The Office of Alien Property Custodian was an office within the government of the United States during World War I and again during World War II, serving as a custodian to property that belonged to US enemies. The office was created in 1917 by Executive Order 2729-A under the Trading with the Enemy Act of 1917 (TWEA) in order to "assume control and dispose of enemy-owned property in the United States and its possessions." [1] [2]
Sec. 6 of TWEA authorized the president to appoint an official known as the "alien property custodian" (APC) who is responsible for "receiv[ing,] ... hold[ing], administer[ing], and account[ing] for" "all money and property in the United States due or belonging to an enemy, or ally of enemy ... ." TWEA was originally enacted during World War I "to permit, under careful safeguards and restrictions, certain kinds of business to be carried on "among warring nations, and to "provid[e] for the care and administration of the property and property rights of enemies and their allies in this country pending the war." [3]
Created in October 1917 within the United States Department of Justice, the Office of Alien Property Custodian (OAPC) ceased to exist in 1934 and its functions were delegated to the Alien Property Bureau (APB) in the Claims Division of the Department of Justice. On December 9, 1941, the APB was superseded in the Justice Department by the Alien Property Division (APD). The APD was abolished in 1942 and its functions were passed along to the Office of Alien Property Custodian (APC) within the Office of Emergency Management. APC was abolished in 1946 and its functions were transferred to the Office of Alien Property, Department of Justice. It was abolished in 1966 and most of the functions related to foreign assets control were passed to the Office of Foreign Assets Control (OFAC) in the United States Department of the Treasury. [4] [5]
President Woodrow Wilson appointed A. Mitchell Palmer, a political ally and former Congressman, Alien Property Custodian in October 1917. Palmer held the position from October 22, 1917 until March 4, 1919. A wartime government official, the Custodian had responsibility for the seizure, administration, and sometimes the sale of enemy property in the United States. Palmer was also allowed to take control of property that might hinder the war effort, including all property belonging to interned immigrants, whether they had been charged with a crime or not. [6] [7] Palmer's background in law and banking qualified him for the position, along with his party loyalty and intimate knowledge of political patronage. [8] : 128 Under Palmer's leadership, the Custodian employed hundreds of officials. [6]
The size of the assets the Custodian controlled only became clear over the next year. In January 1918, The New York Times wrote that Palmer's organization turned into "the biggest trust institution in the world, a director of vast business enterprises of varied nature, a detective agency, and a court of equity." [9]
Late in 1918, Palmer reported he was managing almost 30,000 trusts with assets worth half a billion dollars. He estimated that another 9,000 trusts worth $300,000,000 awaited evaluation. [10] Many of the enterprises in question produced materials significant to the war effort, such as medicines, glycerin for explosives, charcoal for gas masks. Others included mines, brewing, and newspaper publishing. Palmer built a team of professionals with banking expertise as well as an investigative bureau to track down well-hidden assets. Below the top-level positions, he distributed jobs as patronage. For example, he appointed one of his fellow members of the Democratic National Committee to serve as counsel for a textile company and another the vice-president of a shipping line. [8] : 128–35
In September 1918, Palmer testified at hearings held by the U.S. Senate's Overman Committee that the United States Brewers Association (USBA) and the rest of the overwhelmingly German liquor industry harbored pro-German sentiments. [11] He stated that "German brewers of America, in association with the United States Brewers' Association" had attempted "to buy a great newspaper" and "control the government of State and Nation", had generally been "unpatriotic", and had "pro-German sympathies". [12] Palmer wanted to seize the estate of the late Adolphus Busch, whose wife was stranded in Europe during the war, and succeeded in seizing the property of another brewer, George Ehret. [13]
The assets of the Orenstein & Koppel Company, the Bosch Magneto Company, the Hamburg-American Shipping Line, the German-American Lumber Company, the New York Evening Mail , as well as twenty German insurance companies, were seized. [13] Among other significant seizures, the United States assets of the chemical company Bayer were auctioned off and it lost its U.S. patent for Aspirin. [6] In April 1919, the president of the Chemical Foundation, Inc. and Palmer's successor Francis Patrick Garvan transferred 4,500 German chemical patents valued at $8 million to the Chemical Foundation, paying only $250,000; the Chemical Foundation in its turn licensed patents to American companies. [14]
Palmer said that the alien property custodian kept "the biggest general store in the country." [13] Altogether, the United States Government confiscated close to $500 million of foreign assets during WWI. [6] In 1921, the Congress while adopting the Joint Resolution Terminating the State of War Between the Imperial German Government and the United States of America and Between the Imperial and Royal Austro-Hungarian Government and the United States of America specified that all seized property had remained in the United States ownership; also, the Trading with the Enemy Act of 1917 was not terminated. [15] It stayed dormant until March 1933, when Franklin D. Roosevelt invoked it to enforce a week-long Bank Holiday of 1933. [14] In 1925, the Office of Alien Property Custodian still controlled $300 million worth of alien property, with half of that amount in cash. [16]
