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Defrosting
Much as the "freezing" of ass/ets had been considered in the Treasury Department well before the
"0,,,- ~l1)J.S. entered the war, so the "d*sting" of assets was considered already in January 1944, well before
:/'\}'" ) h hostilit~es ended. I I~ fact, mo:t(:ne~passets were "~ever vested but rema~ned blocke~ under the fre~zing
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regulatIOns," the major exceptIOns bi!mg patents, copYrIghts and trademarks, Unblockmg, or "defrostmg,"
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was a matter for the Treasury Department to undertake and, correspondingly, the return of vested property
______was the responsibility of the Alien Property Custodian.
The Treasury Department had no intention to keep the foreign funds controls beyond the point
where they were essential. 3 "It is the intention of the Tre~sury Department," Acting Foreign Funds Control
(FFC) Director Orvis Schmidt said in a speech on October 9, 1944, "to relax and eliminate them as rapidly
as can be done consistent with the protection of American financial interests and the completion of Foreign
Funds Control's wartime objectives.,,4 These objectives included:
'
1) protection of American credi.tors, deprived during the war period of their nonnal recourse
against foreign debtors;
2) protection of AmeriCan financial institutions against adverse claims resulting from conflicts
over ownership or control of foreign companies, doubtful validity of transfers of.property
. under enemy occupation, payment orders executed under duress and other consequences ofthe
confused commercial and financial situation emerging from the war ;
3) insuring against concealment or release of enemy assets held through non-enemy financial
institutions j
4) prevention of the completion of transactions effected under duress or for the benefit of the
enemy,5
But by the same token, such objectives would not be met unless there was an "orderly transition" and a
"gradual removal of controls" in a defrosting program,6 at the very least because the situations in enemy
occupied (France, Norway,' Belgium, Holland), enemy (Germany, Japan) and neutral countries
(Switzerland, Sweden, Spain, Switzerland) differed. 7 "A lack of safeguards at the time of the lifting of
freezing restrictions," a contemporary analysis noted, "would cause harm to many legitimate interests,,,g
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FFC History, Chapter 6, 1.
.
Isadore Alk and Irving Moskowitz, "Removal of United States Controls over Foreign-owne~ Property,"
Federal Bar Journal 10 (1948), 4.
3 FFC History, Chapter 6, t .
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'
4 "Lifting Foreign Funds Control," Speech to be delivered by Orvis Schmidt before the Thirty-first National
Foreign Trade Convention, New York City, October 9, 1944, NACP, RG 131, Acc. 61-A-I09, Foreign
Funds Control, Defro'sting, Box 95 [200366-200367).
5 FFC History, Chapter 6, I.
6 "Lifting Foreign Funds Control," Speech to be delivered by Orvis Schmidt before the Thirty-first National
Foreign Trade Convention, New York City, October 9,1944, NACP, RG 131, Acc 61-A-109, Foreign
Funds Control, Defrosting, Box 95 [200370); also cited in Rudolf Littauer, "The Unfreezing of Foreign,
Funds," Columbia Law Review 45 (1945): 134.
7 "Lifting Foreign Funds Control," Speech to be delivered by Orvis Schmidt before the Thirty-first National
Foreign Trade Convention, New York City, October 9,1944, NACP, RG 131, Acc 61-A-109, Foreign
Funds Control, Defrosting, Box 95 [200367].
8 Rudolf Littauer, "The Unfreezing of Foreign Funds," Columbia Law Review 45 (1945): 146,
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In this, the issue of cloaked or looted assets, and of fmancial transactions carried out under duress,
loomed large. The United States - at least in the view ofthe Chief Counsel and Associate Chief Counsel of
the FFC - "was committed to supporting an international program for 'preventing the liquidation of property
looted by the enemy'," as Resolution No. VI at Bretton Woods had stated. 9 A simple lifting of controls
might allow "frozen" transactions that had been made under duress to be completed, cloaked assets in
neutral countries would enter the marketplace, and lifting wartime import restrictions might tum the U.S.
