The next paragraph provides:

The proceeds of the property, rights and interests, and the cash assets, of the nationals of allied or associated powers held by Germany shall be paid immediately to the person entitled thereto or to his government; the proceeds of the property, rights and interests, and the cash assets of German nationals received by an allied or associated power shall be subject to disposal by such power in accordance with its laws and regulations.

Say, for instance, that we dispose of property here and we have assets of $400,000,000 derived from the sale of property by the Alien Property Custodian, and in Germany assets of $300,000,000. That leaves an excess of $100,000,000. Now, as I understand you, your claim is that under that clause that excess of $100,000,000 may be by Congress applied to the payment of the debts of American nationals who can not otherwise collect their debts in Germany. Is that it?

Mr. PALMER. Yes.

Senator FALL. Then, undoubtedly, the people of the United States are very materially interested in seeing that the alien property brings just as much as it possibly can bring in the market upon its disposition by the Alien Property Custodian. Otherwise, there would be no excess which might be applied as payment of the debts of our nationals. Now, take the Bosch Magneto case, for instance, that you know about, of course, as you are attorney for the Alien Property Custodian. There is a very serious controversy about that case. The entire property was disposed of for something like $4,000,000, and it is claimed by the owner and others that the cash assets would make the value of the property at the time it was disposed of it was disposed of after the armistice, I think-$6,000,000. I will call it that in round numbers. It is claimed by some of the accountants that its value might be very much more than that. That matter is now in controversy, through some sort of court proceedings. At any rate it has been before a committee of the Senate upon several different occasions and was discussed at great length. Now grant, for the sake of argument, that there was a discrepancy of $2,000,000; that amount might very well have gone to the nationals for the payment of their debts.

Mr. PALMER. Surely it is a matter of interest between the Government and the Alien Property Custodian.

Senator FALL. The Congress of the United States is the only tribunal to which they can come. Suppose it is shown clearly to the Congress of the United States that here is an American citizen who has a $2,000,000 claim which he can not collect against Germany and which Germany does not guarantee; if there are funds in the hands of the Alien Property Custodian, Congress can say to the Property Custodian, or to some other official, "Pay this man so as to discharge his claim." If there is no such excess, how is he going about it to get his claim paid? Would he have to come to Congress for an appropriation of $2,000,000 out of the Treasury? You can not set aside a sale that has been made by the Alien Property Custodian. This validates the sale.

Mr. PALMER. This validates it.

Senator FALL. But suppose it does not. He can not set it aside. Mr. PALMER. In case of a fraud, any fraudulent transaction is void. Senator FALL. What proceedings would you take?

Mr. PALMER. In the case of a question of the character you raise, those are matters between the United States Government and its officers.

Senator FALL. I want to see if American citizens can be protected, if I can.

Mr. PALMER. Well, I am not prepared to answer that question, because it would depend on the character of the act, in what part of the country, and under what State government it was passed, and a whole lot of things. What I wanted to say was that the treaty has not anything to do with that objection.

Senator FALL. I do not think it has, except that it validates the acts of the Alien Property Custodian.

Senator WILLIAMS. Not as to American nationals.

Mr. PALMER. That is just the point. The German national never had any rights, because the trading with the enemy act has taken them away in advance.

Senator WILLIAMS. Let me ask you this question. If this man was an American citizen, and could show it, and had acted upon a wrong impression that he was an alien enemy, he would have the same rights in the courts of the United States that he always had? Mr. PALMER. I understand so.

Senator FALL. I am not interested in the Bosch Magneto Co. I am interested only in an American citizen collecting his money from a German national.

Mr. PALMER. Mr. Senator, I can answer that only in a general way. It is perfectly true that if the Alien Property Custodian has not collected and realized as much money as he could have from the enemy property in this country, the fund at the disposal of Congress is not as much as it otherwise would be. That is true. If on the other hand there has been nothing that has been wrongly done by the Alien Property Custodian

Senator FALL. I did not mean to insinuate that, for a moment. Mr. PALMER. That is a matter between the Government and its own officers.

