. 120 While the power to freeze left the title with the original owners, with "vesting," title passed into the hands of the U.S. government, with the declaration that seized property could be used for the benefit of the United States. 121 The Office of Alien Property Custodian (APC) would be given far more direct power over businesses than the Department of the Treasury had been granted, though it would be exercised over far fewer businesses. 122
President Roosevelt could not easily bring APC to life because the precedent was inauspicious. An Alien Property Custodian had been appointed during World War I, but the office had been scandal-ridden, and one custodian had even gone to prison in the wake of a postwar congressional investigation. 123 The first Custodian's Office was abolished in May 1934, but its remaining functions were still being carried out by the Alien Property Division in the Justice Department in early 1941. 124 The Attorney General lobbied Roosevelt to have a new custodian appointed in the Justice Department, but the Secretary of the Treasury did not want the functions of FFC to be undermined, and any new custodian would also have to take over the alien property issues that still remained from World War I. The APC was finally launched as an independent agency on March 11, 1942 by Executive Order 9095. It was placed in the Office for Emergency Management of the Executive Office of the President and its function was to seize or vest and take over the ownership of certain types of enemy property that was not already frozen or blocked and regulated by the Treasury Department.
The Process of Vesting
Within APC, an Investigations Division looked for property that should be seized. 125 Much of its information came at first from Treasury's 1941 Census of Foreign-Owned Assets, though the Custodian's office also relied on the Justice Department, OSS and other intelligence agencies, the Securities and Exchange Commission, and the Patent Office. 126 The Investigations Division then made recommendations to the Executive Committee, chaired by the Deputy Custodian, and that committee made recommendations to the custodian. The final decision to vest lay with the custodian.
If a vesting order was issued and published in the Federal Register, that transfer of title was immediately and summarily effectuated. 127 Vesting, however, was not the only option available, for the custodian could also provide for "direction, management, supervision, and control" without transferring ownership, an option particularly suited for the vesting of business enterprises. General Orders, usually relating to specific classes of property, were also issued, requiring specific action on the part of persons who held an interest in the asset in question. 128
The Custodian's Office also established mechanisms so that if a mistake was made in the decision to vest, "every American and friendly alien [was] given opportunity to show that his rights [had] been infringed." 129 The operating principle was that "mistakes against our friends could be corrected, but mistakes in favor of our enemies might be fatal." 130 Any person other than "a national of a designated enemy country" could assert and file a claim with the Alien Property Custodian, requesting a hearing within a year from the time the vesting order was issued. Claims were heard by the Vesting Property Claims Committee. The committee, set up on July 22, 1943, found itself busy, processing more than 2,000 claims within a year of its establishment. 131 Once the committee had reviewed a claim, it passed its recommendations to the Alien Property Custodian. Some contemporaries remarked that because the custodian had appointed the committee members, this process made him "judge and defendant in his own case." 132 Others, however, believed that the procedure met "the basic constitutional requirements for administrative review." 133
become of property taken under control was not always clear, and
the wording of the vesting orders themselves left open what would
happen to the property. The orders read that property and its
proceeds "shall be held in a special account pending further
determination of the Alien Property Custodian." That determination
might include returning the property, returning the proceeds from
the sale of the property, or paying compensation for it "if
and when it should be determined that such return should be made
or such compensation should be paid." Vesting, however, could
also mean property could be "administered, liquidated, sold
or otherwise dealt with in the interest of and for the benefit
of the United States," and that could mean a determination
that nothing would be returned. 134 It was also possible
to interpret the power to vest merely as an act of custody. The
press release accompanying Vesting Order No.1 (Feb. 16, 1942)
stated that vested property was to be considered as "sequestered."
135 The precedent of World War I could be read two ways
as well, either implying confiscation--since the Supreme Court
had held in 1924 that the end of World War I did not bring with
it a right to have property returned 136 --or implying
a return of the proceeds, since alien properties had been sold
but most of the proceeds
subsequentlyreturned to the former owners. 137 The ultimate disposition of vested property remained unclear during the war, and in any case was a matter for Congress to decide.
Faced with this uncertainty over eventual disposition, the Alien Property Custodian equivocated. 138 In the case of vested businesses, some were sold but others were run as going concerns, sometimes with salaried employees of the APC acting in supervisory or directorial capacities, as much for lack of skilled and competent managers as out of fear of enemy influence. On the other hand, the Custodian's Office really did not want to assume the direct responsibility for everything from methods of production to labor relations, arguing that "activities of this character are foreign to the effective operation of the Custodian's Office as an agency of the government." 139 Assets were also treated selectively, since not all assets were readily convertible into cash, or even if they were, equally valuable. Thus, patents were ordinarily vested but mortgages and life insurance policies were not. The general rule of selling vested property at public sales (by General Order 26, of June 9, 1943) by sealed written bids was hedged with all kinds of exceptions: property worth less than $10,000 might be sold privately or not advertised for sale; brokers might be used in exceptional circumstances; some classes of persons (such as those on the Proclaimed List) would not be permitted to buy; perishable commodities or property that was expensive to retain might be disposed of through privately arranged sales; and some property could not find willing buyers at the assessed value.
The most useful and pragmatic solution, the APC argued, was to convert vested property (other than patents and copyrights) into cash and hold it in separate accounts, pending Congressional decision about settlement, and the decision to sell at the best price was compatible with a decision to provide full compensation since "the original owners are in general interested not in specific pieces of property but in the economic value of their property as a source of income." 140 Whether this assumption was justified, at least in 1944, "it seems certain...that provisions will be made for the return of property to nationals of non-enemy countries." 141 The provision of separate accounts of course also made it easier to return vested property.
Evaluating the Property Taken Under Control
Because so much property in so many different asset categories was seized from enemy nationals for the war production effort, it is likely that some victims' assets were inadvertently taken in the process. Knowing the extent of the value of all assets taken was important at the time: it provided a basis for Congressional decisions about future disposition. For individuals or companies whose assets were seized, the value would become part of the claim for return that could be filed, including for the return of property seized in error. The vesting program is also one of the instances where the property of individuals was taken by the U.S. government, though there is evidence that some of that property was also returned. That intellectual property formed a large part of the assets seized adds still another dimension.
In many ways, the APC resembled a holding company, not only because it controlled assets of considerably greater value than its ownership equity in them, but also because of the wide variety of property involved. 142 The Custodian was the majority stockholder of corporations producing cameras, dyestuffs, potash, pharmaceuticals, scientific instruments, and alcoholic beverages, but was also in charge of guardianship estates of Japanese children born in the United States who had been sent to Japan for their education. The Custodian's Office held the largest patent pool in the country, and it vested over 200,000 copyrights during the war. It also controlled dairies, banks, and retail stores. It was the successor to the enemy heirs of more than 2,000 American residents whose estates held cash, real property, jewelry, securities, and other valuables, but it was also in charge of "bankrupt enterprises, damaged merchandise, rural wasteland, and bad debts."143
Copyrights, Trademarks, and Patents
Copyrights, trademarks, and patents are structurally similar, as they protect an exclusive legal right, whether to make, use, or sell an invention (in the case of a patent), to reproduce, publish, and sell a literary, musical, or artistic work (in the case of a copyright), or to reserve the use of the owner as maker or seller (in the case of a trademark). Put more precisely, at least in the case of a patented invention, it "confers the right to secure the enforcement power of the state in excluding unauthorized persons, for a specified number of years, from making commercial use" of it. 144 In the context of the U.S. control of assets during wartime, however, a difference was drawn in practice, because while only selected copyrights and trademarks were vested, "all patents of nationals of enemy and enemy-occupied countries" were vested.145
Copyrights. U.S. copyright protection was limited in scope for foreign holders, largely out of protectionist impulses. In the early 1940s, Congress had
sought copyright monopoly for United States authors in other countries; but reciprocal protection in the United States could only be obtained on condition that for the most part copyrighted works should be manufactured in the United States. Thus, the text of a book published in another country would have to be re-set in type and wholly reproduced in this country or else be open to piracy by publishers here without any legal remedy by the holders of the violated copyright.146
As a result, even before APC began to vest copyrights, protection for non-U.S. authors was weak unless they had prewar agreements to produce their works in the United States. In any case, the freezing order had included copyrights, trademarks, and patents, and they had to be reported in the 1941 Census of Foreign-Owned Assets even if the value was less than $1,000.147
For the custodian, the operative principle in deciding to vest a copyright was whether a work had financial value or was of importance to the war effort. The latter reason justified taking copyright title not just from the nationals of enemy countries but also from nationals in enemy-occupied countries, which of course meant that the copyrights of victims might also be seized as no distinction was drawn at the time of vesting.148 In a tally covering the wartime vesting period (March 11, 1942, to June 30, 1945), 120,690 of the nationally identifiable copyright interests vested were in fact for sheet music, 82 percent of which were in the hands of French and Italian music publishers. This is why almost all of the $1 million in copyright royalties paid and collected by the custodian in this period were the result of prewar contracts, and why the lions' share went to French (49 percent) and Italian (17 percent) publishers and copyright holders.149 Thus, Claude Debussy's Clair de Lune, used in the film Frenchman's Creek, brought royalties to the APC, as did performances of Puccini's La Boheme, Tosca, and Madame Butterfly. Even the German war song "Lili Marlene" brought in $10,000 in royalties by 1945 under the 23 licenses that were granted for its use in films, radio, on stage, and as sheet music.150
A more direct connection to the war effort was the licensing and republication of important German books and periodicals in metallurgy, physics, mathematics, medicine, and chemistry.151 One of the most significant works was Friedrich Beilstein's Handbuch der organischen Chemie, originally published in 59 volumes at a cost of $2,000, but now made available in the United States in a photo-offset reprint for only $400, and a work on which the Custodian's Office collected nearly $41,000 in royalties.152 By January 1, 1945, the Office had also "reprinted one or more volumes of approximately 100 different scientific periodicals, chiefly German," mostly for industrial concerns or research institutions and universities. The republication of articles from Die Naturwissenschaften and the Zeitschrift für Physik were regarded as "one of the factors which made the atomic bomb possible" by some of the American scientists involved in its development.153
However, the most surprising is the list of European authors whose works were vested, including Henri Bergson, Karl Capek, Madame Curie, Georges Clemenceau, André Gide, André Malraux, Guy de Maupassant, Baroness Orczy, Romain Rolland, Edmund Rostand, and Georges Simenon. "Among French books, the gay Babar elephant stories for children enjoy great popularity," one learns, and "the Seven Gothic Tales and Winter's Tales, by the Danish Baroness Blixen, earned substantial amounts in royalties collected by the Office."154 However, Baroness Blixen's copyrights, including those to Out of Africa, were returned to her at the end of 1950, along with $33,558.67 in royalties.155
The number of victims whose copyright royalties were seized is unknown, but those who were victimized by the Nazis might have taken some satisfaction in knowing that one particular author did not see any of his royalties. Adolf Hitler's Mein Kampf, a work first published in the United States in 1933, had its copyright vested, and the royalties--totaling $20,580 by June 30, 1945--were held in an account in the name of Franz Eher, the publisher of Hitler and the Nazi Party. A dry note was added to the Custodian's 1944 Annual Report that "the ultimate disposition of Hitler's royalties, as of all other property in the hands of the Custodian, remains to be decided by the Congress."156
Trademarks. Trademarks, as devices that on the one hand imply a right to exclude others from using a name or symbol, and on the other hand try to provide assurances of goodwill (or an absence of deceptive practices) on the part of a business, are difficult to value in terms of dollars, let alone for war purposes. Dealing with trademarks nevertheless was part of a strategy to encourage a negative attitude towards the enemy:
A trademark belonging to an Axis business enterprise represents an investment in good will, and is part of that enterprise's enduring roots in the country. Disposition of an enterprise should include the disposition of the trademark as well. Destruction of a trademark might be the best method of disposition.157
Anti-enemy sentiment was fanned by assertions such as "every time an American bought a box of headache remedy with a certain trademark a few cents were added to the German coffers,"158 whether or not such statements were accurate.
