WAR CLAIMS ACT AMENDMENTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP75B00380R000500380002-8
• Release Decision: RIFPUB
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• Document Page Count: 19
• Document Creation Date: December 9, 2016
• Document Release Date: August 24, 2001
• Sequence Number: 2
• Publication Date: July 3, 1974
• Content Type: REPORT

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93n CONGRESS HOUSE OF REPRESENTATIVES I REPORT
2d Session } No. 93-1179
WAR CLAIMS ACT AMENDMENTS
JULY 3, 1974.-Committed to the Committee of the Whole house on the State
of the Union and ordered to be printed
Mr. STAGGERS, from the Committee on Interstate and
Foreign Commerce, submitted the following
REPORT
together with
SUPPLEMENTAL VIEWS
[To accompany S. 1728]
The Committee on Interstate and Foreign Commerce, to whom was
referred the bill (S. 1728) to increase benefits provided to American
civilian internees in Southeast Asia, having considered the same,
reports favorably thereon with amendments and recommends that the
bill as amended do pass.
The amendments are as follows:
1. Strike out all after the enacting clause and insert in lieu thereof
the following:
That section 5(i) (3) of the War Claims Act of 1948 (50 App. U.S.C. 2004(i) (3))
is amended by striking out "$60" and inserting in lieu thereof "$150".
SEC. 2. (a) Section 213(a) (3) of the War Claims Act of 1948 (50 App. U.S.C.
20171(a) (3)) is amended as follows:
" (3) Thereafter, payments from time to time on account of the other awards
made to individuals pursuant to section 202 and not compensated in full under
paragraph (1) or (2) of this subsection in an amount which shall be the same for
each, award or in the amount of the award, whichever is less. The total payment
pursuant to this paragraph on account of any award shall not exceed $500,000.".
(b) Section 213(a) of such Act is amended by redesignating paragraph (4)
as paragraph (5) and inserting after paragraph (3) the following new paragraph:
" (4) Thereafter, payments from time to time on account of the other awards
made to corporations pursuant to section 202 and not compensated in full under
paragraph (1) or (2) of this subsection in an amount which shall be the same for
each award or in the amount of the award, whichever is less. The total payment
pursuant to this paragraph on account of any award shall not exceed $50,000.".
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2. Amend the title so as to read:
An Act to amend the war Claims Act of 1948 to increase benefits provided to
American civilian internees in Southeast Asia and to provide for additional
payments on awards made to individuals and corporations under that Act.
COMMITTEE AMENDMENTS
The first committee amendment struck out all after the enacting
clause of the bill as passed by the Senate and inserted a substitute
text. 1'he first section of the substitute text is identical in substance
with the bill passed by the Senate and increases from $60 to $150 per
month the benefit,,, provided to American civilian internees in South-
east Asia. The second section of the substitute text was not contained
in the bill passed by the Senate. The new section 2 added by the
committee amendment provides for payment in. full of individual
awards up to a limitation of $500,000, and for additional payments on
awards made to corporations up to ;% limitation of $50,000 per award.
The other committee amendment merely conformed the title to
reflect the changes made in the text.
PURPOSE AND SUMMARY
This bill amends two sections of the War Claims Act of 1948 to
accomplish different purposes. Section 5 is amended to increase the
authorized detention benefit for American civilians during the Viet-
nam conflict from $60 per month to $150 per month. The purpose is to
raise the detention, benefits authorized for civilians who are or were
being held as prisoners to the level presently authorized for military
personnel. The proposed benefit of $150 per month for civilians would
be equivalent to the current $5 per day benefit for military personnel.
These benefits would be paid from funds which have already been
appropriated; approximately $275,000 would be required.
Section 213(a) of the War Claims Act of 1948 is amended to give a
first priority to the payment in full of the remaining individual
awards for property losses arising out of World War 11, then a second
priority to the payment, of the remaining corporate awards for
similar losses up to the level of $50,000.
Existing law provides for payment of both individual and corporate
awards, in equal amounts up to $35,000, and on a pro rata basin above
that figure. The total of the remaining corporate awards is about
$94.7 million; the total of the remaining individual awards is about
$6.5 million. Therefore, payment on a proportional basis (which is the
present rule, for the bulk of any payments) would result in the corpo-
rate claimants receiving the major part of any remaining funds. The
purpose of these amendments is therefore twofold: first, to provide
for the settlement of all unpaid individual claims and second, to pro-
vide for the payment of the smallest unpaid corporate claims (up to
$50,000) before dividing any remaining funds on a pro rata basis
among the rest of the corporate claimants.
No appropriation of Federal funds would be required for the amend-
ments to section 213(a), because all payments of awards certified by
the Foreign Claims Settlement Commission pursuant to Title 11 of
the 1948 Act, are required to be paid by the Secretary of the Treasury
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out of the War Claims Fund, a trust fund on the books of the Treas-
ury of the United States. This fund was established by the 1948 Act
and consists of the net proceed-, of German and Japanese assets seized.
in the United States during World War II under the authority con-
tained in the Trading With the Enemy Act.
COMMITTEE ACTION
On November 7, 1973, the Subcommittee on Commerce and Finance
held hearings on four bills to amend the War Claims Act of 1948.
H.R. 5895, the Administration proposal, and S. 1728, which passed
the Senate on October 8, 1973, amended section 5 of that Act to
increase benefits provided to American civilian internees in South-
east Asia. H.R. 1729 and H.R. 4870 amended section 213(a) of that
Act to provide, for the full payment of certain individual claims under
that Act. After executive session the Subcommittee reported S. 1728
with an amendment containing the provisions of H.R. 1729 and H.R.
4870 to give priority to the full payment of individual claims under.
the 1948 Act.
The full Committee considered S. 1728 and ordered it reported to
the House, with additional amendments, by voice vote on June 18,
1974.
