No case has come to my attention, and none has been cited in the House or Senate hearings, where this provision has been used successfully by dummies for enemies.

Under these circumstances, the existing provision having been found workable, no reason is recognizable why this remedy should be abolished. That, however, is just what this bill is intended to do. The benefits of such legislation are undetectable. The disadvantage, on the other hand, is the fact that errors of the Custodian are made permanent. The damage inflicted by such an enactment is highly detrimental to our national interest.

Contrary to some statements which have been made in hearings on this bill, no court of the United States has ever found authoritatively that section 9 (a) of the Trading With the Enemy Act is not applicable to people who can actually qualify under the statutory provisions, particularly friendly aliens. All the more reason is there to consider this bill as superfluous matter.

II

Three grounds speak against enactment of this bill: (1) The damage it would inflict on foreign trade and foreign public opinion; (2) its unconstitutionality; (3) it constitutes a breach of our treaty commitments.

I should like to enlarge on these three points:

1. (a) On several recent trips to Europe, I was asked by many people of different walks of life quite spontaneously whether the United States were still a democracy, whether it was possible to call on, and get justice from, the courts. I finally felt myself impelled to cause an article to appear in a European newspaper explaining in detail that the democratic system of checks and balances is still operating here and that it is always possible to obtain redress against arbitrary administrative actions from the courts. In fact, I referred specifically to the very statutory provision, the abrogation of which is here at issue.

By discriminating against friendly aliens, we would intensify the feeling that we have become unmindful of other people's rights. We would sow the seeds of deep resentment and distrust needlessly. Foreigners would become reluctant indeed to let any part of their property come within the jurisdiction of the United States for fear that protection of such property be denied. Instead of promoting ourselves and, therefore, democracy, we would be regarded as lawless encroachers upon private and friendly property. We would be accused of making use of our powerful position unjustly and unfairly.

The consequences of such feeling are: Reluctancy to even deal with us commercially, deep distrust, unwillingness to have us be their bankers or trustees in any form.

(b) If we want to measure the deep resentment that will be created by this needless bill, we only need to think back a few years. At that time, a South American country proceeded to expropriate American property against compensation. We all remember the deep resentment we felt and the shock this conduct gave to the good-neighbor policy. At least the people of this country have never since overcome a feeling of distrust in the economy and political conduct of the country in question.

To recall our reaction to that expropriation is to measure the feeling that this bill would arouse elsewhere, only that we ourselves be the targets.

2. If the remedy of access to the equity courts be deleted from the act, the Trading With the Enemy Act would become unconstitutional.

In Garvan v. $20,000 Bonds (265 Fed. 477) the United States Circuit Court of Appeals for the Second Circuit said:

"If persons not alien enemies, or allies of alien enemies, were given no means to protect their interest in such property the seizure would be unconstitutional as without due process of law; but they are given such remedies under section 9." The United States Supreme Court has repeatedly made similar pronouncements. In Central Union Trust v. Garvan (254 U. S. 554, 65 L. Ed. 403), Mr. Justice Holmes based the affirmative decision as to constitutionality of the Trading With the Enemy Act on the possibility of recourse to the courts in accordance with section 9. In Stoehr v. Wallace (255 U. S. 239, 65 L. Ed. 604), Mr. Justice Van Devanter said:

"The plaintiff further objects that the shares, although claimed by and standing in the name of the New York corporation, which concededly was neither an enemy nor an ally of an enemy, were seized and transferred to the name of the Alien Property Custodian in virtue of a determination by an executive officer in an ex parte administrative proceeding that they belonged to an alien enemy-the gist of the objection being that the shares could not be taken from the New York

corporation consistently with due process of law without first according it a hearing on its claim in a court of justice. The objection rests on erroneous assumptions and is not tenable.

"That Congress, in time of war, may authorize and provide for the seizure and sequestration, through executive channels, of property believed to be enemyowned, if adequate provision be made for a return in case of mistake, is not debatable. Central U. Trust Co. v. Garvan, supra. There is no warrant for saying that the enemy ownership must be determined judicially before the property can be seized; and the practice has been the other way. The present act commits the determination of that question to the President, or the representative through whom (246) he acts, but it does not make his action final. On the contrary, it distinctly reserves to any claimant who is neither an enemy nor an ally of an enemy a right to assert and establish his claim by a suit in equity unembarrassed by the precedent executive determination. Not only so, but, pending the suit, which the claimant may bring as promptly after the seizure as he chooses, the property is to be retained by the Custodian to abide the result, and, if the claimant prevails, is to be forthwith returned to him. Thus there is provision for the return of property mistakenly sequestered: and we have not hesitation in pronouncing it adequate, for it enables the claimant, as of right, to obtain a full hearing on his claim in a court having power to enforce it if found meritorious."

