Morris, chairman of the Association of American Creditors of Russia, the Department has always had in mind that whatever funds are recovered as a result of the Litvinov assignment would be made available in whole or in part to American private claimants.

While the Department gives its endorsement to the general purpose of this legislation, 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. It is recommended that the committee defer action on these measures until the aforementioned draft legislation is transmitted for its consideraion." In the event either House Joint Resolution 49 or House Joint Resolution 130 should receive favorable consideration, the Department desires to submit the following observations concerning them :

(1) House Joint Resolution 49 is identical with House Joint Resolution 364, 82d Congress, 2d session, upon which the Department submitted suggestions last year, most of which suggestions are now incorporated into House Joint Resolution 130. Therefore, the balance of the comments and suggestions in this memorandum are addressed to House Joint Resolution 130.

(2) Section 2 of the original resolution fixed the salary of the Commissioner at $9,000 per annum. The proposed measure amends that section to fix such salary at $15,000.

(3) Section 9 of the original resolution provided as follows: "Appropriations are hereby authorized for the purpose of carrying into effect the provisions of this resolution, not exceeding $25,000 in any year.”

In

The present resolution increases the limitation to $100,000 per annum. this respect, it is noted that section 6 of the original resolution (which is not amended by this measure) contains a time limit of 2 years for the completion of the Commissioner's function. Consequently, there would be authorized for expenses a total sum of $200,000. Based on past experiences, both that amount and the 2-year period are inadequate. For example, the International Claims Settlement Act of 1948, contained a provision requiring the Commission to complete its affairs in connection with the claims against Yugoslavia within a 4-year period. Moreover, the Commission's expenses during the fiscal year 1951 approximated $145,000, expenses for the fiscal year 1952 were approximately $197,000, and for 1953 are estimated at approximately $161,000. In contrast to the some 1,500 claims totaling $150 million filed with that Commission, there are in excess of 3,000 individual claims totaling some $443 million to be adjudicated pursuant to the pending measure. It is recommended, therefore, that section 6 of the original resolution be amended to provide a time limitation of 4 years and that section 9 of that resolution be struck out.

(4) It is noted that the proposed section 10 (d) provides that 3 percent of the Litvinov assignment fund shall be covered into the Treasury as reimbursement to the United States for the expenses incurred in carrying out the provisions of the resolution. Three percent of the Litvinov assignment fund would amount to approximately $270,000. As already noted above, this amount would be inadequate to meet the expenses of the adjudication. The Department recommends that the entire cost of adjudication should be borne by the fund. This can be accomplished by striking out the proposed section 10 (d) and inserting in lieu thereof the following:

"The expenses incurred in carrying out the provisions of this resolution shall be a first charge against the fund derived from the liquidation of the assigned assets, and there is hereby authorized to be appropriated from such fund such sums as may be necessary to defray such expenses, and also to effect payment of awards rendered pursuant to this resolution."

(5) It is noted that it is proposed in the present resolution, beginning at line 23 on page 2, that claims shall be decided by the Commissioner "in accordance with his best judgment and with justice and equity and such principles of law as may be applicable including international law." It is recommended that the italicized words be struck out.

(6) It is recommended that in line 12, page 3, the words "ninety days" be struck out and the words "six months" be inserted in lieu thereof.

(7) The proposed section 11 (a) is concerned with claims against Russian nationals whose American creditors acquired an attachment or judgment lien on their debtor's assets, which lieu was subsequently frustrated by the recovery of the assets by the United States pursuant to the Litvinov assignment.

The Department agrees with what seems to be the objective of proposed section 11 (a), paragraph (1), viz., that the claim of such an American creditor should first be paid up to the amount to which the asset recovered by the United States was subject to an attachment or judgment lien. However, that objective apparently is not accomplished by the proposed language in lines 22 and 23, page 4. Also, it is noted that line 23, page 4, appears to make mandatory the awarding of interest on these claims. It is believed that the question whether interest should be allowed should be decided by the Commissioner in accordance with applicable law. It is, therefore suggested that lines 22 and 23, page 4, be struck out and the following language inserted: "individual claim shall not exceed the amount of the assets subject to such attachment or judgment lien, with such interest as may be allowance, and shall not exceed the". Section 11 (a), paragraph (2), provides that after the American creditor has been paid the secured portion of his claim against a Russian national under paragraph (1) "all other allowed claims including the balance of any claims allowed and unpaid under paragraph (1) shall be similarly certified and paid ***" out of the Litvinov assignment fund. It is recommended that the italicized language be struck out because the American creditor of a Russian debtor has a legal or moral claim against the Litvinov assignment fund only to the extent that that fund contains the proceeds of assets on which the American creditor had a lien. Had there been no Litvinov assignment, the maximum that the American creditor could have recovered from his Russian debtor would have been the amount of the debtor's asset on which the creditor had a lien. To allow the creditor to recover more than this is to reduce the amount payable to those who claims are directly against the Soviet Government.