Detention benefits for civilians and members of the U.S. Armed
Forces were authorized by the War Claims Act of 1948 to provide a
measure of compensation for those Americans captured and held as
prisoners of war during World War II. The original law set the benefit
rate at $60 per month for civilians and $2.50 per day (equivalent to
$75 per month) for military personnel. In 1954 the Act was amended
to include internees during the Korean conflict. Another amendment
in 1970 (Public Law 91-289) authorized detention benefits for civilian
and military internees in Southeast Asia during the Vietnam conflict.
The rate for civilian benefits was continued at $60 for each calendar
month.
To qualify for the benefit a civilian must be a United States citizen
who was captured in Southeast Asia during the Vietnam conflict or
who went into hiding in Southeast Asia in order to avoid capture by
a hostile force. The benefit is not authorized for any person who
voluntarily, knowingly, and without duress gave aid to or collaborated
with or in any manner served any hostile force. The benefit is effective
for all periods during which a civilian was interned in Southeast Asia
during the Vietnam conflict. The Foreign Claims Settlement Com-
mission determines the amount and validity of benefit claims and
provides for payment of ajudicated claims from appropriated funds.
The detention benefit for military personnel was raised by Public.
Law 91-289, enacted in 1970, and is presently $2.00 for each day
without adequate food and $3.00 per day for certain other violations
of the Geneva. Convention of 1949. All of the military prisoners whose
claims have been processed by the Foreign Claims Settlement Com-
mission have qualified for and have been paid the total benefit of $6
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per day. No comparable increase in benefits was made in 1970 with
respect to civilian American citizens held by a hostile force in South-
east Asia. American civilian prisoners suffered the same deprivations
and bards-ups during the Vietnam conflict as military prisoners.
Therefore, it is a matter of equity to give civilians the same detention
benefit that is provided under the 1948 Act for military personnel.
INDIVIDUAL AND CORPORATE AWARDS
A brief review of the legislative history of the War Claims. Act of
1948 provides a perspective for the amendments giving priority to the
full payment of individual awards from the War Claims Fund followed
by payment of corporate awards up to $50,000. In 1948 the Congress
enacted the War Claims Act to permit American citizens and corpora-
tions incorporated in the United States to receive awards to com-
pensate them for Losses suffered as a result of World War II and
created the War Claims Fund to provide for the payment of these
awards.
The 1948 Act also established a War Claims Commission, now the
Foreign Claims Settlement Commission, which was required to make
recommendations on the handling of personal injury and property
claims arising out of World War 1.1 to the President. Legislative
recommendations resulted in the enactment of amendments to the
1948 Act in 1962 ('Public Law 87-846) which established the initial
schedule of priorities for payments from the War Claims Fund. The
Foreign Claims Settlement Commission was required to adjudicate
each claim and. determine the amount of each award in accordance
with these priorities.
The law provided for payment in full of all death and personal
injury awards, for all property losses of small business concerns, and
finally, for all other property loss awards of $10,000 or less. These
awards have all been satisfied in full. For each remaining award over
$10,000 the statute provided that the unpaid balance was to be satis-
fied on a pro rata basis. The funds available at that time permitted
the payment of 61.3 percent of the balance of all remaining awards.
The Act was amended again, in 1970 after it became apparent that
there would not be sufficient funds available for full payment of every
claim as had been originally anticipated. The House-passed bill estab-
lished two new priorities for the remaining unpaid balances on (1) all
awards made to nonprofit organizations, and (2) all awards made to
individuals. The Foreign Claims Settlement Commission initially
opposed the altered priority schedule on the ground that priority for
the nonprofit organizations would be unfair to the small awardees.
However, tine Commission's opposition was withdrawn when a com-
promise agreement was incorporated in the Senate bill whereby after
payment in full of the nonprofit organizations claims, both individual
and corporate claimants would be paid up to $35,000. Unpaid bal-
ances abovE, this amount would be satisfied on a pro rata basis, These
provisions were eventually enacted as Title II of the War Claims Act
of 1948 (Public Law 87-846).
The accompanying chart lists for each category of property loss
claim: the number and amount of the original awards, the amounts
paid after the 1962 and 1970 amendments, and the balance due.
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1. Death and personal injury------
34
$51,035
0
II. Small business----------------
251
6, 093 100 percent of award_____________________
12, 02
0
III. $10,000 and under_____________
5,635
13, 059, 352
Total______________________
5,920
25,595,480 ----------------------------------------
0
IV. Over$10,000:
1. Individuals____________
886
35, 276 571
,
$10,000 on each l (
$6,
578, 916
2. Corporations___________
199
249, 441
, 491
{$11,000 on each
award plus 61.3
94,
700, 830
3. United States__________
1
327, 073
(
} percent of remain- award.
107,100
4. Religious, charitable, and
nonprofit____________
33
J
24, 159, 313
1
der.
- --------------- 100 percent of award-
0
The statutory provision requiring pro rata payments to individuals
and corporations on awards above a certain amount has resulted in
the major part of funds used for such pro rata payments going to
corporations whose property loss claims are generally larger. The un-
paid awards to 186 individuals amount to about $6.5 million; those to
161 corporations amount to about $94.7 million. Under existing law,
individuals and corporations would receive additional equal payments
up to $24,000, having already received $11,000, towards each out-
standing claim. Above this level the corporations would receive about
93 cents for every one dollar paid out. The War Claims Fund, from
which these awards will be paid, can be expected to receive less than the
$20 million currently held by the Office of Alien Property, This alncunt,
is still subject to various pending claims. After their resolution and a
determination by the Attorney General that the funds are not re-
quired to fulfill an obligation imposed by any other provision of law,.
the remainder will be transferred to the War Claims Fund. Since all-
unpaid awards total over $101 million, your Committee understancil
that the Fund will be insufficient to satisfy many awards.
The funds for the payments from the War Claims Fund under the
provisions of the 1948 Act, as amended, have been made available as a
matter of grace by Congress. Principles of equity and justice were
applied to the drafting of the original schedule of priorities enacted
in 1962 and again in 1969 as changing circumstances indicated the
need for amendment. All remaining claims, whether individual or
corporate, are for property losses. The decision by your Committee to
accord first priority to the remaining individual awards is based
on several factors.
