To Amend the Joint Resolution Providing for the Adjudication of Claims of American Nationals Against the Government of the Union of Soviet Socialist Republics

DEAR MR. CHAIRMAN: This is in response to your requests for the views of the Department of Justice concerning the resolutions (H. J. Res. 49 and H. J. Res. 130) to amend the joint resolution entitled "Joint resolution to provide for the adjudication by a Commissioner of Claims of American nationals against the Government of the Union of Soviet Socialist Republics," approved August 4, 1939. The proposals are designed to provide for the determination of claims of American nationals against the Government of the U. S. S. R.. arising prior to November 16, 1933, or against Russian nationals who prior to nationalization by the U. S. S. R. owned or were entitled to property in the United States; and to provide payment out of the funds collected by the United States under the Litvinov assignment of November 16, 1933. Apparently, although legislation has been in existence since 1939, providing for the adjudication of these claims, the assets assigned to the United States in connection with the recognition of Soviet Russia in 1933 have only recently been liquidated. As a result the 1939 legislation was not put into working effect.

Although the subject matter of the two resolutions is the same, their provisions differ. The language of the provisions of House Joint Resolution 130 is believed preferable to that of House Joint Resolution 49 in the respects indicated below.

Subsection 4 of section 1 of House Joint Resolution 49 apparently would provide for the amendment of section 4 of the 1939 resolution to eliminate any divergence in the time limitation for presenting claims. However, as it now reads, the proposed amendment would omit the language "The decisions of the Commissioner shall be in writing, and shall be final and conclusive as to the merits of all cases decided." It is assumed that this omission is the result of inadvertence and is not intended to provide for judicial review of the Commissioner's findings either under the Administrative Procedure Act or otherwise. On the assumption that it is intended to make the decision of the Commissioner final, it is suggested that subsection 4 of section 1 of House Joint Resolution 49 be amended to read as does the corresponding section of House Joint Resolution 130.

It may be that the proposed section 10 (c) of House Joint Resolution 49 would not accomplish its intended purpose, i. e., that the Commissioner shall certify to the Secretary of the Treasury for payment certified copies of awards entitled to priority. Proposed section 11 (d) requires the Secretary to pay such an award upon its presentation. Inasmuch as the ultimate outcome of the Comissioner's arbitration may be such that general claimants will receive only a fractional amount of their established claims, it is suggested that proposed section 10 (c) be amended to read as does the corresponding section of House Joint Resolution 130.

Under House Joint Resolution 49 an American national is defined as including "any citizen of the United States" and under House Joint Resolution 130 the term "American national" is defined as meaning "any citizen of the United States who had a claim at the time of the Litvinov assignment." Presumably, the intent of this definition is to preclude the assertion of claims by persons who would otherwise be considered American nationals but who acquired their claims by assignment or by operation of law subsequent to November 16, 1933, the date of the Litvinov assignment. This could be interpreted to include claims passing by descent and distribution. If this be not the intent of the definition, then the definition should be amended to set forth the correct congressional intent.

Whether, subject to the amendments suggested herein, the proposed legislation should be enacted is a question of policy on which this Department prefers to make no recommendation.

It should be pointed out that there is under consideration within the executive branch draft legislation providing for the adjudication of these and other outstanding claims by an existing tribunal, the International Claims Commission. It seems unnecessary to establish a new agency to perform this function. The committee may, therefore, wish to defer action on these measures until the aforementioned draft legislation is transmitted for its consideration.

The Bureau of the Budget has advised that there is no objection to the submission of this report.

Sincerely,

Hon. ROBERT P. CHIPERFIELD,

Chairman, Committee on Foreign Affairs,

WILLIAM P. ROGERS, Deputy Attorney General.

TREASURY DEPARTMENT, Washington 25, July 3, 1953.

House of Representatives, Washington 25, D. C.

MY DEAR MR. CHAIRMAN: Reference is made to your request of May 7, 1953, for an expression of the views of the Treasury Department on House Joint Resolution 49 and House Joint Resolution 130, each entitled "To amend the joint resolution entitled 'Joint resolution to provide for the adjudication by a Commission of claims of American nationals against the Government of the Union of Soviet Socialist Republics,' approved August 4, 1939."