into a major market for looted securities. Worse, "the unqualified release of frozen funds ... might easily
result in the surrender of frozen funds to the enemy" or "to those adherents of the enemy's cause who will
seek to continue their warfare into the postwar period."lo The parallels with the beginning of the war were
not lost on the FFC: "we find that considerations very similar to those which led to the original application
of the freezing controls make it strongly undesirable to completely wipe out the controls immediately after
the liberation of the country by Allied armed might," Acting FFC Director Orvis Schmidt put it in October
of 1944. 11 This view suggested that similar policy solutions were in order, in this case adopting a
"certification" program (like the wartime "licensing") that permitted legitimate transactions l2 but tried to
control undesirable transactions. The gradual, successive "freezing" of assets before and during the war
suggested a gradual, successive "defrosting" of assets after the war. There was also a sense that if the U.S.
had acted as a trustee in freezing foreign property, "it would be anomalous to permit such a trust relation to
serve as a medium for putting owners in a worse position than that which they enjoyed at the time when the
relationship was created."l3
Process
Defrosting was a three-step process: First (May 1945) came the reopening of communication with
liberated areas. Each such liberated area was declared to no longer be "enemy territory," hence its residents
were no longer "enemy nationals," and no longer subjected to General Ruling No. 11 that had prohibited,
trade and communication with the enemy unless authorized by license. 14 Adequate machinery had to be
established in the liberated area to ensure that instructions emanating from the liberated area did not order
transactions which would permit
a) the completion of payments, transfers, withdrawals, or other transactions
effected under duress, compulsion, or other unlawful meanS during the period of
occupation;
b) the recognition of changes of ownership, powers of attorney, changes in signing
authority, or the consummation or validation of other transactions effected under
duress and. compulsion even though ostensibly legalized by enemy decrees; and
c) the dissipation or hiding of funds owned by or cloaked for enemy interests or
persons collaborating with them, or by the completion of any other transactions
benefiting such persons.
Initially, these assurances were obtained from the allied military authorities
operating within the area. lS
<---,
9 Isadore Alk and Irving Moskowitz, "Removal of United States Controls over Foreign-owned Property,"
Federal Bar lournallO (1948), 10.
.
10 Rudolf Littauer, "The Unfreezing of Foreign Funds," Columbia Law Review 45 (1945): 147,
paraphrasing Orvis Schmidt's October 9,1944 speech.
11 "Lifting Foreign Funds Control," Speech to be delivered by Orvis Schmidt before the Thirty-first
National Foreign Trade Convention, New York City, October 9,1944, NACP, RG 131, Acc 61-A-I09,
Foreign Funds Control, Defrosting, Box 95 [200368,200370].
_,12 Isadore Alk and Irving Moskowitz, "Removal of United States Controls over Foreign-owned Property,"
Federal Barlournall0 (1948),5; Memorandum for the Files, July 13, 1944, NACP, RG 131, FFC General
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Correspondence, Box 95 [ ' ]. 3 \ 0
13 Rudolf Littauer; "The Unfreezing of Foreign Funds," Columbia Law Review 45 (1945): 156.
14 Isadore Alk and Irving Moskowitz, "Removal of United States Controls over Foreign-owned Property,"
Federal Bar lournallO (1948), 5-6.
[S FFC History, Chapter 6, 2-3.
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',France was the first country (November 4, 1944) to be
followed by Belgium (February 2,
1945), Finland, Poland, and the Baltic countries (all February 16, 1945); by May 1945, all formerly·
occupied European countries were no longer "enemy territory." The ban on communication with Bulgaria,
Hungary, Romania and the Allied-occupied parts of Italy was lifted in October, 1944, but for Germany and
Japan this ban would only be lifted in March 1947. 16
~he next step, carried out from October to December 1945, was to start business and financial
transactions with European countries ane';JiThe United States wanted the post-liberation governments to
.
take primary responsibility for meeti~g e economic warfare objectives of freezing control, as well as to
ensure that "no transactions effected der duress were permitted to be consummated contrary. to the wishes
of the rightful owners of the funds." 17 Reopening communication with Europe had not altered the status 0
blocked property in the U.S.: transactions in such property still required licenses, and whatever gains wer
made remained frozen. But new financial transactions were not limited, and trade and commerce could no,
create "free" (as opposed to frozen) dOllarsJTo begin with, FFC remo~ed existing financial transaction
controls on a individual country basis (thus, General. Licenses Nos. 90-93 applied only to France and
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Belgium), but this was a rather inefficient way to relax controls over most of Europe. General License No.
