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The CHAIRMAN. We will adjourn, then, until 10 o'clock Monday. Let the witness appear at that time.

That is all for this evening. The committee stands adjourned until next Monday morning at 10 o'clock.

(Whereupon, at 4.32 o'clock, an adjournment was taken until Monday, November 22, 1926, at 10 o'clock a. m.)

HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, Washington, November 22, 1926.

The committee met at 10 o'clock a. m., Hon. Willis C. Hawley presiding.

Mr. HAWLEY. The chairman is unavoidably detained and has asked me to start the hearings. The first witness for this morning is Mr. Charles Le Fevre, of this city.

FURTHER STATEMENT OF CHARLES H. LE FEVRE. WASHINGTON.

D. C.

Mr. LE FEVRE. Mr. Chairman and gentlemen of the committee, I was called before your committee just about the time you were ready to adjourn on Friday and I then gave my name and stated I was a member of the law firm of Le Fevre & Le Roy, having offices in the Hibbs Building, of this city, and that that firm represents some American claimants whose claims have been considered by the Mixed Claims Commission and we have awards for our claims in all except one case; that we also represent quite a number of German nationals whose property is held by the Alien Property Custodian or by the Treasury of the United States. I took occasion to state that I was with the Alien Property Custodian during the war and for some time after the war. I did that in order to make known to you the experience I had there and also my familiarity with the trading with the enemy act.

Mr. HAWLEY. You acted as counsel?

Mr. LE FEVRE. Yes. I was in the bureau of law and came there in the latter part of 1917. I was there during the war and for a short time after Colonel Miller became Alien Property Custodian. One of the last acts I performed as a member of the Alien Property Custodian's office was to prepare the original draft of what became the amendment to the trading with the enemy act, under date of March 4, 1923, which is known as the Winslow Act.

You have before you certain bills that were introduced at the first session of the present Congress, which have been termed in the bills themselves as "Settlement of war claims act of 1926," and those bills all contemplate returning to the German nationals the property the Alien Property Custodian took over. If the bills became law, there should be a provision in them that has not been placed in them as yet, and this provision would relate to the property that the Alien Property Custodian demanded or seized and which has not come into his possession. There are quite a number of outstanding demands or seizure orders that have not been com

plied with as yet, although the time for making demands expired a little over five years ago.

When the Knox-Porter peace resolution was adopted by Congress and declared the war to be at an end, we considered that it made the former alien enemies alien friends, the war being over, and the trading with the enemy act authorized merely the taking over of property of alien enemies. But the demands that had been issued prior to that date have been judicially determined to have given the Alien Property Custodian constructive possession of that property, or left with him the right, subject to the provisions of another section of the trading with the enemy act, to enforce compliance with those demands.

Mr. HAWLEY. You say "judicially determined "?

Mr. LE FEVRE. Yes.

Mr. HAWLEY. What do you mean by that?

Mr. LE FEVRE. The courts have decided that the Executive orders and proclamations that were made, the rules and provisions for carrying out the trading with the enemy act, as provided for in the act itself, must be construed and treated as a part of the trading with the enemy act, and the President, in his earlier Executive orders, declared that when a demand was served the effect of the service of that demand was to vest the title to the property in the Alien Property Custodian and to give him the power of administration of that property.

Mr. HAWLEY. No case has arisen in any court on any of these demands, however?

Mr. LE FEVRE. No, sir. The nature and the character of the property interests that were demanded is what interfered with immediate compliance with the demands, and, to give you a concrete example of that, there was a man by the name of Wilhelm Wolters who was born and bred in Germany, and as a young man went to Honolulu and became a very successful business man in that city, was interested in the sugar industry and other industries, and died leaving a fortune of over half a million dollars. He died during the war, and his last will and testament provided that a trust should be formed for the period of 10 years and that certain annuities should be paid to designated beneficiaries; that after the end of the 10 years the corpus of the estate should go to the charitable institutions of his native city of Bremen, and the Senate, or the governing body of that city, should have the power of appointment in designating what charitable institutions of that city should receive this bounty and in what amounts. The 10 years covering the period of the trusts has not elapsed and the right, you see, of the city of Bremen, whose interests had been demanded, has not accrued, and the money will not be paid to the Alien Property Custodian until the termination of the trusts.