Senator FALL. In so far as I am concerned, I have been on the committee investigating the acts of the Alien Property Custodian for some time, and I am willing to say frankly that I have discovered nothing whatsoever that would reflect in any degree upon the manner in which the present Attorney General of the United States administered that property. But there may be cases in which his agents or himself have acted in such an inefficient manner in securing the largest proceeds which they might, that while without any moral turpitude upon their part whatsoever, nevertheless the funds which may be at the disposal of Congress for the payment of claims to American citizens might not be sufficient. Where would they go? Senator SMITH of Arizona. Would they have to lose their property or come to Congress?

Senator FALL. If by the treaty the German Government had been compelled to guarantee the debts of its citizens, then it would not have been depleted by such claims, we will say, to the extent of $300,000.

Senator HITCHCOCK. Mr. Palmer, the fund which is secured by the sale of alien property under the administration of the Alien Property

Custodian has certain liens placed upon it by this treaty. Is that

true?

Mr. PALMER. No; that is not true; there are no liens.

Senator HITCHCOCK. What are the first claims on that fund?

Mr. PALMER. Congress has the fullest right to dispose of it in any way it sees fit.

Senator HITCHCOCK. Are there any claims prior to the payment of claims by American nationals against German debtors?

Mr. PALMER. Not unless Congress desires to so stipulate.

Senator HITCHCOCK. So that this fund is subject in its use to the payment of American claims against German debtors, and not in excess of the fund, but the whole fund?

Mr. PALMER. Yes; if you like. The American with a claim against Germany has got something which he never had before.

Senator WILLIAMS. Germany undertakes to pay its own nationals? Mr. PALMER. Yes.

Senator SWANSON. First, you obtain from Germany an agreement that will return all the property of American nationals?

Mr. PALMER. Yes.

Senator SWANSON. That is obtained; and secondly, you obtain from Germany an agreement that all the property of the Germans here in this country can be used to discharge any further debts that the German nationals owe the United States?

Mr. PALMER. Yes.

Senator SWANSON. Third, you have given to Congress the right to dispose of its alien property absolutely without interference by the German Government?

Mr. PALMER. Yes.

Senator SWANSON. And if Congress desires to create courts to deal with this property, it has the power to do it; and there is nothing in the treaty which precludes Congress from making a free disposition of it?

Mr. PALMER. Absolutely. That is one of the reasons why the American delegates would not consent to the enemy debt plan, because the enemy debt plan would have taken away the freedom of disposition which Congress should enjoy.

Senator WILLIAMS. And which Congress had reserved to itself. Mr. PALMER. Which Congress had reserved.

The CHAIRMAN. Mr. Palmer, do I understand you to say this treaty does not validate the acts of the Alien Property Custodian so as to put him entirely beyond the right of the courts so far as enemy aliens are concerned?

Mr. PALMER. Oh, no; I said that the treaty does validate the act as far as the enemy is concerned.

The CHAIRMAN. That is, no enemy alien can bring suit in any way. Mr. PALMER. No.

The CHAIRMAN. Exactly. That is what I supposed. I know nothing about the Bosch magneto case which has been mentioned by the Senator from New Mexico. Suppose there was an American stockholder, would he have any right under this treaty, which becomes the supreme law of the land, to go to the courts and get proceedings?

Mr. PALMER. The same right as before?

The CHAIRMAN. No; I am not asking whether he has the same right as before. I want to know whether he is cut off from any that he previously had.

Mr. PALMER. No.

Senator JOHNSON. In answer to what the chairman said to the Senator from Mississippi, and in answer to what has just now been said to you, may I call Mr. Palmer's attention to paragraph 1 of the Annex, page 375? If I may read to you a couple of sentences, I would be glad to be instructed. It reads:

In accordance with the provisions of article 297, paragraph (d), the validity of vesting orders and of orders for the winding up of businesses or companies, and of any other orders, directions, decisions, or instructions of any court or any department of the Government of any of the high contracting parties made or given, or purporting to be made or given, in pursuance of war legislation with regard to enemy property, rights, and interests is confirmed.

