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The International Responsibility of the United States for Vested German Assets

Published online by Cambridge University Press:  28 March 2017

Henry P. DeVries
Henry P. DeVries*
Affiliation:
Professor of International Comparative Law, Columbia Law School
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Extract

The organized pressures for return of vested enemy assets are accumulating. Acting in rhythm with “that cyclical movement of policy toward an enemy which history has made familiar, German interests directing their primary efforts toward the United States have received a sympathetic hearing from the Administration, and the Senate Committee on the Judiciary has approved proposed legislation which, if adopted, would reopen and nullify commitments to our Allies following World War II.

Type
Research Article
Information
American Journal of International Law , Volume 51 , Issue 1 , January 1957 , pp. 18 - 28
Copyright
Copyright © American Society of International Law 1957

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References

1 Jessup, , “Enemy Property,” 49 A.J.I.L. 58 (1955)Google Scholar.

2 S. Rep. No. 2809, 84th Cong., 2d Sess. (July 26, 1956). Chancellor Adenauer opened negotiations for release of German assets vested during World War II with a letter to President Eisenhower, dated July 17, 1954, stating: “The Federal Government follows with special interest efforts of the United States Congress to find a solution to the question of seized German assets in the United States. Despite the favorable development of relations between our two countries, this problem has remained unsolved. A solution to it is a special wish of my Government.” 31 Dept. of State Bulletin 269 (1954). A strong direct appeal for return was recently made to Congress by Hermann J. Abs, German banker and industrialist, in a letter dated Dec. 28, 1955, to Senator Olin D. Johnston, Chairman, Senate Subcommittee on Trading with the Enemy. Hearings before a Subcommittee of the Senate Committee on the Judiciary on S.854, S.995, S.1405, S.2227, S.3507 (to Amend the Trading with the Enemy Act) and S.3114 and S.3115 (to transfer the office of Alien Property Custodian from the Department of Justice to the Department of State), 84th Cong., 1st and 2nd Sess. (Nov. 29, 30, 1955, and April 20, 1956), p. 320 (hereinafter cited as Hearings on S.854, S.995, S.1405, S.3507, etc.). On his recent visit to the United States Chancellor Adenauer raised the question of vested German assets with Secretary of State Dulles. Joint Communiqué of Chancellor Adenauer and Secretary of State Dulles, 34 Dept. of State Bulletin 1048 (1956). The German Chancellor also conferred with Senator Olin D. Johnston on ways to speed proposed return legislation. New York Times, June 15, 1956, p. 7, col. 6. See Hale and Clift, “Enemy Assets—The $500,000,000 Question,” The Reporter Magazine, July 14, 1956, p. 8.

3 Huijsmans, , “German External Assets and American Contractual Obligations,” 27 Nederlands Juristenblad 581 (July 14, 1956)Google Scholar.

4 During recent hearings of the Senate Subcommittee on Trading with the Enemy, Senator Olin D. Johnston, Subcommittee Chairman, invited Mr. Hermann J. Abs, chief German negotiator at the 1955 United States-German Conference on return of German assets, to state the German position on proposed United States return legislation. Hearings on S.854, S.995, S.1405, S.3507, etc., op. cit. note 2, at 319. None of the Allied Governments was invited to submit its views. In 1953 Senators Kefauver and Hendrickson declared that the Senate Subcommittee reviewing the administration of the Trading with the Enemy Act had given inadequate consideration to the international obligations of the United States with respect to German vested assets. Supplemental Views of Senator Kefauver and Senator Hendrickson, Senate Report of the Subcommittee to Examine and Review the Administration of the Trading with the Enemy Act of the Committee on the Judiciary, 83d Cong., 2nd Sess. (1953), pp. 74, 76.

5 Jessup, loc. cit. (note 1) at 60.

6 The Paris Agreement on Reparation of January 14, 1946 (U. S. Dept. of State Pub. No. 2584, European Series 12), p. 11; 14 Dept. of State Bulletin 114 (1946); 40 A.J.I.L. Supp. 117 (1946).

