Memorandum of Disapproval of Bill for the Relief of the Trust Association of H. Kempner.

I HAVE WITHHELD my approval from H.R. 951, "For the relief of the Trust Association of H. Kempner."

This bill would provide an indirect means for payment of approximately one million dollars by the United States for certain peacetime commercial losses of the Kempner Trust Association. To accomplish this purpose the bill would require the Court of Claims to determine the amount that the Trust Association lost as a result of cotton sales made to certain private business firms in Germany during 1923 and 1924. The bill would then require that the Court of Claims determine how much of the property seized during World War I by the United States from a German firm wholly unconnected with Kempner or the cotton sales-Germann and Company--had been lost through improper administration by the Alien Property Custodian. The determined amount of the loss of the Germann and Company vested property would be then withdrawn from the War Claims Fund and used to compensate the Kempner Trust Association to the extent of its loss.

Following World War I the Kempner Trust Association through subsidiary corporations entered into contracts for the sale of cotton with a number of German textile manufacturers for future delivery. A fall in cotton prices before delivery led the German firms to breach their contracts with the Association. The amounts payable by the German debtors on account of the breaches of contract, as determined by judgments and negotiated settlements, could not be paid through the subsequent period before World War II because of German foreign exchange controls, and, as a result, the Trust Association lost money on the transactions. These losses would be paid by the United States if this bill were enacted although it is clear that the United States bears no moral or legal liability for the transactions which resulted in the losses in question.

Moreover, the method of payment proposed by the bill raises serious questions of propriety. The matter involving Germann and Company has no relationship to the claim which the Kempner Trust Association seeks to have paid. During World War I the Alien Property Custodian had seized the property of Germann and Company, a firm in the Philippines, as enemy property. When the property was returned to Germann and Company, following enactment of legislation authorizing return of seized property after World War I, it was claimed that the firm's assets had been depleted by approximately one million dollars during the period of its administration by the Alien Property Custodian through allegedly improper payments. The Treaty of Berlin which terminated World War I between the United States and Germany, however, precludes Germann and Company from asserting any claim against the United States on account of the seizure of its property or any losses during the period it was held by the United States. There is therefore no valid claim to be asserted by Germann and Company as the basis for the proposed determination by the Court of Claims. Even if such a claim existed, however, the proposed payment of its proceeds to the Kempner Trust Association instead of to Germann and Company would not appear to be a proper disposition of the fights of the latter company.

Furthermore, the bill confers upon the United States Court of Claims jurisdiction to sit in judgment upon the acts of the former German government with respect to acts committed in Germany. I am informed that this would be contrary to a well-recognized principle of international law and practice.

For these reasons, the purpose and method of payment would not appear justified. Moreover, enactment of this bill would establish an undesirable precedent for the assumption by the United States for the commercial losses of American citizens, even where no governmental sponsorship of the commercial venture appeared. It would also set an undesirable precedent for the use of the German and Japanese assets vested during World War II for commercial losses suffered during peacetime in lieu of their present use through the War Claims fund as the source of payment of the wartime personal injury damages suffered by American nationals.

Accordingly, I am constrained to withhold my approval from the bill.

DWIGHT D. EISENHOWER