The type of property loss from which the individual awards are
derived has been examined due to the charge that priority to individual
award holders would discriminate in favor of stockholders of corpora-
tions which were less than 50 percent owned by U.S. nationals. The
Foreign Claims Settlement. Commission breaks down individual
claims into three categories according to the kind of property upon
which the claim of loss is based. First, there are 123 unpaid "in-
dividual" awards which are "based on loss of property directly owned
by an individual." 1 This group comprises two-thirds of the unpaid
awards to all individuals. Second, the 16 "mixed" claims by individuals
are "based partly on direct ownership of some property and partly
1 Hearing Rocord, Serial No. 93-44, at page 31.
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on indirect ownership of other property via interests in a corporation
or it partnership" I Third, the Commission describes the 47 awards
in the "corporate and partnership" category as "claims based solely
on loss of corporate or partnership property and brought by individual
holders or interests; in such entities."
A study of Commission decisions indicates that the classification
of an individual claim as corporate or partnership in nature did not
take into aocount the fact that the majority of these individual losses
were "corporate" in form only and involved organizations that did
little more than hold a family's assets or at most operate a family
business. These "corporations" were often organized only to avoid
confiscation. of individually held property by the Nazi government
in the 19:0's. Virt!rallv allf these 47 awards involve family organiza-
tions or very closely held organizations with only it few principals.
't'hese organizations were no more than the alter ego of a family, an
individual, or a, small group of individuals. Such losses are funda-
mentally different from. the business losses of a large, publicly-held
multinational corporation.
to consicering the issue of whether payment of individual before
corporate awards would discriminate against American corporations
and their stockholders, domestic and foreign tax benefits available to
awardees are pertinent. The 1948 Act requires the Commission to de-
duct from the amount of any corporate award exceeding $10,000 an
amount equal to the aggregate of Federal tax benefits derived by such
corporation and based on the same property loss for which the award
was given. '.These Federal tax benefits derived. from the Internal
ltevenue Code provisions allowing a~n income tax deduction for a war
or confiscation loss. The intent of this section of the 1948 Act was to
prevent the corporation from receiving a double benefit for it single
loss. However, there were also substantial foreign tax benefits available
to niultinat~onal corporations for which the statute (lid not require a
corresponding deduction from an award. Both domestic and foreign
tax law benefits were taken in the 1940's by some corporate awardees
who thus realized immediate and substantial compensation for their
losses before postwar depreciation of the dollar. As a result of Ile
availability of these tax provisions, to~?ether with the amounts already
paid towards their war claims awards, the corporate claimants, and
indirectly t}.e:ir stockholders, have recovered most, and in some cases
all, of their World War II losses.
The provisions of the Tntern_al Revenue Code allowing deductions
from taxable income for confiscation and war losses were also available
to individuals. Several factors resulted in a situation in which none of
individual :awardees utilized these provisions. Many had no knowledge
of Federal tax law or had insufficient income against which to offset the
loss at that time. i'Vloreover, the war loss deduction was not available
to individuals whose property had been confiscated before December
11, 1941.. For this reason many individuals who later were granted
awards under the 1948 Act were ineligible to take war loss deductions.
The amendment to the 1948 Act providing for payment of the re-
rnaioint; corporate claims up to the level of $50,000 was adopted in
full Committee executive session. The purpose is to provide for the
payment of uhe smallest remaining corporate claims from any existing
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sums in the War Claims Fund after the individual claims have been
paid in full. Equitable considerations led your Committee to conclude
that the 65 corporate claims with unpaid balances totaling $50,000
or less should be satisfied before paying the larger remaining corporate
awards on a pro rata basis. In reaching this conclusion your committee
relied on the list of corporate and partnership claims prepared by the
Foreign Claims Settlement Commission, which consists of claims based
solely on loss of corporate or partnership property and brought
by the corporation or partnership. This list was attached to the
letter dated November 23, 1973 sent to the Honorable John E.
Moss, Chairman of the Subcommittee on Commerce and Finance,
from Wayland D. McClellan, General Counsel of the Foreign Claims
Settlement Commission 1. Your committee intends that the pay-
ments to the awardees in accordance with the provisions of this legis-
lation shall be made to the appropriate corporate and partnership
claimants (insurance and general), as well as to the appropriate
individual claimants, so listed in the attachment to Mr. McClellan's
letter.
Examination of the nature of the remaining individual and cor-
porate claims thus forms the basis for the Committee's determination
that these claims are entitled to preference for equitable reasons.
However, in adopting these amendments to existing law, your Com-
mittee does not intend to encourage or set any precedent concerning
settlement of property loss claims in the field of international law
which are within the proper jurisdiction of other committees of the
Congress. On the contrary, this bill is designed to provide an equitable
solution to the particular facts surrounding the remaining unpaid
property loss claims arising out of World War II.
COST ESTIMATE
In accordance with section 252(a) of the Legislative Reorganization
Act of 1970 (Public Law 91-510), your Committee estimates that no
additional expenditures by the United States should be required in
carrying out the functions of the Foreign Claims Settlement Com-
mission under the provisions of S. 1728 as amended by your
Committee.
EXPLANATION OF LEGISLATION BY SECTION
This explanation is of the bill as reported by your Committee with
amendments.
The title of the bill is an Act to amend the War Claims Act of 1948
to increase benefits provided to American civilian internees in South-
east Asia and to provide for additional payments on awards made to
individuals and corporations under that Act.
Section 1 of the bill amends section 5 (i) (3) of the 1948 Act by
striking out "$60" and inserting in lieu thereof "$150," thus raising
the rate of detention benefits for civilian internees in Southeast Asia
to $150 for each calendar month. Approximately $275,000 will be
required to be paid under this provision from funds which have
already been appropriated.
' This letter and the list of claims attached is reproduced in the record of the hearing before the Subcom-
mittee on Commerce and Finance on this legislation at pages 31-37.
