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(2) After the payments provided for in paragraph (1), all other allowed claims shall be similarly certified, and paid on a pro rata basis out of any funds collected by the United States under the Litvinov assignment."

8. It is suggested that in line 10, page 3, the words "ninety days" be struck out and the words "six months" be inserted in lieu thereof.

9. With respect to the proposed section 11 (c) on page 5, providing that claims based on Russian bonds, if allowed, shall be allowed only to the extent of the actual consideration paid for them by claimants, it should be pointed out that such bonds represent the obligation of the issuer to pay face value. It is recognized, however, that some bonds may have been acquired by claimants for less than face value, and thus in view of the limited funds available, if claims based on bonds are allowed and prorated at face value, the result could be that some bondholders would receive more than they paid for their bonds at the expense of other claimants who have suffered an actual loss. This could also be true of any claim, other than claims based on defaulted bonds, assigned for less than its actual value. If, for this reason, the Congress decides to retain section 11 (c) in its present form, it is suggested that the following be added:

"Provided, That, where such bonds were acquired by testamentary or other gift, or inheritance, any claims based thereon may be allowed by the Commissioner in an amount not in excess of the actual consideration last paid therefor." 10. The Department recommends that section 13 (1) pages 5 and 6, be struck out and there be inserted in lieu thereof the following:

"(1) The terms 'Soviet Government' and the 'Government of the Union of Soviet Socialist Republics' include the Union of Soviet Socialist Republics or any of its political subdivisions recognized by the Government of the United States." 11. The objective of House Joint Resolution 364 appears to be to distribute the Litvinov assignment fund only among American claimants who had valid claims at the time of the assignment. However, the definition of "American national" in section 13 (2), page 6, appears to add two other categories of eligible claimants, viz, (a) those who were not American nationals at the time their claim arose, and (b) alien stockholders of American corporations. In view of the limited funds available, the inclusion of these latter groups can only be at the expense of the former. It is, therefore, recommended that section 13 (2) be amended to included only American claimants having valid claims at the time of the assignment.

12. The significance of the date of August 1, 1914, in line 8, page 6, is not clear since the Union of Soviet Socialist Republics did not come into existence until November 7, 1917. Moreover, it does not seem necessary to mention any date in connection with the definition of the term "Russian national."

13. The definition of the term "Litvinov assignment" in section 13 (4), pages 6 and 7, is historically inaccurate and also may lead to the erroneous conclusion that the assignment was only for the benefit of claims resulting from the taking of property. The Litvinov assignment was, in its own language, "preparatory to a final settlement of" all claims between the two Governments. It is, therefore, recommended that the proposed section 13 (4) be struck out and there be inserted in lieu thereof the following:

"(4) The term 'Litvinov assignment' includes the letter dated November 16, 1933, written by Maxim Litvinov to President Roosevelt, wherein the Soviet Government assigned to the United States amounts admitted or found to be due it as the successor of prior governments of Russia or otherwise, preparatory to a final settlement of the claims outstanding between the two Governments and the claims of their nationals, and the letter dated November 16, 1933, from President Roosevelt to Maxim Litvinov, accepting such assignment, and letters written by Serge Ughet, assigning certain amounts and accounts to the United States for the same purpose."

Hon. JAMES P. RICHARDS,

Chairman, Committee on Foreign Affairs,

House of Representatives.

DEPARTMENT OF STATE, Washington, October 10, 1951.

MY DEAR MR. RICHARDS: Reference is made to the Department of State's letter of August 22, 1951, commenting on House Joint Resolution 142, 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.

With respect to the reopening of discussions with authorities of the Soviet Government looking to a final settlement of all outstanding claims between the two Governments, the Department desires to clarify its comment that, "Pending the outcome of such discussions, the Department is of the opinion that the proposed legislation may be somewhat premature and might be construed as a proposal not contemplated by the (Litvinov) assignment."

By this language, it was not, of course, intended to disagree with the proposition that there should, as promptly as possible, be an adjudication of all claims of American nationals against the Soviet Government.

It is the view of this Department that the Litvinov assignment contemplated a subsequent final settlement of all claims and counterclaims outstanding between the two Governments, and that the purpose of the assignment was to create a fund in which all American claimants might share. The Department is of the opinion that until the validity and value of all such claims is determined, any legislation enacted at this time should be directed to the adjudication of existing claims and not to the establishment of priorities for certain categories of claimants.

The entire question of the settlement of claims of United States citizens against the U. S. S. R. which might be applied against funds collected under the Litvinov assignment is now under intensive review by this Department and it is expected that a further report on House Joint Resolution 142 should be available before the end of the year.