7 Declared Mr. Angell, head of the U. S. Delegation, at the Paris Conference on Reparation, in plenary session: “ I am deeply convinced—and I think the history of the past twenty-five years will bear me out—that it is only by a joint effort of this kind that it will be possible to achieve reasonable and durable solutions.” Declaration of James W. Angell, Proceedings of the Paris Conference on Reparation of 1945, CPE/P.V.2, Annex I (Nov. 12, 1945).

8 Howard, , “The Paris Agreement on Reparation from Germany,” 14 Dept. of State Bulletin 1023 (1946)Google Scholar.

9 Proceedings of the Paris Conference on Reparation of 1945, Doc. CPE/P.V.5, Annex 4A.

10 Rueff, , “Les Nouvelles Réparations Allemandes, 1946,” in Nouveaux Aspects du Problème Allemand (Centre d'Etudes de Politique Etrangère, Pub. No. 17 (1947))Google Scholar.

11 Howard, loc. cit. (note 8) at 1023.

12 Each signatory government's reparation share was limited to the share allocated to it by the Paris Agreement without, however, prejudicing its right to an eventual final settlement of reparation:

“A. The Signatory Governments agree among themselves that their respective shares of reparation, as determined by the present Agreement, shall be regarded by each of them as covering all its claims and those of its nationals against the former German Government and its Agencies, of a governmental or private nature, arising out of the war (which are not otherwise provided for), including costs of German occupation, credits acquired during occupation on clearing accounts and claims against the Reichskredit-kassen.

“B. The provisions of paragraph A above are without prejudice to:

(i) The determination at the proper time of the forms, duration or total amount of reparation to be made by Germany;

(ii) The right which each Signatory Government may have with respect to the final settlement of German reparation; and

(iii) Any political, territorial or other demands which any Signatory Government may put forward with respect to the peace settlement with Germany.” (Art. 2A and B, Paris Agreement on Reparation, loc. cit. (note 6).)

13 The Agreement on Reparation directed the United States, the United Kingdom and France, as Trustee Powers, to negotiate the transfer of German assets in neutral countries to the Inter-Allied reparation pool:

“German assets in those countries which remained neutral in the war against Germany shall be removed from German ownership or control and liquidated or disposed of in accordance with the authority of France, the United Kingdom and the United States of America, pursuant to arrangements to be negotiated with the neutrals by these countries. The net proceeds of liquidation or disposition shall be made available to the Inter-Allied Reparation Agency for distribution on reparation account.” (Art. 6C, Paris Agreement on Reparation, loc. cit. (note 6).)

Pursuant to this authority the Trustee Powers entered into agreements with Switzerland and Sweden in 1946, Spain in 1948, and negotiated, but never finalized, a draft agreement with Portugal. Inter-Allied Reparation Agency, Report of the Assembly of the Inter-Allied Reparation Agency to its Member Governments, pp. 8–10, Annexes 7, 8, 9, Brussels (1951).

14 “Each Signatory Government shall, under such procedures as it may choose, hold or dispose of German enemy assets within its jurisdiction in manners designed to preclude their return to German ownership or control and shall charge against its reparation share such assets (net of accrued taxes, liens, expenses of administration, other in rem charges against specific items and legitimate contract claims against the German former owners of such assets).” (Art. 6A, Paris Agreement on Eeparation, loc. cit. (note 6).)

15 Angell, loc. cit. (note 7) ; see also Howard, loc. cit. (note 8) at 1027.

16 During the Senate Subcommittee hearings on the War Claims Act, Senator Cooper, Subcommittee Chairman, asked Mr. Benedict English, Assistant Legal Adviser for International Claims, Department of State:

“I want you to put into the record, if you will, the authority under which our Government can hold these assets and prevent their return to nationals of enemy countries. Is it under the provisions of the Paris Conference? I wish you would put that into the record.”

