Mr. FULTON. Would you comment on the second, the time for which interest is to be given? Suppose there is an obligation on which there is an interest rate set. The obligation goes into default. Is there any interest after the time of default and, if so, what amount?

Mr. MULTER. That depends on the obligation. If it were a bond, and the bond calls for 6 percent interest and nothing else other than that, it would carry 6 percent interest until paid. On the other hand, many bonds call for 6 percent and on default 7, 8, or 10 percent interest.

Mr. FULTON. That is the point I am raising. limitation?

What would be the

Mr. MULTER. I think when you get into the general claims, unsecured claims, it won't matter, because most of those claims will be based upon bonds. If you take a dollar bond and permit it to participate in this fund only to the extent of a dollar, it will participate to no greater extent than if you say, "$1 plus interest to date," because they all carry the interest to date, and instead of being $1 it will be $100 but they all participate on a pro rata basis.

You get a different situation with judgments and attachments. There it calls for interest only in accordance with the local statute under which the attachment was issued. You can't take the interest away, because you get into the question of, can you take away his vested right.

Mr. FULTON. On that particular point, let us leave that as an area of research for the staff as to the question of vested rights and the various questions of interest that we are bringing up here rather than trying to decide at this particular point. We have brought the question up, and I think we have gone far enough.

Mr. MULTER. The other point I would like to make, which was suggested by the Treasury Department, was that the language of sections 7 (c) and 7 (d) of the International Claims Settlement Act of 1949– the official citation is title 22, United States Code, supplement 5, sections 1626 (c) and (d)-should be included in this resolution. I go along with that because that then gives the Treasury a criteria to follow in making payment. That will be the case in many instances, because American nationals who were alive in 1919 and had claims that were fixed in 1933 have since died. Their heirs should be permitted to receive the payment upon proof of the claim.

Mr. FULTON. We will ask the Treasury Department to amplify that. We won't need to go into that here.

Mr. MULTER. May I make one final comment? The suggestion has heretofore been made that this resolution might well be rewritten so that it will throw all of these claims into the International Claims Commission and that that law be amended so as to provide authority there to hear these claims.

There are two objections to doing that. One is the very sound legal objection that under the treaty entered into with Yugoslavia pursuant to which the International Claims Settlement Act was passed, any balance in that fund after administrative expenses and paying the claimants who proved claims must go back to Yugoslavia. Therefore, you can't very well join the two together and let that fund carry part of the expenses of administration of this fund.

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Plus the fact that you have the practical objection that we have experienced considerable delay in the proving of those claims. There are thousands of them. You have thousands here. There is no reason why each fund, as each is paying its own administration expenses, can't be running side by side in two commissions and expedite the action that way. Then you don't get into all the difficulty and wrangle that did accompany the administration of the other act.

Mr. FULTON. My recommendation would be separate commissions. Some of the commissions have operated very well and others have been very slow in following up. I feel you would get better followup on it from the legislative department to see that these things are quickly done.

Mr. GORDON. I have one more question, Mr. Chairman. What is the big difference between House Joint Resolution 130 and House Joint Resolution 49?

Mr. FULTON. We will have the staff give us that.

Mr. MULTER. I said that Congressman Keogh had authorized me to say that he is supporting House Joint Resolution 130, which he recognizes has various amendments in it which he does not have in his, and that he would rather have House Joint Resolution 130 acted upon and not his.

Mr. FULTON. Thank you very much. Our next witness is Mr. Ben H. Brown, Deputy Assistant Secretary of State. Mr. Brown, do you have a statement from the Department on this legislation?

STATEMENT OF HON. BEN H. BROWN, JR., DEPUTY ASSISTANT SECRETARY OF STATE FOR CONGRESSIONAL RELATIONS, DEPARTMENT OF STATE

Mr. BROWN. Mr. Chairman, I do have a prepared statement; however, I think if I read the statement I would cover considerable ground that has already been covered by previous witnesses.

If it is agreeable to the committee, I would like to file the statement and just mention those points that have either not been fully covered or not covered at all by previous witnesses.

Mr. FULTON. With the consent of the committee, we will ask that it be filed with the clerk.

(The statement referred to is as follows:)

STATEMENT OF THE DEPARTMENT OF STATE REGARDING HOUSE JOINT RESOLUTION 49 AND HOUSE JOINT RESOLUTION 130, 83D CONGRESS, 1ST SESSION

Mr. Chairman, at the committee's request, the Department of State has submitted a written report regarding the pending resolutions.

The purpose of the resolutions is to amend a joint resolution approved August 4, 1939, which authorized the designation of a Commissioner to determine the validity and amounts of claims of American nationals against the Government of the Union of Soviet Socialist Republics. No funds having been appropriated to pay the expenses involved, a Commissioner was never designated. Copies of the 1939 resolution are submitted for the information of the committee.