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

Sincerely yours,

JACK K. MCFALL,
Assistant Secretary

(For the Secretary of State).

DEPARTMENT OF STATE,
Washington, August 22, 1951.

Hon. JAMES P. RICHARDS,

Chairman, Committee on Foreign Affairs,

House of Representatives

MY DEAR MR. RICHARDS: Reference is made to your letter of June 29, 1951, in: which you enclosed for the Department's comment a copy of House Joint. Resolution 142, 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 principal purpose of the proposed amendment to the joint resolution approved August 4, 1939, appears to be to authorize the payment by the Secretary of the Treasury of awards, plus interest, upon rendition by the Commissioner, in certain specified and preferred order, from funds heretofore or hereafter collected by the United States under the so-called Litvinov assignment of November 16, 1933.

The Department, of course, recognizes the desirability of effecting at as early a date as practicable, the claims of American nationals against the Soviet Government which have remained unsettled over a long period of time. As will be noted, however, from the notes exchanged by the two Governments on November 16, 1933, extracts from which are quoted below, the Litvinov assignment and the requirement for notice to the Soviet Government of amounts collected thereunder, represent only a preliminary step in a general plan of the two Governments to bring about a final settlement of all claims and counterclaims outstanding between them. Relevant portions of the assignment are as follows:

***** the Government of the Union of Soviet Socialist Republics agrees that, preparatory to a final settlement of the claims and counterclaims between the Governments of the Union of Soviet Socialist Republics and the United States of America and the claims of their nationals, the Government of the Union of Soviet Socialist Republics will not take any steps to enforce any decisions of courts or initiate any new litigations for the amounts admitted to be due or that may be found to be due if, as the successor of prior Governments of Russia, or otherwise, from American nationals, *** and will not object to such amounts being assigned and does hereby release and assign all such amounts to the Government of the United States, the Government of the Union

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of Soviet Socialist Republics to be duly notified in each case of any amount realized by the Government of the United States from such release and assignment."

The Department understands informally that the Department of Justice expects within the relatively near future to conclude the litigation in which it has been engaged at considerable expense to this Government subsequent to 1933, in connection with the liquidation of claims assigned to this Government under the Litvinov assignment. It is further understood that the total amount recovered in that relation will approximate $82 million.

At such time as this litigation is concluded, it is the intention of this Department to notify the Soviet Government, as contemplated by the assignment, of the status of the funds realized thereunder and endeavor to initiate discussions looking to a final settlement of all outstanding claims. Funds collected under the assignment would be offset against the amount agreed upon as a final settlement figure. Pending the outcome of such discussions, the Department is of the opinion that the proposed legislation may be somewhat premature and might be construed as procedure not contemplated by the assignment. Should such discussions fail to achieve the desired purpose, it is believed consideration should then be given to the application of funds realized under the Litvinov assignment to the partial satisfaction of American claims.

As a matter of procedure it is suggested that the proposed legislation should not be in the form of an amendment to Public Resolution 36, 76th Congress, approved August 4, 1939. No money was ever appropriated by Congress to carry out the provisions of the resolution, and the Department has no present intention of requesting any such appropriation. The effect of amending the resolution at this time might be to give the impression to all private claimants that the adjudication of their claims is contemplated or that a settlement of such claims by the Soviet Government is imminent.

In the event House Joint Resolution 142 should receive favorable consideration, it seems desirable to call attention to the language of subparagraphs (1) and (2) of section 12 (a), in which reference is made to Russian nationals "all or part of whose property in the United States has been recovered or collected by the United States under the Litvinov assignment * So far as the Department is advised, only amounts due the Soviet Government itself, as indicated by the language of the assignment, were collected thereunder by this Government.

While House Joint Resolution 142 recites that all payments authorized to be made thereunder "shall be without prejudice to the claims of the United States against the Soviet Government," no provision appears to be made therein for the consideration or adjudication of such claims. The effect of the proposed resolution, therefore, if enacted and approved, would apparently be to exclude claims of the United States Government, in large amounts, in favor of those defined, and to distribute, as soon as awards can be made, a relatively small fund aggregated, at considerable expense to the United States, by agreement of the Governments "preparatory to a final settlement."

It should be observed, moreover, that the International Claims Settlement Act of 1949 (Public Law 455, approved March 10, 1950) provides a mechanism for adjudication and distribution and, if duly amended, would obviate the necessity for the appointment of a commission for the purpose contemplated. The Department has been informed by the Bureau of the Budget that there is no objection to the submission of this report.

Sincerely yours,

JACK K. MCFALL, Assistant Secretary (For the Secretary of State).

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