Mr. English: “Yes. Article 6A of the final act of the Paris Conference on Reparations to [sic] Germany, to which the United States and 17 other governments are signatory, provides as follows:

‘Each Signatory Government shall. … ’

[Quotation of Article 6A] ”

Senator Cooper: “In other words, this is just considered to be a part of reparations claims against the German and Japanese Governments. …” (Hearings before a Subcommittee of the Senate Committee on the Judiciary on H. R. 4044, 80th Cong., 2nd Sess. (1948), p. 22.)

During debate of the measure on the floor of the House, Representative Wadsworth, reporting on H.R. 4044, explained that sec. 39 amending the Trading with the Enemy Act was drafted in keeping with the Inter-Allied Paris Agreement on Reparation. 93 Cong. Rec. 551 (1948). Having recited Art. 6A, he repeated it in part: “May I call the attention of the gentlemen to that language ‘to preclude their return to German ownership or control and shall charge against its reparation such assets’.” Ibid.

17 Allied High Commission for Germany, Official Gazette, No. 64 (1951), p. 1107.

18 “The Federal Republic shall ensure that the former owners of property seized pursuant to the measures referred to in Articles 2 and 3 of this Chapter shall be compensated.” Ch. Six (Reparation), Art. 5, Convention on the Settlement of Matters Arising out of the War and the Occupation, signed at Bonn on May 26, 1952 (hereinafter cited as Bonn Convention), as amended by the Protocol on the Termination of the Occupation Regime in the Federal Republic of Germany, signed in Paris on Oct. 23, 1954 (hereinafter cited as Paris Protocol of 1954); Sen. Doc. No. 11, 84th Cong., 1st Sess. (Feb. 18, 1955), p. 103; 49 A.J.I.L. Supp. 98 (1955). The Bonn Convention did not at first become fully effective because of the failure of the French Government to ratify the European Defense Community Arrangement, but it was later expressly incorporated into the Paris Protocol of 1954 and is now in full force and effect.

19 50 U.S.C.A. App. § 40 (1956).

20 The Agreement on Reparation provides:

“If any Signatory Government renounces its shares or part of its shares in German reparation as set out in the above Table of Shares, or if it withdraws from the Inter-Allied Reparation Agency at a time when all or part of its shares in German reparation remain unsatisfied, the shares or part thereof thus renounced or remaining shall be distributed rateably among the other Signatory Governments.” (Art. 1H, Paris Agreement on Reparation, loc. cit. (note 6).)

The Inter-Allied Reparation Agency has reported that on two separate occasions the United States renounced part of its reparation share, which each time became available for ratable distribution to other signatory governments. Inter-Allied Reparation Agency, op. cit. (note 13) at 27.

21 Huijsmans, loc. cit. (note 3) at 585–586.

22 Inter-Allied Reparation Agency, Letter from Jacques Rueff, President of the Assembly, to Member Governments, op. cit. (note 13).

23 Inter-Allied Reparation Agency, op. cit. (note 13) at 8–10.

24 The agreements of the Trustee Powers with the neutral countries provided for the liquidation of German assets in the latter's territory and the transfer of a part of the proceeds to Inter-Allied Reparation account. Inter-Allied Reparation Agency, op. cit. (note 13), Annexes 7, 8, 9.

25 Inter-Allied Reparation Agency, Proceedings of Meeting of Representatives of the Custodian Officers of Eighteen Governments, Members of the Inter-Allied Reparation Agency (March 14–17, 1949), p. 6.

26 Bonn Convention, as Amended by the Paris Protocol of 1954, Ch. 6, Art. 1, par. 1, op. cit. (note 18).

27 Testimony of John Foster Dulles, Secretary of State. Hearings before Senate Subcommittee on the Judiciary on S.3423 (the Dirksen Bill), 83rd Cong., 2nd Sess. (1954), p. 161.

28 Letter of Hermann J. Abs of Dec. 28, 1955, Hearings on S.854, S.995, 8.1405, S.3507, etc., op. cit. (note 2) at 322. Roos, , Zur Konfiskation Privater Deutscher Auslandsvermögen (Stuttgart, 1956)Google Scholar; statement of Walter Germann, Managing Director of Interhandel, Hearings on S.854, S.995, S.1405, S.3507, etc., op. cit. (note 2) at 201–202; statement of Senator William Langer, ibid. at 524; speech of Senator Olin D. Johnston, 102 Cong. Record 6115 (April 24, 1956); Reeves, , “Is Confiscation of Enemy Assets in the National Interest of the United States?” 40 Virginia Law Review 1029 (1954)CrossRefGoogle Scholar.