94 was thereupon promulgated, on December 7, 1945, unblocking all current transactions and all new dollar
assets in all blocked countries other than Germany, Japan, the four European neutrals, Liechtenstein and
Tangier. 18
While many of the provisions of General License No. 94 dealt with financial instruments and
changes in banking restrictions, two ofl them were of particular relevance to individuals: nationals of
(,.. specified blocked countries not in a blocked country would have their property immediately unblocked, an·
cJ..r.y ( "fr.ee" fot~gn-owned assets did not need to be reported in the United States. 19 Some restrictions 0
securities were-easea;-but securities still needed certification before being released and ad to
surrendered (under General Ruling No.5) if imported into the U.S. 20 Suspicion remained that prope
ostensibly owned by the nationals of friendly countries was in fact secretly owned by enemies: neutra
nations were excluded "until they have taken effective action to search out, immobilize, and control all
enemy assets within their jurisdiction.,,21C'General Ruling No. 94 was only extended to Switzerland and
Liechtenstein in late November, 1946, and to Germany, Japan and Sweden in March of 1947. Spain and
Portugal had to wait until 1948. 2
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16 Isadore Alk and Irving Moskowitz, "Removal of United States Controls over Foreign-owned Property,"
Federal Bar Journai 10 (1948), 6.
11 Treasury Df!partment Annual Report 1945, 107.
18 FFC History, Chapter 6, 12.
19 Press Release accompanying General Ruling No. 94, reprinted in Documents Pertaining to FFC,
September 1946, 82.
20 FFC History Chapter 6, 13, 16.
21 Press Release accompanying General Ruling No. 94, reprinted in Documents Pertaining to FFC,
September 1946; 82.
22 Isadore Alk and Trying Moskowitz, "Removal of United States Controls over Foreign-owned Property,"
Federal Bar Journal 10 (1948),8; FFC History, Chapter 6, 14.
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The third step was the certification process. This tried to ensure that camouflaged enemy assets
were not released by demanding of foreign governments that they themselves investigate and ascertain the
true ownership of blocked property. Certification was to be supplied by an official government agency as to
the ownership of the property, thereby placing the responsibility for determination of ownership 'on the.
foreign government. To "give the liberated countries free scope in dealing with wartime transfers according
to their own laws, a simple test was applied: What was the ownership of the property on the effective date
of the [U.S.] Freezing Order?,,23 General License No. 95 (December 29, 1945) initiated this certification
:
procedure, and agreements were negotiated with France, Belgium, Norway, and Finland by that date, as
well as subsequently with the Netherlands (February 13, 1946), Czechoslovakia and Luxembourg (April 26,
1946), Denmark (June 14, 1946), Greece (October 15, 1946), Switzerland and Liechtenstein (November 20,
,1946), Poland (January 7, 1947), Austria (January 16, 1947), and Sweden (March 28, 1947).24 Once
property was certified, it was no longer regarded as blocked. 25
Victims and Certification
Demanding certification from foreign governments relieved the FFC of certain practical problems,
such as that it lacked the manpower or appropriate knowledge about local situations abroad to be able to
ascertain true ownership. But there were larger political problems as well. Only the country where a
blocked national resided exercised the legal· and political jurisdiction to conduct the appropriate
investigation. The U.S. Treasury Department had no authority to investigate, meaning it was "virtually
impossible for the Treasury Department to attempt to ascertain the real ownership of property held by
residents of foreign countries.,,26 A related problem was that if Treasury was able to act, the consequenc~
might be that an asset hOlder could thereby avoid taxation or foreign exchange controls. The FFC "did not
countenance schemes which would have required a sacrifice of our objectives - to discover enemy assets
held in the U.S. in the names of nationals of the liberated' countries - in order to assist these foreign
.
nationals to avoid the regulations of their own governments."Z7
By the same token, investigations by foreign governments might reveal information about the
assets their nationals held in the U.S., useful to them economically as a potential source of assets for
reconstruction, but also useful politically to these foreign governments particularly if they were behind the
Iron Curtain. Generally, blocked account owners had to apply to a certification office, established by their
government, for the release of their assets" and that certification office would' determine whether the
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accounts in question involved any enemy interest. 2s If no such inte.rest was discovered, the account was
uutomatically unblocked.