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Section 2 (a) of the bill amends section 213 (a) (3) of the 1948 Act to
provide for payments of awards made to individuals pursuant to
section 202 of the 1948 Act, which have not already been compensated
in full under section 213(a)(1) or (2), in equal amounts or in the
remaining amount of the award, whichever is less. The total payment
pursuant to this paragraph orL any award must not exceed $500,000.
The information made available to your Committee by the Foreign
Claims Settlement Commission indicates that the remaining 187
individual claims are all below the $500,000 ceiling and that approxi-
mately $6.5 million would be required to satisfy all such claims in full.
Section 2(b) of the bill also amends section 213(a) of the 1948 Act
by inserting a new paragraph (4) after paragraph (3). After, the re-
maining individual awards have been compensated in full under the
terms of paragraph (3), as amended by this bill, payments shall be
made on awards made to corporations pursuant to section 202 and
not compensated in full under section 213 (a) (1) or (2) in equal amounts
or in the remaining- amount of the award, whichever is less. The total
payment pursuant to this paragraph on any award must not exceed
$50,000. Approximately $5.8 million would be required to satisfy the
65 corporata claims of $50,000 or less, according to an estimate made
from the information supplied to your Committee by the Foreign
Claims Settlement Commission.
Section 2,b) of the bill redesignates paragraph (4) of section 213(a)
of the 1948 Act as paragraph (5). This provision of existing law states
that payments on the unpaid balance of each remaining award shall
be made on a proportional basis from the remaining sums of the War
Claims Fund. The pro rata share pail to each corporate awardee will
vary according to the size of the unpaid balance in relation to the
amount of money remaining in the War Claims Fund. Such awards
would be ccrporatc in nature due to the provisions of this bill. Your
Committee estimames that approximately $88.9 million would be
required to matisfy ,he remaining 96 corporate claims in full.
AGENCY COMMENTS
FOR .IGN CLAIMS SETTLEMENT COMMISSION
Hon. HARLEY C. STAGGERS,
OF TIIE UNITED STATES,
Washington, D.C., April 18, 1973.
Chairman, Committee on Interstate and Foreign Commerce, House of
Representatives, Washington, D.C.
DEAR vin. CHAIRMAN: Further reference is made to your letter of
March 26, 1073, requesting a report by the Foreign Claims Settlement
Commission on the bill H.R. 5895, 9:),d Congress, "A Bill To increase
benefits provided to American civilian internees in Southeast Asia."
The purpose of the bill is to increase the rate of detention benefits
payable under section 5(i) (3) of the War Claims Act of 1?44S, as
amended, to civilian American citizens held as prisoners in Southeast
Asia, from $60 per month as presently authorized to $150 per month.
Section 5(i) of the War Claims Act of 1948, as amended, authorizes
the Foreign Claims Settlement Commission to determine the amount
and validity, and provide for payment, of any claim filed by, or on
behalf of, any civilian American citizen for detention benefits at the
rate of $60 per month for any period of time after February 27, 1961
during which he was held as a prisoner, internee, or :hostage, in South-
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east Asia by any force hostile to the United States, or who went into
hiding to avoid capture or internment by such hostile force. Section 5
of the Act also authorized the settlement of claims of certain civilian
American citizens who were held as prisoners, internees or hostages,
during World War II and the Korean conflict. These claimants were
also paid at the rate of $60 per month.
Members of the Armed Forces of the United States who were
captured and held as prisoners of war during World War II, and the
Korean conflict were paid benefits at the aggregate rate of $2.50 per
day for each day they were held as prisoners of war and where there
was a violation by the detaining enemy force of the Geneva Conven-
tion of 1929 in regard to the food rations, forced labor and the treat-
ment of such prisoners.
The Congress, however, in the enactment of legislation (Public Law
91-289, approved June 24, 1970) providing for the settlement of similar
claims by prisoners of war of the Vietnam conflict, increased the rate of
compensation to $5.00 per day for every day members of the Armed
Forces of the United States were held as prisoners of war during such
conflict. No comparable increase in benefits was made with respect to
the civilian American citizens held by a hostile force in Southeast
Asia.
The Commission would have no objections to the proposal to
increase the civilian. internee benefits to $150 per month inasmuch as
the increase would be equal to those presently being paid to military
prisoners of war in Vietnam. This arrangement would be more equitable
than that currently in effect.
The proposed legislation would affect approximately 60 civilian
American citizens in Soutliesat Asia and the increase in the amount
of compensation payable under the legislation from $60 to $150 would
total approximately $275,000. There would be no increase to the
Commission in the cost of administering the civilian internee program
in case the legislation is enacted.
The Commission is in favor of the proposed amendment to section
5(i)(3) of the War Claims Act of 1948, as amended by H.R. 5895
and recommends that the bill be enacted by the Congress.
The Office of Management and Budget has advised that there is
no objection to submission of this report and that enactment of H.R.
5895 would be consistent with the Administration's objectives.
Sincerely yours,
LYLE S. GARLOCK, Chairman.
EXECUTIVE OFFICE OF THE PRESIDENT,
OFFICE OF MANAGEMENT AND BUDGET,
Washington, D.C., April 18, 1973.
Hon. HARLEY STAGGERS,
Chairman, Committee on Interstate and -Foreign Commerce, House of
Representatives, Washington, D.C.
DEAR MR. CHAIRMAN: This is in reply to the Committee's request
for the views of this Office on H.R. 5895, "To increase benefits pro-
vided to American civilian internees in Southeast Asia."
H.R. 1179-z
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The pur-)ose of this bill is to incre :use the detention payment author-
ized under the War Claims Act for American civilians interned in
Southeast Asia. from $60 a month to $150 a month.
The Department of State and the Foreign Claims Settlement Com-
mission are submitting reports which recommend enactment, of the
bill. The agency reports indicate that, the increased detention payment
proposed for civili?t.n internees would parallel the amount now provided
military personnel who were prisoners of war.