Many trademarks went unused, as was true of the more than 7,000 trademarks in the names of nationals in enemy or enemy-occupied countries that were registered in the United States in 1944. By June 30, 1945, only 412 trademarks had been vested, 325 (79 percent) of which were owned by vested enterprises, and 357 (87 percent) of which were German.159 An opinion of the General Counsel of the APC on July 22, 1943, stated bluntly that "unless the business and good will in connection with which a particular trademark is used are vested, a vesting of the trademark gives the Custodian nothing."160 Furthermore, 47 percent of the vested trademarks were for cosmetic and soap products, and only 27 percent were for products, such as medicines, pharmaceuticals, chemicals, and scientific appliances, that were potentially useful for war purposes.161 By June 30, 1945, only $568,000 had been collected by the APC in trademark contracts.162
Patents. Patents and their role in controlling the market through monopolies and cartels had been an issue long before the war. "The interchange of patents between American and foreign concerns," one journalist had argued,
has been used as a means of cartelizing an industry to effectively displace competition. The production of...beryllium, magnesium, optical glass and chemicals has been restrained through international patent controls and cross-licensing which have divided the world market into closed areas.163
Indeed, the control or restraint of world trade through patent arrangements formed a prominent part of the Kilgore Committee hearings in the Senate in 1943 and 1944, with numerous antitrust cases subsequently filed against U.S. companies alleging "German control over our industry."164 In light of prewar arrangements between I.G. Farben and Du Pont (1925) and between I.G. Farben and Standard Oil of New Jersey (1927), such concerns appeared warranted 165 --though the warnings of the danger sometimes verged on the hysterical.166 Custodian Leo Crowley made clear the continuity between prewar cartels and wartime use of patents when he told the Senate that "the primary purpose of vesting and administering foreign-owned patents is to break any restrictive holds which these patents may have on American industry, particularly restrictions which may operate to impede war production."167
Soon after the Alien Property Custodian's office was established, it launched an investigation into patents, patent applications and patent contracts, in order to vest all that were "owned by persons in enemy and enemy-occupied countries," other than those in which a bona fide American interest existed. General Orders 2 and 3 (both June 15, 1942) of the Alien Property Custodian had already required the filing of a report by anyone claiming right, title, or interest to a patent granted to a "designated foreign national" since January 1, 1939, as well as a declaration that the patent holder was not at present residing in an enemy or enemy-occupied country. Armed with this information, the Office was able to exclude patents that needed more investigation to determine how much they were controlled by American interests. On December 7, 1942, the President sent a letter to the Custodian directing his Office "to seize all patents controlled by the enemy, regardless of nominal ownership, and make the patents freely available to American industry, first for war purposes of the United Nations, and second for general use in the national interest."168
By the end of 1942, about 35,000 patents "presumed to be enemy owned or controlled" were vested.169 A comprehensive list, organized into 110 different classifications, indicated a total of 36,675 patents vested by January 1, 1943, with the classifications ranging from a high of 1,998 patents vested in "radiant energy" and 1,607 in "chemistry, carbon compounds" down to two patents for fences and a single patent for needle and pin making.170 By June 30, 1945, a total of 46,442 patents, patent applications, and unpatented inventions from nationals of enemy and enemy-occupied countries had been vested.171 Of these 46,442, the vast majority (42,726) were patents, 64 percent of which were held by German owners. By June 30, 1945, about 6,000 of these 42,726 patents had expired, and patents held by Italian nationals as well as by Europeans in liberated countries were no longer vested after September 1944, so the effective number of "live patents" by 1945 was around 36,700, close to the number of patents vested by the end of 1942.172 The Census of Foreign-Owned Assets in 1941 had indicated a total of around 65,000 foreign-held patents and agreements related to patents,173 so only slightly more than half of all foreign-held patents were actually vested by the APC.
In making them "freely available," patents held by enemies were made royalty-free (so no profit went to the enemy), nonexclusive, and revocable (so no one using the patent could benefit from the value accruing to an exclusive right), and were licensed after the payment of a small fee. All of this was "tantamount to the destruction of the right."174 For patents held by nationals of enemy-occupied countries, licensing was more complex. Initially, the Custodian issued royalty-free licenses for the duration of the war plus six months, but after several governments-in-exile protested, in 1944 this policy was changed to provide for licensing with "reasonable royalties" from the date of licensing, unless it was a license for war production. As countries were liberated, the policy changed again "because the nationals of the liberated countries now could carry on negotiations themselves" over patents.175
The total number of licenses actually granted under patents vested from nationals of enemy countries was very small, likely because of the complications that were feared once the patents were returned to their owners at the end of the war.176 APC made considerable efforts to let potential users know about the technical information in the vested patents,177 but the Office was hampered by the nature of patents themselves: many patents are taken out based on laboratory findings rather than commercial applicability, patents become obsolete, patents can be unworkable owing to lack of resources, and patents can be encumbered by prewar contracts and commitments. Thus in practice, only about two-thirds of the vested patents were licenseable, and of these 22,000, licenses were in fact granted under only 7,343 different patents--2,000 of them to a single firm.178
But if only about a third of the available patents were actually exploited in the United States, the following (selected) list of products manufactured under vested patent licenses by the end of 1944 gives a sense of which patents were of greatest interest: 42 million gallons of nitration-grade toluene (for explosives and aviation fuel), 66 million pounds of processed tin, 23 million pounds of polyvinyl chloride, 320 thousand feet of steel cable, 500 propeller blades, 450 thousand barrels of cement, and 110 thousand dozen pairs of ladies hosiery.179
A different list from mid-1943 highlights those patents that in some manner were used to create products that contributed to the war effort:
Typical licenses already issued are for high explosives, collapsible boats for the Navy, fire-fighting material, power transmission, intermediates for pharmaceuticals, a magnetic alloy composition, aluminum production, surgical bandages, electrical current amplifiers, synthetic resuscitants, machine tools, camera equipment, and die presses and machines for stretching and drawing metal.180
That not more than a third of the available vested patents were used was attributed to the revocability of the licensed patents, the absence of exclusivity and royalties, or the use by "big business" of these patents. In the view of the Custodian's Office, the "real explanation for the existence of unused vested patents is that they are not commercially valuable" even if they were helpful in certain aspects of war production.181 But patents had to be put to work, as "our friends in the occupied countries would hardly have us do less than to turn their patent rights into active weapons of warfare for the defeat of their oppressors."182 Thus, even if victims were seeing their patent rights seized, the APC wanted to reassure them that they were being put to good use.
By the end of June, 1945, $8.3 million in patent royalties had been collected under vested patents and patent contracts, two-thirds of them German. Half of the $8.3 million total had accrued prior to vesting,183 indicating that the APC was merely continuing with freezing and immobilizing the financial assets represented by patents, while it tried to disseminate the information patents contained for use in manufacturing and in the war effort.
