The German Government would be grateful if your Excellency would confirm the correctness of this assumption.

In the view of the German Government it would furthermore be in the interest of both Governments concerned that the work of the Commission be carried out as quickly as possible. In order to insure this it might be expedient to fix a period for the reporting of the claims to be considered by the Commission. The German Government, therefore, proposes that the Commission should consider only such claims as are brought before it within at least six months after its first meeting as provided in Article III of the above-named agreement.

I should be obliged to your Excellency for a statement as to whether the American Government is in agreement herewith.

At the same time I take advantage of this occasion to renew to you, Mr. Ambassador, the assurance of my most distinguished consideration.

No. 128.

WIRTH.

[The American Ambassador at Berlin to the German Chancellor]

AMERICAN EMBASSY,
Berlin, August 10, 1922.

Mr. Chancellor: I have the honor to acknowledge the receipt of your note of today's date transmitting the draft of the agreement enclosed to you in my note of June 23, as modified as a result of the negotiations that have been carried on between us.

In accordance with the instructions that I have received from my Government, I am authorized by the President to state that he has no intention of pressing against Germany or of presenting to the Commission established under the claims agreement any claims not covered by the Treaty of August 25, 1921, or any claims falling within Paragraphs 5 to 7, inclusive, of the annex following Article 244 of the treaty of Versailles.

With regard to your suggestion that the Commission shall only consider such claims as are presented to it within six months after its first meeting, as provided for in Article III, I have the honor to inform you that I am now in receipt of instructions from my Government to the effect that it agrees that notices of all claims to be presented to the Commission must be filed within the period of six months as above stated.

I avail myself once more of the opportunity to renew to you, Mr. Chancellor, the assurances of my most distinguished consideration. A. B. HOUGHTON.

Dr. WIRTH,

Chancellor of the German Empire, Berlin.

Mr. WINSTON. The second section relates to a determination of the claims against the United States by the German owners of ships, radio stations, and patents.

It has been satisfactory to the German representatives of the owners of the ships and radio stations that there shall be a sole arbiter and that the arbiter shall be appointed by the President. They express confidence in the fairness of any arbiter appointed by the President in these matters.

So that there is one arbiter to be appointed, and if the arbiter should be the same man as the umpire on the mixed claims, as is permissible, and as would probably be the case, he would receive a salary which, with the salary as umpire, would be $15,000. Mr. OLDFIELD. What is his salary now?

Mr. WINSTON. I think that he gets that much.

Mr. GARNER. If you were the German owner of these ships, stations, and patents, you would be willing to select almost any arbiter that would give you anything, would you not?

Mr. WINSTON. I want to tell you that I have received criticisms for having provided for only one arbiter. People have said, "Why, that is an outrage. He will not decide fairly.'

Mr. GARNER. Well, if this was not in the form of a gift, that criticism would be well founded.

Mr. OLDFIELD. I assumed that you had not been criticized, because you said that they were perfectly willing to have only one arbiter. Mr. WINSTON. Not by the German representatives, but I have been criticized by people outside for saying that one arbiter should decide a matter which is of such importance.

Mr. MAPES. Mr. Winston, I do not understand under what law these vessels and radio stations and patents were taken, as distinguished from the law creating the Alien Property Custodian. Can you tell us that?

Mr. WINSTON. The situation is quite complicated, but I think that the ships in general were just taken possession of.

Mr. MAPES. They were not taken possession of by the Alien Property Custodian?

Mr. WINSTON. No; they were just taken possession of by the United States. We went down to the docks and took them.

Mr. NEWTON. They were seized under the general war powers. Mr. WINSTON. Yes; they were seized under the general war powers, without any specific authority. Under date of May 12, 1917, which was subsequent to the seizure, there was a joint resolution of Congress giving the President the power to take possession and title to these ships, and directing the Secretary of the Navy to appoint a board of survey to ascertain the value of the vessels and the property contained therein.

The findings of the board appointed by the Secretary of the Navy shall be considered as competent evidence in all proceedings for any claim for compensation.