We concur in the views expressed by these agencies and, accordingly,
recommend. enactment of the bill. Enactment of H.R. 5895 would be
consistent, with the Administration's objectives.
Sincerely,
WILFRED H. ROMMEL,
Assistant Director for Legislative Reference.
DEPARTMENT OF STATE.
ashington, D. h'., April 9, .t 975'.
Iron. HARLEM O. STAGGERS, Washington, Chairman, Committee on Interstate and Foreign Commerce, House of
Representatives.
DEAR EMIR. CHAIRMAN: In further a'eference to your letter of Ma:?ch
26, 1973 eoncerninf; H.R. 5895, a bill "To increase benefits provided
to American civilian internees in Southeast Asia", we would like to
thank on for the introduction of this legislation which the Depart-
ment strongly snpport,s.
']'he bill would amend the War Cl ,im.s Act of 1948 to increase the
detention benefit; for civilians wrthori~;ed by section 5 of that Ac.t from
$60 per month to $150 per month. The benefit is payable to American
civilians or their survivors who were captured in Southeast Asia during
the Vietnam conflict. The detention. benefit for military personnel was
raised by P.L. 91-289, enacted June 24, 1970, and is presently $2.00
for each day without adequate food and $3.00 per day for certain other
violations of the Geneva Convention of 1949. The proposed benefit
of $150 per month for civilians would be equivalent to the $5 per day
benefit for rr_ilitarv, personnel.
The bill would benefit only about 60 persons-the number known
or believed t:> have Dean captured in Southeast Asia during the recent
conflict. The total cost of this bill is estimated to be $275,000 which
would he paid from appropriated funds by the Foreign Claims Settle-
trrent Comrmssion.
We believe the benefits provided by this bill are fully justifiable and
that they wiI help equate civilian and military benefits of this type.
We submitted a more detailed explanation of this bill with our letter
to the Speaker of .Nfarch 2, 1973 which I understand has been referred
to your Com.mit.tee. We stand ready to provide any additional infor-
rnation younav desire and recommend, that your Committee give
prompt and favorable consideration to H.R. 5895.
The Department has been informed by the Office of Management
and Budget t'sat the enactment of H.R. 5895 would be consistent with
the Administ?ation's objectives.
Sincerely yours,
MARSHALL WRIGHT,
Acting Assistant &cretary for Congressional Relations.
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FOREIGN CLAIMS SETTLEMENT COMMISSION
OF THE UNITED STATES,
Washington, D.C., June 14, 1973.
Hon. HARLEY O. STAGGERS,
Chairman, Committee on Interstate and Foreign Commerce, House of
Representatives, Washington, D.C.
DEAR MR. CHAIRMAN: This letter is in further reference to your
February 12, 1973 request for a report by the Foreign Claims Settle-
ment Commission on H.R. 1729, 93d Congress, "A Bill to amend
section 213 (a) of the War Claims Act of 1948 to provide for the full
payment of certain individual claims under that Act."
The subject bill would amend paragraph (3) of section 213(a) of the
War Claims Act of 1948, as amended (76 Stat. 107, 50 U.S.C. App.
2017-2017p (1970), hereinafter referred to as "the Act"), which
authorizes payment in equal amounts on awards not compensated in
full under the priority payment schedules of paragraphs (1) and (2) of
that section, by restricting such payments to awards of individuals.
At the present time, both individual and corporate awardees are
eligible for such payments without preference.
The bill also eliminates the provision in paragraph (3) which author-
izes payments of up to $35,000 before prorated payments may be
made. The thrust of the bill is thus to direct payments in equal amounts
on awards to individuals not fully compensated previously until all
such awards have been paid. Thereafter, the remainder of the awards
having outstanding balances, e.g., the awards to corporations, would be
paid and then only under the provisions of paragraph (4) which
authorizes pro-rata (not equal) payments. The distinction between
modes of payment is not nearly as significant as the establishment of a
payment priority for awards to individuals. A review of the award
payment provisions as they now exist may clarify this significance.
Paragraph 1 of section 213(a), as constituted when the Act was
passed, directed the Secretary of the Treasury to pay in full (1) the
awards granted in death and disability claims; and (2) the awards
granted claimants who qualified as small business concerns within the
meaning of the Small Business Act. Thereafter, paragraph (2) of that
section directed the Secretary to make payments on all other awards
up to $10,000.00 and after such payments had been made, paragraph
(3) directed prorated payments on the unpaid balances of awards
granted under section 202 of the Act and certain recertified Hungarian
war damage awards granted under section 303 (1) of the International
Claims Settlement Act of 1949, as amended.
The General War Claims Program under the Act was completed
on May 17, 1967 and the Commission granted awards which totaled
approximately $334.8 million. The recertified Hungarian war damage
awards totaled approximately $5.7 million and one award of $500,-
000.00 was certified to be paid to the Jewish Restitution Successor
Organization under specific language of the statute. The total amount
of these awards was approximately $341 million.
At the time that the program was completed, the money available
in the War Claims Fund permitted the Secretary of the Treasury to
pay in full the awards granted priority, i.e., death, personal injury
and small business. The fund then was sufficient to make payments
on all other awards of up to $10,000.00 plus 61.3% of the amounts
of such awards in excess of the $10,000.00.
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On December 24, 1970, Public Law 91-571 (84 Stat. 1503) was
enacted, which amended paragraph (1) of section 213(a) of the Act
by additionally granting priority of payment to awardees determined
by the Commission to have been "A nonprofit organization operated
exclusively for the -rromotion of social welfare, religious, charitab:.e,
or educational purposes," on the date of loss, damage or destruction
which formed the basis for award. The Commission was directed to
recertify suci awards to the Secretary of the Treasury. Public Law
91-571 also established a new paragraph (3) which authorized addi-
tional payments, not to exceed $35,000, on all other awards, such
payments to be in the same amount for each award or in the amount
of the award, whichever was less. The former paragraph (3), directing
pro-rate payments on non-priority awards, became the new para-
graph (4).