Businesses, Real and Personal Property, Estates and Trusts
Other property categories vested by the APC were easier to estimate in monetary terms than patents or copyrights. The following table highlights the major asset categories:
Table 7: Net Equity Vested by the Custodian,
Ranked by Largest Type of Property 184
(Domestic Assets Only, As of June 30, 1945)
|By Specific Type of Property||
|Vested businesses: stock||
|Vested businesses: equity||
|Estates and trusts: trusts under wills||
|Estates and trusts: decedents' estates||
|Vested businesses: notes/accounts receivable||
|Estates and trusts: inter vivos trusts||
|Personal property: bonds||
|Real property: real estate||
|Personal property: notes, claims, credits||
|Estates and trusts: guardianship estates||
By Category Percent
|Vested business enterprises||
|Estates and trusts||
|Other (real and personal property; royalties)||
By Nationality of Former Ownership
Businesses. Business enterprises in the United States were the single largest individual form of property in dollar terms controlled by nationals of enemy countries--$151 million of the $208 million vested in the Custodian.185 A total of 408 enterprises, 71 percent of them corporations, with assets amounting to $390 million, had their interests vested from 1942 to 1945. Of these 408, 200 (49 percent) were German-owned, 169 (17 percent) were Japanese-owned, and 33 (8 percent) were Italian-owned.186 Control was typically exerted through the acquisition of enough voting shares to exert dominant control, such that 61 percent of the 408 enterprises had 50 percent or more of their voting stock controlled by the Custodian.187 In terms of categories of enterprises, those with the largest book value were chemical manufacturers (21 companies, most of them German, with total assets worth $162 million), but the largest single group was in wholesale trade (153 companies, mostly small, with total assets worth $45 million).188 So though chemical manufacturers accounted for only 5 percent of the companies, they represented 41 percent of the assets vested, while wholesale trade accounted for 37 percent of the companies but only 11 percent of the assets vested.
If a business could be run profitably and perform useful functions, it was operated as a going concern. As of June 30, 1945, 117 of the 408 enterprises were operating with total assets of $257 million as of that date, the most important of which (in terms of total sales as well as sales of war products) were again the chemical manufacturers.189 The remaining 291 enterprises were placed in liquidation, many of them having depended on trade with enemy countries (e.g., import/export firms, steamship companies). Relative to the amount realized, it can hardly be said that the United States profited much from the seizure of these businesses.190
Real Property and Tangible Personal Property. A small amount of real property ($4.3 million) was vested during the wartime operation of the Custodian's Office, of which German-owned properties were the largest ($2.3 million) by nationality. Most (worth $3.5 million) of this property was urban and consisted of either single dwellings or commercial buildings (319 and 96 of the 622 properties vested, respectively), though ten small hotels and rooming houses as well as two Japanese Shinto temples were also vested.191 One-third of the properties were on the eastern seaboard, though there were properties scattered across the country.192 Sales proceeds from properties, though 11 percent better than their appraised value, yielded only slightly more than $2 million.
As with the sale of vested businesses, there were difficulties in selling vested property, ranging from title insurance problems (affecting 81 real estate parcels) to political considerations (the sale of 98 real estate parcels vested from Italian and Austrian nationals, for example, was discontinued at the request of the State Department).193 Vested tangible personal property was even more difficult to sell. The Custodian's annual report for 1943, for example, noted with some satisfaction that the Office had found "two carloads of steel bars owned by an Italian concern, which had stood on a siding in the New Jersey freight yards for almost 2 years," and that these were thereupon vested.194 But though the Custodian "offered at public sale 77,161 pounds of steel bars vested from Alfa-Romeo" on April 3, 1944 (possibly these same bars), valued at $24,000, no buyers could be found at that price. In fact, the highest bid the Custodian received was $825. The warehouse where the bars were stored was urgently needed for other war purposes, and moving the bars would have cost $400, so the Custodian settled for the best price obtainable in September 1944: $1,375.195 Of course, while this kind of property might end up being sold at steep discounts "or even at scrap value," personal property such as jewelry or art objects might sell for a third more than their appraised value. Total tangible personal property vested amounted to only $901,000 and sale proceeds by June 30, 1945 were only $452,000.196
Estates and Trusts. From March 11, 1942 until June 30, 1945, the Custodian vested a total of just under 2,997 estates and trusts, worth an estimated $41.1 million. Of that total, 77 percent (2,330) were formerly German-owned, constituting 82 percent ($33.6 million) of the total, the vast majority of which (1708) were decedents' estates and trusts under wills (541), valued at $11.7 and $17.1 million respectively197 . Distribution to the Custodian from executors, trustees, and fiduciaries of estates reached $13 million by mid-1945, nearly all of which came from decedents' estates and trusts under wills.
Heirs and executors could find themselves brought up short by the fact that the Custodian's determinations as to property and survivorship were conclusive. That was despite the fact that survivorship was "often extremely difficult, and not infrequently insoluble" to determine when a legatee was an enemy national resident in an enemy country.198 Complicating matters were contradictory legal rulings: some cases stated that lack of evidence of death created a presumption that heirs were still alive, while other cases declared the presumption did not exist owing to the ravages of war.199
Some securities from the distribution of estates and trusts or from the assets of vested enterprises were also vested, $1.8 million worth of stocks and $4.8 million worth of bonds, with more than three-fourths of the latter U.S. government bonds.200 As of June 30, 1945, the Custodian still held $871,000 worth of stocks and $2.2 million worth of bonds, indicating that $3 million realized from these sales was less than half of their total value of $6.6 million.201
The Postwar Period
Postwar Vesting and Return of Assets
Though Germany capitulated on May 8, 1945, the official cessation of hostilities was only proclaimed on December 31, 1946, and the official declaration of the end of the state of war between the United States and Germany came only on October 25, 1951. Thus, at least in formal terms, the "end" of the war was protracted, and the same can be said for the end of vesting. To be sure, Italian assets were no longer vested after December 1943, and as European countries were successively liberated in 1945, the property of nationals from these formerly enemy-occupied countries ceased being vested, though by that date the only property still being vested by the United States was patents and copyrights.
Yet in the later years of the war, the fear grew that
even though victorious, we shall still find large segments of our industry being controlled and manipulated from Berlin and we shall still be harboring within our borders a Nazi army ready to resume the task of boring from within in the hope of ultimately taking revenge for its previous defeat.202
Such an assessment may have lain behind the decision in the spring of 1945, when
the Secretary of State, the Secretary of the Treasury, and the Alien Property Custodian agreed that all property in the United States of hostile German and Japanese nationals should be vested in the Alien Property Custodian and that neither the property nor its proceeds should be returned to the former owners. Accordingly, they recommended to the President that the Custodian be authorized to vest German and Japanese bank accounts, credits, securities, and other properties not seized under the original vesting program. This recommendation was approved, and the expansion of the vesting program was authorized by Executive Order No. 9567 on June 8, 1945.203
Postwar vesting of German and Japanese-owned property would not be terminated until April 17, 1953, by which time an additional $210 million was paid into the Treasury from these seizures.204 In October of 1946, the APC was transformed into the Office of Alien Property (OAP) in the Justice Department, and over the next seven years, the pace of vesting increased substantially.205 In fact, 60 percent of all vesting orders issued from 1942 to 1953 were issued after 1946. The OAP relied on the FBI and the Treasury Department to investigate ownership before vesting, but with an important caveat.206 All property of German and Japanese citizens "is vested unless available evidence indicates they were victims of persecution by their governments."207 According to the Deputy Director of the OAP, the Office "took great pains to avoid vesting the property of such persons."208
Though postwar vesting was limited to property controlled by German and Japanese nationals, a reporting of assets similar to the wartime census was demanded of asset holders. Even among the first 12,000 reports received by October 1946, about one-third had to be set aside as they appeared to cover property that could not be vested.209 On the other hand, the continued concern over cloaked ownership prompted intensive investigations to locate as yet undisclosed property still controlled by enemies.210
By 1947, the OAP began returning vested property of all kinds--including cash, patents, interests in estates and trusts, copyrights, shares, and real property--to claimant individuals and businesses. By 1958, approximately 3,700 return orders had been issued, as compared to the over 5,000 vesting orders issued during the war and the over 14,000 issued thereafter.211 Thus, only about one in five of the properties seized were returned even by 1958, and of those 20 percent in turn, only about one in five were for properties vested during the war to judge by the related vesting order numbers. The names (and businesses) to whom property was returned give few clues as to identity or status, and even the precise nature of assets being returned is unclear: Return Order No. 4 gave back "certain patents" to "Arnold Janowitz and others" on February 24, and Return Order No. 2827 gave "securities" back to Leo Robinsohn on June 29, 1956, for example. A survey of the cash returned, some possibly from the sale of non-cash assets, shows a similar distribution as the 1941 Census of Foreign-Owned Assets, with quite small amounts (some as little as $3 or $10) returned to many individuals, and much larger amounts returned to a few companies and associations. Even the largest amounts were not that great. From 1947 to 1958, there were only 44 return orders, half of them to business enterprises, that were issued for amounts over $100,000. The largest single amount returned by the OAPC was the $4.7 million returned to "Wm. Kohler, Albert Arent, and Fidelity--Philadelphia Trust Co., sub-trustees of Trust of Dr. Otto Rohm" on June 30, 1954; the next largest amount was the $1.5 million given back to the Banco di Napoli in 1949. 212
Initially during World War I, the Custodian thought of himself as a trustee; later, he saw himself as the confiscator of enemy property. Confiscated property was sold, and the proceeds were meant to be used to satisfy U.S. war claims.213 The same line of thinking recurred during and after World War II with freezing (trusteeship) and vesting (confiscation) followed by the argument in Congress in 1946 that the proceeds from the sale of vested property should be used to pay for war damage claims of Americans. If foreign nationals had had their property seized abroad, then it was the responsibility of their governments to compensate them for those losses.214
In fact, the peace treaties signed with Italy, Bulgaria, Hungary, and Romania included explicit commitments by these countries to compensate their own nationals, but only Italy seems to have lived up to this obligation.215 A similar commitment formed part of the Paris Reparation Agreement on Germany (as well as subsequently directly with Germany in 1952), 216 and was confirmed for the United States as well through passage by Congress of the U.S. War Claims Act in 1948.