There were a great many reversionary and remainder interests that were demanded. I have mentioned only one concrete case, but there were quite a number of outstanding demands when the war ended, and, unless some provision is made in the contemplated legislation disposing of this property, the Alien Property Custodian office will have to continue to function in order to administer the property when received.

So I have prepared a draft of an amendment. I drew this as an amendemnt to H. R. 12643, thinking that was the particular bill, probably, you would make the basis of your consideration: but it could serve as an amendment to any of these bills you might favor, to be added as a new section to the trading with the enemy act. It reads:

After the enactment of the settlement of war claims act of 1926, all money or other property theretofore demanded or constructively seized by the Alien Property Custodian but not actually paid over or delivered to the Alien Property Custodian shall be freed and forever discharged from the force and effect of the demand or seizure of the Alien Property Custodian, and may be dealt with between those in possession of such money or other property and those entitled to receive the same as if the Alien Property Custodian had never made such money or other property the subject of a demand or seizure.

If you would add some such new section, that would terminate the matter of the Alien Property Custodian being required to administer all that property that was demanded and not delivered over, and, by terminating that, would enable the proposed legislation to dispose of the necessity of continuing for years to come the office of the Alien Property Custodian.

Mr. WATSON. I understand this trust was for a period of 10 years? Mr. LE FEVRE. The trust was for a period of 10 years.

Mr. WATSON. If the trust was for a period of 10 years, the money could not have been distributed until after the end of that time? Mr. LE FEVRE. Yes.

Mr. WATSON. Who is the trustee?

Mr. LE FEVRE. There were three citizens of the United States who were named in the will as trustees, and the demand was made upon one of those trustees.

Mr. WATSON. The trust can not be paid anyway until after the end of 10 years.

Mr. LE FEVRE. At the end of 10 years the trust can be paid, and it will have to be paid over to the Alien Property Custodian if that demand is still legally in force.

Mr. WATSON. You are suggesting this in order to avoid that complication?

Mr. LE FEVRE. Yes. I have limited this to apply only after the war settlement bill has been passed.

Mr. WATSON. The trustee is collecting interest, I presume, and adding it to the principal?

Mr. LE FEVRE. Yes; and paying out of the funds in their possession certain annuities that were provided for in the last will and

testament.

I have been present at your hearings and I have heard the witnesses talk and I have heard you ask your questions, and it appealed to me that maybe I could be of some assistance to you by giving you briefly an outline of some things relating to the matters you have before you for consideration.

The constitutional authority for a bill like the trading with the enemy act arose out of the war-time powers given to Congress in the Constitution of the United States to make rules concerning captures on land and sea. The trading with the enemy act

Mr. CHINDBLOM. Do you refer to a specific delegation of power? Mr. LE FEVRE. Under the general powers conferred by the Constitution upon the Congress of the United States is the power to declare war, to make rules concerning captures on land and sea, to grant letters of marque and reprisal, etc. And, in the first case that came to the Supreme Court of the United States, one of the first things in the opinion was that Congress was given authority to pass an act of this kind under that particular provision.

Mr. CHINDBLOM. Would it not be under the general powers of Congress to conduct a war just as well? If you have to base it on the other authority, then the question is, What is meant by captures and reprisals on land and sea?

Mr. LE FEVRE. Yes; but Mr. Justice Holmes, in his opinion, refers to that particular phrase as covering the situation as far as the taking over of any of the property is concerned in time of war.

The trading with the enemy act has one remedial section, section 9, and that was placed there so as to enable anyone who was not an enemy, and whose property might have been seized, to claim it and have it restored to him. And in section 12 of the trading with the enemy act there is a provision that the claims of enemies, after the war, should be disposed of as Congress might direct. In other words, Congress reserved to itself the power of disposing of the enemy property that was taken over under the trading with the enemy act.

