effect can be found in other cases which have since been decided by the Supreme Court of the United States.

Shall the United States, in view of this unimpeachable line of authorities, both upon law and upon national policy, retain the property held in trust by the Alien Property Custodian, even as a pledge to secure the payment by former enemies and enemy nationals of the many millions of dollars' worth of claims held by Americans, or is this Government under duty to return unconditionally this property to its former enemy owners?

Many Senators and Representatives would have Congress make provision to return at once all the property taken over by the Alien Property Custodian, without regard to the claims of Americans against former enemy countries and enemy nationals. However, these American claimants have now been waiting several years for the German Government to pay them approximately $300,000,000 on account of lives of relatives lost on the Lusitania as well as property seized or destroyed during the war.

It is becoming more and more evident that the United States will be denied priority on money spent since the signing of the Armistice in maintaining its army along the Rhine. German assets are under mortgage to the Allies. In view of this depressing condition in Germany, American claimants are clamoring for government protection of their rights and ask that the property controlled by the Alien Property Custodian, approximating $350,000,000, be held as collateral security, or as a pledge, to enforce the payment of these American claims by Germany and Austria, or their nationals.

Most of the American claims are for marks. The former value (March, 1917) of marks was seventeen and three-sixteenths cents a mark. The present value is half a cent a mark. Under the Treaty of Versailles, the claims of British, French and other Allied nationals have already been paid in full at former rates of exchange (August, 1914) out of seized property under the Clearing House provisions of the Treaty. The American Government has never taken advantage of the Clearing House provisions of the Versailles Treaty, and has allowed the option period of these treaty provisions to lapse until now, when it is too late for American claimants to take advantage of them.

Unless American claimants can take advantage of the former rate of exchange, as provided for by Section 4 of Article 10 of the Treaty of Versailles, they will suffer enormous loss; first, because unless this is done it is not clear that mark debts must be paid at former rates of exchange, and second, because of the inability of German debtors to pay and the fact that the reparation provisions of the Treaty will make it impossible for the German Government to pay.

This matter of rate of exchange is of the utmost importance. Take, for instance, the claim of an American bank having a sum of marks on deposit by a German bank at the outbreak of the war. This is a good example of the type of claim involving marks. Thus, if the German bank is permitted to pay these marks at the current rate of exchange, the American bank will be obliged to bear the burden of the tremendous depreciation which has been brought about by the war. That would be eminently unjust.

The provisions of the Treaty of Versailles bearing upon the rate of exchange to be applied in the settlement of former mark debts, are contained in Part 10, Sections 3 and 4, the rights and advantages under Part 10 being reserved to the United States and its nationals under the Porter-Knox Peace Resolution and the Treaty of August 25, 1921.

Section 3 of Part 10 is entitled "Debts", and provides, among other things, for the settlement of debts payable before the war through the intervention of Clearing Offices. By this arrangement debts were to be paid or credited in the currency of the Allied or Associated Power involved, and mark debts, therefore, paid or credited at the rate of exchange of before the war. This rate of exchange is defined as the average cable transfer rate prevailing in the Allied or Associated country involved during the month immediately preceding the outbreak of the war.

It is generally understood that all English and French banka have already been paid in full for their before-the-war deposits in marks with German banks at former rates of exchange, in accordance with the aforementioned sention of the Treaty of Versailles, As far as English and French banks are concerned, the rate of exchange, of course, is that which prevalled in 1914, that is, 24 centa a mark. Under the terms of the treaty American claimants are

entitled to only the rate of exchange which prevailed in March, 1917, that is, 17-3/16 cents a mark.

The question of the rate of exchange is only a small part of the problem that America is now called upon to solve in connection with the property held by the Alien Property Custodian. But it is just such questions and considerations which Congress will have to look into before legislating upon this subject.

Congress might well make a study of what England, France, Italy, Belgium and Canada have done in working out a solution of this difficult problem. Each of these countries has done all in its power to avoid the disreputable practice of confiscation. However, none of these countries has disposed of enemy property held by its Public Trustee or Alien Property Custodian without due regard to the rights of its own claimants against the enemy countries and their nationals. Hence, a brief summary of what each of these Allied nations has done in this connection may not be out of place.

Great Britain, with the other Allies, has reserved the right to retain and liquidate all property belonging to German nationals pursuant to Division B of Article 297 of the Treaty of Versailles, which stipulates as follows:

Subject to any contrary stipulations which may be provided for in the Peace Treaty, the Allied and Associated Powers reserve the right to retain and liquidate all property, rights and interests belonging at the date of the coming into force of the Peace Treaty to German nationals, or companies controlled by them, within their territories, colonies, possessions and protectorates, including territories ceded to them by the Peace Treaty.

