Travel Return of field staff to United States, seven 1-way trips.. ed in Communications services: Calculated on the Department's current PREPARED STATEMENT Senator SMITH. Mr. Clay, will you give us a brief explanation of the Commission's operations, which I understand were to be concluded by December 31, 1954, under authority of the International Claims Settlement Act of 1949, as amended? as Mr. CLAY. Yes, sir. If it please the committee, I would like to submit a prepared statement relative to the work and the production of the International Claims Commission of the United States, presently constituted. And by your leave I will merely summarize the pertinent related items which may be of interest. (The statement referred to follows:) STATEMENT OF HENRY J. CLAY, ACTING CHAIRMAN INTERNATIONAL CLAIMS INTRODUCTION As you gentlemen know, this Commission was established by Congress within the Department of State by the International Claims Settlement Act of 1949, approved March 10, 1950. It was given jurisdiction to adjudicate certain claims of the United States and of its nationals against foreign governments for the nationalization or other taking of property in instances where the United States Government had agreed to accept a lump-sum money settlement in satisfaction of claims that fall within specific limitations of the several agreements. Thus far, agreements have been concluded with the Federal People's Republic of Yugoslavia and the Republic of Panama. Under the former agreement, the United States, after extended diplomatic negotiations on behalf of its citizens, received a $17 million fund in full settlement and discharge of all claims of the Government of the United States and its nationals against the Government of Yugoslavia for property which was nationalized or otherwise taken between September 1, 1939, and July 19, 1948. In the latter case, a Claims Agreement, signed on October 11, 1950, provided for settlement of certain questions relating to property rights between the United States and the Republic of Panama. Under this agreement, the Government of Panama agreed to pay the sum of $400,000 in full and final settlement of American claims relative to disputed property ownership in Panama. The Commission, as constituted under the International Claims Settlement Act of 1949 represents a major development in the orderly adjudication of claims in the international field. In the past, these types of claims have been generally assigned to special tribunals with the objective of resolving claims of a specific category involving two particular countries. The International Claims Commission of the United States is the first permanent tribunal created as a purely domestic institution to adjudicate claims of an international character before which individual claimants may appear in person with the right to a formal hearing to present evidence and legal arguments in support of their respective claims. Another improvement in this type of claims procedure provides a facility whereby, upon request by a claimant, the Commission will assist, through investigators in the field, in obtaining the necessary documents, records or copies thereof, in order to legally establish their claims. Although this represents an added burden on the Commission's limited staff, it has provided necessary and material assistance to the claimants involved. This Commission was activated in August of 1950 when President Truman appointed the first three Commissioners. Commissioner Baker, one of the original appointees, resigned on January 16, 1953, and the terms of office of the other two members were thereafter fixed by President Eisenhower to terminate on June 30, 1953. According to the records of the Commission, during the 3 years of their incumbancy, the Commissioners received some 1,600 claims and settled 508 Yugoslav (117 final awards, 384 denials, 7 withdrawals) and adjudicated none of the 67 Panamanian claims. RECENT AMENDMENTS The 83d Congress, 1st session, amended the International Claims Settlement Act of 1949 by (1) extending the time for the settlement of the Yugoslav claims from March 10, 1954, to December 31, 1954; (2) increasing the amount deductible from awards of the Commission from 3 to 5 percent, as reimbursement for expenses incurred by the Commission; (3) permitting the appointment of only acting members of the Commission until its reorganization by further act of Congress; and (4) prohibiting the use of funds appropriated for the expenses of the Commission during the fiscal year 1954 for the payment of salaries of the acting members of the Commission. After the passage of this amendment, Congress then appropriated $220,000 for the operation of the Commission for fiscal 1954. REORGANIZATION OF COMMISSION President Eisenhower, on August 12, 1953, designated Mr. Harold B. Teegarden of the Securities and Exchange Commission and Mr. George W. Spangler of the Department of Justice as Acting Chairman and acting member, respectively, of the Commission. Both men undertook their new duties immediately but were initially limited to a part-time attention pending completion or reassignment of work in their regular agencies. Upon assuming their new responsibilities, they made an immediate survey of the unfinished work before the Commission. It became quite evident from the analysis of pending claims that, if the work on the claims was to be completed by December 31, 1954, with the funds provided, the previous organization and staffing pattern had to be drastically modified. This was promptly accomplished by abolishing in certain cases, and reducing the salaries in others, the numerous highly graded senior positions in the Commission's Washington office. At the same time, the number of attorneys and investigators who actually do the basic work on the claims in the field and at the Washington office was increased. One of the reasons why the former Commission did not process a reasonable number of cases during the initial 3-year period was its failure to recruit a qualified and adequate