The difficulty even for those working in the OAP was the "unrealistic bookkeeping" such commitments meant. Though U.S. war claims after World War II were greater than those made after World War I, less property was seized and the costs to the United States of occupying Germany were much greater than the war claims of Americans against Germany.217 Thus it did make sense to use seized German-controlled property in the United States to settle American war claims against Germany while at the same time spending far larger dollar sums to occupy and rebuild Germany. It was a good deal more reasonable
to recognize that the damages done by Germany will never be made whole; that valid war claims will never be paid; that compensation for war claims to the extent that it is allowed must come, if at all, from the American Treasury; and to devote all German assets in this country directly to the relief of Germany, which we have, in fact, undertaken.218
But the "theory that the interests of American claimants for damage suffered at the hands of the Nazi government should have precedence" evidently took priority.219 Section 13 (a) of the 1948 War Claims Act created a War Claims Fund that was supervised by a Congressional War Claims Commission. That Commission saw its duty, according to an OAP critic, to "insure at all times the sufficiency of funds to provide for payment in full of every valid claim" possible under the Act.220 But since claims greatly outstripped available funds, the War Claims Commission in effect became "a pressure group with official status seeking the enlargement of the Fund."221 As the War Claims Act was financed through the Treasury Department, the argument in Congress was that proceeds from the sale of German and Japanese vested assets could be used to pay American war claims--an argument that drew objections from both the Justice Department and the Bureau of the Budget. For victims' heirs, the situation was even worse:
when the question is presented whether property of Jewish families exterminated at Auschwitz and Buchenwald should continue to be held by the United States, the issue should be determined in terms of the justification or lack of justification for the seizure and not in terms of the effect of a return on the [War Claims] fund.222
But in the end, by 1954, the War Claims Commission received $75 million in funding from seized German and Japanese assets, although evidently efforts had been made to insure that these would not, in fact, be assets of persecutees.
Though the category "victim" was not explicitly recognized as such until after the war, there was no evident intent to immobilize or seize assets from those who were clearly not enemies. Even in the midst of the war, John Foster Dulles could write that "nothing in the Congressional hearings or debates suggests any intention to confiscate the property of friendly aliens, neutrals, and the victims of German aggression" by the Alien Property Custodian.223 In addition, assets vested after the war were limited to those controlled by Germans and Japanese.
In practice, both the Treasury and Justice Departments tried to distinguish a small, problematic group that was trying to exploit assets or their access to the United States from the large, unproblematic group of those with legitimate control over assets in the United States or legitimate reasons for being here. The focus was on potential saboteurs, smugglers and the businesses that acted as fronts for Nazi interests as well as on the assets of innocents abroad that had been, or were in danger of being, captured by Nazi invaders. The Alien Registration Act, the freezing and then licensing of financial transactions by FFC, and the work of Customs inspectors were all directed towards preventing the enemy from exploiting assets in or access to the United States. The very existence of error-correction or asset-protection mechanisms, whether in the form of Treasury regulations and policies or the APC claims process, lend weight to Dulles's assertion. Other practices, ranging from the wartime reassertion of the legal rights of aliens to the exclusion of certain nationality groups from enemy alien restrictions, also testify to a desire to draw distinctions that would benefit those who had been persecuted. The evolution in thinking about persecutees would lead to an explicit recognition of their special status reflected in the August 1946 revision of the Trading with the Enemy Act (TWEA); when they were excluded from postwar vesting.
Foreign Funds Control tried to protect European property owners from Nazi actions, though for assets already in the United States in 1940 and 1941 the effect was limited by the very nature of the asset pool. Not only was that pool comparatively small and skewed towards assets controlled by nationals of Allied rather than Axis powers, but according to the 1941 census, these assets were distributed between a small group of businesses with large holdings and a large group of individuals with small holdings. That same distribution was also evident in the claims honored by the OAP after the war, with a few large sums returned to a few companies and many small sums (and other assets) returned to many individuals.
In fact, other than the looted Dutch securities that were eventually restituted to the Netherlands, FFC controlled assets were not vested by the APC.224 For individuals in the U.S. who needed funds during the war for living expenses, or for organizations working to help those trying to flee from Nazi-controlled territories, FFC tried to facilitate such access to assets. For bonafide refugees in the United States, FFC early on tried to ensure that their status not impinge upon access to their funds. After the war, the return of assets to the smallest property owners was eased by a unilateral decision to defrost accounts below a certain monetary threshold. Far less property was ever seized and sold than was temporarily frozen during the war, and even that freezing ensured oversight more than it absolutely prohibited transactions.
Assets vested by the APC during the war were explicitly to be used for the benefit of the United States, and when possible were converted into cash. While several hundred thousand individual assets were seized, in some of the largest categories such as patents and copyrights conversion into cash was impossible or impractical. Instead, their use was licensed, and the resulting revenues were paid to the custodian; in the postwar period, at least some of these copyrights and patents, along with the accumulated royalties, were returned to their former owners or their heirs, though with considerable delay. Claims could be and were filed for the return of vested assets, though the number of successful claims (under 4,000 by 1958) appears to have been much smaller than the number of properties seized (19,312 vesting orders).225 Gold presented its own difficulties because of its liquidity, the manner in which the world gold trade functioned, and the difficulty of tracing ownership and a U.S. "unquestioned acceptance" policy. Some of the "flight capital" arriving in the United States before the war, including gold, undoubtedly came from victims, but available information permits no definitive conclusions about what proportion that might have been.
Endnotes for Chapter 3
1 Treas. Dept., FFC, "Administration of the Wartime Financial and Property Controls of the United States Government," June 1942, 1 - 3, NACP, RG 131, FFC Subj. Files, Box 367, Rpts TFR-300 [311908-963] (hereinafter "Administration of Wartime Controls"); "General Information on the Administration, Structure and Functions of Foreign Funds Control, 1940 - 1948," Ch. 1, 1 (hereinafter "History of FFC"), NACP, RG 56, Entry 66A816, Box 47 [331331 - 775].
2 Exec. Order 8389 (Apr. 10, 1940), Sec. 2, in Martin Domke, Trading with the Enemy in World War II (New York: Central Book Co., 1943), 432 - 3.
3 Domke, Trading with the Enemy in World War II, 391, 438. Congress amended Sec. 5 (b) on May 7, 1940, as did the First War Powers Act of Dec. 18, 1941.
4 "History of FFC," Ch. 2, 3 fn. 6.
5 Ibid., Ch. 2, 1 - 4. The memos were sent on Dec. 15 and 22, 1937; Oliphant drafted extensive regulations for such controls.
6 Ibid., Ch. 2, 8.
7 Ibid., Ch. 3, 2.
8 3 Code of Federal Regulations (CFR), 1938 - 1943 Compilation. Exec. Orders 8405 (657 - 659), E.O. 8446 (674), E.O. 8484 (687), and E.O. 8565 (796).
9 CFR, 1938 - 1943 Compilation. E.O. 8701 (904), E.O. 8711 (910), E.O. 8721 (917), and E.O. 8746 (929).
10 By October 1940, both agencies agreed to examine how German funds located in the Western Hemisphere were being used. Francis Biddle, Solicitor General of the Department of Justice, asked J. Edgar Hoover, the Director of the FBI, to provide whatever information he had on such funds "being used for propaganda in this country and South America." See Memo from Francis Biddle, Solicitor General, Dept. of Justice, to J. Edgar Hoover, Oct. 15, 1940, FBI Files .
11 Dean Acheson, Present at the Creation (New York: Norton, 1969), 23. The State Department was particularly concerned about the effect a communications freeze with enemy countries would have: "it was imperative that no action be taken by this government which might invite retaliatory measures against our [diplomatic] pouch." "History of FFC," Ch. 5, 101A [331331 - 775].
12 Freezing orders were also extended to China and Japan (July 26), Thailand (Dec. 9), and Hong Kong (Dec. 26), retroactive to June 14, 1941. William Reeves, "The Control of Foreign Funds by the United States Treasury," Law and Contemporary Problems 11 (1945), 24; "Administration of Wartime Controls," 2 [331908 - 963]; Domke, Trading with the Enemy in World War II, 434.
13 Starting on May 10, 1940, the Treas. Dept., had required that assets in the U.S. belonging to blocked countries or their nationals be reported (on Form TFR - 100) as countries fell successively under the freezing order. Treas. Dept., Annual Report 1940, 543.
14 "History of FFC," Ch. 4, 19 - 20.