29 The War Claims Act of July 3, 1948, 50 U.S.C.A., App. § 39 (1948), 62 Stat. 1240.

30 Note 16 supra.

31 5 Hackworth, Digest of International Law 402 (1943). See U. S. v. Curtiss-Wright Export Corporation, 299 U. S. 304, 57 S. Ct. 216, 81 L. Ed. 255 (1936); U. S. v. Belmont, 301 U. S. 324, 57 S. Ct. 758, 81 L. Ed. 1134 (1937); U. S. v. Pink, 315 U. S. 203, 62 S. Ct. 552, 86 L. Ed. 796 (1942).

32 War Claims Act of 1948, loc. cit. (note 29). Congress, authorizing the President to conclude inter-custodial conflicts agreements with other nations, declared:

“Such agreements shall be in accordance with the policy of protecting and making available for utilization the American and nonenemy interests in such property and further the elimination of enemy interests in such property and the efficient administration and liquidation of enemy property in the United States.” (50 U.S.C.A. App. § 40, sub. (2) (1950).)

The Joint Congressional Resolution to terminate the state of war between the United States and the Government of Germany stated:

“Provided, however, That notwithstanding this resolution and any proclamation issued by the President pursuant thereto, any property or interest which prior to January 1, 1947, was subject to vesting or seizure under the provisions of the Trading With the Enemy Act of October 6, 1917 (40 Stat. 411), as amended, or which has heretofore been vested or seized under that Act, including accruals or proceeds of any such property or interest, shall continue to be subject to the provisions of that Act. …” (50 U.S.C.A. App. 1, p. XX (1951); 46 A.J.I.L. Supp. 13 (1952).)

The Treaty of Peace with Italy, in force Sept. 15, 1947, expressly reserved to the Allied and Associated Powers the right to retain and liquidate Italian external assets, the Government of Italy undertaking to compensate former owners. Treaty of Peace with Italy, Art. 79, pars. 1 and 3, 61 Stat. 1247 at 1406–1407 (1948). The same provisions are contained in Art. 27, Art. 25 and Art. 29 of the Rumanian, Bulgarian and Hungarian Peace Treaties, respectively, also in force Sept. 15, 1947. 61 Stat. 1757, 1915, 2065 (1948); see also 42 A.J.I.L. Supp. 47, 179, 225, 252 (1948).

Pursuant to the authority of the Peace Treaties with Rumania, Bulgaria and Hungary, Congress, on Aug. 9, 1955, ordered the vesting and liquidation of blocked assets of these countries in the amount of $27,000,000, the proceeds to be applied to American claims. International Claims Settlement Act, as Amended, 22 U.S.C.A. 1631 (a) (1955); U.S.C., Congressional and Administrative News, Legislative History (1955), p. 625.

The Treaty of Peace with Japan, in force April 28, 1952, expressed the right of Allied Powers to retain and liquidate vested Japanese assets. Treaty of Peace with Japan, Art. 14, 2(1). U. S. Treaties and Other International Agreements 3169 (1952); T.I.A.S., No. 2490; 46 A.J.I.L. Supp. 77 (1952).

Congress approved and ratified Allied policy on reparation in ratifying the Bonn Convention, as amended by the Paris Protocol of 1954, which records Germany's consent to Allied measures with regard to German external assets and its promise to compensate former German owners. The Bonn Convention of 1952 as Amended by the Paris Protocol of 1954, Ch. Six, Arts. 3 and 5, op. cit. (note 18).

83 A subsequent Act of Congress can supersede a treaty in its operation as internal law. Hackworth, op. cit. (note 31) at § 489. The Cherokee Tobacco, 11 Wallace 616 (1871); The Head Money Cases, 112 U. S. 580 (1884); Whitney v. Robertson, 124 U. S. 190 (1888); Chae Chan Ping v. U. S., 130 U. S. 581 (1889).