It has been argued that under this act the United States is obligated to pay compensation for those ships. Whether or not there is any duty on the United States legally to pay, it is hard to distinguish in principal between ships belonging to private German citizens, which were taken and used by the United States, and property of private German citizens which was taken by the Alien Property Custodian. Mr. MAPES. What agency of the Government has been handling the ships and radio stations?

Mr. WINSTON. Some, I think, went to the Navy and some to the Shipping Board. Some have been sold. Some went to the Emergency Fleet Corporation.

Mr. MAPES. They never came under the Alien Property Custodian, I take it?

Mr. WINSTON. Not the ships.

Mr. MAPES. Or the patents?

Mr. WINSTON. The patents present a very complicated situation and I would like to be relieved from the necessity of trying to explain it. The attorney for the Alien Property Custodian knows the situation. The general purpose of the act is to pay for these patents which have been used by the United States, or taken by the United States for its own use, a reasonable compensation. Some of them went through the Alien Property Custodian. If we paid anything for them, we would get back the amount that we paid.

Mr. MAPES. Your proposition is to pay for the patents that the Government has used, whether or not they went through the Alien Property Custodian?

Mr. WINSTON. However, they came to us, yes; the same is true with relation to the radio stations.

Mr. GARNER. Who can give us the information as to how much money has been received by the Government through the sale of this property which we took over, how much the property is worth at the present time and in what department it is located?

Mr. WINSTON. Are you talking now about the property under the jurisdiction of the Alien Property Custodian?

Mr. GARNER. I am talking about the ships, patents and radio stations.

Mr. WINSTON. The Navy would know about that.

Mr. GARNER. What I would like to know is how much money we have received from the sale of these properties, where the property is now located and how much that the property that is still on hand is worth.

Mr. WINSTON. I imagine that that information could be obtained from the Navy Department and Shipping Board.

Mr. NEWTON. And the Army, with reference to the patents.

Mr. WINSTON. Yes. We have put a limitation in this bill to the effect that we shall not pay any compensation for patents during the war; that is, from April, 1917, to November, 1918. We did not believe that the United States ought to pay for fighting Germany.

Mr. NEWTON. I should like to ask a question with relation to paragraph 1 of section 2, lines 9 and 10. It reads:

Such compensation shall be the fair value, as nearly as may be determined, of such vessel to the owner at the time possession was taken under the authority of such joint resolution, and in its condition at such time

This is my understanding of the situation. All of the ships that were seized were German ships that had been interned after the war broke out in Europe, but before we got into the war. When it became apparent that war was coming, and just before the declaration of war, the German crews who were in possession of the ships, did everything possible to put them out of commission. In the case of one of them, which later became the Mount Vernon, I happen to know something of just what was done in the way of putting the ship

out of commission.

It is your understanding, is it not, that in arriving at the value to be placed upon these ships, it shall be the value of them after the German crews had finished trying to place the ships in such condition that they could not be used against them?

Mr. WINSTON. That is the purpose of putting in the phrase "and in its condition at such time.

Mr. NEWTON. That is what I thought. I wanted to get your understanding of it while we were discussing it.

Mr. WINSTON. The matter of the ships is a very difficult thing to determine. Ships in 1914 had a certain value per ton and in 1917, when we took these ships, by reason of war conditions, the ships had a very much increased value. Ship tonnage was scarce, and if you could have taken these ships out and sold them in April, 1917, they would have commanded a high value. At the time of the Armistice, ships had a higher value than they had in 1917.

When we signed the treaty of peace in July, 1921, ship prices were almost down to the bottom, not the bottom, but they were down to where they had been in 1914.

What did the Germans lose? These ships were interned in our harbors. So far as they were concerned, in April, 1917, those ships were nothing but pieces of steel and engines. They were not ships, because they could not use them. They could not have taken them out of the harbor without having them seized or destroyed. They did not have any right to use them until we were at peace.

What we have sought to express in fixing the value of the ships, is what those ships were worth to the Germans, what they could have sold them for, bearing in mind that the ships had been damaged, in the first place, and, secondly, that the war was on and they could not have been used until peace was declared.

That is what we have tried to express in this subclause.

Mr. NEWTON. Of course, any ship which was tied up for that length of time would naturally deteriorate in value.

Mr. WINSTON. Yes; but as a matter of fact, as you know, we took the ships and repaired them. We made improvements on them. We do not want to pay for those improvements.

