mains acute that regulation of consumer credit, like other anti-inflationary measures, is most essential. More than ever before, therefore, it is important that the power derived from the Trading With the Enemy Act to regulate the volume of consumer credit should not be now withdrawn.

For the reasons above stated, the Board earnestly hopes that no action may be taken by your subcommittee which would terminate or impair the effectiveness of section 5 (b) of the Trading With the Enemy Act.

Very truly yours.

M. S. ECCLES, Chairman.

Mr. VEST. The first letter relates to the act of April 13, 1943 (57 Stat. 65), which act exempted from the reserve requirements, which member banks must maintain with Federal Reserve banks, deposits in member banks payable to the United States arising solely as the result of subscriptions for United States Government securities, commonly known as war loan deposits.

The Board feels that the necessity for that statute no longer exists and that if a law were passed now stating that the cessation of hostilities were deemed to occur, the 6-month period provided in the law would be sufficient to make whatever adjustments are necessary and the Board therefore favors the declaration of cessation of hostilities for the purposes of this statute.

Mr. HOBBS. Both of these relate to the same subject?

Mr. VEST. No, sir; that was just the first one. The second one was with respect to the Trading With the Enemy Act. The Trading With the Enemy Act is the basis for certain authority of the Alien Property Custodian, and of the Treasury Department in its program of foreign funds control, and of the Federal Reserve Board's power to combat inflation through regulation of consumer credit. That statute does not expire at the termination of the war or on any given date. The need for continuing control of consumer credit was recognized by President Truman, and in his message to Congress of January 14, 1946, he made the following statement with reference to this matter:

Continued control of consumer credit will help to reduce the pressure on prices of durable goods, and will also prolong the period during which the backlog demand will be effective.

The Board simply recommends in its letter that that statute be retained in its present form and that no change be made in that respect. That is all.

Mr. HOBBS. Thank you very much. We appreciate your statement.

STATEMENT OF JOHN WARD CUTLER, ESQ., ASSISTANT GENERAL COUNSEL TO THE ALIEN PROPERTY CUSTODIAN

Mr. CUTLER. Mr. Chairman, I will be glad to summarize briefly, if you care to have me do so, the problems which face us.

Mr. HOBBS. We will be glad to hear your statement.

Mr. CUTLER. Under date of November 5, 1945, the Alien Property Custodian addressed a letter to Mr. Snyder summarizing the problems which our agency would face in the event of an over-all termination of the war or of the emergency, and a copy of that letter was furnished at that time to you.

Mr. HOBBS. Yes, sir.

Mr. CUTLER. And you may have put that in the record. Briefly, the Custodian derives his authority from the Trading With the Enemy Act of October 6, 1917 (40 Stat. 411), which the previous witness

mentioned. The powers which have been exercised from 1942 on by the Alien Property Custodian were derived in large measure from subdivision (b) of section 5 of the Trading With the Enemy Act, as amended by the First War Powers Act, 1941, particularly title III "Trading With the Enemy," and that title is drawn in terms of war or any national emergency declared by the President.

It might be useful, briefly, to read the essential parts of that into the record [reading]:

TITLE III-TRADING WITH THE ENEMY

SEC. 301. The first sentence of subdivision (b) of section 5 of the Trading With the Enemy Act of October 6, 1917 (40 Stat. 411), as amended, is hereby amended to read as follows:

"(1) During the time of war or during any other period of national emergency declared by the President, the President may, through any agency that he may designate, or otherwise and under such rules and regulations as he may prescribe, by means of instructions, licenses, or otherwise—

“(A) investigate, regulate, or prohibit, any transactions in foreign exchange transfers of credit or payments between, by, through, or to any banking institution, and the importing, exporting, hoarding, melting, or earmarking of gold or silver coin or bullion, currency or securities and