34 Hackworth, op. cit. (note 31) at 185–186.

35 “No essential difference exists between private property and public property in the case of Germany and Japan. For several years before World War II, while Germany and Japan were preparing to make war upon the United States, property owned in the United States by the citizens of both these countries was subject to rigid control of their respective Governments. While the fiction of private ownership was retained, actually property of German and Japanese nationals in the United States was widely used to accomplish the national objectives of those countries.” House Report No. 976 (on the War Claims Act), 80th Cong., 1st Sess. (July, 1947), p. 2.

36 The Bonn Convention of 1952 as Amended by the Paris Protocol of 1954, Ch. Six, Art. 5, op. cit. (note 18).

37 German “residents may not dispose of prewar German assets abroad” and new investments are subject to government license. International Monetary Fund, Fifth Annual Report on Exchange Restrictions 157 (1954).

38 Huijsmans, loc. cit. (note 3) at 595, note 1.

39 Russian Volunteer Fleet v. U. S., 282 U. S. 481 (1931); Clark v. Uebersee Finanz-Korporation, 332 U. S. 480, 68 S, Ct. 174, 92 L. Ed. 88 (1947); Silesian-American Corporation v. Clark, 332 U. S. 469, 68 S. Ct. 179, 92 L. Ed. 81 (1947).

40 Hyde, International Law Chiefly as Interpreted and Applied by the United States 1737 (2nd rev. ed., 1945).

41 Brown v. U. S., 8 Cranch 110 (1814) ; Miller v. U. S., 11 Wallace 268 (1871) ; U. S. v. Chemical Foundation, 272 U. S. 1 (1926); Woodson v. Deutsche Gold, 292 U. S. 749 (1934); Cummings v. Deutsche Bank, 300 U. S. 115 (1937); Clark v. Uebersee Finanz-Korporation, loc. cit. (note 39) ; Silesian-American Corporation v. Clark, loc. cit. (note 39).

42 International Claims Settlement Act, as Amended, 22 U.S.C.A. 1631.

43 Note 32 supra.

44 American Bar Association, Proceedings of Section of International and Comparative Law 74 (December, 1945)Google Scholar.

45 The United States has traditionally relied on bilateral treaties for the protection of its foreign investments and property. Declared Herbert Hoover, Jr., Under Secretary of State, in an address to the Harvard Business School Association on June 16, 1956: “The commercial and tax treaty programs have long been an integral part of the effort of our Government to develop on a reciprocal basis standards of fair treatment. Since World War II, 15 commercial treaties, with modernized provisions relating to investments, have been negotiated. Similar treaty proposals are under negotiation or consideration with more than half a dozen other governments.” 34 Dept. of State Bulletin 1049 at 1052 (1956). Of the 15 treaties negotiated since World War II, three are awaiting final action by the foreign governments, four are awaiting Senate approval, and the following eight are already in force: with China, 63 Stat. 1299, T.I.A.S., No. 1871; Ethiopia, 4 U. S. Treaties and Other International Agreements 2134, T.I.A.S., No. 2864; Germany, S. Exec. E, 84th Cong., 1st Sess., effective June 14, 1956; Greece, 5 U.S.T. 1829, T.I.A.S., No. 3057; Ireland, 1 U.S.T. 785, T.I.A.S., No. 2155; Israel, 5 U.S.T. 550, T.I.A.S., No. 2948; Italy, 63 Stat. 1255, T.I.A.S., No. 1965; and Japan, 4 U.S.T. 2063, T.I.A.S., No. 2863. Declared Herman J. Phleger, Legal Adviser, Department of State, in a recent address before the New York State Bar Association on June 23, 1956: “Among the rights secured to Americans by these treaties, in consideration of like rights granted in this country, are the right to do business, protection against expropriation, and protection againBt discriminating treatment.” 35 Dept. of State Bulletin 11 at 16 (1956).