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The late war brought a wide deviation from these principles and produced great changes in the politics of all the nations engaged in the war. In countries invaded by our enemies, they systematically carried off enormous quantities of private property, from the complete equipments of factories to the pretty household goods of the peasants, often ruthlessly destroying what they could not take away. It is probable that pillage in war cannot be regarded as unusual or unexpected; but the systematic and complete manner in which it was carried on by the Germans was not only unexpected but was sufficient to warrant the conviction that the ruthless robbery of private individuals, the destruction of private property, and the seizure of private businesses, constituted a part of the official policy of the German government, determined upon at the very beginning of the war as an effective means of crushing its enemies.
Possibly the most interesting and far-reaching features of this departure from settled policies was that which had to do with the taking over of businesses and enterprises in enemy countries. Conditions following soon upon the beginning of the world war brought to the attention of all of Germany's enemies the great danger involved in what has come to be known as Germany's “industrial penetration” of other countries. Her use of branch business houses located in every country in the world, not only to aid active military operations by supplying information and spreading propaganda, but also to destroy, cripple and debauch the industry of the invaded countries, brought the world to a correct understanding of Germany's great plans in building up an army sufficient to conquer, subdue and control the world, an army whose industrial and commercial wing, spreading throughout all the civilized world, was intended to be quite as potent a factor in bringing about the desired result as the military wing itself. Great Britain was the first to realize the menace arising from the activities of German-owned businesses in her territory, and took prompt measures to control and finally wind up their operations. Although Germany did not possess the same provocation or excuse as that which justified Great Britain in this course, she lost no time in taking over all British, Belgian and French enterprises in German territory, and upon America's entry into the war applied the same measures to American business there. This treatment of enemy property as a part of the war
establishment of the Government of which its owners were subjects or citizens, carried the war into the domain of private rights to an extent quite as unprecedented as the scope of the terrible conflict itself, involving all interests as well as all peoples anad entailing consequences which it would be quite impossible at this stage to foretell.
Early in the war, both Great Britain and Germany adopted measures to seize enemy property within their territories. They adopted measures of sequestration and of liquidation. In Great Britain all enemy property was required to be reported to public authorities. Some of this property was taken into possesion by such authorities, while the balance was left in the hands of the persons who reported it. Great Britain early adopted a plan for liquidating enemy businesses, and under that process sold out various German concerns and businesses.
In Germany the same course was adopted, and many orders and ordinances were enacted, authorizing the sequestration and liquidation of enemy property. In France and Italy the governments took possession of enemy property, but none has been liquidated.
When America entered the war, therefore, the process of sequestration and liquidation had been developed and carried on to a considerable extent in Great Britain and Germany. When the Trading-with-the-Enemy Act was passed, it was planned that the United States was to take possession of and hold enemy property, leaving the final disposition to the Congres after the war.
This plan, in effect, authorized sequestration, but not liquidation, and it was upon this theory that the Alien Property Custodian entered upon the discharge of his duties.
It soon became apparent that there were many reasons why the Alien Property Custodian should be given the right of liquidation. These reasons were explained to the Congress, and resulted in the adoption of amendments to the law which authorized the sale of enemy property, under certain restrictions. The proceeds of sales, however, were required to be placed in the Treasury of the United tSates, and with the property which has not been sold make a fund of large proportions held by the United States, subject to the disposition of the Congress.
This was the situation at the time when the peace
treaty was being considered, and the treaty has not materially altered it.
We do not know definitely what has been done with American property in Germany. We do know that the ordinances and orders authorizing the seizure and sale of French, Belgian and British property in Germany were specifically applied to the property of American citizens. We have received information that many American properties have been sequestered by the German authorities and that some of them have been liquidated. We are also informed that factories belonging to American companies have been converted and used for the manufacture of munitions. But we have no complete data as yet. On the other hand, the German government has announced several times that the American property in Germany is intact and can be restored to the owners. Unless our information is wholly erroneous, however, this statement is not correct, although it is probable that most of the American property in Germany is capable of being restored.
Very striking evidence that Germany has not told the truth with respect to the treatment of American property is found in the case of American oil wells and properties in Roumania, as to which proof has been produced to show exactly what happened. When the Germans occupied Roumania, they proceeded to carry out preconceived plans of taking over for themselves and their allies, private property in Roumania. To accomplish this, the German military supreme command issued orders from time to time, which were published in the official bulletin, of which I have original copies.