Later criticism of Palmer's and his successors performance, especially Thomas W. Miller's, focused less on legality of their appointments or the fees earned by political cronies but on sales of enemy assets. There were safeguards in place, but competitive bidding meant nothing when an auction was rigged by withholding information from all participants. More revelations took years to surface and the connections between Palmer and direct profits proved too tenuous to support his indictment. However, Thomas W. Miller was caught in the act and served jail time for taking a $50,000 bribe. [17]
Palmer successfully campaigned to keep the powers to sell confiscated assets within the office of custodian. He promised to hinder Germany's industrial expansion after the war. Even when Germany was facing an inevitable defeat, Palmer insisted on continuing his crusade to make American industry independent of German investment, with major sales of the seized assets in the metals industry in the spring of 1919, for example. [18] He offered his rationale in a speech to an audience of lawyers: "The war power is of necessity an inherent power in every sovereign nation. It is the power of self-preservation and that power has no limits other than the extent of the emergency." [8] : 135–50, quote 149
On 11 March 1942, President Franklin D. Roosevelt issued Executive Order 9095 establishing the Office of the Alien Property Custodian [19] within the Office for Emergency Management under authority of the Trading with the Enemy Act of 1917 and the First War Powers Act of December 18, 1941. On April 21, 1942 an Executive order subsequently transferred to it the functions, personnel, and property of the Alien Property Division of the Department of Justice. [20] He appointed Leo Crowley, a former banker and chair of the Federal Deposit Insurance Corporation as APC. During the war the APC amassed a vast portfolio of enemy property including real estate, business enterprises, ships and intellectual property in the form of trademarks, copyrights, patents and pending patent applications. Following Nikola Tesla's death at the New Yorker Hotel in 1943, the Custodian seized much of Tesla's work from his hotel room even though Tesla was an American citizen. [21] [22]
In 1947, Assistant Attorney General David L. Bazelon took over as head of the Office of Alien Property, [23] [24] as a result of the reorganization in Executive Order 9788. [25] He remained in this post until he received a recess appointment from President Harry S. Truman on October 21, 1949, to a new seat on the United States Court of Appeals for the District of Columbia Circuit. [26] Before he was seated on the bench, Harold L. Ickes, a key figure in the Roosevelt administration, indicated that Bazelon's activities as head of the Office of Alien Property warranted a Senate investigation but predicted none would be forthcoming. [27]
Among the assets held by the Alien Property Custodian in WWII was the copyright for Adolf Hitler's book Mein Kampf , meaning that Hitler got none of the royalties from the book's sales in the United States, totaling $20,580 by 1945. [28]
In 1953, President Dwight Eisenhower appointed Dallas Townsend Sr. Assistant United States Attorney General, heading the Justice Department's Alien Property Office, an office he held until 1960. Townsend supervised the seizure of enemy property and assets that had been seized during World War II. [29]
Testifying before a U.S. Subcommittee in 1957, Townsend argued that a return of 10% of seized enemy property was a sufficient amount. "One of the most unfair aspects of a general return of all German and Japanese property is that it would donate huge windfalls to large enemy corporations, industrialists and their agents, many of whom were strong supporters of the militaristic and aggressive policies of the former Governments of Germany and Japan," he told Senators. [29]
Townsend seized $329 million in proceeds of Interhandel, a Swiss holding company, saying that it was a front for the real owner, IG Farben, the German chemical cartel. [29]
On May 13, 1966, President Lyndon B. Johnson issued Executive Order 11281 which abolished the office, effective June 30 of that year. [30]
The Office of Foreign Assets Control (OFAC) is a financial intelligence and enforcement agency of the U.S. Treasury Department. It administers and enforces economic and trade sanctions in support of U.S. national security and foreign policy objectives. Under Presidential national emergency powers, OFAC carries out its activities against foreign states as well as a variety of other organizations and individuals, like terrorist groups, deemed to be a threat to U.S. national security.
The Union Banking Corporation (UBC) was a New York investment bank incorporated in 1924 in the United States. During World War II, under the U.S. Trading with the Enemy Act, the United States government seized the bank's assets pending investigation of the bank's business involving a former party member of the Nazi government in Germany, Fritz Thyssen. The now-former U.S. Senator Prescott Bush was a founding member and is included among its seven directors whose entire collective shareholdings in Union Banking Corp. were shares wholly owned by, and held on behalf of, the Thyssen empire's Bank voor Handel en Scheepvarrt in Rottendam. [1]
The Trading with the Enemy Act (TWEA) of 1917 is a United States federal law, enacted on October 6, 1917, in response to the United States declaration of war on Germany on April 6, 1917. It continues to give the President of the United States the power to oversee or restrict any and all trade between the United States and its enemies in times of war. TWEA was amended in 1933 by the Emergency Banking Act to extend the president’s authority also in peace time. It was amended again in 1977 by the International Emergency Economic Powers Act (IEEPA) to restrict again the application of TWEA only to times of war, while the IEEPA was intended to be used in peace time.
Alexander Mitchell Palmer was an American attorney and politician who served as the 50th United States attorney general from 1919 to 1921. He is best known for overseeing the Palmer Raids during the Red Scare of 1919–20.