In a communication of June 1, 1939, to the President recommending the enactment of the 1939 joint resolution, Secretary Hull pointed out that there had been filed in the Department a large number of such claims, most of which had their origin in decrees of the Soviet Government issued subsequent to the 1917 revolution, nationalizing property and repudiating bonds and other obligations of prior governments of that country. Secretary Hull also pointed out that this Government had a large claim of its own against the Soviet Government

as the successor to prior governments of Russia, consisting for the most part of notes of the predecessor governments given in exchange for cash advances and supplies furnished by this Government on credit. He also reported that it had not been possible to bring about an agreement with the Soviet Government for the settlement of any of these claims, but that on November 16, 1933, preparatory to a possible overall settlement agreement, the Soviet Government assigned to this Government certain Soviet assets in this country. That assignment by Maxim Litvinov and Serge Ughet, respectively, is generally referred to as the Litvinov assignment, and copies are submitted for the information of the committee. The Department of Justice has recently, by litigation or otherwise, completed the task of liquidating these assets, and the sum of $9,114,444.36 has been deposited in a special account in the Treasury.

The following statements were contained in Secretary Hull's report supporting the 1939 resolution:

"The amount of the obligations of Russian Governments held by the Government of the United States is, of course, fixed and certain. As to the private claims, however, a different situation is presented. Despite the fact that the Department has from the beginning endeavored to prevail upon claimants to submit their claims in completed form, with supporting evidence, it is not now possible to determine with any degree of accuracy the validity and value in dollars of more than a small part of the claims that have been filed. It would be extremely useful to this Government to have these questions determined, both from the point of view of future negotiations with the Soviet Government and from the point of view of the distribution of assets realized, and that may be realized, under the assignment of 1933, should Congress decide that the assets should be distributed in whole or in part to the private claimants.

"The failure of such claimants to perfect their claims has been due no doubt in part to the fact that many of them are of limited means and are loath to expend the necessary labor and funds for that purpose, in the absence of prospects for payment, or the establishment of a definite method, with some degree of finality, for adjudication of the claims on their merits within a specified period of time. The desirability of having the claims finally passed upon at the earliest possible date is amply demonstrated by the common experience that the lapse of time renders difficult the production by the claimants of the necessary supporting evidence.

"While the negotiations carried on with the Soviet Government with a view to the settlement of the claims of this Government and its nationals against that Government have not so far been attended by any appreciable degree of success, the Department is actively interested in the claims and in being prepared to take advantage of any opportunity that may arise to renew negotiations. It would be extremely helpful and perhaps contribute to the success of such negotiations if the private claims were reduced to some degree of finality as regards their merits and value."

In 1938, R. Walton Moore, counselor of the Department of State, stated in a letter to Mr. R. S. Morris, chairman of the Association of American Creditors of Russia, that the Department had "always had in mind that whatever funds are recovered as a result of that assignment would be made available in whole or in part, to American private claimants."

The records of the Department indicate that since 1918 at least 2,600 claims have been brought to the attention of the Department. These claims total approximately $443 million, according to the claimants' figures. But experience indicates that this total includes considerable exaggeration.

As pointed out in the Department's written report, House Joint Resolutions 49 and 130 amend the 1939 resolution in the following two important respects: (a) To authorize also the adjudication of certain claims of American nationals against Soviet nationals whose assets in the United States were recovered by the United States pursuant to the Litvinov assignment.

(b) To provide for the distribution of the special fund in the Treasury, obtained as a result of the liquidation of all of the assets assigned by the Litvinov assignment, among American claimants, and to provide for priority of payment to the claimants mentioned in paragraph (a) above.

House Joint Resolution 49 is identical with House Joint Resolution 364, 82d Congress, 2d session. The Department submitted comments on the latter, and a representative of the Department testified at the hearing held thereon. In general, the Department gave, and continues to give, its endorsement to the general purpose of the resolution. However, there is under consideration within the executive branch the whole question of best methods of dealing with various

types of claims of United States citizens against a number of foreign countries, including claims against the U. S. S. R. It is anticipated that an agreed executive branch recommendation will be presented to the Congress within the near future. In view of this, the Department doubts the advisability of establishing a new claims-adjudicating agency.

In general, the Department's suggestions for improving House Joint Resolution 364 (82d Cong.) have been incorporated into the present House Joint Resolution 130. The Department's report on House Joint Resolution 130, suggesting several changes in that resolution, was submitted under cover of a letter of July 3, 1953, to Chairman Chiperfield. These suggested changes may be summarized as follows:

(1) Section 9 of the 1939 resolution authorized the appropriation of $25,000 per year for the costs of adjudication. House Joint Resolution 130, page 2, lines 20 and 21, increases this figure to $100,000. Since section 6 of the 1939 resolution contains a time limit of 2 years for the completion of the Commissioner's function, there would be authorized for expenses a total sum of $200,000. Past experience indicates this amount would be inadequate. The Department recommends that the entire cost of adjudication should be borne by the Litvinov assignment fund.

(2) It is provided, on page 2, line 25, and page 3, lines 1 to 2, that the Commissioner shall "give his decision in accordance with his best judgment and with justice and equity and such principles of law as may be applicable, including international law." "Best judgment," "justice," and "equity" are too indefinite as standards of decision. If a claim has no basis in law, then the claim should be disallowed. It is therefore recommended that this provision be changed to read that the Commissioner shall "give his decision in accordance with applicable law, including international law."