Under authority of Division E of Article 297 England proceeded to establish a Clearing House arrangement through which all claims made by England or the other Allies and their nationals passed at the expense of the German property held by the Allied Governments. The important feature of Division E is as follows:

The claims made in this respect by such nationals (nationals of Allied Powers) shall be investigated, and the total of the compensation shall be determined by the mixed arbitral tribunal provided for. This com

pensation shall be borne by Germany, and may be charged upon the property of German nationals within the territory or under the control of the claimant's State.... The payment of this compensation may be made by the Allied or Associated State, and the amount will be debited to Germany.

From 1919 to 1921 Great Britain, by authority of the sections of the Treaty of Versailles quoted above, issued peace orders to the following effect:

All property, rights and interests within His Majesty's Dominions or Protectorates belonging to German nationals at the date when the Treaty comes into force (not being property rights or interests acquired under any general license issued by or on behalf of His Majesty), and the net proceeds of their sale, liquidation or other dealings therewith, are hereby charged— (a) in the first place, with payment of the amounts due in respect of claims by British nationals with regard to their property, rights and interests, including companies and associations in which they are interested in German territory, or debts owing to them by German nationals, and with payment of any compensation awarded by the Mixed Arbitral Tribunal, or by an arbitrator appointed by that Tribunal in pursuance of paragraph (e) of Article 297, and with payment of claims growing out of acts committed by the German Government or by German authorities since the thirty-first day of July, and before the fourth day of August, nineteen hundred and fourteen, but so nevertheless that the claims of British nationals for the proceeds of the liquidation of their property, rights and interests mentioned in Section IV of Part X of the Treaty and in the Annex thereto, and for the enemy debts owing to them referred to in Article 296 of the Treaty, shall rank in priority to any of the other claims above mentioned.

(b) secondly, with payment of the amounts due in respect of claims by British nationals with regard to their property, rights and interests in the territories of Austria-Hungary, Bulgaria and Turkey, and in so far as those claims are not otherwise satisfied.

Provided that any particular property, rights or interests so charged may at any time be released by the Custodian acting under the general direction of the Board of Trade from the charge so created.

In this connection it may be noted that the American Government has been notified through diplomatic channels that Hungary, according to an article which appeared in the Budapest Pesti Tozsde of February 2, 1922, will begin the payment of before-thewar debts owed to private individuals in England and France, and that the banks are reported to have collected considerable sums in their safes for this purpose. It is reported, however, that Hungary has been granted a further period of several more weeks' grace for the payment of the first instalment.

Hungary's debt in England is estimated to amount to more than 4,500,000 pounds sterling, and out of that sum 2,000,000 pounds are said to be owed for arrear dividends on Hungary's state loans,

1,000,000 for the debt of the city of Budapest, and at least 1,250,000 by private individuals. The entire debt will be payable in instalments of 250,000 pounds sterling per annum, and the only concession made by England is that this sum may be remitted yearly in two-part payments.

The French Ministry of Foreign Affairs, Office of Private Property and Interests, has issued numerous circulars, each dealing with disposition of alien property in the hands of the French Government. Circular No. 78, issued March 17, 1921, provides for the release of property belonging to Alsace-Lorrainers, who are now Frenchmen by virtue of the Treaty of Versailles. By producing a certificate of their new French nationality, stating the manner in which it was acquired, and by producing documentary evidence of their ownership of property in the hands of the French Government, etc., the French Office of Private Property and Interests will return property thus held to the original owners.

At a meeting held at London by the Directors of the Allied Clearing Offices, the following resolution was passed:

Coupons of allied securities, regardless of their nature, maturing after January 10, 1920, shall only be paid to German nationals where they are unable to prove they acquired those securities from an allied or neutral person subsequent to that date.

France's plan to dispose of enemy property in her hands has been further detailed in numerous other circulars. France and Germany have also entered into a separate agreement providing for the payment of indemnities. In all these circulars and orders the French Government makes ample provision for the protection of private claims held by French nationals against Germany and German nationals. France was one of the first to take advantage of the Clearing House provisions of the Treaty of Versailles.

In the settlement of Hungary's before-the-war debts in France, the French agreement does not fix the payments in the precise terms contained in the English agreement. It only pledges Hungary to pay one-seventh part of her debts in the first year. According to the Pesti Tozsde this means that Hungary would have to pay 300,000,000 French francs in 1922. The payments will not be made individually but are to be paid into the Hungary Clearing Office, which will transmit it to the Clearing Houses in Paris.