38 II. Queries 5-9 inclusive. No ships were completed and delivered by Germany under paragraph 5 of Annex III of the Treaty. The two ships ordered for French account under Annexes 1458 a-e and 1508 a-b 39 were laid down in Germany but construction was subsequently suspended (presumably following the Ruhr occupation). After the Dawes Plan entered into force new contracts were made for the completion of the ships in question and for payments out of the Dawes Annuities. The value of the two orders amounted to the same sums as those mentioned in Annex 1508 a2 under the original order, i. e., 6 million gold marks and 8 million 500 thousand gold marks. It is understood that these ships have been completed and delivered and that payment therefore has been made from the Annuities. 39 As to the two ships ordered for Italian account under Annexes 1703 a-d, it appears that they were never built. Their construction was either not begun at all or was suspended at an early stage because of the Ruhr occupation (a search of the Commission's records does not reveal definite information as to whether construction of these ships was ever actually begun but it is certain that they were never completed and delivered). The records of the Commission indicate that the only orders passed for construction of ships under paragraph 5 of Annex III of the Treaty were those referred to above. I have [etc.] For the Chargé d'Affaires ad interim: 763.72113 Au 7/33 The Austrian Minister (Prochnik) to the Secretary of State No. 1900/70 WASHINGTON, October 6, 1928. EXCELLENCY: Sect. 7 of the "Settlement of War Claims Act of 1928" provides for the creation of an Austrian special deposit account and authorizes the Alien Property Custodian to transfer into said account all property of the Austrian Government including a trust held by him in the name of the K. K. Österreichische Tabak Regie (Austrian Tobacco Monopoly). The said Act furthermore provides for the release of Austrian property under the provision that the Commissioner of the Tripartite Claims Commission certifies to the Secretary of the Treasury, that the amounts deposited in the said Austrian special account are sufficient to make the payments authorized by subsection (b) of Section 5 in respect of awards against Austria. i. e., Treaty of Versailles, June 28, 1919; Malloy, Treaties, 1910-1923, vol. III, pp. 3329, 3430. Not printed. Whereas a number of awards were passed by the Commissioner and are awaiting payment out of funds in the Austrian special deposit account; and whereas the work of the Tripartite Claims Commission is nearing that point of progress where the Commissioner will be in a position to determine the maximum total of American claims against Austria and form an opinion whether the same seems to be sufficiently covered by whatever amount is deposited in said Austrian account, I have the honor to solicit on behalf of my Government Your Excellency's kind intermediary with a view of having at the earliest possible convenience transferred to the Austrian special deposit account all property of the Austrian Government seized by the Alien Property Custodian in accordance with the Trading with the Enemy Act, including the trust held in the name of K. K. Österreichische Tabak Regie (Austrian Tobacco Monopoly). An early compliance with this request will be highly appreciated by my Government. Accept [etc.] EDGAR PROCHNIK 763.72113/2335 The Chargé in Rumania (Patterson) to the Secretary of State No. 643 BUCHAREST, October 6, 1928. SIR: I have the honor to transmit herewith a copy and translation of a note, No. 259511, dated October 3, 1928, received from the Ministry of Finance 40 asking that steps be taken to hasten the release of the assets of the Austro-Hungarian Bank seized by the Alien Property Custodian in order that the portion of these assets assigned to Rumania might be available to it as soon as possible. It appears that the property of the Austro-Hungarian Bank in the United States was taken over by the Alien Property Custodian during the war, and that under the treaty of peace between the United States and Austria " no disposition can be made thereof until the Austro-Hungarian Government or its successors shall have made suitable provision for the satisfaction of all claims against these governments by citizens of the United States. A commission was appointed in Washington to determine the amount of the guarantees to be given by Austria and Hungary as a condition for the release of the property seized, but this commission, it appears, has not as yet rendered a decision and the property cannot therefore be disposed of. The Rumanian Government claims $80,000 as its share of the proceeds of the bank's liquidation in the United States and is very 40 Not printed. 41 Of Aug. 24, 1921; Foreign Relations, 1921, vol. I, p. 274. anxious to realize on this amount. The Ministry of Finance has therefore asked the Legation to bring this matter to the attention of the Department in the hope that the decision of the special commission may be hastened and the funds released. I have [etc.] 763.72113 Au 7/36 ROBERT R. PATTERSON The Alien Property Custodian (Sutherland) to the Secretary of State WASHINGTON, October 15, 1928. 42 SIR: Replying to your communication of October 13th, with which you enclosed a copy of the communication from His Excellency, the Austrian Minister, which has reference to the transferring of funds belonging to the Austrian Government, including the K. K. Oesterreichische Tabak Regie (Austrian Tobacco Monopoly). You are advised that I have ordered the necessary procedure to be taken to comply with this request. Very truly yours, HOWARD SUTHERLAND 763.72113/2344 The British Embassy to the Department of State MEMORANDUM The memorandum communicated to His Majesty's Embassy by the State Department of the United States on the 16th June last respecting the test suits instituted in the United States Courts with a view to determining the proper disposal of certain ex-enemy securities now held by the Alien Property Custodian was duly submitted to His Majesty's Government, who have now furnished their observations thereon. That document appears to disclose a mistaken conception of the character of the negotiations which took place between Mr. P. F. Swain, of the Public Trustee's Department, the Alien Property Custodian and the Department of Justice in October 1921. It is suggested in the memorandum that these negotiations resulted in something in the nature of an agreement between the two governments which involved mutual concessions, and it is further suggested that, in bringing the present suit against the Alien Property Custodian, the Public Trustee is endeavouring to repudiate an arrangement entered into in good faith and scrupulously observed by the Alien Property Custodian. His Majesty's Government regret that they are unable to concur 42 Not printed. 