This, of course, meant that the entitlement of the beneficial owners of these interests to receive whatever income they produced was also taken, with the result that ever since their vesting the United States, instead of the original alien owners, has been collecting the proceeds for them under the terms of the instrument by which they were created. In short, the United States stepped into the shoes of enemy alien estate and trust beneficiaries, succeeding to whatever rights they might have had at the time of vesting.

I am informed that at the present time there are approximately 550 estates or trusts that may involve an unknown number of future interests which were vested under the Trading With the Enemy Act and not as yet reduced to actual possession by the United States because the contingency for their vesting in the ultimate remainder, for example, or residual owner, has not occurred.

The war has long since terminated, making it manifestly fair, in my judgment, that the United States shall be divested of its ownership of these unliquidated assets.

I can see no useful purpose to be served by permitting the Government to continue in its present status as a future life tenant, trust beneficiary, or the like, and to continue collecting income or earnings of beneficial interests they may have acquired under former vestings.

That is why I so willingly have joined with my distinguished colleague, the senior Senator from Connecticut, Mr. Bush, in sponsoring the bill, S. 2012, which would correct the situation.

S. 2012 would divest the United States of its right, title, and interest in the estate of any decedent who was an American citizen at his death, and in any trust created by an American citizen, wherein the vested interest has not been liquidated or actually reduced to possession.

No existing assets or proceeds of assets from these sources which were acquired under the Trading With the Enemy Act would be returned to the former enemy alien owner.

I urge strongly the passage of S. 2012 not only in the interests of equity and fairness but because it will bring to an end at least one phase of the enemy property problem, the initial purpose of which has long since lost its meaning.

Senator JOHNSTON. Is Senator Curtis' legislative assistant here? Mr. WOOD. I was informed this morning that Senator Curtis is working on his statement and he would get here just as soon as he possibly could.

Senator JOHNSTON. Is Senator Dodd here, or anyone representing him?

(No response.)

Senator JOHNSTON. Senator Dirksen, who was here at the beginning and had to leave, has now returned.

Mr. J. Sinclair Armstrong, executive vice president, United States Trust Co. of New York, has a brief statement which might fit in right now while we are waiting for Senator Capehart. Mr. Armstrong happens to be interested in the bill introduced by Senators Bush and Saltonstall (S. 2012), on which we have just been hearing testimony. Senator DIRKSEN. I might mention that our witness is former Chairman of the Securities and Exchange Commission, former Assistant Secretary of the Navy, and my longtime friend.

Senator JOHNSTON. We are certainly glad to have you with us, Mr. Armstrong. Will you identify yourself please, for the record? STATEMENT OF J. SINCLAIR ARMSTRONG, EXECUTIVE VICE PRESIDENT, UNITED STATES TRUST CO., OF NEW YORK

Mr. ARMSTRONG. Mr. Chairman and members of the subcommittee, I appreciate the opportunity to submit this brief statement for the record.

As the chairman, Hon. Olin D. Johnston, Senator from South Carolina, pointed out at the conclusion of the last hearings on this problem on April 6, 1957, 25 days of hearings had then been conducted over a period of 5 years. Over 3,300 pages of evidence have been accumulated.

I will not burden the subcommittee by duplicating any of that evidence.

The United States Trust Co. of New York is trustee under the wills of two American citizens whose wills directed payments of income and principal to be made to descendants and relatives by marriage who were and are German nationals and are presently residing in the Federal Republic of Germany.

During World War II the right, title, and interest of the beneficiaries was vested, and now, 14 years after the cessation of hostilities with Nazi Germany, this trust income is still being seized by the U.S. Government. The amount of income under these trusts which has been seized since 1943 is $68,503.07.

The current income annually still being seized is about $5,500, and the number of beneficiaries who are being deprived of the income to which they are lawfully entitled is four.

We understand that many American trustees are confronted with similar problems.

There are several bills before your subcommittee dealing with the return or other disposition of property already seized and reduced to possession, as well as the claims of American citizens against the Governments of Germany and Japan.

Of course, we favor full return of the trust and estate principal and income seized in the past. At the same time, we recognize the conflicting views and controversial issues that continue to plague a solution of this problem.

Therefore, I wish at this time to urge favorable and immediate action on one bill, S. 2012, introduced by Hon. Prescott Bush, U.S. Senator from Connecticut, and Hon. Leverett Saltonstall, U.S. Senator from Massachusetts, on May 20, 1959, the sole purpose of which is to terminate now the continued taking of income and principal becoming payable in the future with respect to trusts created by citizens or nationals of the United States.

This bill does not impinge upon American war claims. It does not affect the large industrial interests. It deals only with the future fruits of property left by Americans in the hands of American trustees, the beneficiaries of which happen to be German or Japanese nationals, and even then excludes any beneficiary who has been convicted of a war crime.

Surely the time has come to stop penalizing these beneficiaries because their benefactors were Americans, and wished to have their property administered in the United States.

The entire vesting procedure was terminated by Executive order of April 17, 1953.

We see no justice or equity in this seemingly endless discrimination against these beneficiaries which occurs because their legal or equitable interests-not the income or property itself-had been vested before that date.

As I mentioned above, I want to emphasize that the present situation affects not only the United States Trust Co. of New York, for which I speak here today, but many other individual and corporate fiduciaries in similar circumstances. The legitimate desires of American donors are thwarted. The trustees to whom they have confided their property and their trust are unable to perform that trust. We are denying the validity and effectiveness of our own trust law, which are laws of the several States.

Also to be seriously considered is the effect of this obvious injustice on the foreign policy of the United States.