In reporting on the proposals which upon enactment became Public
Law 91-571, the Commission irdtially opposed the enactment of the
legislation giving priority of payment to the social welfare, religious,
charitable and educational organizations on the ground that it would
be unfair to the small awardees, However, that opposition was with-
drawn when the $35,000.00 figure was established before prorated
payments would be commenced. That orovision assured that all small
aMwardees, individual or corporate, would be paid in full. Such awardees
no doubt suffered greater losses than others despite the fact that the
property involved may not have been as extensive.
The Comwission recertified the awards granted to those claimants
who qualified as nonprofit organizations operated exclusively for the
promotion of social welfare, religious, charitable, or educational pur-
poses. There were thirty-three such organizations and the awards
totaled $24,159,313.1'',6. After those payments were made, the amount
remaining in the War Claims Fund permitted the Secretary of the
'l.Ireasury to authorise additional payments to all other awardees,
individuals and corporations, in amounts up to $11,000.00, pursuant to
paragraph (3).
Currently there are approximately 348 individual and corporate
award holder, with unpaid balances totaling about X101,279,746. Of
the. 348 award holders having unpaid balances, there are 186 ind.ivid-
pals with unpaid balances totaling $6.578,916.00; and 161 corporate
award holders with total unpaid balances of $94,700,830.
May I point out that under the provisions of section. 201 (c) of the
Act, corporations were eligible to file claims for property losses if they
were organized under the laws of the United States, or any State, the
Commonwealth of Puerto Rico, the District of Columbia, or any terri-
tory or posses;ion of the United States and in which more than 50 per
nentum of the outstanding capital stock or other proprietory o:r
similar intere=t was owned directly or indirectly by natural persons
who were nationals of the United States. Individual stockholders of
such corporations Nvere precluded from, filing for losses based on their
respective stockholder interests.
On the other hand, individual stockholders who were nationals of the
United States were permitted under Section 205(b) of the Act to file
claims for losses sustained by non-United States national corporations
based on their stockholder or other prcprietory per centum interests
therein. 'T'hus, while many awards have been granted to individuals, a,
number have been based on losses sustained by foreign corporations
which could not qualify as United States national corporations.
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The Commission has conducted a study of the claims in which there
are outstanding unpaid balances on awards. Of the 187 individual
award holders who have unpaid balances, 56 represent awards based
on stockholders interest in foreign corporations or other business
entities. The unpaid balances in such claims total approximately
$2,151,748.00. There are an additional 30 award holders with unpaid
balances totaling approximately $2,701,726.00, which represent losses
based on interests in foreign corporations or other business entities and
privately-owned property. Most of these awards are based on sub-
stantial holdings in foreign corporations or other business entities
whose properties were lost, damaged or destroyed as a result of military
operations during World War II.
The bill does not set forth whether it is intended to treat awards
to individuals who were the indirect owners of property through their
stockholder interests in foreign corporations in the same manner
as awards to individuals who directly owned property that was lost,
damaged or destroyed as a result of military operations during World
War II. The Commission is of the opinion that such a preferential
treatment would be discriminatory and unfair to those corporations
that qualified as United States nationals within the meaning of the
Act, and that it would defeat the basic purpose of the payment pro-
visions of the Act as it is presently constituted.
In effect, therefore, this proposal would result in the inequitable
situation under which United States national corporations would be
discriminated against in favor of one group of award holders, including
those whose interests are indirect through foreign corporations, in
the case that additional money becomes available for deposit in the
War Claims Fund.
In light of the foregoing, the Foreign Claims Settlement Commis-
sion does not favor the enactment of H. R. 1729.
Advice has been received from the Office of Management and
Budget that there would be no objection to the presentation of this
report to your Committee.
Sincerely yours,
Hon. HARLEY O. STAGGERS,
LYLE S. GARLOCK, Chairman.
DEPARTMENT OF JUSTICE,
Washington, D.C., June 28, 1973.
Chairman,, Committee on Interstate and Foreign Commerce, House of
Representatives, Washington, D.C.
DEAR MR. CHAIRMAN: This is in response to your request for the
views of the Department of Justice on H.R. 1729, a bill "To amend
section 213(a) of the War Claims Act of 1948 to provide for the full
payment of certain individual claims under that Act."
Section 213(a) of the War Claims Act of 1948 (76 Stat. 1111,
50 U.S.C. App. 20171) establishes priorities for the payment by the
Secretary of the Treasury from the War Claims Fund of awards made
pursuant to Section 202 of the Act (50 U.S.C. App. 2017a). Under
existing law, paragraph (1) of Section 213(a) gives first priority to
the payment in full of awards made pursuant to Section 202(d) (1)
and (2) to certain persons (or their relatives) killed or injured during
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World War 11, and thereafter of any award made pursuant to Section
202(a) to certified small businesses and certain nonprofit organizations.
Paragraph (2) next Gives priority to payments on account of other
awards made pursuant to Section 202, with payments to be "in an
amount which shall be the same for each award or in the ania.Int of
the awa:?d-, whichever is less," within a $10,000 limitation on any
award.
Paragraph (3) next gives priority to payments on other awards
made to individuals and corporations pursuant to Section. 202 and
which have not been compensated in full under paragraphs (1) and
(2). These plyments shall be the same for each award or in the amount
of the award, whichever is less, with the limitation that pa}anent on
any award shall not exceed $35,000.
The hill, H.R_ 1729, without, otherwise altering the existing order
of priority of payment, would remove the $35,000 limitation on
individual payments made under paragraph (3) and also delete
corlxirations from the priority category of paragraph (3).
This Department is not in a position to judge the possible effect
of the hil! on payments by Treasury under Section 213(a) on awards
mach by the Foreign Claims Settlement Commission under Section
202.