Nor are these opinions antiquated or overruled. In 1936 the United States Supreme Court, in an opinion of Chief Justice Hughes, rendered in St. Joseph Stock Yards v. United States (298 U. S. 38, 80 L. Ed. 1033), reaffirmed the basic principle, and in 1943, a Federal district court again applied the same principle to the Trading With the Enemy Act in Draeger v. Crowley (49 Fed. Supp. 215). Some people might say that this bill only seeks to abolish the remedy for nonresident aliens and not for citizens or residents. But even if so, the bill would be unconstitutional. For the guaranty of due process of law, as contained in the fifth amendment of the Constitution of the United States, applies to citizens and aliens alike, whether resident or not. And the protection is afforded to all property within the territory of the United States.

I conclude that the very premise which has been relied on by the courts to ascertain the constitutionality of the Trading With the Enemy Act is now proposed to be deleted.

This committee, given an opportunity to check on this allegation and being unable to deny it, will be very hesitant indeed to recommend the bill for enactment.

3. The Government of the United States has recently entered into treaties with certain neutral powers. In at least one of these treaties provisions were incorporated for the determination whether certain foreign enterprises, who have property in this country which has been seized by the Custodian, were Germancontrolled or not. Provisions are made for the manner in which these determinations are to be made and for the disposal of the cases. Our statutes were known to the contracting parties and the remedies provided therein must be considered implied parts of the agreements.

By enacting this bill after agreements were reached and ratified with foreign powers, our Government could be charged with having acted in bad faith. The possibility and probability of such charge, particularly where the charge would not be entirely unjustified, should be carefully avoided.

III

For the reasons set forth heretofore I submit respectfully that bill S. 2378 should not be recommended for passage.

GEORGE ERIC ROSDEN.

MURPHY, BLOCK, SULLIVAN & SAWYER,
New York, July 19, 1946.

Re: Hearing on Senate bill 2378 held by Subcommittee of the Senate Committee on the Judiciary on July 18, 1946.

SENATE COMMITTEE ON THE JUDICIARY,

The Capitol, Washington, D. C.

BRIEF IN OPPOSITION TO BILL

GENTLEMEN: At the close of yesterday's hearing on Senate bill 2378, Senator Huffman, chairman of the hearing, stated that briefs in support of and in opposi

tion to the subject bill could be submitted to the committee on or before Monday noon next. In view of the shortness of time, I am taking the liberty of making this an informal and brief statement in opposition to the bill, and an extension of my remarks before the committee yesterday. As indicated in yesterday's hearing, I am general counsel for the International Trade Committee of the Advertising Club of New York.

POINT I

Counsel for the Alien Property Custodian is confusing right of eminent domain with seizure of property rights of friendly neutrals by the Alien Property Custodian. Mr. Cutler, assistant counsel for the Alien Property Custodian, indicated to me by his remarks yesterday before the committee that he and his associates are confused between the principle of eminent domain, out of which arise proceedings in condemnation, and the right of seizure of property in enemy countries owned by the nationals of friendly neutral nations.

The right of eminent domain is the power of the Government to take property for public use. When such a right is exercised, the Government seizes the property it requires and the owner thereof is paid the market value of such property as of the date of taking. In other words, theoretically the owner of the property taken by the Government receives an amount which would be paid for such property on the day of taking by a willing buyer to a willing seller. The date for fixing the valuation of the condemned property is arbitrarily set as of the date of taking, regardless of whether the market price of the property taken happens to be high or low on such date.

The right of seizure of enemy property belonging to nationals of friendly nations is an entirely different matter from the right of eminent domain. Such property thus taken is not for pubiic use but merely for public protection against its use by the enemy. Furthermore, it is a right arising out of an emergency and due solely to international conflict. It is therefore legally unsound to attempt to determine the rights of friendly neutrals in enemy property on the theory of eminent domain, which is an arbitrary right running solely to the sovereignty and relates to the taking of property for public use.