"(B) investigate, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition holding withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest,

by any person, or with respect to any property, subject to the jurisdiction of the United States; and any property or interest of any foreign country or national thereof shall vest, when, as, and upon the terms, directed by the President, in such agency or person as may be designated from time to time by the President, and upon such terms and conditions as the President may prescribe such interest or property shall be held, used, administered, liquidated, sold, or otherwise dealt with in the interest of and for the benefit of the United States and such designated agency or person may perform any and all acts incident to the accomplishment or furtherance of these purposes; and the President shall, in the manner hereinabove provided, require any person to keep a full record of, and to furnish under oath, in the form of reports or otherwise, complete information relative to any act or transaction referred to in this subdivision either before, during, or after the completion thereof, or relative to any interest in foreign property, or relative to any property in which any foreign country or any national thereof has or has had any interest, or as may be otherwise necessary to enforce the provisions of this subdivision, and in any case in which a report could be required, the President may, in the manner hereinabove provided, require the production, or if necessary to the national security or defense, the seizure, of any books of account, records, contracts, letters, memoranda, or other papers, in the custody or control of such person; and the President may, in the manner hereinabove provided, take other and further measures not inconsistent herewith for the enforcement of this subdivision

* *

The legislative history of that provision shows that it was intended to be a reaffirmation of the original Trading With the Enemy Act, amending the original powers but making them more flexible; and this particular language has been relied on extensively.

The powers which I have just outlined were delegated to the custodian by Executive Order 9095, and that was amended by Executive Order 9193, both in 1942. In June of 1945, the Custodian by Executive Order 9567 was for the first time given authority to vest-that is, to take title for the United States to-German and Japanese cash and scurities and similar properties in this country. These had theretofore been only immobilized by the Foreign Funds Control of the

Treasury Department. The congressional authorization for that new program was given us in December of 1945, at which time report forms were issued, with a dead line of February 28, which had to be extended to March 31, so you can see that the program of vesting German and Japanese cash and securities is in a sense in its infancy, although it is proceeding as fast as circumstances permit. To stop it at this time, we believe would be unsound administration. The President has announced as his program that, generally speaking, all German and Japanese property in this country should be vested in the United States.

Another example of recently added duties is the approval on March 8, 1946, of Public Law 322. That for the first time in this war gives the President, and now (by delegation by Executive Order 9725 of May 16, 1946) the Custodian, the authority to return certain properties to persons who are determined never to have been hostile to the United States.

Mr. CHELF. Who is chairman of that committee?

Mr. CUTLER. Eligibility for return is to be determined by the President or his delegate who is now the Custodian; but the conditions are laid down: No person can recover unless he can meet certain stringent requirements. There are listed four or five specific conditions, and in addition it must be determined affirmatively that it is in the interest of the United States to make any such return, but it does not permit returns to enemies or those in any way affiliated with the enemy. However, that is a program which we have only had the authority to execute for about a week. There are some 14,000 French, Norwegian, and other enemy-occupied-country cases which must be investigated. The property of such nationals was vested to keep it out of use by the enemy and to put it to work in our war effort, always on the understanding that it was a conservatory measure; and in this law there is now given us authority to make certain returns in fulfillment of that understanding.

Mr. CHELF. The money and property that will be vested in the United States will then be in the form of reparation, or just what is the procedure?

Mr. CUTLER. No, sir; this is apart from the reparations, although dovetailed with the reparations agreements. The properties still to be vested are cash and securities of enemy persons which are in this country and which are apart from German and Japanese assets elsewhere.

Mr. CHELF. Does that amount to much or little?

Mr. CUTLER. The property still to be vested is estimated at between $150,000,000 and $250,000,000. In some instances it is the most valuable property of all the property which we have so far vested. You see, up to this time we have primarily taken active businesses and other properties apart from cash and securities; we operated many important enterprises during the war in the war effort of the United States. Now it is the cash and the securities which we are going into, and in their total value they may be equal to the entire value of what came before.

Mr. SPRINGER. It arose under the First War Powers Act which was passed out by this committee not long ago.

Mr. CUTLER. It was derived from that; yes, sir. That is right.

Mr. SPRINGER. In regard to these instances to which you are now referring, is it possible for these matters to be continued and that power to be continued without reference to retaining the other powers? Mr. CUTLER. As far as the general termination of the war, or emergency is concerned, we are, of course, directly concerned only with the one agency. We do not in any way dissociate ourselves from the statement of Mr. Snyder. We feel that is an over-all picture on which he is making a recommendation for the executive branch. As far as our policy is concerned, sir, the First War Powers Act, which I mentioned, expressly says that the present powers may be exercised during wartime or during emergency. We, therefore, think that something would have to be done to preserve that situaiton. Incidentally, after the last war the Trading With the Enemy Act was continued as a special measure.