With regard. to possible funding of the bill, Section 39 of the Trading
With the Enemy Act, as amended (50 U.S.C. App. 39) requires the
At:tornev Gen er?d to transfer the net. proceeds of German and Japanese
property to the War Claims Fund which in his discretion are not
required to fill obligations imposed under the Act or any other pro-
vision of law, including the payment of claims in the Oce of Alien
Property and which claims are not the subject to any judicial action
or proceeding. The proceeds of vested property currently held by the
Of1?ice of Alien Property amount to about $20,000,000. These funds
for the most part are subject to pending litigation, private bills and
various cir,ims. When. these pending matters have been resolved, the
balance of the remaining assets, if any, will be transferred- to the
War Claims Fund. There can be no assurance that any substantial
portion of the 820 million will be available for such transfer or any
assurance Ls to when. such transfer can be made. According; to our
information, the War Claims Fund has been insufficient by an amount
far in excess of the above $20 million to make full payment on awards
already allowed by the Foreign Claims Settlement Commission.
Whether this proposed legislation should be enacted involves
questions as to which the Department of Justice defers to the Foreign
Claims Settlement Commission.
The Office of Management and Budget has advised that there is no
objection. to the submission of this report from the standpoint of the
Administra,ion's program.
Cordially,
MIKE MCKFVITT,
lssistant Attorney General, Legislative Affairs.
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EXECUTIVE OFFICE OF THE PRESIDENT,
OFFICE OF MANAGEMENT AND BUDGET,
Washington, D.C., July 27, 1973.
lion. HARLEY O. STAGGERS,
Chairman, Committee on Interstate and Foreign Commerce, House of
Representatives, Washington, D.C.
DEAR MR. CHAIRMAN: Reference is made to your requests of
February 1.2, 1973 and March 13, 1973 on two bills II.R. 1729, "To
amend section 213(a) of the War Claims Act of 1948 to provide for
the full payment of certain individual claims under that Act," and
11.R. 4870, "To amend the War Claims Act of 1948, as amended."
For the reasons set out in the report of the Foreign Claims Settle-
ment Commission on II.R. 1729, the Office of Management and
Budget is opposed to the enactment of either H.R. 1729 or H.R. 4870,
bills having essentially similar purposes.
Sincerely,
WILFRED 11. ROMMEL,
Assistant Director for Legislative Reference.
DEPARTMENT OF STATE,
Washington, D. C., June 14, 1973.
lion. HARLEY O. STAGGERS,
Chairman, Committee on Interstate and Foreign Commerce, House of
Representatives, Washington, D.C.
DEAR MR. CHAIRMAN: The Secretary has asked me to reply to
your letter of February 12, 1973 enclosing for the comments of the
Department of State copies of II.R. 1729, a bill "To amend section
213(a) of the War Claims Act of 1948 to provide for the full payment
of certain individual claims under that Act."
The bill., if enacted, would amend paragraph (3) of section 213(a)
of the War Claims Act of 1948 (50 App. U.S.C. 2017(1)(a)) and
thereby provide payments from time to time on awards made under
section 202 and not compensated in full under paragraph (1) or (2)
in an amount which shall be the same for each award or in the amount
of the award, whichever is less.
The Department of State has carefully studied the report of the
Foreign Claims Settlement Commission of the United States on
II.R. 1729 and concurs in its comments and recommendations
regarding the bill.
The Office, of Management and Budget advises that from. the stand-
point of the Administration's program, there. is no objection to the
submission of this report.
Sincerely yours,
MARSHALL WRIGHT,
Assistant Secretary for Congressional Relations.
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CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with clause 3 of rule XIII of the Rules of the House
of Representatives, changes in existing law made by the bill, as re-
ported, are shown as follows (existing law proposed to be omitted is
enclosed in black brackets, new matter is printed in italic, existing law
in which no change is proposed is shown in roman) :
WAR CLAIMS ACT OF 1948
SEC. 5. (a) * * *
* * * * * * *
(i) (1) As used in this subsection-
(A) the term "Vietnam conflict" relates to the period. beginning
on February 28, 1961, and ending on such date as shall thereafter
be determined by Presidential proclamation or concurrent resolu-
tion of the Congress; and
(B) the term "civilian American citizen" means any person
who, being then a citizen of the United States, was captured in
Southeast Asia during the Vietnam conflict by any force hostile
to the United States, or who went into hiding in Southeast Asia
in order to avoid capture or internment by any such hostile force,
except (i) a person who voluntarily, knowingly, and without
duress, gave aid to or collaborated with or in any manner served
any such hostile force, or (ii) a regularly appointed, enrolled,
enlisted, or inducted member of the Armed Forces of the United
States.
(2) The Commission is authorized to receive and to determine,
according to law, the amount and validity, and provide for the pay-
ment of any claim filed by, or on behalf of, any civilian American
citizen for detention benefits for any period of time subsequent to
February 27, 1961, during which he was held by any such hostile
force as a prisoner, internee, hostage, or in any other capacity, or
remained in hiding to avoid capture or internment by any such hostile
force.
(3) The detention benefits allowed under paragraph (2) of this
subsection shall be at the rate of [$60] $150 for each calendar month.
(4) The detention benefits allowed under paragraph (2) of this
subsection shall be allowed to the civilian American citizen entitled
thereto, or, in the event of his death, only to the following persons:
(A) the widow or husband if there is no child or children
of the deceased;
(B) the widow or dependent husband and child or children
of the deceased, one-half to the widow or dependent husband and
the other half to the child or children in equal shares;
(17l
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(C) the child or children of the deceased in equal share if
there is no widow or dependent husband.
(5) Any claim allowed by the Commission under this subsection
shall be certified to the Secretary of the Treasury for payment out
of funds appropriated pursuant to this subsection, and shall be paid
to the person entitled thereto, except that if a person entitled to
payment under this section is under any legal disability, payment
shall be made in accordance with the provisions of subsection (e)
of this section.
(6) Each claim filed under this section must be filed not later than
three years from whichever of the following dates last occurs:
(A) the date of enactment of this subsection;
(B) the date the civilian American citizen by whom the claim
is tiled returned to the jurisdiction of the United States; or
(C) the date upon which the Commission, at the request of a
potentially eligible survivor, makes a determination that the
civilian. American citizen has actually died or may be presumed
to be c.ead, in the case of any civilian American citizen who has
not returned to the jurisdiction of the United States.