,
Some "victims of Nazi persecution/' however, did not have to apply through their governments. If
they were'bona fide refugees'from Germany and Japan, and were not residing in Germany, Japan, Italy,
Romania, Hungary or Bulgaria, they could apply directly to the Treasury Department for release of their
property in the U.S.u These applications had to include affidavits by responsible organizations that
provided indirect proof that such refugees had not acted in a fashion that was inimical to the Illied war
effort. 29
Blocking provisions that had affected "victims" owing to their enemy citizenship or their pr
ce
in enemy territory were legally nullified through the second amending of Section 32 (a) (2) of the Trading
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23 Isadore Alk and Irving :OSkoWitz,
of United States Controls over Foreign-owned Property,"
Federal Bar Journal 10 (1948), 18.
24 FFC History, Chapter 6, 24.
.
25 Press Release accompanying General Ruling No. 94, reprinted in Documents Pertaining to FFC,
September 1946,83.
26 FFC History, Chapter 6, 31. This formulation is repeated verbatim in testimony given to Congress in
1947 by Jolin Richards, then Director of Foreign Funds Control. Hearings before the Subcommittee of the
Committee on Appropriations on the Supplemental Appropriations Bill for 1948, House of Representatives,
'
Eightieth Congress, 1st Session ,June 2, 1947, 184.
27 FFC History, Chapter 6, 31.
28 Isadore Alk and Irving Moskowitz, "Removal of United States Controls over Foreign-owned Property,"
Federal Bar Journal I (1948), 13-15.
29 FFC History, Chapter 6,' 33; FFC letter to the Swiss Compensation Office, Jan. 29, 1947, NACP; RG 131,
FFC Subject Files, Vol. 6 [
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· with the Enemy Act on August 8, 1946, stating that return of property could be made to those individuals
who had lived in nations with which the United States had been at war but who
(C) had been deprived oflife or substantially deprived of liberty pursuant to any
law, decree or regulation of such nation discriminating against po.Jitical, racial or
religious groupO t;
"
or who had not
(D) enjoyed full rights of citizenship under the law of such nation,30
In the first amending of Section 32 (a) (2) five months earlier, on March 8, 1946, passed "under
pressure, in part from Jewish groups" the formulations chosen
did not meet the demands, insofar as Jews are concerned, since the test was
residence in certain territories and citizenship, not the specific situation under
[
existing policies. Variou,s Jewish organizations dissatisfied with this amendment
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[ brought in new drafts which were sponsoredb1'enators and Representative1 and
found the approval of the Alien Property Custodlan. 31
.
The new drafts resulted in the reformulation of subsections (C) and (D) on August 8, 1946, noted above,
though "it must be stressed" that "the amendments do not automatically unfreeze assets belonging to Jews
and other persecutees, but create only the right of the competent authorities to return such property':' though
"it may be, however, expected that the competent authorities will deal with all demands benevolently.,,32
,
~se who were bona fide refugees in blocked countries,....tl:l-er"deserved special attention;'
relative to their blocked property in the U.S./a'iid were called General Ruling l1a cas~ As long as they
were not in Germany, Japan, Italy, Bulgaria:Frungary or Romania, 'and as long as they had an American
consular or diplomatic affidavit attached to their applications attesting to their bona fide status as refugees
from Nazi persecution, their assets could be unblocked as of April 1946, albeit on an ad hoc basis. 33 Bona
fide permanent ernigrantsfrom blocked countries who had established themselves in unblocked countries
also did not have to be certified. 34
-----Finally, to expedite certification and simplify unblocking, the FFC by July of 1947 issued a
General License that immediately unblocked categories of assets w
as no likelihood that there
was any substantial enemy interest. That included accounts und r $10,000, . terests in estates and trusts
(
that were created by non-blocked persons in the U.S. or a genera
lcensed trade area, and property
distributed from a trust or estate pursuant to a Treasury license. Exceptions included Germans or Ja anese
subject to General Ruling No. l1a, citizens of Bulgaria, Hung\lIY or Romania living in t ese countries, and
corporations with thelf pnnclpal place of business in Hungary, Bulgaria or Romania. 35 9.
