Alien Property

THE CABINET

Andrew W. Mellon, Secretary of the Treasury, last week proposed. Congress may or may not be disposed to dispose as he proposes. The proposal has to do 1) with the disposal of the property of Germans seized by the U. S. during the War; 2) with reimbursing various U. S. citizens for damages done to them by Germany at War (claims that have been allowed by the U. S.-German Mixed Claims Commission).

The history of these two factors: Alien Property. The property in the U. S. of individual Germans was seized when the U. S. entered the War and handed over to the Alien Property Custodian. This property or its equivalent (some of it has been sold) now amounts to about $300,000,000 and is in the hands of the Alien Property Custodian. In addition he has about $30,000,000 of the income from this property. When the peace treaty with Germany was made, it was formally agreed that Germany should reimburse her citizens for the seized property, and that the U. S. should hold the property to satisfy the claims of individual U. S. citizens against Germany. Recently Senator Borah and others have proposed to return the seized property to the German owners, contending that it is unethical to seize the property of foreign individuals.

U. S. Claims. U. S. citizens who suffered War losses (in the sinking of the Lusitania, etc.) have claims against Germany which the peace treaty declared should be adjudicated by a mixed claims commission. This has recently been done. The claims allowed amount to something over $200,000,000. These remain unsatisfied. Under the Dawes Plan the U. S. is to get reparations of about 45,000,000 gold marks a year to pay off these claims. But these payments, although supposedly all that Germany can make, are insufficient to pay off the claims.

Mellon Proposal. The U. S. Government also has a share of 55,000,000 gold marks of German reparations annually as repayment for the costs of the U. S. Rhine Army. The Treasury proposes to take all the German reparations to the U. S.--totaling 100,000,000 gold marks (about $23,000,000)--and turn them over to trustees. The trustees would issue $250,000,000 of 5% 25-year bonds which the reparation payments would take care of and pay off. The U. S. claimants would be paid off partly in the bonds themselves. The German owners of seized property would get it or its equivalent returned to them. The U. S. Government would pay nothing directly, would however guarantee the bonds and would have to make good if Germany failed on reparations payments. The U. S. Government would also give up part, perhaps all, of the reparations it is to receive for the Rhine Army costs.

The Treasury announced that the U. S. and German citizens interested have agreed to the plan. The third party to the proposal plan--the U. S. Government--has still to make up its mind.