The fixation of the value of enemy property owned by friendly neutrals as of the date of taking would be manifestly unfair and unjust. Under no rule of reason can we imagine that the nationals of friendly countries should be deprived of their specific property under such an arbitrary rule of valuation as is fixed in condemnation proceedings under eminent domain. Such nationals have a right to their specific property and any increments in the value thereof for all time, rather than an arbitrary market valuation fixed on an arbitrary date.

POINT II

The House report on this legislation states that the purpose of section 33 is to "facilitate the speedy sale of alien properties vested in the Alien Property Custodian under the Trading With the Enemy Act, as amended, while at the same time providing an express judicial remedy for the payment of compensation to the former owner in appropriate cases."

In view of the cogent and persuasive arguments and reasons submitted in opposition to this legislation at the hearing yesterday, it is not logical to ask: Who is to be benefited by undue speed?

Who will be harmed by undue speed?

The obvious answer to the first question seems to be that we do not know who will be benefited by so-called speedy sale of alien properties owned by the nationals of friendly neutral countries. It was conceded yesterday by counsel for the Alien Property Custodian that we face many years of litigation and management pertaining to alien properties seized during the last war, and that there are still important cases pending from such seizures effected during World War I. Therefore, may we not ask if it is fair to penalize and punish unjustly the nationals of friendly neutral countries by arbitrarily taking their property, fixing an arbitrary date on which their property is to be valued, and thereby cutting them off from all increases in the value of such property? Would they not thereby be the victims of arbitrary and unjust procedure, the only excuse for which is speed?

The answer to the second question as to who would be harmed by this legislation has been already indicated. The answer is, of course, that the only people harmed would be the nationals of foreign friendly neutrals.

POINT III

This legislation would be harmful to America's international trade and the saleof our tremendous surpluses in production to foreign countries.

After the immediate needs of our own country are satisfied, there will be a tremendous excess in the production of merchandise and other products in this country. This production must be sold overseas at a profit if we are to maintain and sustain our national economy. That is an economic axiom as it has always been realized that in normal times our country must export profitably 10 percent of its production of foodstuffs and merchandise in order to balance our production and sales.

As I stated before the honorable Senators yesterday, American business will spend upward of $10,000,000 next year and in the following years in advertising and promoting American products and services in countries throughout the world. This advertising is designed to build good will and acceptance for American products in general and the advertisers' products in particular. The amount of money thus spent will increase during the succeeding years and it is the belief of my advertising clients that the value of the money thus spent will be reduced and vitiated substantially by the ill will which would be generated by the adoption of the proposed subject legislation, Senate bill 2378. Information regarding the adoption of such legislation would promptly spread throughout the commercial world and it is inevitable that it will cause suspicion, ill will, and reprisals. We feel that we businessmen are the proper judges of the harmful results commercially which would ensue from the adoption of the subject legislation, which legislation is violative of the terms of reciprocal-trade agreements with many countries who are our best customers.

In conclusion, may we ask why speed should be substituted for good old American justice? We would not want to be treated in such an arbitrary and unjust manner by friendly neutral countries as the nationals of such countries would be treated under the proposed legislation. Respectfully submitted.

CHARLES E. MURPHY,

Counsel, International Trade Committee,
Advertising Club of New York.

P. S.-May I renew my expression of sincere thanks to Senator Huffman, the chairman, and to Senator Eastland and Senator Stanfill for their patience and understanding in listening to the advocates of this legislation as well as to those of us who were its opponents at. the hearing yesterday. Their interest and sympathetic understanding of the gravity of the discussion made for an edifying experience.

MEMORANDUM Re S. 2378, a Bill to Amend the First War Powers Act, 1941 SUBMITTED BY RICHARD J. CONNOR

PROPOSED SECTION 33 OF THE TRADING WITH THE ENEMY ACT WOULD ABROGATE EXISTING TREATY OBLIGATIONS

There are extant treaties between the United States and other nations which contain provisions substantially similar to that between the United States and Switzerland (11 Stat. 587). Article I of the Swiss treaty embodies the following language:

"The citizens of the United States and the citizens of Switzerland * * * shall have free access to the tribunals, and shall be at liberty to prosecute and defend their rights before courts of justice in the same manner as native citizens, either by themselves or by such advocates, attorneys, or other agents as they may think proper to select. No pecuniary or other more burdensome condition shall be imposed upon their residence or establishment, or upon the enjoyment of the above-mentioned rights, than shall be imposed upon citizens of the country where they reside, nor any condition whatever to which the latter shall not be subject.' The Government seeks to avoid the contention that proposed section 33 would repeal the quoted type of treaty provision by making reference to a unilateral interpretation of the quoted provision by our State Department, in a letter to the Swiss Ministry dated January 3, 1934, which unilateral interpretation takes the view that said provision does not apply to corporations. As far as can be determined by the writer, there has been no judicial interpretation in this country of the Swiss Treaty, nor has attention to any such decision been quoted by the Department of Justice or other Government agency, which would support the unilateral interpretation thereof made by the executive department.