field staff with which to gather the necessary evidence and make vitally needed investigations in Yugoslavia. On August 12, 1953, when the new Commissioners took over, there was only 1 man in Belgrade assigned to the Herculanean task of investigating some 1,000 remaining claims. This man's output of investigation reports necessarily set the pace for issuing decisions in the Washington office. The new Commission took immediate steps to remedy this situation by building up an adequate field office. We are pleased to report at the present time, our field staff includes 11 Americans and 9 Yugoslavs assigned to this vital fieldwork in Belgrade and that this phase of our work is now moving rapidly and should be largely completed within 3 months. NEW RULES OF PROCEDURE The new members of the Commission concluded that the Rules of Practice and Procedure formulated by the former Commission had to be drastically simplified if claims were to be settled and disposed within the specified time limit. New rules were promptly promulgated and issued. These rules, which became effective on November 4, 1953, have resulted in eliminating many of the formal and timeconsuming proceedings which had considerably delayed and increased the work of the Commission. The changes occasioned by the new rules have enabled us to process claims in a much more expeditious and less complicated manner. The new procedure has eliminated, as a requirement, all formal interoffice recommendations, briefs, and memoranda. It has eliminated formal prehearing conferences, eliminated hearings de novo, at which all evidence whether obtained by the claimant or the Commission was introduced; and limited hearings to specific factual and legal findings of the Commission upon which claimants desire to present additional evidence or make oral argument. In addition, the rules eliminate certain other practices and procedures, which slowed down the determination of claims. DEATH OF ACTING CHAIRMAN Shortly after the new rules became effective and the Commission was ready to commence issuance of decisions prepared in a number of claims, Mr. Teegarden died on November 17, 1953, leaving Mr. Spangler the sole member of the Commission. The law requires (sec. 4, subdivision 2) that all decisions of the Commission shall be by a majority vote of the members thereof. Thus, with only one member of the Commission present, it was impossible to issue decisions or hold hearings. This unfortunate situation prevailed from November 17, 1953, to March 4, 1954, the date of my appointment. During this period, however, under the supervision of Mr. Spangler, the field staff investigated over 200 claims and the trial attorneys in the Washington office were busy preparing draft decisions in a large number of claims where the investigations had been completed. APPOINTMENT OF A NEW ACTING CHAIRMAN On March 4, 1954, I was appointed acting chairman of the Commission by the President. Between that date and April 20, 1954, we have issued 141 proposed decisions on claims before the Commission. The Commission has also rendered 45 final orders and decisions in other claims in which, for the most part, proposed decisions had been issued and accepted by the claimants and the Yugoslav Government some 10 months ago. It should be noted that these are the first proposed decisions to be actually issued by the Commission since June of 1953. In addition, hearings requested by claimants on proposed decisions issued by the former commissioners have been scheduled and are presently being held at the rate of two a day. TRIP OF ONE MEMBER TO YUGOSLAVIA Shortly after my appointment, Mr. George W. Spangler, the second member of the Commission, spent 2 weeks in Yugoslavia conferring with members of the Commission's field branch for the primary purpose of providing necessary direction concerning the Commission's needs and requirements for appraisals and other evidence and insuring that the operations of the field staff are so conducted that all investigations may be finished by early summer with maximum efficiency and thoroughness. In addition to this task, Commissioner Spangler spent considerable time conferring with appropriate authorities of the Yugoslav Government concerning the latter's cooperation with our field staff and the necessity of their assistance in submitting vital evidence on the claims themselves. PANAMANIAN CLAIMS The Commission has also had pending before it for several years 67 claims against the Government of Panama. The United States citizens involved in these claims were deprived of certain property rights in 1930, and many of them are quite elderly and in dire financial need. Since my appointment, several members of the Commission's staff have been assigned to this particular group of claims for the specific purpose of disposing of this phase of the Commission's work. Heretofore, only preliminary work on the cases had been accomplished and no decisions had been made. By April 20, 1954, 24 proposed decisions had been drafted, reviewed, and issued on these claims. We expect that by the middle of next month proposed decisions will have been issued on the remainder of this group of claims. CASE STATISTICS Following are statistics reflecting what the Commission has accomplished between October 1, 1953, and April 20, 1954. (From July 1, 1953, to September 30, 1953, of this fiscal year, because of the lapse of the Commission and other factors described elsewhere in this report, no significant progress was made in the determination of claims.) It should also be noted that during all of this period, only 2 commissioners, instead of the prescribed 3 members, have been on duty and for 4 months out of the 61⁄2 months covered, there was only 1 commissioner. I. Claims production statistics 1 Includes 65 partial decisions and 25 erroneous decisions for a total of 80 decisions which should be considered still outstanding. Claims on which decisions have been issued that are not yet final. Claims on which investigations are still pending.. Total claims filed. 