Silesian-American Corporation (SACO) was registered as a corporation in Delaware in 1926 to assume ownership of the Giesche Spolka Akcyjna (Giesche) that was registered as a corporation in Katowice, Poland earlier during the interwar period. SACO gave substantial loans to Giesche’s Erben by selling $15,000,000 collateral trust sinking fund bonds that would mature on August 1, 1941. Giesche was that part of the holdings of the German corporation Bergwerksgesellschaft Georg von Giesche's Erben that were in the previously German controlled Upper Silesia territory with the re-established Poland.
The American IG Chemical Corporation, or American IG for short, was an American holding company incorporated under the Delaware General Corporation Law in April 1929 and headquartered in New York City. It had stakes in General Aniline Works (GAW), Agfa-Ansco Corporation, and Winthrop Chemical Company, among others, and was engaged in manufacture and sale of pharmaceuticals, photographic products, light weight metals, synthetic gasoline, synthetic rubber, dyes, fertilizers, and insecticides. The Moody's industrial manual listed an affiliation between IG Farben and American IG at the time of founding. First, Hermann Schmitz, who was the second after Carl Bosch in IG Farben's hierarchy, and then his brother, Dietrich A. Schmitz, served as American IG's presidents. It was re-incorporated as General Aniline & Film (GAF) Corp. in 1939 after a merger with General Aniline Works.
David Lionel Bazelon was a United States circuit judge of the United States Court of Appeals for the District of Columbia Circuit.
H. Upmann is a Cuban brand of premium cigars established by banker Hermann Dietrich Upmann. The brand is currently owned by a British corporation, Imperial Brands. The cigars are manufactured by Habanos S.A., the state-owned tobacco company in Cuba, and Altadis in La Romana, Dominican Republic.
Eduard Reinhold Karl Schulte was a prominent German industrialist. He was one of the first to warn the Allies and tell the world of the Holocaust and systematic exterminations of Jews in Nazi Germany occupied Europe.
Francis Patrick Garvan was an American lawyer, government official, and long-time president of the Chemical Foundation, Inc. The Chemical Foundation was established to administer in the public interest 4,500 German patents associated with production of synthetic organic chemicals and related pharmaceuticals seized by the Office of Alien Property Custodian after the US entered World War I.
Bradley Webster Palmer was a prominent U.S. attorney and businessman. He was involved with the creation and development of multiple corporations, including the United Fruit Company, Gillette Safety Razor Corp., and International Telephone & Telegraph Corporation. He was also part of the American delegation at the Paris Peace Conference following the First World War.
Internment of German resident aliens and German-American citizens occurred in the United States during the periods of World War I and World War II. During World War II, the legal basis for this detention was under Presidential Proclamation 2526, made by President Franklin Delano Roosevelt under the authority of the Alien Enemies Act.
William Warfield Wilson was a U.S. Representative from Illinois.
The War Claims Act of 1948, or Public Law 80-896, is a United States federal law passed by the 80th United States Congress on July 3, 1948.
The Custodian of Enemy Property is an institution that handles property claims created by war. In wartime, civilian property may be left behind or taken by the occupying state. In ancient times, such property was considered war loot, and the legal right of the winner. In the Fourth Geneva Convention Article 147, such action is defined as war crime:
"Grave breaches to which the preceding Article relates shall be those involving any of the following acts, if committed against persons or property protected by the present Convention: willful killing, torture or inhuman treatment, including biological experiments, willfully causing great suffering or serious injury to body or health, unlawful deportation or transfer or unlawful confinement of a protected person, compelling a protected person to serve in the forces of a hostile Power, or willfully depriving a protected person of the rights of fair and regular trial prescribed in the present Convention, taking of hostages and extensive destruction and appropriation of property not justified by military necessity and carried out unlawfully and wantonly."
The War Powers Act of 1941, also known as the First War Powers Act, was an American emergency law that increased Federal power during World War II. The act was signed by U.S. President Franklin D. Roosevelt and put into law on December 18, 1941, less than two weeks after the Japanese attack on Pearl Harbor. The act was similar to the Departmental Reorganization Act of 1917 as it was signed shortly before the U.S. engaged in a large war and increased the powers of the president's U.S. Executive Branch.
Interhandel, short for Internationale Industrie & Handelsbeteilungungen, was a Swiss conglomerate, known for its long-running disputes with the U.S. government over German ownership during World War II. Interhandel, which had both financial as well as industrial holdings was the corporate successor of I.G. Chemie, which the U.S. government had claimed was a front organization for Germany's I.G. Farben during World War II.
Dallas Selwyn Townsend Sr. was an American Republican Party official who served as the Assistant United States Attorney General during the Eisenhower administration. He was the father of CBS Radio news reporter Dallas Townsend.
Air Raid Attack Act of 1942 was a United States federal statute authorizing the United States civil defense to protect Americans and property from bombing attacks, sabotage, and war hazards upon the United States entry into World War II. The Act of Congress established Civilian Defense regulations prohibiting the obstruction of the duties and rights of local districts, municipals, counties, and State officials.