15 Memo from Elting Arnold, "Divulging Information from Form TFR-300 Reports to Foreign Countries and American Creditors of Nationals of Such Countries," Oct. 27, 1944, NACP, RG 131, FFC, Box 367, TFR-300 Release of Info [312003 - 009].
16 U.S. Treas. Dept., Census of Foreign-Owned Assets in the United States (Washington: Government Printing Office, 1945), 8 - 9, 55 - 57 (hereinafter Census of Foreign-Owned Assets).
17 See Judd Polk, "Freezing Dollars Against the Axis," Foreign Affairs 20 (1): Oct. 1941, 114. Polk's estimates differed significantly from the Census even thought his information came from Treasury Dept. compilations and other government sources.
18 "History of FFC," Ch. 4, 22.
19 Census of Foreign-Owned Assets, 14 - 15.
20 It is worth noting in this context how comparatively small American investment in the neutral countries was. According to a 1942 American Economic Review article, American investment was largest in Spain ($86 million), followed by Sweden ($28 million), Portugal ($17 million) and Switzerland ($12 million). Cited in Edward Freutel, "Exchange Control, Freezing Orders and the Conflict of Laws," Harvard Law Review 56 (1942), 63.
21 Census of Foreign-Owned Assets, 62.
22 Ibid., 17 - 19.
23 Ibid., 20, 66, 68.
24 Ibid., 62, 75. The market value of foreign securities held in the U.S. by banks, brokers, and custodians for Danes and Norwegians was higher, at $23.5 million.
25 This was from an unpublished Commerce Dept. estimate of 1940, reproduced as Table VI in the Census of Foreign-Owned Assets, 21.
26 "Administration of Wartime Controls," 21 [311908 - 963].
27 "History of FFC," Ch. 3, 28 - 29.
28 "Administration of Wartime Controls," 21 [311908 - 963]; "History of FFC," Ch. 3, 29 [331331 - 775].
29 Treas. Dept., Annual Report 1944, 215 - 16; Treas. Dept., Annual Report 1945, 200; Reeves, "Control of Foreign Funds," 42.
30 "History of FFC," Ch. 3, 30; "Administration of Wartime Controls," 20 [311908 - 963]; Reeves, "Control of Foreign Funds," 42.
31 "Administration of Wartime Controls," 22 [311908 - 963].
32 Following Public Circular 6, as of September 13, 1941, such securities could not be redeemed unless a Form TFEL-2 was attached.
33 Reeves, "Control of Foreign Funds," 43.
34 Treas. Dept., Annual Report 1943, 126.
35 Ruling 6A was revoked again in September 1943, and control of securities subsumed under General Ruling 5, with similar restrictions.
36 "History of FFC," Ch. 5, 13 - 15. Reeves, "Control of Foreign Funds," 44. Reeves also asserts that the Treasury "did everything practical to depreciate the value of the American dollar bill in Europe and elsewhere."
37 "History of FFC," Ch. 5, 14. Currency import controls were lifted in April 1947 since by that time most important European countries in Europe "had taken steps to detect and segregate any US currency within their borders in which there was an enemy interest." Ibid., Ch. 6, 47.
38 Ibid., Ch. 5, 22.
39 Ibid., Ch. 5, 22 - 23.
40 Ibid., Ch. 5, 22 - 25. This ruling was revoked again on August 19, 1947. Ibid., Ch. 6, 47.
41 Ibid., Ch. 5, 24 - 25.
42 Barry Eichengreen, Golden Fetters: The Gold Standard and the Great Depression, 1919 - 1939 (New York: Oxford Univ. Press, 1992), 194.
43 "The 40 percent [gold cover] ratio was viewed as a critical threshold below which public confidence in convertibility would be threatened." Eichengreen, Golden Fetters: The Gold Standard and the Great Depression, 1919 - 1939, 116 n. 47. In the late 1920s, the gold cover ratios in other nations ranged from 33 percent in Albania to 75 percent in Belgium, Poland, and Germany. Barry Eichengreen, Elusive Stability (New York: Cambridge Univ. Press, 1990), 248.
44 48 Stat. 337, Sect. 8; the earlier wording comes from Sect. 2. See U.S. Statutes at Large, 73rd Congress, 2nd Session, Jan. 30, 1934, 337, 341. A license to take such actions with respect to gold was granted to the Federal Reserve Bank of New York by the Treasury Department on March 24, 1937. U.S. Treas. Dept., Spec. Form TGL-18, License No. NY-18-1, "License to Transport, Import, Melt and Treat, Export, Earmark and Hold in Custody for Foreign or Domestic Account," Mar. 24, 1937, Princeton Univ., Seely Mudd Lib. Harry Dexter White Collection, Box 3, File 82 [223773-774].
45 Milton Friedman & Anna Schwartz, A Monetary History of the United States 1867 - 1960 (Princeton: Princeton Univ. Press, 1963), 470 - 71.
46 Though gold continued to come in under anti-hoarding provisions during the next 17 years, in no year was the amount greater than $240,000. U.S. Treas. Dept., "Material in Reply to Questions from Senator Knowland," no date [ca. April 1952], NACP, RG 56, Entry 69A7584, Box 4, Congressional and other Inquiries .
47 Friedman & Schwartz, A Monetary History of the United States 1867 - 1960, 473.
48 G.A. Eddy, "The Gold Policy of the United States Treasury," 5th Draft, Jan. 7, 1949, NACP, RG 56, Entry 69A7584, Box 4, Congressional and other inquiries . The chief of the Balance of Payments Division of the Federal Reserve Bank of New York later argued that the transfer of foreign dollar assets worth $3.4 billion in the 1933 to 1940 era "reflected essentially 'autonomous' private transfers of 'hot money' from Europe and was accompanied, and in fact made possible, by large gold exports to this country." Fred Klopstock, "The International Status of the Dollar," Essays in International Finance 28 (May 1957), 7.
49 Griffeth Johnson, The Treasury and Monetary Policy 1933 - 1938 (Cambridge: Harvard University Press, 1939), 54. Friedman & Schwartz, A Monetary History of the United States 1867 - 1960, 509.
50 Johnson, The Treasury and Monetary Policy 1933 - 1938, 154. $297 million of the $3 billion total came from the Netherlands, the next largest source. Memo from Mr. White to Secy. Morgenthau, "Gold Imports in the United States," May 9, 1939, NACP, RG 56, Entry 67A1804, Box 50, Divisional Memo #2, [202539, 545].
51 Eddy, "The Gold Policy of the United States Treasury," Jan. 7, 1949, NACP, RG 56, Entry 69A7584, Box 4, Congressional and other inquiries . This 1949 total is of the same order of magnitude as the $14.47 billion noted in 1952 (see table). Likewise, though there are minor discrepancies in the figures for yearly gold imports, several sources agree that the yearly gold flows to the U.S. in the 1930s regularly amounted to between $1 and $2 billion worth. Eichengreen, Golden Fetters: The Gold Standard and the Great Depression, 1919 - 1939, 346, 353; Johnson, The Treasury and Monetary Policy 1933 - 1938, 56.
52 This table is adapted from U.S. Treas. Dept., "Material in Reply to Questions from Senator Knowland," no date [ca. April 1952], NACP, RG 56, Entry 69A7584, Box 4, Congressional and other Inquiries . Senator Knowland sat on the Senate Appropriations Committee, and inquired of Treasury on April 14, 1952; this reply was prepared by early May .
53 From Table "Gold Movement Between the United States and the Axis Powers, 1934 - 1941," NACP, RG 56, Entry 67A1804, Box 50, Div. Memo #4 , probably prepared by Mr. Bernstein for the Stabilization Fund Hearings in June 1941 .
54 Treas. Dept., Div. of Monetary Research, "Net Movement of Gold to the United States by Countries, 1940," NACP, RG 56, Entry 67A1804, Box 50, Div. Memo #4 , probably prepared by Mr. Bernstein for the Stabilization Fund Hearings in June 1941 .
55 Memo from Mr. White to Secy. Morgenthau, "Gold Imports in the United States," May 9, 1939, NACP, RG 56, Entry 67A1804, Box 50, Divisional Memo #2, [202539, 545]. An earlier (March 17, 1938), unsigned, draft memo entitled "Merits of a Proposal to Place an Embargo on Gold Imports" exists in these files, and concludes that the disadvantages of an embargo greatly outweighed the advantages; gold inflows could be reduced by other means if so desired. NACP, RG 56, Entry 67A1804, Box 50, Division Memoranda #1[202515-520].
56 H. D. White, "The Future of Gold," corrected copy, Dec. 12, 1940, Princeton Univ., Seely Mudd Manuscript Lib., Harry Dexter White Collection, Box 4, Future of Gold (Part I, Section III), Folder # 10 [223821-835].
57 Memo from Mr. White to Secy. Morgenthau, "Gold Imports in the United States," May 9, 1939, NACP, RG 56, Entry 67A1804, Box 50, Divisional Memo #2, [202539, 545].
58 Note handed by Mr. Pinsent, Financial Counselor to Brit. Embassy, to Mr. Cochran in the Treasury at 7 P.M., May 27, 1940, NACP, RG 56, Entry 67A1804, Box 49, Discrimination (U.S.) . Pinsent estimated the worth of the gold at 50 - 100 million pounds.