ary 27,
1948, General License No. 97 unblocked all accounts which on February 1, 1948, were 5,000 0 less
representing 50 percent of the accounts from (but unknown to) Marshall (
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geeever')') Plan countries, but only 5 percent of the blocked assets. 36
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30' In Martin Domke, The Control ofAlien Property (New York: Central Book Company, 1947),226-27.
31 "The Present Position of Assets in the USA which Belong to Residents or Subjects of Nationals with
whom the United States was at war at any time after December 1941," Nov. 6, 1946, RG 131, Ace. 61-A
109, Foreign Funds Control, Box 95 [200518-200519]. This is likely the "attached memorandum" referred
to in the letter afNov. 11, 1946, from C. Irving Dwork, World Jewish Congress, to Harold Pollack, Foreign
Funds Control, RG 131, Ace. 61-A-109, Foreign Funds Control, Box 95 [200520-20521], which'would
account for the references to the actions of Jewish organizations in influencing the amending of the law.
32 "The Present Position of Assets in the USA which Belong to Residents or Subjects of Nationals with
whom the United States was at war at any time after December 1941," Nov. 6, 1946, RG 131, Acc. 61-A
109, Foreign Funds Control, Box 95 [200519].
33 FFC History, Chapter 6, 34.
34 Isadore Alk and Irving Moskowitz, "Removal of United States Controls over Foreign-owned Property,"
. Federal Bar Journa/ 10 (1948),19.
35 FFC History, Chapter 6,37.
36 Isadore Alk and Irving Moskowitz, "Removal of United States Controls over Foreign-owned Property,"
Federal Bar Journal 10 (1948), 23; Treasury Department Annual Report 1948,288,291.
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Certification Problems 0 tions and Polic -Makin
Certification of course ~ei1ded pon-the..cooperation_of-other-gf>.vemrnents) and by January of
1947, FFC officials acknowledged that "su stantial amounts" of property was still uncertified. 37 Delays in
reaching agreements with S~tzerland and other countries may have accounted for some of the problem, but
FFC officials were sufficiently concerned to discuss alternatives that would either encourage greater
compliance with the certification program or would allow for the ultimate disposition of property in blocked
accounts that was not otherwise being released. 38 Four courses of action were considered.
_-~irst, the blocking controls could be continued indefinitely, "with a vie~~.~lly_eliminating,---...........
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---ricenses." This would force owners to use certification in order jQ..ol,)tain-tl1e"Te'leiise of their property, but
i;;'disadvantages were political: owners would exert pressure;a;-d the extended use of war powers it would
imply would be "obnoxious to Congress as well as to banks." This alternative was rejected. 39
/'"
Second, the U.S. government could conduct a new census of uncertified, blocked assets. Such
information would help the FFC fotmulate defrosting policies, and it would be'collected with the expressed
intent ofturning over the results to European governments. A new census would encourage more voluntary
reporting, and foreign governments would be encouraged to show leniency toward those who were now
declaring previously undeclared assets. While this would provide leverage to pressure foreign governments
to take greater initiative in investigating the ownership of property, and would even afford "some statistical
basis for [ap ]praising the 'masterless property' problem," 40 its disadvantages included the expected
resistance from the U.S. financial community to turn over information to foreign governments, as well as
forcing foreign owners into the hands of their governments only to be penalized for having hidden assets. 41
Another problem was that a census gave the U.S. government little leverage over what actions foreign
governments would take with regard to the funds. The plan's biggest weakness, however, was that a census
, would not reveal the beneficial ownership of blocked omnibus accounts, which meant account owners
w.~ld still be able to avoid taxation and detection as an enemy.
'
The third option was to unconditionally unblock, without ,certification. This was not a popular
option either, since FFC had learned that from June 1946 to January 1947, "at least $2 million of concealed
enemy property" was "among accounts previously blocked only as Dutch, 'Swiss, etc.,,42 Thus the
assumption that the certification procedure was unlikely to reveal a significant amount of enemy property
was deemed questionable.