Now follow, please [reading]:

The interests of all persons shall be regarded as having been effectively dealt with by any order, direction, decision, or instruction dealing with property in which they may be interested, whether or not such interests are specifically mentioned in the order, direction, decision, or instruction. No question shall be raised as to the regularity of a transfer of any property, rights, or interests dealt with in pursuance of any such order, direction, decision, or instruction. Every action taken with regard to any property, business, or company, whether as regards its investigation, sequestration, compulsory administration, use, requisition, supervision, or winding up, the sale or management of property, rights or interests, the collection or discharge of debts, the payment of costs, charges, or expenses, or any other matter whatsoever, in pursuance of orders, directions, decisions, or instructions of any court or of any department of the Government of any of the high contracting parties, made or given, or purporting to be made or given, in pursuance of war legislation with regard to enemy property, rights, or interests, is confirmed: Provided, That the provisions of this paragraph shall not be held to prejudice the titles to property heretofore acquired in good faith and for value and in accordance with the laws of the country in which the property is situated by nationals of the allied and associated powers.

Would you make, with that provision in view, the same answer with regard to the minority American stockholder that you have made to the Senator from Mississippi and the chairman ?

Mr. PALMER. Yes, sir; the paragraph begins by reference to article 297, paragraph (d). If you will look at that, you will find that the clause is limited to enemy nationals in Germany. The exact treaty is as follows:

(d) As between the allied and associated powers or their nationals on the one hand and Germany or her nationals on the other hand, all the exceptional war measures, or measures of transfer, or acts done or to be done in execution of such measures as defined in paragraphs 1 and 3 of the annex hereto shall be considered as final and binding upon all persons except as regards the reservations laid down in the present treaty.

Now, paragraph (1) of the annex which you read and referred to there is simply an enlargement of that provision, and refers to it. Senator MOSES. What other provisions are laid down?

Mr. PALMER. Some other reservations. I do not recall what they are at present.

I

Senator FALL. Reading over that, I became convinced some time ago that you were correct in your construction of this provision. say without any hesitation that you are correct. Then, if the minority stockholder was dissatisfied with the amount derived from the sale, what would be his recourse?

Mr. PALMER. He has the recourse that is given to him under the trading with the enemy act and the general laws of the land. It depends entirely upon the nature of the act, Mr. Senator, and the only reply that I can make to it is that the treaty does not affect his rights, whatever they are.

Senator FALL. I think you are correct about that, also. But a minority stockholder in such a company, as was suggested by the question of the chairman-a large stockholder might, of course, pursue the proceeds, and would only have his proportional amount of the proceeds represented by the average value of his stock, and would not be entitled to upset the sale and have a resale unless Congress gave affirmative relief by subsequent legislation.

Mr. PALMER. That depends again. It depends on the nature of the transaction. If there is fraud

Senator FALL. I am not speaking of fraud.

Mr. PALMER. Or inadequacy of price, that is a question of procedure, a question of corporation law of the State and of various details, and it is impossible to answer intelligently a question of that kind.

Senator FALL. You are familiar with the trading-with-the-enemy act?

Mr. PALMER. The trading-with-the-enemy act as we have construed it, and we think correctly, provides that no American citizen or any neutral shall be deprived of his rights, and in enforcing the tradingwith-the-enemy act, of course, we tried as hard as possible not to transgress anybody's rights; but all the courts are open at every stage of the game, and they had additional rights given them by the act itself.

Senator FALL. But having failed to avail himself of the provisions of section 9 of the act by going into court to protect his rights, the American citizen would then merely be left to appeal to Congress for reimbursement of the amount that he had lost, if he established that he had lost anything, or proceed against the proceeds of the sale.

Mr. PALMER. He still has a right to make a claim up to nine months after the war is ended.

Senator FALL. But not to set aside the sale.

Mr. PALMER. His right to set aside the sale had not been changed in any way.

Senator FALL. But if the sale is made, you do not think that any individual can set it aside?

Mr. PALMER. I know they could if they have the proper cause. Senator JOHNSON of California. I am unable to see that subdivision (e) has the limited effect that you suggest upon the portion of the Annex that I read to you. You will observe how much extended the portion of the Annex that I read is beyond the matter to which you allude. It says that the interests of all persons should be regarded as having been effectively dealt with, and so on, and no question shall be raised as to the regularity of the transfer of any property, etc. Now, would not that be effective concerning the rights of the minority stockholder such as was suggested by the chairman?

Mr. PALMER. I do not think so at all. We had a discussion on that very question, and all the powers agreed that this treaty did not affect the rights of neutrals or nationals of our country. When it came to that particular clause, in order to make it clear, we inserted