The Treasury Department now holds in a suspense account the sum of $9,114,444.66 representing the proceeds of Russian property in the United States derived pursuant to the Litvinov and Ughet assignments. House Joint Resolution 49 and House Joint Resolution 130 would provide for the payment from this fund of claims against the Russian Government allowed by a Commissioner authorized to be appointed by the joint resolution of August 4, 1939, and would establish an order of priorities for the payment of such claims.

The proposed legislation makes no provision for the payment of claims of the United States although the United States has claims in excess of $500 million resulting from direct loans to the Russian Government during World War I and the fund to be distributed includes $1,500,000 derived from intergovernmental postal transactions. The Department believes that as a minimum the amounts derived from these postal transactions should be deposited in the general fund of the Treasury.

The Department also believes that (1) an appropriation should be authorized to defray expenses including those incurred by the Treasury Department in making payment of the awards; (2) the provisions relating to the certification of claims should be clarified; and (3) provision should be made for the assignment of awards and the payment of awards to the successors of awardholders.

There is enclosed a memorandum which discusses the foregoing recommendations in more detail.

The Bureau of the Budget has advised that there would be no objection to the submission of this report to your committee. However, it has further advised that there is under consideration in the executive branch draft legislation providing for the adjudication of these and other outstanding claims by an existing tribunal, the International Claims Commission; that it seems unnecessary to establish a new agency to perform this function; and that action on these measures be deferred by the committee until the aforementioned draft legislation is transmitted for its consideration.

Very truly yours,

M. B. FOLSOM, Acting Secretary of the Treasury.

MEMORANDUM OF THE TREASURY DEPARTMENT CONCERNING HOUSE JOINT RESOLUTION 49 AND HOUSE JOINT RESOLUTION 130 (83D CONG., 1ST SESS.)

The joint resolution of August 4, 1939 (53 Stat. 1199) authorized the appointment of a Commissioner to determine the validity and amount of the claims of American nationals against the Government of the Union of Soviet Socialist Republics. The amendatory legislation would redefine the claims to be considered to include "claims of American nationals against the Government of the Union of Soviet Socialist Republics arising prior to November 16, 1933, or against a Russion national which [sic] prior to its nationalization owned or was entitled to property in the United States, which has been collected or was

recovered by the United States under the Litvinov assignment." Also, in addition to certain other amendments, the proposed legislation would provide for the payment of claims allowed by the Commissioner from funds collected by the United States under the Litvinov assignment of November 16, 193,, which is defined to include the prior Ughet assignments and would establish an order of priorities for the payment of such claims.

Under the contemplated order of priorities, no provision is made for payment of claims of the United States and there is little likelihood that any balance will remain for payment into the general fund after the payment of the private claims. For these reasons, attention is invited to the facts that the United States has claims in excess of $500 million resulting from direct loans to the Russian Government during World War I and that there is included in the fund to be distributed an amount of $1,500,000 which was received from the Post Office Department and which represents amounts due the postal administration of the former Russian Government on account of money orders certified to that Government for payment. The Treasury recommends that in the event either House Joint Resolution 49 or House Joint Resolution 130 receive favorable consideration by your committee, the amounts resulting solely from intergovernmental postal transactions be removed from its scope and the Secretary of the Treasury be authorized to deposit them into the general fund of the Treasury. Provision is made in House Joint Resolution 130 for making the expenses incurred by the United States a first charge against the fund to the extent of 3 percent thereof and for the covering of that amount into the Treasury to the credit of miscellaneous receipts. The Treasury Department feels that any expenses which would be incurred in carrying out the provisions of the joint resolution should be made a first charge against the fund and that there should be authorized to be appropriated from the fund such sums as may be necessary to defray these expenses including those incurred by the Treasury Department in making payment of the awards.

Both House Joint Resolution 49 and House Joint Resolution 130 provide for granting a first priority to certain claims on which a judgment lien or warrant of attachment has been obtained. The provisions relating to these claims contemplate that it is possible to trace the funds held by the Treasury back to specific Russian nationals. Although sufficient information to permit this to be done may exist, the records of the Treasury alone would not be sufficient for this purpose in every case.

The provisions of House Joint Resolution 130 would limit the amount certified in the case of a first priority claim to the amount of the judgment or attachment, with interest, and to the amount of the funds having a source in the Russian national against whom the claim arose. If, however, the aggregate of the claims certified with respect to a particular national exceeds the funds having source in that national, the duty of prorating certified claims would fall upon the Secretary of the Treasury. Furthermore, certification of second priority claims is not to begin until after payment of first priority claims and the balance of first priority claims not paid in full is to be included in the second priority. These provisions would require first the Commissioner and then the Secretary of the Treasury to determine the amount of funds having a source in a particular Russian national and would subject the commencement of the certification of second priority claims by the Commissioner to all of the delays incident to payment of the first priority claims. For example, litigation among the survivors of an award holder might well delay payment for several years.