Fourth, the government could simply annoUnce its intention to vest all property that remained
uncertified after a specified date. The presumption was that what remained was enemy property, with the
threat of seizure designed to enhance the appeal of certification, especially for the omnibus accounts. 43 By
vesting, the government would of course maintain control over the final disposition of assets.
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37"Resolution of Problem of Uncertified Accounts," memo from John S. Richards, Director, Foreign Funds.
Control, to A. N. Overby, Jan. 16, 1947, NACP, RG,131, FFC Subject Files, Box 457, [
) . _ f"O r -;,...~
38 "Resolution of Problem of Uncertified Accounts," memo from John S. Richards, Director, Feign Funds
); see also
Control, to A. N. Overby, Jan. 16, 1947, NACP, RG 131, FFC Subject Files, Box 457, [
FFC History, Chapter 6,39-43. An-unsigned Foreign Funds Control "Summary of questions a d opinions
FFC Subject Files, Defrosting #1, Box 95, 29 November 1947 [310366-310374].
,
FFC History, Chapter 6, 39-40.
'
40 "Resolution of Problem of Uncertified Accounts," memo from Foreign Funds Control Dir ctor John S.
Richards to A. N. Overby, Jan. 16, 1947, NACP, RG 131, FFC Subject Files, Box 457, [
. ].
41 PFC History, Chapter 6,40-42.
,
42 FFC History, Chapter 6, 42.
,
~etter from Foreign Funds Control Director John Richards to Donald Sham, Secretary, Office of Alien
,
Property, Department ofJustice, April 4, 1947, NACP, RG 131, FFC S(bject Files, Defrosting III, Box 95 [ 3\
39
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control implied an increased administrative burden for the government, but FFC proposed in
May 1947 to limit the burden by issuing a blanket license freeing small accounts (for example, those under
$10,000). Such accounts made up a large proportion of the total number of blocked accounts but only a
small roportion of total blocked assets;44 a General License freeing small accounts was issued in July of
1947. The FFC also proposed freeing certain interests in estates and trusts, which were assumed to
"undoubtedly involve more substantial assets," as well to dispose of amounts of $1,000 or less whose
"continued blocking creates for this Department [Treasury] administrative difficulties out of all proportion
.,. to their volume.,,45\ Vesting itself, the FFC believed, could be done in a manner whereby properties could
be vested without publishing data about ownership, thus avoiqing any disclosure to foreign governments.
~ 4 FFC proposals received further attention in late March 194} when representatives of the Departments of
State, Treasury, and Justice met to discuss certification. 46 Although the FFC was aware of the heirless
assets issue, the possibility that many accounts might not have been certified because account owners and
their heirs had been killed during the war was not considered. 47 Instead the meeting discussed, among other
matters, the problem that European govermnents themselves were major deterrents to certification, as
several of them had used the opportunity of the certification procedure to uncover assets their nationals had
failed to declare. These governments had then required the payment of lost taxes and frequently imposed
stiff penalties for the initial failure to report: as a result, many people avoided the certification procedure
altogether. 48 £§ome asset holders also may have hoped the certification procedure would be abandoned in
time and all remaining assets thereupon unblocked, while others may have thought they could circumvent
the system by providing evidence directly to the U.S; that their assets were free of any enemy interest.5
Even if owners of blocked accounts avoided tax complications, they frequently shied away from certifying
their assets because the European governments required the conversion of their assets from (strong) dollars
to (weak) local currencies. 5o Though there was a presumption that those who failed to seek certification
were hiding an enemy interest, it may have also been that some asset holders preferred to take their chances
that new developments would ease the postwar economic instability and would make certification
unnecessary. 5I
,
Letter from Foreign Funds Control Director John Richards to Donald Sham, Secretary, Office of Alien
Property, Department ofJustice, May 23, 1947, NACP, RG 131, Acc 61-A-I09, FFC Subject Files,
Defrosting III, Box 95, [302652-302653]. Richards indicated that an analysis of the TFR-300 reports
revealed 60,975 private persons held assets in the U.S. valued at $3.25 billion, of which 40,603 persons (66
percent) held accounts valued at less than $10,000. The total value of the assets in these 40,603 accounts
was $147.4 million dollars (less than 4.5 percent of the total).