(8) Finally, to make section 11(a) conform to the change recommended in paragraph (4) of this memorandum, lines 7 and 8, page 4, should be struck out and the following be inserted in lieu thereof: “and subject to the provisions of section 10 (d), shall be paid by the Secretary of the Treasury in the following order :".

Hon. JAMES P. RICHARDS,

Chairman, Committee on Foreign Affairs,

TREASURY DEPARTMENT,
Washington, June 24, 1952.

House of Representatives, Washington 25, D. C.

MY DEAR MR. CHAIRMAN: Reference is made to your request of June 5, 1952, for an expression of the views of the Treasury Department on House Joint Resolution 364 entitled "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 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 Russian 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, 1933, which is defined to include the prior Ughet assignments and would establish an order of priorities for the payment of such claims.

Under the Litvinov assignment, the Union of Soviet Socialist Republics, preparatory to final settlement of claims and counterclaims by the Governments of the Union of Soviet Socialist Republics and the United States of America and the claims of their nationals, assigned to the United States of America all amounts due it as the successor of prior governments of Russia. Similar assignments had previously been executed by Serge Ughet as Russian Financial Attaché and custodian of the property of the Russian Government, acting for and on behalf of the State of Russia.

There is now held by the Treasury Department in a suspense account the sum of $8,815,744 representing the proceeds of liquidation of Russian property in the United States and derived pursuant to the Litvinov assignment as defined by House Joint Resolution 364. This sum includes an amount of $1,500,000 which was received from the Post Office Department and represented amounts due to the Postal Administration of the former Russian Government on account of money orders certified to that Government for payment. It is understood that the Post Office Department retained approximately $50,000 of the total amount due to the former Russian Government on account of such orders to cover possible claims by American remittors arising from the nonreceipt of the amounts of the orders by the payees. Thus the $1,500,000 and such balance, if any, as may remain of the $50,000 retained by the Post Office Department resulted solely from intergovernmental postal transactions. In view of this and the fact that the United States Government has certain claims, hereinafter described, far in excess of $1,500,000 arising from financial transactions with the former Russian Government during World War I, the Treasury Department recommends that in the event House Joint Resolution 364 receives favorable consideration by your committee, the amounts resulting from 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.

The proposed joint resolution would establish the following orders of priority for payment of claims allowed by the Commissioner: (1) Judgment or attachment liens to the extent of the amounts realized by the United States from the collection of the property to which such liens related; (2) all other allowed claims including the balance of any claims allowed and unpaid under the first order of priority; and (3) the balance remaining after the payment of the first two orders of priority to be paid into the general fund of the United States Treasury. The proposed legislation does not specify whether or not it is contemplated that awards in respect to judgments falling within the first order of priority would include amounts on account of interest which has accrued on the judgments. Since it is possible that these amounts may be substantial and would have a decisive bearing upon the matter of whether any balances would be available for the payment of the remaining orders of priority, it would seem desirable that the legislation make specific provision for the treatment to be given such amounts.

Attention is directed to the fact that the United States Government has claims on account of direct loans to the Russian Government during World War I amounting to $192,601,297.37, principal, and $322,654,969.29, interest, as of May 15, 1952. Since it does not appear at all probable that any balance would be available for payment into the general fund of the United States Treasury under the third order of priority, it is suggested that consideration be given to the matter of the treatment which would be accorded to the claims of the United States Government under House Joint Resolution 364 as now drafted. In any event, as has been suggested by the Department of State, 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 derived from the liquidation of the assigned assets 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. The suggested revision would contemplate the striking of section 10 (d) from the proposed resolution.

In order that provision would be made for the assignment of awards and for the payment of awards in cases where the awardholder is deceased or under legal disability or the existence of a corporate or partnership awardholder 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. Sup. IV 1626 (c) (d)).

Since it is understood your committee desires that the Treasury furnish an expression of its views on House Joint Resolution 364 as expeditiously as possible, this report has not been cleared with the Bureau of the Budget.

Very truly yours,

JOHN W. SNYDER, Secretary of the Treasury.

Hon. JAMES P. RICHARDS,

DEPARTMENT OF STATE, Washington, D. C., April 14, 1952.

Chairman, Committee on Foreign Affairs,

House of Representatives, Washington, D. C.

MY DEAR MR. RICHARDS: Further reference is made to your letter of March 5, 1952, requesting the Department's comments concerning House Joint Resolution 364, 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.

In accordance with your request there is transmitted herewith a memorandum regarding the measure.

Because of the urgency of this matter, this letter has not been cleared with the Bureau of the Budget. However, a copy is being sent to that Bureau. Sincerely yours,

JACK K. MCFALL,
Assistant Secretary

(For the Secretary of State).

MEMORANDUM OF THE DEPARTMENT OF STATE CONCERNING HOUSE JOINT RESOLUTION 364 (82D CONG., 2D SESS.)

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. The purpose of House Joint Resolution 364 is to amend that resolution in certain respects which will be discussed below.