The Commission shall complete its determinations for each claim fled
under this subsection at the earliest practicable date, but not later
than one year after the date on which such claim was filed.
(7) There are authorized to be appropriated such amounts as may
be necessary to carry out the purposes of this subsection, including
necessary administrative expenses.
PAYMENT OF AWARDS; PRIORITIES; LIMITATIONS
SEc. 213, (a) The Secretary of the Treasury shall pay out of the
War Claims Fund on account of awards certified by the Commission
pursuant to this title as follows and the following order of priority:
(1) Payment in full of awards made pursuant to section 202(d) (1)
and (2), and thereafter of any award made pursuant to section 202(a)
to any claimant (A.) certified to the Commission by the Small Business
Administration as having been, on the date of loss, damage, or dest?uc-
tiorl, a small business concern within the meaning now set forth in the
Small Business Act, as amended, or (13) determined by the Commission
to have been, on the date of loss, damage, or destruction, a nonprofit
organization operated exclusively for the promotion of social welfare,
religious, charitable, or educational purposes.
(2) Thereafter, payments from time to time on account of the other
awards made pursuant to section 202 in an amount which shall be the
same for each award or in the amount of the award, whichever is less.
The total payment made pursuant to this paragraph on account of any
award shall not exceed $1.0,000.
(3) Themafter, payments from time to time on account of the other
awards made to individuals [and corporations pursuant to section
202 and nct compensated in full under paragraph (1) or (2) of this sub-
section in an amount which shall be the same for each award or irL the
amount of the award, whichever is less. The total payment pursuant to
this paragraph on account of any award shall not exceed [$35,000]
$500,000.
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(4) Thereafter, payments from time to time on account of the other
,awards made to corporations pursuant to section 202 and not compen-
sated in full under paragraph (1) or (2) of this subsection in an amount
which shall be the same for each award or in the amount of the award,
whichever is less. The total payment pursuant to this paragraph on ac-
count of any award shall not exceed $50,000.
[(4)] (5) Thereafter, payments from time to time on account of the
unpaid balance of each remaining award made pursuant to section 202
or recertified pursuant to subsection (b) of section 209 which shall bear
to such unpaid balance the same proportion as the total amount in the
War Claims Fund and available for distribution at the time such
payments are made bears to the aggregate unpaid balances of all such
awards. No payment made pursuant to this paragraph on account of
any award shall exceed the unpaid balance of such award. Payments
heretofore made under section 310 of title III of the International
Claims Settlement Act of 1949, as amended, on awards made against
the Government of Hungary under section 303(1) of title III of the
International Claims Settlement Act of 1949, as amended, and
recertified under subsection (b) of section 209, shall be considered as
payments under this paragraph and no payment shall be made on any
recertified award until the percentage of distribution on awards made
under section 202 exceeds the corresponding percentage of distribution
on such recertified award: Provided, That no payment made on
awards recertified under subsection (b) of section 209 shall exceed 40
per centum of the amount of the award recertified.
(b) Such payments, and applications for such payments, shall be
made in accordance with such regulations as the Secretary of the
Treasury shall prescribe.
(c) For the purpose of making any such payments, other than under
section 213 (a) (1), an "award" shall be deemed to mean the aggregate of
all awards certified for payment in favor of the same claimant.
(d) If any person to whom any payment is to be made pursuant to
this title is deceased or is under a legal disability, payment shall be
made to his legal representative, except that if any payment to be
made is not over $1,000 and there is no qualified executor or adminis-
trator, payment may be made to the person or persons found by the
Comptroller General to be entitled thereto, without the necessity of
compliance with the requirements of law with respect to the admin-
istration of estates.
(e) Payment on account of any award pursuant to this title shall
not, unless such payment is for the full amount of the award, ex-
tinguish any rights against any foreign government for the unpaid
balance of the award.
(f) Payments made under this section on account of any award
for loss, damage, or destruction occurring in the Commonwealth of
the Philippines shall not exceed the amount paid on account of awards
in the same amount under the Philippine Rehabilitation Act of 1946.
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SUPPLEMENTAL VIEWS BY MR. KUYKENDALL TO S. 1728,
WAR CLAIMS ACT AMENDMENTS
The history of the War Claims Act and the facts concerning the
effect of the bill as reported are fully and accurately explained in the
body of the report, but certain implications of this legislation should
be set forth here.
If present law retiring all claims up to $35,000 had been fully
implemented, there would then remain only 43 individual claims not
fully paid, and these claimants would have received over 61% and
as high as 79% of their original awards. This bill eliminates the $35,000
ceiling, and all individual claims of whatever size will be paid in full.
It is questionable public policy to grant legitimate individual claims
a preference over legitimate corporate claims, just as it would be to
give the claims of the corporations priority over those of the indi-
viduals. Congress should consider very seriously whether it wishes to
establish the precedent that the claims of companies are inferior to
those of individuals.
But this bill goes even further. If there is any rationale to the
proposal, it must be on the basis that one set of claims (individual)
has more basic merit justifying a preference over another set of claims
(corporate). Such a rationale, if worthy of acceptance, cannot account
for the fact that this bill proceeds to favor small corporate claims over
large corporate claims. Such a scheme cannot commend itself as good
law or simple justice. It must be based on a premise that the more one
lost, the less entitled he is to reimbursement. At the very least, the
distinction between corporations should be eliminated.
It is pointed out correctly in the report that individuals had tax
benefits available as well as corporations, but it seems to argue that no
individual claimants are known to have used them and that this
failure creates some kind of special equity.
Where losses fall upon large numbers and classes of victims, and a
limited amount of recovered funds is available to satisfy those losses,
it seems that fair and equal treatment requires a sharing in that fund
in proportion to the established losses.
DAN KUYKENDALL.
(21)
0
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