45 Letter from Foreign Funds Control Director John Richards to Donald Sham, Secretary, Office of Alien
Property, Department of Justice, May 23,1947, NACP, RG 131, Acc 61-A-109, FFC Subject Files,
Defrosting III, Box 95, [302653]. A handwritten note at the bottom of this letter from EA (likely Elting
Arnold) notes that "The legal division disagrees with the policy expressed in this letter as to estates and
trusts but concurs with the fonn of the letter." An undated draft "letter to General License No. 95
countries" also contains these proposals. NACP, RG 131, Acc 61-A-109, Foreign Funds Control,
Defrosting Vol. 2, Box 95, [302654-302655].
46 Memorandum for the Files, FFC Correspondence 1942-1960, Swiss Defrosting, April 2, 1947, RG 131
44
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47 Richards' memo [WHICH?'fii1entionea the census option as one means of determining the size of the
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heirless assets issue.
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48 Files contain frequent references to this issue, which continued to be~blem~for-sevet:al-yeaFs,,",see"for
example, Letter.Q1h.....:? from R. Deeway to Fred HausdorffideAtHi£aUonZ, March 8, 1954, NACP, RG .
~.,
, /59;-~ Entry 3067, Netherlands Claims, October 1950?, Box 13 [
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~"J/ 49 Letter from Henry G. Hilken, Chief, erations Branch to David L. Bazelon, Assistant Attorney General,
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Director, Office of Alien Property, Dc. 20, 948, NACP, RG 131, FFC Correspondence 1942-1960, Swiss
4~
Defrosting Vol. XII, Box 459, [ --1
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50 Memorandum for the Files: Uncertifiei Accounts, Apri12, 1947, NACP, RG 131, FFC Correspondence
1942-1960, Swiss Defrosting, Box [
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51 This problem was significant en. gh tOi~warrant discussion in the International Bank for Reconstruction
.;"
and Development in early 1948, a it was connected to where funds would come from for European
G~~" reconstruction. See "Memorand with egard to a Plan for Mobilizing Foreign Assets in the United
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Th' repre"nlativ" of Slate. Ju'ti". ,.d Tre,,,ury tght tho be,t ,olution would b, for tho
government to announce its intent to terminate the certification procedure at a specified date, after which all
property remaining uncertified would be vested by the Of ce of Alien Property. This announcement might
serve to encourage certification and reveal still-hidde, enemy assets. Alien Property representatives
expressed some uncertainty over whether it would be ermissible to issue the blanket vesting orders that
were essential to ~intaining the anonymity of prope -owners vis-a-vis their governments, but this issue
did not seem to represent a major obstacle. 52 FFC approached Congress for an appropriation with the
"understanding that its controls over blocked property would be substantially terminated" during fiscal year
1948,53 then began to advise the financial community of its intentions, meeting informally with leading
/" ~
bankers and financiers in August and October 1947. 54
The banking community, including John Haskell, Vice-President of the New 6rk Stock Exchange,
firmly opposed "tJ!r
and Randolph. Burgess, Chairman of the National City Bank of New York,
Treasury's plans, and argued strenuously against the seizure of property. The claimed that the possible
enemy interest in still-blocked accounts remaining was small. 55 They contended the proposal flew in the
face of established policy, effectively imposing ex post facto regulations on investors who had deposited
$eir assets in good faith. 56 Investors would hesitate before 'Placing their money in the U.S., threatening the
further "development of the United States as a center of international finance and trade.,,57 The bankers
suggested U.S. policy might only wind up aiding the Comt\unists, .ShOUld the latter come to power in the
countries in question. 58
"- ~"If.. v...~
\J
y.
States Blocked under Foreign Funds Control," RG 131, Acc. 61-A-109, Foreign Funds Control, Defrosting
#2, Box 95 [302693-302701].
.