On the 10th of February, 1917, General von Mackensen prescribed the sequestration and forced administraiton of enemy enterprises generally, and on the 27th of July, 1917, he made an order authorizing the liquidation of all enterprises in which British, French or Belgian nationals directly or indirectly had a predominant interest, or which were, or had been administered or supervised from British, French or Belgian territory.
On the 12th of March, 1918, the latter order was made applicable “by way of retaliation, to enterprises in whose property American nationals have directly or indirectly preponderant participation, or which are managed or supervised from American territory, or were so managed or supervised up to the outbreak of the war. The
same holds good of American interests in the enterprises. Branches, agencies, warehouses, successions, real estate, as well as property of any kind, are regarded as enterprises under this regulation. Corporations in which American nationals are preponderantly interested are regarded as American enterprises under this regulation."
This regulation is a characteristic German document. The measures are said to be taken “by way of retaliation. At that date, however, the Alien Property Custodian not only had not made any sales, but had no authority to make any, except to prevent waste. The amendment under which liquidations or sales by the Alien Property Custodian subsequently were made, was enacted the 28th of March, 1918. Thus appears another proof of German intelligent foresight, for they knew what we were going to do, even before we knew it ourselves—and "retaliated" in advance against it.
On the same date, March 12, 1918, a further order was made, ordering the enforced liquidation of two American companies engaged in the manufacture, sale and export of petroleum. Subsequently, these companies, and all of their properties, lands, oil wells and concessions were transferred to a new German company, which had been organized for the purpose of exploiting oil in Roumania. Thus were transferred to a German private company, by private act, American properties of very great value, estimated, roughly, as in the neighborhood of $50,000,000.00.
The consideration payable for the properties was not finally determined, but was left to the decision of three named persons, apparently German. But the consideration was payable in Berlin in lei.
I must here digress, in order to explain what were the lei in which the consideration was to be paid. In October, 1916, before Roumania had been fully occupied, the miitary authorities of Germany, Austria and Bulgaria met at Berlin for the purpose of discussing, among other things, the economic utilization of Roumanian territory. It was concluded to divide the properties and revenue in Roumania. It was first decided that the following goods were of first necessity: Mineral oil products, food supplies and fodder, raw materials for all purposes, wood, machines, labor and horses. It was decided that machines, factories, work shops and installations should be given to Austria-Hungary; Ger
many, Turkey and Bulgaria, however, receiving such machines as were necessary to complete their munition factories, and Turkey receiving the machines necessary for her textile and leather industries. A division of the mineral oil was agreed upon; and the wood, after the needs of the army of occupation were provided for, was to be divided in equal portions.
Then came the question of payment. It was obvious that goods and products would be hidden, and not offered by the population unless paid for. It was, therefore decided to begin by paying for supplies and only to conscript them later, because in that manner greater amounts could be obtained. But even payments to this extent would be embarrassing, because if marks had to be sent to Roumania, the Reichsbank would have make fresh issues and that method, it was stated, would create a critical situation. Finally, after long discussions, this method was devised: There existed in Roumania a bank owned by Germans, called the Banca Generala Romana. It was decided to grant to this bank the right to issue bank notes in Roumania, which would be established as legal tender in Roumania, by military order, and thus be available to make all necessary payments. The security for the new bank notes, which were expressed in the Roumanian currency, lei, was to be constituted in form by the deposit of marks at the Reichsbank in Berlin, at the rate of eighty marks for one hundred lei. But the deposit was to be retained in Berlin, and it was agreed that at the conclusion of peace, Roumania should be required to assume the new currency and to release the deposit. I now quote from a translation of the original text, of the minutes of the meetings: "By this means, the entire deposit would be returned to those who had paid it in, and the allies (that is the Central Powers) would receive the imported goods eventually without cost."
This program, adopted in October, 1916, was faithfully carried out. The orders issued by the German supreme military command in Roumania authorized the creation of the new bank notes, made them legal tender, required their acceptance by every one, and prescribed penalties for non-acceptance. Furthermore, the German authorities resorted to various devices in order to obtain the exchange of the existing Roumanian currency, which was secured by gold deposits, for the new bank notes. This they succeeded in doing in a large measure, and