59 Memo from Mr. White to Messrs. D.W. Bell, Cochran & Foley, June 4, 1940, NACP, RG 56, Entry 67A1804, Box 49, Discrimination (U.S.) . Though White does not explicitly say so, this assertion was most likely due to the practice among gold trading nations to resmelt, recast, and stamp bars of gold with national marks, thereby hindering the tracing of the previous origin.
60 Ibid. [202512-513].
61 H. D. White, "The Future of Gold," corrected copy, Dec. 12, 1940, Princeton Univ., Seely Mudd Manuscript Lib., Harry Dexter White Collection, Box 4, Future of Gold (Part I, Section III), Folder # 10 [223821-835].
62 Memo from Ms. Kistler to Mr. White, "Whose gold are we buying?" Feb. 13, 1941, NACP, RG 56, Entry 67A1804, Box 49, Acquisitions [202388-202389].
63 "History of FFC," Ch. 3, 14 - 17, under Gen. Licenses 32 (Aug. 1940) & 33 (Sept. 1940).
64 Reeves, "The Control of Foreign Funds by the United States Treasury," 38 - 41.
65 "Administration of Wartime Controls," 12 [311908-963].
66 The figures permitting this calculation may be found in Treas. Dept., Annual Report 1941, 219; 1942, 56; 1943, 125; 1944, 127; 1945, 206. In 1946, 112,000 applications were filed (1947: 54,000; 1948: 15,000), but no approval percentages are given. See Treas. Dept., Annual Reports 1946, 200; 1947, 123; 1948, 138.
67 Treas. Dept., Annual Report 1945, 423.
68 Reeves, "The Control of Foreign Funds by the United States Treasury," 52 - 53; "Administration of Wartime Controls," 19 [311908-963].
69 "History of FFC," Ch. 5, 82. This was "probably the most common device employed for large holdings."
70 "Administration of Wartime Controls," 4, 32, 37 [311908-963]; Reeves, "The Control of Foreign Funds by the United States Treasury," 54.
71 "Administration of Wartime Controls," 34 - 35 [311908-963]; "History of FFC," Ch. 5, 86. These sources do not make clear whether this is the number liquidated only by FFC, whether this represents liquidations by both FFC and the APC, or whether this included Japanese-controlled companies as well.
72 Mitchell Carroll, "Legislation on Treatment of Enemy Property," American Journal of International Law 37 (1943), 628.
73 Domke, Trading with the Enemy in World War II, 63.
74 Donald Perry, "Aliens in the United States," The Annals, v. 223 (September 1942), 5 - 7. The registration was mandated by the President on June 28, 1940. "Europe" in this list encompassed the Baltics, Russia, Eastern Europe and Turkey, as well as Austria-Hungary. No more than 1.5 million aliens (30 percent of 4.9 million) would have arrived after 1924, of whom no more than 1 million (30 percent of 3.57 million) came from "Europe."
75 That is, 25 percent of the Germans, 42 percent of the Italians, and 37 percent of the Japanese were aliens. Charles Gordon, "Status of Enemy Nationals in the United States," Lawyers Guild Review 2 (1942), 9, citing Att. Gen. Francis Biddle. See also "Alien Enemies and Japanese-Americans: A Problem of Wartime Controls," Yale Law Journal 51 (1942), 1317.
76 Maurice Davie, "Immigrants from Axis-Conquered Countries," The Annals, v. 223 (September 1942), 114. The countries were France, Belgium, Netherlands, Denmark, Norway, Greece, Poland, Czechoslovakia and Yugoslavia. Thus one reading is that most of the foreign-born had arrived long before 1940 and were already naturalized (though at least some may have never taken out U.S. citizenship); another reading is that for a given European immigrant group, around one-third in 1940 were registered aliens (among whom varying percentages would have been refugees).
77 George Warren, "The Refugee and the War," The Annals, v. 223 (September 1942), 92. This figure was "based on Jewish immigration from Europe since 1933 and statistics of other admissions from European countries in which refugees have originated or through which they have passed."
78 Domke, Trading with the Enemy in World War II, 39, 436. The freezing order definition of "national" extended to partnerships, associations, and corporation that had their principal place of business in such foreign country" or were controlled by such foreign country and/or one or more nationals. Also Reeves, "Control of Foreign Funds," 33 - 34; "New Administrative Definitions of 'Enemy' to Supersede the Trading with the Enemy Act," Yale Law Journal 51 (1942), 1392 - 93.
79 According to the Treasury Department on May 8, 1943. Martin Domke, The Control of Alien Property, (New York: Central Book Company, 1947), 291. Thus, though "many refugees are stateless, statelessness is not the essential quality of a refugee." Jane Carey, "Some Aspects of Statelessness since World War I," American Journal of International Law 40 (1946), 113.
80 Domke, Trading with the Enemy in World War II, 437.
81 So persons not in designated enemy countries are not deemed nationals of a designated enemy country unless the Alien Property Custodian determined such a person is controlled by or acting for on behalf of a designated enemy country or person. Otto Sommerich, "Recent Innovations in Legal and Regulatory Concepts as to the Alien and his Property," American Journal of International Law 37 (1943), 65. See also Domke, Trading with the Enemy in World War II, 44. This Executive Order delimited the powers of the Alien Property Custodian.
82 The stateless who were still resident in blocked countries were "nationals" as defined by the freezing order, while the stateless who were resident in the U.S. after June 17, 1940, were generally licensed nationals. The difficulties arose for refugees in transit, because though they might intend to never return, technically their domicile might still be in a blocked country. Arthur Bloch & Werner Rosenberg, "Current Problems of Freezing Control," Fordham Law Review 11 (1942), 75.
83 "History of FFC," Chapter 4, 30 - 33. The New York law firm Topken & Farley, specializing in German business, was blocked in this "ad hoc" manner. Clearly ad hoc blocking also implied ad hoc mitigating circumstances for long-term U.S. residents who happened not to be U.S. citizens.
84 Ibid., Chapter 5, 7 - 8.
85 Rudolf Littauer, "Confiscation of the Property of Technical Enemies," Yale Law Journal 52 (1943), 741.
86 Frank Sterck & Carl Schuck, "The Right of Resident Alien Enemies to Sue," Georgetown Law Journal 30 (1942), 433. The legal complications created by this Act are well summarized in Michael Brandon, "Legal Control over Resident Enemy Aliens in Time of War in the United States and in the United Kingdom," American Journal of International Law 44 (1950), 382 - 87.
87 Domke, Trading with the Enemy in World War II, 63 - 64; Sterck & Schuck, "The Right of Resident Alien Enemies to Sue," 434.
88 "New Administrative Definitions of 'Enemy' to Supersede the Trading with the Enemy Act," 1388. By the same token, "citizens domiciled in enemy territory are regarded as enemies." Leon Yudkin & Richard Caro, "New Concepts of 'Enemy' in the 'Trading with the Enemy Act'," St. John's Law Review 18 (1943), 58.
89 The proclamations were issued on December 7, 1941, for Japanese (No. 2525, 6 F.R. 6321), and on December 8, 1941, for German (No. 2526, 6 F.R. 6323) and Italian (Proclamation No. 2527, 6 F.R. 6324) alien enemies. Travel and identification regulations were issued on February 5, 1942, and January 22, 1942, respectively. Gordon, "Status of Enemy Nationals in the United States," 12 - 13; Domke, Trading with the Enemy in World War II, 68; "Alien Enemies and Japanese-Americans: A Problem of Wartime Controls," 1319 - 1321.
90 Earl Harrison, "Alien Enemies," 13 Penn Bar Association Quarterly 196, cited in Gordon, "Status of Enemy Nationals in the United States," 10 - 11.
91 E.g., "many 'enemy aliens' are actually here because they are friendly," Clyde Eagleton, "Friendly Aliens," American Journal of International Law 36 (1942), 662.
92 "Alien Enemies and Japanese-Americans: A Problem of Wartime Controls," 1337; Domke, Trading with the Enemy in World War II, 29, 47.
93 Robert Wilson, "Treatment of Civilian Alien Enemies," American Journal of International Law 37 (1943), 41; "Alien Enemies and Japanese-Americans: A Problem of Wartime Controls," 1321; E. von Hofmannsthal, "Austro-Hungarians," American Journal of International Law 36 (1942), 292 - 294.
94 Sommerich, "Recent Innovations in Legal and Regulatory Concepts as to the Alien and his Property," 60; Domke, The Control of Alien Property, 47.
95 Gordon, "Status of Enemy Nationals in the United States," 11; "Civil Rights of Enemy Aliens During World War II," Temple University Law Quarterly 17 (1942), 87.
96 The quotes are from Department of Justice press releases on December 9 and December 14, 1941, respectively, cited in Sterck and Schuck, "The Right of Resident Alien Enemies to Sue," 421.
97 Ibid., 423.
98 32 N.Y.S. (2d) 450, 177 Misc. 939 (Jan. 21, 1942).
99 Sterck and Schuck, "The Right of Resident Alien Enemies to Sue," 431 - 432, 436. "Civil Rights of Enemy Aliens During World War II," 91 states that in this case "the alien enemy was considered an alien friend, rather than an enemy." Nonresident aliens did not have this right to sue.
100 As with citizens, the outcome was uncertain for aliens. "Even if he can prove that he is not an enemy," for example in pursuing a claim against the APC, he "need not necessarily succeed in obtaining possession of the property" if the court deemed otherwise. See Rudolf Littauer, "Confiscation of the Property of Technical Enemies," Yale Law Journal 52 (1943), 769; "Civil Rights of Enemy Aliens During World War II," 91.