On the other hand, the Swiss Minister replied to the letter of the State Department under date of January 8, 1934, a part of which letter of the Swiss Minister reads as follows:

"Your answer of January 3, 1934, is indeed apt to give to the convention a considerably different and much more limited comprehension than the one my Government and the courts in Switzerland have given to it up to now. To start with, my Government holds that the question of whether or not corporations are mentioned in the treaty of 1850 is not decisive. It is clear that the only reason for their omission must have been the fact that corporations did not yet play any important part in the economic life of the time. But there was certainly no intention of depriving citizens of both parties of their treaty rights in such cases where they do not act personally but through the means of a corporation." [Italics supplied.]

Thus the weight to be given to the unilateral interpretation of the treaty made by only the executive branch of our Government-even as it respects only corporations-is greatly diminished by the fact of a contrary interpretation by both the executive and judicial departments of the Government of the other party to the treaty.

But even if conclusive effect be given to the interpretation of the treaty by our State Department insofar as corporations are concerned, the Government representatives are by no means relieved of their dilemma. The treaty would still be applicable to all natural persons, as distinguished from corporations, and proposed section 33 would effect an abrogation of the treaty in the case of all natural persons. The Department of Justice has heretofore tacitly admitted the validity of this proposition. At page 4 of its brief filed in the United States Court of Appeals for the District of Columbia, in the case of Uebersee Finanz-Korporation, A. G., appellant, v. James E. Markham, as Alien Property Custodian, appellee (No. 9187), the Government states:

"The treaty of 1850 between the United States and Switzerland affords special protection only to natural persons. Hence, the appellant, a corporation, cannot invoke it to support the position taken in this case.'

The Government now attempts to bail itself out of the dilemma created by the vigor of the treaty provision in respect of natural persons by making reference to a letter written by a representative of the Department of Justice, dated May 21, 1946, and incorporated in the record (pp. 156-157) of the hearings held on the companion bill before a subcommittee of the Judiciary Committee of the House of Representatives. In the hearings before this (Senate) committee the impression was attempted to be left that this letter of May 21, 1946, was an opinion of the Attorney General. It is submitted that this letter is not an opinion of the Attorney General and that its persuasiveness is in nowise to be measured by the weight to which an opinion of the Attorney General is entitled. It is simply a letter prepared in the Claims Division of the Department and signed by the person heading that Department.

A careful study of the letter, and particularly of the cases referred to therein, will establish that there is not even gossamer support for the Government's contention that the treaty does not protect the interests of a friendly Swiss national whose property in this country has been seized by the Custodian.

In the case of Maiorano v. Baltimore & Ohio R. R. Co. (213 U. S. 268, 1909) cited in the letter, which denied to a wife, resident in Italy, a right of action for the death of her husband under a Pennsylvania death damage statute, the court specifically pointed out (p. 274):

"It cannot be contended that protection and security for the person or property of the plaintiff herself have been, withheld from her in the territory of the United States, because neither she nor her property has ever been within that territory.' [Italics supplied.]

As far as is known to the writer all of the property which has been vested by the Alien Property Custodian was that located in the United States or its possessions. It is quite apparent, therefore, that the Maiorano case has no applicability. In the third paragraph of its letter of May 21, 1946, the Department of Justice cites the case of Valk v. U. S. (29 C. Cls. 62, (1894), aff. 168 U. S. 703). The case passed on the interpretation of an act of Congress giving citizens of the United States a right of action for depredations upon their property committed by Indians "in amity" with the United States. The court found as a fact that the Indians who committed the depredations complained of were "not in amity" with the United States. It therefore held that the plaintiff was not entitled to recover. This was the specific ground on which the United States Supreme Court, in a short per curiam opinion, 168 U. S. 703, affirmed the decision of the lower