(3) On page 3, lines 8 to 12, it is provided that claimants shall not have more than 90 days to file claims. It is believed that this should be changed to 6 months.

(4) Page 4, line 23, appears to make mandatory the awarding of interest. In the Department's opinion, whether interest should be allowed should be decided by the Commissioner in accordance with applicable law. It is therefore suggested that in line 23 the reference to interest should be changed to read "with such interest as may be allowable."

(5) Lines 5 to 25, page 4, provide that where an American creditor of a Russian national had a lien on the latter's assets prior to the Litvinov assignment, the American creditor has a preferred claim up to the amount of his lien. This is as it should be. But under lines 4 to 8, page 5, the balance of such American creditor's claim against a Russian national is directed to be paid as though it were a claim against the Soviet Government. This is not believed to be fair, and can be prevented by striking from lines 5 to 6, page 4, the phrase "including the balance of any claims allowed and unpaid under paragraph (1).” It is desired at this time to make the following additional comments on House Joint Resolution 130:

(1) Section 6 of the 1939 resolution provides that the work of the Commissioner must be completed in 2 years. It is difficult to predict how much time it will take, but it is likely that 2 years is inadequate. It is suggested that the Commissioner have authority to act for at least 4 years or until such earlier time as the President may direct.

(2) It is suggested that section 13 (1) be changed to read as follows: "The terms 'Soviet Government' and the 'Government of the Union of Soviet Socialist Republics' mean the Union of Soviet Socialist Republics, including any of its constituent republics, or other political subdivisions, and any territories thereof, as constituted on November 16, 1933."

(3) It is suggested that the resolution should contain the following: "Payment of awards certified pursuant to this resolution shall not, unless payment is in full, extinguish the claims of American nationals against the Union of Soviet Socialist Republics with respect to which the Commissioner is vested with jurisdicton by this resolution. Such claims shall remain as valid claims against the Union of Soviet Socialist Republics to the extent they are not fully satisfied by payment."

(4) On the basis of past experience with similar claims adjudications, it is suggested that 5 percent be deducted from each award to defray the costs.

(5) The resolution provides for a single commissioner. The committee may want to give consideration to the possibility of amending the resolution to provide for a Commission of three members.

(6) In connection with the total sum of $9,114,444.36 in the account, it should be pointed out that only $7,614,444.36 represents the proceeds of the liquidation of Soviet property in the United States, the balance of $1,500,000 representing a credit due the Soviet Government from the United States as a consequence of money-order transactions between the two countries. The amount of $1,500,000 was pursuant to agreement between State, Post Office, and the General Accounting Office in 1936 deposited in this special account. A balance of $50,889.46 of the total credit due the Soviets was retained by the Post Office Department to pay off possible claims of American remitters who could show that the payees in the Soviet Union in whose favor they had purchased money orders had in fact not received payment in the Soviet Union.

The question arises, therefore, as to the disposition to be made of this $1.5 million, and also any balance which may remain of the $50,000 retained by the Post Office-that is, whether this money should remain in the fund for distribution to private individuals having claims against the Soviet Government, or whether the money should be transferred to the general fund of the Treasury as a credit against the large claims of this Government against the Soviet Union.

On the one hand, it may be considered desirable that the funds in question be distributed among private claimants in order that they may receive a higher percentage payment on account of their claims, the Government to await some possible future settlement with the Soviets to recover on account of itsthis Government's-claims. Again, since the funds are the result of purely intergovernmental transactions in the postal field, it might be proper for this Government to retain the funds. We do not find that the State Department has ever taken any firm position with respect to this point. However, the State Department would be glad to have the Congress consider and pass upon the matter in connection with its consideration of this legislation.

Mr. BROWN. First, let me say that I am pinchhitting this morning for Mr. Ben English, Acting Legal Adviser of the Department, who has had a little throat trouble and an operation and has been instructed by his doctor not to talk any more than he has to. He will be available here to answer questions.

I might say that Mr. English has been handling claims in the State Department for 25 years. I suppose any of us who had talked to as many claimants as he has would have throat trouble by now.

Mr. Chairman, the Department has commented on House Joint Resolution 130 as it has commented in previous Congresses on other legislation in respect to the same claims and the same funds.

A great many of the comments that have been made by the Department on previous legislation have been incorporated in this legislation before the committee today. I would like to invite the attention of the committee to the fact that there is now under consideration in the executive branch of the Government the whole question of the best method of how to settle the various claims of United States citizens against foreign governments or funds of foreign governments, including the Litvinoy claim.

It is anticipated that an agreed Executive position will be reached in a short time and that the President will make a recommendation to the Congress covering this whole field.

Mr. FULTON. Do you infer that the action on this legislation should be held up pending that Executive position on the whole field?

Mr. BROWN. I think that is a matter within the discretion of the committee. I just wanted the committee to have that knowledge. Mr. FULTON. Within what period of time do you think such a decision would be made?

Mr. BROWN. It is hoped that it will be made within the next month or so in order that the Congress at this session will have an opportunity