Assuming that it is feasible to determine by the tracing of funds the amount. of a claim to be accorded a first priority, it is suggested that with respect to the first priority claims the Commissioner should determine (1) the allowable amount of the claim which shall not exceed the amount of the judgment or attachment, with interest, (2) the Russian national against whom the claim originally accrued, (3) the aggregate amount of all allowable claims originally accruing against the same Russian national, and (4) the amount in the Treasury having a source in that national. The Commissioner should then certify to the Secretary of the Treasury as a first priority claim an amount which shall be equal to the allowable claim or an amount which shall bear the same proportion to the amount in the Treasury having a source in the Russian national against whom the claim originally accrued as the allowable claim bears to the aggregate amount of all allowable claims originally accruing against the same Russian national, whichever shall be the lesser, and shall certify as a second priority claim the difference between the allowable claim and the amount certified as a first priority claim.

In order that provision would be made for the assignment of awards and for the payment of awards in cases where the award holder is deceased or under legal disability or the existence of a corporate or partnership award holder has terminated, it is the opinion of the Treasury Department that the proposed legislation should include provisions similar to those contained in sections 7 (c) and 7 (d) of the International Claims Settlement Act of 1949 (22 U. S. C. Supp. V, 1626 (c) (d)).

Hon. ROBERT B. CHIPERFIELD,

Chairman, Committee on Foreign Affairs,

DEPARTMENT OF STATE,
Washington, July 3, 1953.

House of Representatives, Washington, D. C.

MY DEAR MR. CHIPERFIELD: Further reference is made to your letter of April 14, 1953, enclosing for the comment of the Department of State copies of House Joint Resolution 49 and House Joint Resolution 130, to amend the joint resolution entitled "Joint resolution to provide for the adjudication by a commissioner of claims of American nationals against the Government of the Union of Soviet Socialist Republics," approved August 4, 1939.

The Department's comments regarding the measures are set forth in the enclosed memorandum.

The Department has been informed by the Bureau of the Budget that there is no objection to the submission of this report.

Sincerely yours,

THRUSTON B. MORTON, Assistant Secretary
(For the Secretary of State).

MEMORANDUM OF DEPARTMENT OF STATE CONCERNING HOUSE JOINT RESOLUTIONS 49 AND 130 (83D CONG., 1ST SESS.)

There have been filed with the Department of State a large number of claims of American nationals against the Government of the Union of Soviet Socialist Republics, having their origin in decrees of the Soviet Government issued subsequent to the revolution in 1917, nationalizing property and repudiating the bonds and other obligations of prior governments of that country. The United States Government also has 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 predecessor gopernments given in exchange for cash advances and supplies furnished by this Government on credit. It has not been possible to bring about an agreement with the Soviet Government for the settlement of such claims, but on November 16, 1933, preparatory to a possible overall settlement, the Soviet Government assigned certain assets in this country to this Government. This assignment is generally referred to as the Litvinov assignment. The Department of Justice recently completed the task of liquidating these assets and the proceeds in the amount of approximately $9 million are deposited in a special account in the Treasury.

On August 4, 1939, the President approved a joint resolution (53 Stat. 1199) authorizing 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 defray the expenses involved, a commissioner was never designated.

House Joint Resolutions 49 and 130 amend the 1939 resolution in two important respects, as follows:

(1) To authorize, also, the adjudication of certain claims of American nationals against Soviet nationals who, prior to their nationalization by the Soviet Government, had assets in the United States which were recovered by the United States pursuant to the Litvinov assignment.

(2) To provide for the distribution of the special fund in the Treasury, obtained as a result of the liquidation of the assets assigned by the Litvinov assignment, among American claimants, and to provide for priority of payment to the claimants mentioned in paragraph (1) above.

The Department recognizes the desirability of effecting at as early a date as practicable a determination of the claims of American nationals against the Soviet Government which have remained unsettled over a long period of time. It would be extremely useful to this Government to have the validity and value in dollars of these claims determined. Moreover, as stated in 1938 by Mr. R. Walton Moore, Counselor of the Department of State, in a letter to Mr. R. S.

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