Mr. MILLS. The value to the Germans was the price at which they would have sold the ships in the condition they were in, for delivery after the war. Is that true?

Mr. WINSTON. Yes, sir.

Mr. NEWTON. That is the condition they were in at the time of seizure and for delivery after the war.

Mr. MILLS. Yes; damage to the ships for delivery after the war That was their only value to the Germans.

about the same.

Mr. WINSTON. The question with regard to the radio stations is That is, they were there, but they could not be used. by the Germans. The question is as to what those radio stations were worth in the condition they were in when we took them on July 2,

1921.

With relation to the patents and the use of the patents, I wish you would make inquiry of the Department of Justice and the Alien Property Custodian.

Mr. MILLS. I think that the representative of the Army and Navy knows more about that, perhaps.

Mr. WINSTON. Yes; Colonel McMullen.

Mr. MILLS. Colonel McMullen knows more about that than anybody else. He is here.

Mr. WINSTON. Yes.

Mr. MAPES. May I ask you just one more question?

I take it from your statement that those patents which were involved in the Chemical Foundation would not come within the jurisdiction of the provisions of the bill?

Mr. WINSTON. No; because the United States never got the beneficial use of those patents. They went to private citizens. If there is any claim against private citizens, they should pay, and not the

United States.

Mr. NEWTON. Is it not true that whatever proceeds there were from the sale of those patents to private citizens would be subject to distribution under the terms of this bill?

Mr. WINSTON. Yes, sir; they go back.

Mr. MAPES. They would come under the subsequent provisions of the bill which provide for the turning back of the property of German nationals in the possession of the Alien Property Custodian?

Mr. WINSTON. That is correct.

Mr. MILLS. Except this, that we have a provision in this bill to the effect that if a man has elected to go to court and the matter is being litigated, he can not have both remedies; that is true, is it not ?

Mr. WINSTON. That is true and has taken care of several situations which may arise. There is a question as to whether under the joint resolution under which the ships were seized, the United States does not owe compensation, and if compensation is paid under the resolution, it can not be paid under the bill.

Mr. GARNER. Under the theory of this bill, you are undertaking to do equity to the German citizens for property taken by the Alien Property Custodian, is that so?

Mr. WINSTON. I do not think that that is quite the way to put it. Mr. GARNER. What are we trying to do?

Mr. WINSTON. We are trying to do equity in the three matters. Mr. GARNER. In the first instance, then, in returning the property, you are undertaking to do equity to the German nationals from whom the property was taken by the Alien Property Custodian. Let us take the case, for instance, of the Chemical Foundation. I do know what their properties were worth. Let us suppose for the sake of the argument, that they sold them for $250,000 and they were in possession of conclusive proof that they were worth $5,000,000. What attitude would the Government of the United States take with reference to the matter of disposing of $5,000,000 worth of property for $250,000?

Mr. WINSTON. What attitude do you think it should be?

Mr. GARNER. If you are undertaking to do equity, and you grossly mismanaged the property of the alien, it seems to me he would have some equitable claim. That is the way it strikes me.

Mr. WINSTON. If you are going to open up that question

Mr. GARNER. I did not say that I was going to open it up. I was asking you what the equity in that case was.

Mr. WINSTON. I do not know, except that if the United States is going to pay because something was done which was wrong, by a trustee who had enormous operations, we would open the door to unlimited claims.

Mr. GARNER. In this bill we are undertaking to return to German nationals the property we took from them. We are undertaking to pay for their radio stations and patents that we took over; is that correct?

Mr. WINSTON. That the United States used; yes.

Mr. GARNER. The United States was in possession of the patents that the Chemical Foundation bought?

Mr. WINSTON. They were in the possession of an agent of the United States, as trustee.

Mr. GARNER. Suppose that the trustee abused his office to the extent of selling $5,000,000 worth of property for $250,000 dollars. Is there not a question of equity there?

Mr. WINSTON. I think the Chemical Foundation is already in court on that matter.

Mr. GARNER. I did not ask you whether they were in court. I asked you whether there was a question of equity involved.

Mr. WINSTON. But they are not in court against the United States.