1,614 1,622 APPROPRIATIONS As the members of the committee know, this Commission is not financed by the taxpayers, although the Congress is called upon to make annual appropriations as such. The Government is reimbursed for expenditures to defray costs of operating this Commission by deductions from awards made to claimants. Last August, when Congress raised the amount from 3 percent to 5 percent which could be deducted from awards for expenses to administer this work, a total of approximately $365,000 was made legally available to complete the work on the Yugoslav and Panamanian claims for the remainder of fiscal 1954 and the first 6 months of fiscal 1955. It should be borne in mind that the former commissioners expended over $500,000 to dispose of less than one-third of the claims filed, while we presently have considerably less money available to complete the work on the remaining two-thirds of the claims filed. In other words, the former commissioners disposed of some 500 claims totaling amounts claimed of approximately $24 million; 117 awards totaling less than $600,000 were made in these cases. There remained for the new commissioners to settle some 1,100 claims in which claimants seek awards in excess of $130 million out of the $16,400,000 available for distribution. Of the remaining claims, there are 60 claims alone which total over $50 million and which cover a broad scope of industrial and corporate interests in the steel, textile, wood and paper, glass, sugar, rubber, chemical, heating, electrical equipment, transportation, oil refining, mining, brewing, and vegetable-processing fields. Working against the ceiling of $365,000, the Congress appropriated $220,000 for the Commission's expenses during fiscal 1954. Out of this appropriation, the Commission will have obligated at the most by June 30, 1954, approximately $186,000, which will leave an unobligated balance or surplus of $34,000. I should like to report to you that this amount of $34,000 will represent a genuine savings. Unfortunately, this is not the case. Almost this entire amount is represented by a loss in personal services which the Commission desperately needed. Because of the delay occasioned by the requirement of full field security investigation for all of the Commission's appointments to its staff prior to January 1954, it has taken nearly 9 months to build up our staff to its present level. This is still under the minimum strength which we believe required to complete the job on time. This delay in actually obtaining the services of key personnel, coupled with the hiatus between Mr. Teegarden's death and my appointment, has unavoidably deferred fulfillment of the Commission's work program and will necessarily require us to accomplish a greater proportion of the work in the last 6 months than had originally been planned. Instead of reaching a peak of 42 people in the current fiscal year, we shall need a peak of 55 attorneys, investigators, and stenographers. This staff will have to be carried over into fiscal 1955 at an estimated actual operating cost of $170,000 for the 6 months involved. Thus, instead of operating at the planned level of $220,000 during this fiscal year and winding up the job with $144,950 during fiscal 1955, the Commission has only been able to operate and produce decisions at a $186,000 level and because of the time element involved will be forced to operate at a proportionately higher level during the next 6 months. Based on the congressional estimate made only 9 months ago, there will be approximately $180,000 available out of the claims funds for the operations of the Commission from July 1 to December 31. We estimate that we will need $170,000 of this to finish the job within the time limit. We very definitely cannot finish the task with the $130,000 which the House has appropriated. Thus, despite of what I consider excellent progress in the face of numerous obstacles and difficulties, I must tell you frankly that the Commission cannot finish its work by December 31 with the amount of money in the bill before you. CONCLUSION We believe that with sufficient funds the work on the Yugoslav and Panamanian claims can be completed by December 31, 1954. We are doing this job just as economically and efficiently as possible. There have been only been 2 commissioners instead of the 3 permitted to supervise the work of the Commission. We have eliminated substantially all of the high-priced senior positions. The rules of practice and procedure of the Commission have been changed to eliminate many formal and time-consuming proceedings. We have coped as best we could with the problems of getting qualified personnel as fast as possible for this temporary program, which, of course, has probably cost more money than it would under programs which had time to proceed in a more leisurely fashion. I respectfully submit that, if you want the job completed, we will need more money. Now that the Commission is approaching a satisfactory working capacity with its claims processed in an orderly and expeditious manner, we believe that the request for funds suggested herein to complete the work is reasonable and in the best interests of all persons concerned in view of the likelihood of meeting the December 31, 1954, deadline. HISTORY OF COMMISSION Mr. CLAY. As you gentlemen know, this Commission was established by Congress within the Department of State under the International Claims Settlement Act of 1949, as amended, and approved on March 10, 1950. There have been amendments to this act. The most recent amendment was by the 1st session of the 83d Congress, which extended the time for the Commission to complete the work of the Yugoslav claims: from March 10, 1954, to December 31, 1954. It also permitted an increase from 3 to 5 percent as the amount deductible from awards for reimbursement of expenses incurred by the Commission. You will also recall that the act as amended permitted the appointment only of acting members of the Commission until its reorganiza-. tion by further act of Congress. |