101 Confiscation by the U.S. government was practiced on an unprecedented scale during World War II (in 1941 and 1942, the War Department took complete control of nearly ten million acres of land), and was legitimated by the legislative mandates provided by the Export Control Requisition Act of Oct. 10, 1940 and the Requisitioning Act of October 16, 1941, among other laws. For an extended discussion, see Paul Marcus, "The Taking and Destruction of Property Under a Defense and War Program," Cornell Law Quarterly 27 (1942), 317 - 346, 476 - 533.
102 Russian Volunteer Fleet v. United States, 282 U.S. 481, (1931) that "the petitioner was an alien friend and as such was entitled to the protection of the Fifth Amendment," and this ruling was subsequently upheld in Becker Steel Co. v. Cummings 296 U.S. 74 (1935). See Littauer, "Confiscation of the Property of Technical Enemies," 760; also "Former Enemies may sue in Court of Claims to Recover Value of Property Unlawfully Vested by Alien Property Custodian," University of Pennsylvania Law Review 106 (1958), 1059.
103 "Friendly Alien's Right to Sue for Return of Property Seized by Alien Property Custodian," Yale Law Journal 56 (1947), 1068 - 76; "Remedy Available to Alien Friend whose Property has been 'Vested' by Alien Property Custodian," Columbia Law Review 47 (1947), 1052 - 61.
104 "Return of Property Seized during World War II: Judicial and Administrative Proceedings under the Trading with the Enemy Act," Yale Law Journal 62 (1953), 1210 - 35.
105 In fact, licenses under the freezing order as well as the rights of the APC were "irrelevant," since the TWEA deals with "disabilities in respect of the privileges of trade" and they had "no connection with disabilities in respect of the ownership of lands." Lawrence Pratt, "Present Alienage Disabilities under New York State Law in Real Property," Brooklyn Law Review 12 (1942), 3.
106 Ibid., 3.
107 Sterck and Schuck, "The Right of Resident Alien Enemies to Sue," 422; for a discussion of this case, see Domke, Trading with the Enemy in World War II, 79 - 82.
108 Pratt, "Present Alienage Disabilities under New York State Law in Real Property," 2.
109 Ibid., 12 - 13. The catch was that aliens had no "heritable blood" in common law and therefore could not transmit by descent.
110 Ibid., 14; Sect. 60 - 70 of the Public Lands Law (N.Y. Laws 1909, c. 46).
111 Pratt, "Present Alienage Disabilities under New York State Law in Real Property," 2; Domke, Trading with the Enemy in World War II, 96.
112 Domke, The Control of Alien Property, 61 - 62. New Jersey had previously passed similar legislation (on April 8, 1943) removing the disabilities imposed upon resident aliens classified as "enemies."
113 Doris Banta, "Alien enemies: Right to acquire, hold, and transmit real property: Recent change in New York Real Property Law abolishing all disabilities," Cornell Law Quarterly 30 (1944), 242.
114 Ibid., 238. Banta further notes that even at the time, 19 states made no distinctions between aliens and citizens in their right to transfer property at death.
115 William Butler, "Proving Foreign Documents in New York," Fordham Law Review 18 (1949), 49 - 71.
116 "History of FFC," Ch. 5, 107.
117 Ibid., 108.
118 Ibid., 109.
119 Ibid., 109 - 10. The President established the War Refugee Board by Executive Order at about the same time, a body dedicated to helping rescue persons in occupied territories who were in imminent danger of death. The Board's operations were mostly privately funded and required an FFC license: about $20 million in private funds was transferred abroad for private rescue and relief projects under this license, aided by a U.S. government appropriation of about $2 million for operations.
120 John Foster Dulles, "The Vesting Powers of the Alien Property Custodian," Cornell Law Quarterly 28 (1943), 246.
121 Kenneth Carlston, "Foreign Funds Control and the Alien Property Custodian," Cornell Law Quarterly 31 (1945), 5 - 6.
122 Francis Fallon, "Enemy Business Enterprises and the Alien Property Custodian, I," Fordham Law Review 15 (1946), 223 - 24.
123 Stuart Weiss, The President's Man: Leo Crowley and Franklin Roosevelt in Peace and War (Carbondale: Southern Illinois Univ. Press, 1996), 117, 127. Weiss implies the scandal involved patronage and a lack of transparency in the Custodian's actions.
124 This Division was transferred, with all its property and personnel, to the APC on Apr. 21, 1942, by Exec. Order 9142. Office of Alien Property Custodian, Annual Report, [hereinafter APC Annual Report] 1944, 2 . See also Domke, Trading with the Enemy in World War II, 264.
125 The best overview of the office and the assets under its control is Paul Myron, "The Work of the Alien Property Custodian," Law and Contemporary Problems 11 (1945), 76 - 91. Myron was Chief of the Estates and Trusts Sec. in the office during 1942 and 1943, then worked as Assistant to the Custodian in 1944 and 1945.
126 APC Annual Report, 1942 - 43, 26 - 27 [322726-808].
127 A. M. Werner,"The Alien Property Custodian," Wisconsin State Bar Association Bulletin 16 (1943), 15.
128 APC Annual Report, 1943 - 43, 19 - 20 [322726-808].
129 Werner, "The Alien Property Custodian," 15. This was meant as a means to protect due process. See Kenneth Woodward, "Meaning of 'Enemy' Under the Trading with the Enemy Act," Texas Law Review 20 (1942), 753.
130 Dulles, "The Vesting Powers of the Alien Property Custodian," 259.
131 APC Annual Report, 1944, V [322809-953].
132 Sommerich, "Recent Innovations in Legal and Regulatory Concepts as to the Alien and his Property," 68.
133 Carlston, "Foreign Funds Control and the Alien Property Custodian," 22.
134 Specimen copies of vesting orders from 1942 and 1943 can be found in Sommerich, "Recent Innovations in Legal and Regulatory Concepts as to the Alien and his Property," 67, and in Domke, Trading with the Enemy in World War II, 467 - 68.
135 Carlston, "Foreign Funds Control and the Alien Property Custodian," 7.
136 Dulles, "The Vesting Powers of the Alien Property Custodian," 257. The case referred to is Swiss Insurance Company.
137 Carlston, "Foreign Funds Control and the Alien Property Custodian," 8.
138 The following is from the discussions in APC Annual Report, 1942 - 43, 4, 68 [322726-808]; APC Annual Report, 1944, 4 [322809-953].
139 APC Annual Report, 1942 - 43, 69 [322726-808].
140 Ibid., 69 - 70 [322726-808].
141 APC Annual Report, 1944, 136 [322809-953].
142 APC Annual Report, 1945, 19 [322954-3090]. Assets were greater than equity because creditors other than the Custodian held interests in the companies, but also because total value included supervised property in which the Custodian had no equity.
143 Ibid., 1945, 17 [322954-3090].
144 Fritz Machlup, "Patents," International Encyclopedia of the Social Sciences (New York: Macmillan, 1968), v. 11, 461.
145 APC Annual Report, 1944, 109 [322809-953].
146 Wallace McClure, "Copyright in War and Peace," American Journal of International Law 36 (1942), 386.
147 Domke, Trading with the Enemy in World War II, 280.
148 APC Annual Report, 1944, 109 - 10 [322809-953].
149 APC Annual Report, 1945, 121 [322954-3090]; APC Annual Report, 1942 - 43, 39 [322726-808].
150 APC Annual Report, 1945, 132 - 33 [322954-3090].
151 For a sample list of titles, see the APC Annual Report, 1942 - 43, 64 - 65 [322726-808]. Given the fate of Jewish intellectuals employed in German universities before the war, it is likely that some of the royalties from such works belonged to victims.
152 APC Annual Report, 1945, 122 [322954-3090].
153 Ibid., 123 - 24 [322954-3090].
154 APC Annual Report, 1942 - 43, 64 [322726-808]; APC Annual Report, 1945, 126 - 27 [322954-3090].
155 Fed. Reg., Nov. 4, 1950, 7459 - 60.
156 APC Annual Report, 1945, 125 [322954-3090] for the royalty amount; the quote is from APC Annual Report, 1944, 113 [322809-953].
157 "Administration of Wartime Controls," 31 [311908-963]; Domke, Trading with the Enemy in World War II, 291 - 2.
158 Werner, "The Alien Property Custodian," 17.
159 ACP Annual Report, 1944, 115 [322809-953].
160 Domke, The Control of Alien Property, 190 - 191.
161 APC Annual Report, 1944, 116 [322809-953].
162 APC Annual Report, 1945, 137 [322954-3090].
163 Guenther Reimann, Patents for Hitler (London: Victor Gollancz, 1945), 137.
164 U.S. Senate, Committee on Military Affairs, Subcommittee on War Mobilization, Scientific & Technical Mobilization, Hearings, 78th Congress, 1st Session, 1943. A 1942 investigation by the Committee on Patents under Homer T. Bone had heard similar testimony. Mira Wilkins, The Maturing of Multinational Enterprise: American Business Abroad from 1914 to 1970 (Cambridge: Harvard Univ. Press, 1974), 263.
165 Wilkins, The Maturing of Multinational Enterprise, 79, 81. Wilkins (258) cites an April 18, 1941, cable from a Du Pont vice president to I.G. Farben, "suggesting that in view of government restrictions our two companies mutually agree discontinue exchange technical information patent applications etc on all existing contracts," which was a response to a Presidential proclamation of April 15, 1941, that required technical information exports to be licensed.