Now, when the Knox-Porter resolution declaring the war at an end was adopted, it was deemed wise to leave the case open to Congress, to act after a formal treaty of peace had been made, and, when this question might come before you as it is now, to decide what should be done with this seized property, and a restriction was put in the peace resolution that this property shall remain where it is and shall not be disposed of until Germany makes suitable provision in the matter of American claims. But, in the matter of the retention of this property, there is an expressed exception. Mr. Mondell referred to it on Friday. It is, "except as shall have been heretofore or specifically hereafter shall be provided by law."

Now, you have provided by law for the return of a part of this property. That was done by the Winslow Act. And the power is with you to dispose of the rest of the property--all of it. It shall be retained"except," you see-as leaving the case open for Congress to act under that provision of section 12, simply saying, that the claims of the enemies shall be disposed of as Congress shall direct.

When we took over this property, we had no thought that Congress would ever decide, in its power, that the property would be confiscated. We opened a trust in the name of each person to whom we believed the property belonged at the time of seizure, and the prop erty is still held in that way-in a trust of a given number, associated with the name of the original owner. When the property was demanded, the Alien Property Custodian received that property and held it as a trustee-not for the original owner, but as a trustee for the United States of America. The United States of America having ordered or directed that this property should be taken over for war time purposes and left it with the United States of America to decide what shall be the final disposition of that property.

We took a great bulk of property over, and I really feel that the office of the Alien Property Custodian accomplished a great work in the manner in which that was done. We had no precedents to follow; it was a new law so far as the United States was concerned. It was copied largely after the British trading with the enemy acts. The British and the French, back in 1914, passed similar laws and took over German property, and when the trading with the enemy act was being considered here in Congress it was made known to the committees who considered the bill that the British had made certain mistakes that we wished to avoid, and we did not copy the British act in its entirety on that account. One thing we did that the British did not do, we made the bill apply only to the property of persons who were residents in the territories that were occupied by the armed forces of the nations with which we were at war, while the British took the property of a German national, whether he was behind the lines of the German forces or whether he was living peaceably among the British subjects in Great Britain. The trading with the enemy act declared an enemy to be, and whose property could be taken over, a person resident in the territory under the control of the enemy nations, and it also provided, if the President should deem it expedient for the best interests of the country, to declare other classes of persons to be enemies, and the President exercised that power and declared that all those persons who were under arrest in the United States for any hostile act and who were interned during the period of the war should be treated as enemies and their property should come within the provisions of the trading with the enemy act so that it could be demanded and sequestrated.

Mr. Pavenstadt, who was president of Amsinck & Co. in New York, was one of those arrested. He was quite a friend of Count Bernstorff, and Mr. Pavenstadt had over a million dollars worth of property. I prepared the original demand for taking over that property and had charge of it practically until the time Mr. Pavenstadt was released from Fort Oglethorp and got his property back. Mr. CHINDBLOM. Did that action follow as a matter of course upon his release?

Mr. LE FEVRE. No. Congress passed an amendment to section 9 of the trading with the enemy act providing that the property of those who were interned, coming within this particular class under the presidential proclamation, might be returned that is, might have the benefit of the amendment to section 9 of the trading with the enemy act-and the property of enemies of the interned class has, in large measure, been given back to the owners.

Mr. CHINDBLOM. You said "might be "; not "should be "?

Mr. LE FEVRE. The amendment to section 9 gave the Government officials the authority to turn the property back.

Mr. CHINDBLOM. You say it has been returned in large part but not altogether?

Mr. LE FEVRE. It may all have been returned by this time. The claimants were given the right, under this amendment to the trading with the enemy act, to file a claim for their property, and, unless a claim was filed and considered and acted upon, they have not gotten their property back as yet; but I presume that class of claims has been largely settled.