There have 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 revolution in 1917, nationalizing property and repudiating the bonds and other obligations of prior governments of that country. 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 $8,815,744.00, are deposited in a special account in the Treasury.

House Joint Resolution 364 amends the 1939 resolution in two important respects, as follows:

(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.

The Department desires to submit the following observations with respect to the pending measure:

1. Since it is understood that both classes of claims to be adjudicated are those arising prior to November 16, 1933, the date of the Litvinov assignment, it is suggested that on page 1, line 9, the term "national" be followed by a comma and the following inserted: "arising prior to November 16, 1933,"; and that the same language be deleted in lines 1 and 2 on page 2. The same suggestion is made with respect to lines 10 and 12 on page 2.

2. On page 2, line 17, the word "assignment" should be deleted and the word "appointment" inserted in lieu therof.

3. Section 2 of the original resolution fixed the salary of the Commissioner at $9,000 per annum. The proposed measure, page 2, paragraph 3, amends that section to fix such salary at $15,000.

4. Section 9 of the original resolution provided as follows:

"Appropriations are hereby authorized for the purpose of carrying into effect the provisions of this resolution, not exceeding $25,000 in any year."

The present resolution increases the limitation to $50,000, per annum. In that relation, it is noted that section 6 of the original resolution (which is not amended by this measure) contains a time limitation of 2 years for the completion of the Commissioner's function. Consequently, there would be authorized for expenses a total sum of only $100,000. Based on past experiences both that amount, and the 2-year period, are grossly inadequate. For example, the International Claims Settlement Act of 1948 contained a provision requiring the Commission to complete its affairs in connection with the claims against Yugoslavia within a 4-year period. Moreover, the Commission's expenses during the fiscal year 1951 approximated $145,000, expenses for the fiscal year 1952 are estimated at $212,000, and for 1953 at $350,000. In contrast to the some 1,500 claims totaling $150 million filed with that Commission, it is estimated that there are some 2,600 claims totaling some $344 million to be adjudicated by the Commissioner authorized by the pending measure. It is recommended, therefore, that section 9 of the original resolution be struck out. It is also recommended that the time limitation of 2 years fixed by section 6 of that resolution be changed to 4 years.

5. It is also recommended that the proposed section 10 (d) of House Joint Resolution 364, beginning at line 17, page 3, be struck out, and there be inserted in lieu thereof the following:

"The expenses incurred in carrying out the provisions of this resolution shall be a first charge against the fund derived from the liquidation of the assigned assets, and there is hereby authorized to be appropriated from such fund such sums as may be necessary to defray such expenses, and also to effect payment of awards rendered pursuant to this resolution."

The proposed sections 11 (d) and 12 would seem to be unnecessary if this amendment and the amendments proposed to section 11 (a) referred to in paragraph numbered 7 of this memorandum, are adopted.

6. It is noted that it is proposed in the present resolution, beginning at line 22 on page 2, that claims shall be decided by the Commissioner "in accordance with his best judgment and with justice and equity and such principles of law as may be applicable, including international law". It is recommended that the words in italic be struck out. It is also recommended that the following provision contained in section 4 of the 1939 resolution be reinserted:

"The decision of the Commissioner shall be in writing, and shall be final and conclusive as to the merits of all cases decided."

It is also recommended that the following be added thereto : "and shall not be subject to review by any other tribunal or authority."

7. The Department agrees with the principal incorporated in the proposed section 11 (a) that there should first be paid in full any attachment or judgment lien outstanding against any asset of a Russian national received by the United States pursuant to the Litvinov assignment. Such a lienor should not be entitled to any payment in excess of the amount of his lien, even though he had a larger claim against his debtor Russian national. Had there been no Litvinov assignment, the maximum that an American creditor could have recovered from his Russian national debtor would have been the amount of his lien against the specific asset of his debtor. No reason is perceived why this result should be changed by legislation, yet section 11 (a) as drawn appears to require payment of an American creditor's claim in excess of any lien he may have obtained. It is, therefore, recommended that the proposed section 11 (a) be changed in part to read as follows:

"Section 11 (a). The claims allowed by the Commissioner shall be certified by him to the Secretary of the Treasury, and subject to the provisions of section 10 (d), shall be paid by the Secretary of the Treasury and in the following order:

"(1) Claims which originally accrued wholly or partly in favor of an American national against a Russian national, on which claims a judgment lien or a warrant of attachment had been obtained prior to November 16, 1933, in a court of the United States or of a State of the United States against such Russian national, who prior to its nationalization by the Soviet Government owned or was entitled to property, moneys, credits, or choses in action in the United States which has or have been collected or recovered by the United States under the Litvinov assignment, shall be certified to the Secretary of the Treasury according to any priority established by law among lienors of the same asset: Provided, That the amount so certified in any individual claim shall not exceed the lien securing it, or exceed the proceeds of the assets of the respective Russian national to whose asset in the United States the lien applies.