43 Ante, p. 487. in the construction placed by the Government of the United States upon the discussions between Mr. Swain and the Alien Property Custodian and they must repudiate the suggestion that there has been any breach of faith on the part of the Public Trustee. The issue, indeed, does not appear to be one involving legal or theoretical interpretation but appears rather to have been defined by a clear and unambiguous declaration made by the Secretary of State of the United States at the time when the negotiations took place. In his note of May 5th, 1922 to His Majesty's Embassy Mr. Secretary Hughes was at pains to leave it beyond doubt that the negotiations were not to be considered as in any respect an endeavour to reach an agreement between the two Governments, but were to be regarded solely as "efforts to explain the law". The Secretary of State proceeded:"You will of course understand that the Department in transmitting this information does not undertake to enter into any agreement on behalf of the Government of the United States respecting the interpretation or the execution of the law of this country, relating to sequestered property, the administration of which rests with the Attorney General and the Alien Property Custodian. However, in accordance with your request, I take pleasure in setting forth the understanding of officials of the Department of Justice and the Alien Property Custodian with regard to the efforts made by them and by the representative of the British Public Trustee to explain the law of their respective Governments with regard to the return of sequestered property. "The American officials concerned point out that they did not undertake to enter into any agreement at the conference with Mr. Swain, but that the purpose of the conference was merely to clarify the provisions of the law and regulations of Great Britain and the United States respectively, with regard to enemy property and applications for its return". As a result of this communication His Majesty's Embassy at Washington telegraphed to the Foreign Office on May 10th, 1922 as follows: "I have now received State Department's reply. . . . It repudiates idea that Mr. Swain's conference can be said to have resulted in an 'agreement' and contends that their object was merely to clarify the provisions of existing laws and regulations on both sides". This express disclaimer of any intention to enter into an agreement was reiterated in a letter from the Alien Property Custodian to Mr. Hughes dated 28th June, 1922,** in which he said :— "This (memorandum) was not an agreement between this office and the British Government, but was merely a conference to arrive at a thorough understanding as to procedure. "Not printed. "As I herebefore stated the conference was not for the purpose of entering into an agreement but merely for the purpose of clarifying the provisions of the Law of the various Governments with regard to enemy property. The memoranda which were drawn up are merely statements of the explanations rendered in connexion therewith and the procedure adopted by the two Offices. An official approval, if you so desire, may be given to the British Embassy, but such approval need not be in the form of an agreement, but merely a statement that the understanding of this Office and of the British Public Trustee as to the conversations had is correct". Having regard to the above declarations on the part of the United States Government themselves and of their officials, His Majesty's Government, as stated above, cannot agree that the present claim by the Public Trustee constitutes in any way whatsoever a repudiation of an agreement honourably entered into or a breach of good faith as between the two Governments or their representatives. On the contrary, the suit is merely an attempt to obtain from the United States Courts, having jurisdiction in the matter, a definite interpretation of the legal position having regard to pronouncements of the law which occurred subsequently to the above-mentioned negotiations, and which have placed a quite different legal interpretation upon the facts under consideration. It may be added that all the allegations contained in the memorandum under reply as to the existence of an agreement have been raised as a legal issue in the pending suits. There is no reason to apprehend that the eminent judges of the United States Courts, before whom the case will come, will not find a satisfactory solution to this issue, as well as the other issues raised by the respective parties. While it is not necessary in the circumstances to enter into a detailed discussion of the various subsidiary questions raised in the memorandum, attention may be usefully drawn to the following points: (1) Not only do the United States Government appear to be under a misapprehension in assuming the existence of an agreement, but they are also apparently labouring under some misapprehension when the suggestion is made in their memorandum that any concessions or considerations of value were furnished by the Alien Property Custodian. It is sufficient again to cite a declaration by the Alien Property Custodian on this point. In a letter to Senator Borah on 27th July, 1926, the then Alien Property Custodian wrote: "Colonel Miller (the former Alien Property Custodian) did not waive any rights of the United States Government by his agreement not to issue demands for those shares of stock, the actual certificates of which were held by the British Public Trustee, and for which no demand had been issued by this Office. At the time he made this agreement this Office had no right or authority to issue demands for |