166 E.g., "Few have appreciated until recently the extent to which enemy controlled patents had been used even before the war in a systematic conspiracy to throttle American war production." Werner, "The Alien Property Custodian," 17.
167 Senate Committee on Patents, testimony given on Apr. 27, 1942, cited in Howland Sargeant & Henrietta Creamer, "Enemy Patents," Law and Contemporary Problems 11 (1945), 101.
168 Cited in Carlston, "Foreign Funds Control and the Alien Property Custodian," 19.
169 APC Annual Report, 1942 - 43, 27 - 28 [322726-808].
170 Ibid., 40 - 45 [322726-808].
171 Of the 44,796 vested patents (the number given in an article written by the Chief of the Division of Patent Administration in the Office of APC), half were for the machinery, chemical, automotive, electrical and radio industries. Sargeant & Creamer, "Enemy Patents," 107 - 08.
172 APC Annual Report, 1945, 97, 99, 100 [322954-3090].
173 Reeves, "The Control of Foreign Funds by the United States Treasury," 55.
174 Carlston, "Foreign Funds Control and the Alien Property Custodian," 19 - 20; Sargeant & Creamer, "Enemy Patents," 96 - 105.
175 APC Annual Report, 1945, 101 [322954-3090].
176 Ibid., 102 [322954-3090].
177 Edwin Borchard, "Nationalization of Enemy Patents," American Journal of International Law 37 (1943), 92 - 97.
178 APC Annual Report, 1945, 105 - 108 [322954-3090].
179 Ibid., 107 - 108 [322954-3090].
180 APC Annual Report, 1942 - 43, 62 - 3 [322726-808]. Particular mention is also made of the patent for the synthetic antimalarial drug Atabrine, as "of vital importance to the successful prosecution of the war" after the Dutch East Indies--which produced 96 percent of the world supply of quinine--had fallen to the Japanese.
181 APC Annual Report, 1945, 110 [322954-3090].
182 The quote is from A. M. Werner, Gen. Counsel for the APC in early 1943. Werner, "The Alien Property Custodian," 17 - 18.
183 APC Annual Report, 1945, 119 [322954-3090].
184 Ibid., 21 - 22, 25 [322954-3090].
185 Ibid., 31 [322954-3090]. For a very thorough survey of the control of enterprises by the APC, written by a former Assistant Gen. Counsel in the Office of APC, see Francis Fallon, "Enemy Business Enterprises and the Alien Property Custodian, I" Fordham Law Review 15 (1946), 222 - 247; Francis Fallon, "Enemy Business Enterprises and the Alien Property Custodian, II" Fordham Law Review 16 (1947), 55 - 85.
186 APC Annual Report, 1945, 33, 36 - 37 [322954-3090]. The remaining six were owned by persons of "other" nationality.
187 Ibid., 33 [322954-3090]. Types of enterprises included corporations (291), partnerships (27), proprietorships (23), nonprofit organizations (12), U.S. branches of foreign enterprises (52), and miscellaneous associations (3).
188 Ibid., 36 [322954-3090]; APC Annual Report, 1942 - 43, 37 [322726-808]. Most of the banking firms that were vested were Japanese.
189 APC Annual Report, 1945, 42 - 43 [322954-3090].
190 Ibid., 49 - 54 [322954-3090]. There were high levels of insolvency (at least 81 companies), as well as uncertainties about liability in the case of sole proprietorships or unincorporated branches of foreign enterprises (77 companies), making it difficult to realize gain from their sale. Assets in foreign countries, and the difficulty of selling property for which there was no ready market provided further hindrances. Thus, of the vested enterprises on June 30, 1945, 30 were closed banks and insurance companies, 34 were in liquidation, 55 companies operated at a profit, but 172 operated at a loss: the net loss was thus $1.4 million (54). The sale of a few (largely Japanese) vested banks was marginally profitable.
191 Ibid., 139 [322954-3090].
192 Ibid., 140 [322954-3090]. That is, vested properties clustered along the New York (90), Pennsylvania (54), New Jersey (23), Maryland (16), and Washington D.C. (27) corridor, but Missouri (61) and Texas (34) were also well represented, likely owing to their relatively large German immigrant populations. California (98) and Hawaii (73) properties were largely Japanese-owned.
193 APC Annual Report, 1945, 141 [322954-3090].
194 APC Annual Report, 1942 - 43, 31 [322726-808].
195 APC Annual Report, 1945, 145 [322954-3090].
196 Ibid., 146 [322954-3090]. To judge by the disparities, the most difficult to sell were industrial machinery, equipment and materials.
197 Ibid., 157 [322954-3090].
198 Merlin Staring, "The Alien Property Custodian and Conclusive Determinations of Survivorship," Georgetown Law Journal 35 (1947), 264 - 265.
199 APC Annual Report, 1945, 176 [322954-3090].
200 APC Annual Report, 1944, 125 [322809-953]; APC Annual Report, 1945, 147 [322954-3090].
201 APC Annual Report, 1945, 149 [322954-3090].
202 John Dickinson, "Enemy-Owned Property: Restitution or Confiscation?" Foreign Affairs 22 (1943), 138 - 9. Leo Pasvolsky, an advisor in the State Department during the war, put it succinctly in 1942: "[w]e must make sure that the cessation of armed hostilities will not be followed by a continuation of economic warfare."
203 Terminal Rpt., Office of APC, Oct. 1946, 3 - 4 [106992-7020].
204 This sum represents mingled German and Japanese property, and claims were paid out of it to those who were neither German or Japanese, such as to Italian POWs. William Reeves, "Is Confiscation of Enemy Assets in the National Interest of the United States?" Virginia Law Review 40 (1954), 1046.
205 In fact, by October of 1946, the APC vested four times as much as it had in the nine months preceding, and doubled the amount of cash it realized from sales and liquidation. However, the property of Hungarian, Romanian, and Bulgarian nationals was only still vested if the property had been acquired in the United States before December 7, 1945. Terminal Rpt., Office of APC, Oct. 1946 [106992-7020].
206 Statement of Paul V. Myron, Dept. Dir. of the OAP, Feb. 20, 1953, U.S. Congress, Senate, Committee on the Judiciary, Administration of the Trading with the Enemy Act, 83rd Cong., 1st Sess., Hearings, Feb. - Apr., 1953, 106.
207 Term. Rpt., Office of APC, Oct. 1946, 5 [106992-7020].
208 Letter from Paul V. Myron to Congressman Arthur G. Klein, Aug. 10, 1956, AJA, WJC Papers, Box C294 .
209 Term. Rpt., Office of APC, Oct. 1946, 18 [106992-7020].
210 Ibid., 19 [106992-7020].
211 APC Annual Report, 1945, 9 [322954-3090] noted that by June 30, 1945, the APC had issued 5,226 vesting orders; the APC Annual Report, 1958, 82 [324619-718] noted a return order number 19,234 on Oct. 30, 1957. By the end of vesting on April 17, 1953, about 1,750 return orders had been issued. APC Annual Report, 1953, 147 .
212 All preceding information
in this paragraph is from the OAP Annual Reports,
1948 - 1958.
213 Malcolm Mason, "Relationship of Vested Assets to War Claims," Law and Contemporary Problems 16 (1951), 395.
214 Term. Rpt., Office of APC, Oct. 1946, 14 [106992-7020].
215 Mason, "Relationship of Vested Assets to War Claims," 398 - 399. Jessup, however, calls it a "dubious doctrine that there is no confiscation if the enemy state is required to assume an obligation to compensate its nationals whose property is held for the satisfaction of claims." Philip Jessup, "Enemy Property," American Journal of International Law 49 (1955), 62.
216 Jessup, "Enemy
Property," 58 - 59. See also the discussion of the Paris
in Reeves, "Is Confiscation of Enemy Assets in the National Interest of the United
217 Malcolm Mason, "Relationship of Vested Assets to War Claims," Law and Contemporary Problems 16 (1951), 397. According to Philip Jessup, aid to Germany amounted to $1.47 billion from 1948 to 1954--see his "Enemy Property," American Journal of International Law 49 (1955), 58--but amounted to $3.3 billion from a 1952 HICOG report, "nearly all of this aid represents the cost of procuring and shipping food, industrial raw material and like commodities to Germany." Cited in Reeves, "Is Confiscation of Enemy Assets in the National Interest of the United States?," 1044.
218 Mason, "Relationship of Vested Assets to War Claims," 398. Mason was chief of the legal branch in the Office of Alien Property in the Department of Justice.
219 Jessup, "Enemy Property," 59.
220 Mason, "Relationship of Vested Assets to War Claims," 403.
221 Mason, "Relationship of Vested Assets to War Claims," 400 - 02.
222 Mason, "Relationship of Vested Assets to War Claims," 404. Indeed, Mason states that the War Claims Commission "seriously delayed" a bill for the heirless property successor organization, and only withdrew later when it war argued that the sum involved would not be more than three million dollars.
223 Dulles, "The Vesting Powers of the Alien Property Custodian," 252.
224 The Annual Reports of the OAP list the dates and sometimes the amounts returned to the Netherlands.
225 The total number
of return orders was 4,475 by February 1965. OAP, Vesting
Orders 1 - 19,312 and Return Orders 1 - 4,475, Recs. Office Civil Division, Dept. of Justice.
Home / Contents