While the amounts involved for each beneficiary may seem small, to these individuals they represent very real and vital sums of money, to which they are lawfully entitled by the gifts of American citizens. Also, we are informed that there are several thousand beneficiaries whose trust property is still thus being seized.

At a time when our Government is giving its fullest support to the Federal Republic of Germany, and clearly expects its support, in the common effort to prevent the spread of Communist influence, it seems foolish to perpetuate injustice, discrimination, and useless penalties. Regardless of the pros and cons of return of property already seized, it would be an act of simple justice and equity to stop these seizures

now.

I, therefore, respectfully urge favorable consideration of and action by the Congress on S. 2012.

Thank you.

Senator JOHNSTON. The form of the assets is such that it would not necessitate any appropriation by the Government?

Mr. ARMSTRONG. That is correct.

Senator JOHNSTON. I imagine some of them are in bonds. Are some in Government bonds?

Mr. ARMSTRONG. Yes, sir; Government bonds, stocks.

Senator JOHNSTON. A great deal of these properties were seized and used by our Government in carrying on the war. That was one reason for their seizure at that time. You understand that?

Mr. ARMSTRONG. Yes, sir.

Senator JOHNSTON. Of course, now that the war is a thing of the past, I firmly believe we should again, as we have always done in the past, consider private property to be sacred, so to speak, and return it as we have after all other wars.

Mr. ARMSTRONG. Yes, sir.

Senator JOHNSTON. That is the only thing you are asking, to return this to the people?

Mr. ARMSTRONG. Yes, sir.

I believe the Senator has pointed out that these are assets that are being administered in the various States. We administer these trusts under the jurisdiction of the surrogate of New York and we will have to account to him, of course, for the due and proper execution of our trust.

We will be forced to say to him, "No. Surrogate, we have not been able to pay the income to the beneficiaries because it has been seized by the U.S. Government."

Therefore, we petition Congress for this relief.

Senator JOHNSTON. We certainly appreciate your coming here and presenting your views.

Mr. ARMSTRONG. Thank you, Mr. Chairman.

Senator JOHNSTON. Our next witness is the Honorable Senator Homer E. Capehart, from the State of Indiana.

STATEMENT OF HON. HOMER E. CAPEHART, A U.S. SENATOR FROM THE STATE OF INDIANA

Senator CAPEHART. Thank you, Mr. Chairman.

I have two or three other committee meetings at this time. I would like the privilege of reading about three paragraphs of my statement and then ask that the balance be made a part of the record. Senator JOHNSTON. That will be done.

Senator CAPEHART. Mr. Chairman and members of the subcommittee, I am pleased to have the opportunity of again testifying before this subcommittee on the complex problems involved in the matter of the payment of all appropriate American war damage claims and the return of the vested assets of our former enemies, now our strong and dependable allies, the Germans and Japanese.

I wish at the outset to avail myself of the privilege of embracing my previous statements submitted to this subcommittee on November 30, 1955, and the brief statement I made which appears at page 279 of the hearings on April 4, 1957.

I have had occasion to study the provisions of S. 672 in its amended form. I endorse the principles contained in this bill for two substantial reasons:

One is based upon the morals and philosophy involved; the other is grounded upon sound economic justification.

I would like the unanimous consent of the committee to have the balance of my statement placed in the record, Mr. Chairman, I just want to say that I have been going up and down the United States and throughout the world now for many, many years, preaching the private enterprise system, preaching against expropriation and preaching the philosophy that we must stand by and adhere to the philosophy of sanctity of privately owned properties.

I would dislike very, very much to see this Congress do anything to go against those philosophies.

I do not see how we are going to make our private American enterprise system work if we do not 100 percent practice it as to others. Senator JOHNSTON. Do you know the amount of money invested by American individuals in other countries?

Senator CAPEHART. It runs into billions and billions of dollars. I do not have it exactly, but you can rest assured it is billions of dollars. Senator JOHNSTON. We will get it for the record.

As I remember the last report, it was between $50 and $60 billion. Senator CAPEHART. At least that much. I was under the impression it was possibly more.

Senator JOHNSTON. More than that, according to the last report. (The information referred to was subsequently compiled :)

The following data was taken from the Survey of Current Business, a publication compiled by the Office of Business Economics of the U.S. Department of Commerce, and dated September 1958. Figures are taken from table I, page 16, entitled "International Investment Position of the United States by Area, 1956-57 (Millions of Dollars)"

1 Consists primarily of securities payable in foreign currencies, but includes some_dollar obligations, including participations in loans made by the International Bank for Reconstruction and Development.

Senator DIRKSEN. You are not testifying on any particular bill? Senator CAPEHART. No. sir. I am testifying on the philosophy. Senator DIRKSEN. You are in favor of an expeditious handling of this matter?

Senator CAPEHART. Yes, sir.

Thank you very much, Mr. Chairman.

(The formal statement of Senator Capehart follows:)

Mr. Chairman and members of the subcommittee, I am pleased to have the opportunity of again testifying before this subcommittee on the complex problems involved in the matter of the payment of all appropriate American war damage claims and the return of the vested assets of our former enemies-now our strong and dependable allies-the Germans and Japanese.

I wish at the outset to avail myself of the privilege of embracing my previous statements submitted to this subcommittee on November 30, 1955, and the brief statement I made which appears at page 279 of the hearings on April 4, 1957.

I have had occasion to study the provisions of S. 672 in its amended form. I endorse the principles contained in this bill for two substantial reasons. One is based upon the morals and philosophy involved; the other is grounded upon sound economic justification.

What are the morals involved? We vested, as we had a right to do, the properties of all of our former enemies, the Germans, Japanese, Italians, Ru