Mr. SPRINGER. But insofar as your agency is concerned, if that power was extended by special act or otherwise, you would have no concern whether or not the war was terminated under these pending resolutions, would you?

Mr. CUTLER. From the agency standpoint, naturally our responsibility is to execute the duties and powers as we see them.

Mr. SPRINGER. If those powers were extended so that you would have that power you need and you continued to carry out that function under it, regardless of whether the war was terminated by these resolutions or not, it would be a matter of no concern to your agency, would it?

Mr. CUTLER. That is correct, sir, provided the extensions were broad enough. It would be a matter for this committee to decide, and naturally you would decide after consultation with Mr. Snyder as to which approach of the two that he mentioned you would follow. I think that is a matter of only secondary concern to us.

Mr. HOBBS. Have you anything else you wish to say?

Mr. SPRINGER. By what act was the extension of your power made after the last war?

Mr. CUTLER. The Trading With the Enemy Act was continued after World War I by Public Resolution No. 64 of the Sixty-sixth Congress, approved March 3, 1921. That, of course, was nearly 3 years after the armistice. In that resolution Congress provides that certain statutes should be constituted as if the war had terminated on the date of the resolution, and the Trading With the Enemy Act was excepted from it, and that was confirmed when, by Public Resolution No. 8 of the Sixty-seventh Congress, approved July 2, 1921, the war was officially terminated. As I say, no action was taken there for 3 years, but when finally action was taken, the Trading With the Enemy Act was excepted. That was approximately the time of the making of the Treaty of Berlin, as I recall it. I do not think it is an analogous situation, because we are now less than a year beyond the cessation of hostilities.

Mr. SPRINGER. At that time the War Powers Act was continued after World War I, after the concurrent resolution was adopted terminating the war. For how long was it continued?

Mr. CUTLER. Indefinitely, but no more seizures were made. The exception in the Joint Resolution may not have been broad enough to permit the continuation of seizures, which have been considered as

dependent on the existence of war. The agency continued as a separate organization for nearly 15 years. I would like to say that we are very much alive to that history, which we think is a deplorable one in terms of what we would like to see happen this time, and the custodian is shaping his policies in the hope that within a relatively short time, though it is very difficult to say how short, he will be in a position to say that the majority of the administrative matters have been concluded and the matters remaining will be primarily those which may be finished by the Department of Justice.

I might say one word more, if I may, in that connection. In addition to the Executive orders delegating the powers under 5 (b) which I read to you, the custodian under Executive Order 9142 had transferred to him the residual powers under the old act, from the Department of Justice where they resided in 1942, to the newly recreated custodian's office, and that was done under title I of the First War Powers Act. By the same act, but still a different title, title IV, this transfer expires six months after the war, so that there would be an automatic reversion of those powers to the Department of Justice. That was also confirmed by Executive Order 9142 itself. So we would have one group of powers reverting to the Department of Justice whereas other powers would not revert although they might lapse, and I think that two-headed monster would not commend itself to this committee and the Congress.

Mr. SPRINGER. Does the custodian have a definite length of time when this power should be discontinued under the present circumstances?

Mr. CUTLER. I believe he hopes, sir, that the majority of his duties can be wound up, say, in the course of 18 months to 2 years, given adequate funds and manpower. One reasons we could not say any less than that is this: Several of our major properties, as has been brought out in the hearings before another subcommittee of this committee on pending legislation (H. R. 5089), are tied up by the socalled section 9 suits. Under section 9 of the Trading With the Enemy Act, a person other than an enemy or ally of enemy may sue to recover his property, and if he does, no disposition may be made of that property until the suit is finally determined. We have to wait for that decision before selling. Some of our most important properties are tied up through actions brought by the Swiss or other neutrals who claim that the properties were non-German. We have reason to believe that these properties were German-owned and not owned by the Swiss. So, pending a grant of authority by Congress to sell notwithstanding a section 9 suit, many sales are tied up and we cannot move as expeditiously as we would like, to liquidate some of the major properties. With that authority, I believe that we can do so. In any event, many sales and other matters of administration remain to be concluded.

Mr. CHELF. I am heartily in favor of seeing all of this property that formerly belong to the Japanese and the German people or their Governments turned over to our country in the form of reparations or war booty because, as we all know, this war has cost us a terrific toll in treasure and blood and if we keep that which we now have of theirs maybe they will be more cautions in starting wars especially if they know that it is going to cost them something.

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