52 Memorandum for the Files: Uncertified Accounts, April 2, 1947, NACP, RG 131, FFC Correspondence
1942-1960, Swiss Defrostin~ 13't.t1!3l-j. At the meeting, the representatives of the OAP noted that
they would have to giv.e~furtfier consideration "whether under this procedure they would have adequate
grou~d~!2!.:presi.il@ng an enemy ownership of assets and whether under the law they could refrain from
.
. p,Y.bhsh"mg the names ofthe owners ~opeI!Y'"
S~53 Memo from Frank SouthardJ.£,..(ftlentificationJ)o Treasury Secretary John Snyder, August 29, 1947,
NACP, RG 131, FEg..Subjec"(Files, Vol/5, Box 457, I
]. vw ~ "C\)
54 Mem9"fronr"Frank Southard, Jf. identification? to Treasury Secretary John Snyder, August 29, 1947,
""..NA:CP, RG 131, FFC Subject Files, VoI.5,Box457, r
]. ~,,;h-...:,...a....
.,..,,,--'# 55 Memorandum Re: Proposed vesting in the office of Alien Property of Cash and Securities Held in the
.
I~
..._--." ~ur ~"")
United States for the Account of Foreign Nationals," from John HaSkel'C.:).~'f ept;-26;-1'94'1;,"N'ACP71{G.
\~t:>lC.M"·
1. ...
l
.
f(C--
~131'FFCSUbjectFileS'Defrosting#1'BOX951 ~31o 401...1 -
.vV'-~
~...,..\
A
11-~
~~
\t-d" . ~vPv
-4,.L~
Ij
'\::)
,
t)""
56 Memorandum Re: Proposed vesting in the office of
n Property of Ca and Securities Held in the
United States ~or.th~ Account o~Foreign Nationals," om J~hn Haskell o. ,Sept. 26, 1947, NACP, RG
131, FFC Subject FIles, Defroshng #1, Box 95 [
1; UntItled memorandum from the Foreign Exchange
Co~ttee, Oct. 7,1947, NACP, RG 131, FFC S ~ect Files, Defrosting I, Box 95 I --1)1..-.- - - - - 57 Memorandum Re: Proposed vesting in the offic of Alien Property of Cash and Securities Held in the
United State~~r th~ Account o~Foreign National," from John Haskell to? , S~pt. 26, 19~7, N~CP, RG
131, FFC S.ubJech~s, Defroshng #1, ~ox 95 [ , j; Mem~randum for the ~Iles: Mee~mg With
re~resentahve.s of the ~~?!.k fm~nclal comm Ity concermng the ternnnatlOn ~fFo~elgn Funds ~ontrol,
wnttenby Eltmg Arnola...l.!!!.~~Oct. 8, 1 47, NACP, RG 131, FFC Subject FIles, Defrostmg I,
Box 95, [
).
.
58 Memorandum Re: Proposed vesting in the office f Alien Property of Cash and Securities Held in the
United States for the Account of Foreign Nationals,' from John Haskell t~ Sept. 26, 1947, NACP, RG
j.
131, FFC Subject Files, Defrosting #1, Box 95 I
,'31 ()'{c \ _
'I {)
.3
~u
�•
(9\
Treasury subsequently altered its plans, though not i a manner that addressed the bankers' concerns.
Rather, by January 1948 a hybrid plan that combined ele, ents of the census as well as vesting options ~as
decided upon, but now with provisions calling for asset to be handled differently depending upon whether
or not they belonged to nationals of countries rec~it{ng aid under the Marshall Plan. 59 The estimated
(\', U.!1ited3@.es_.J!$set,e,60 both blocked and free, heldJby persons (and excluding governments and c
al
banks) in the proposed recipient countries as of Jine 30,1947, amounted to'$5.1 billion (t
of this
total, only about $3.3 billion were deemed "a~:), of which the largest country a
ts were held in
the United Kingdom ($2.3 billion) and the Netherlands ($1.1 billion).61 Even be
European economic
recovery was proposed through the Marshall Plan, the Treasury Departme
ad already declared that
"forcing friendly aliens to disclose their holdings to their governments,"
reby mobilizing dollar assets,
was "a meritorious objective per se" as it enabled such governments to Ip reconstruct their countries, and
"thereby reducing to that extent the burden on the United States.,,62 irectly held assets of Marshall Plan
"recipient country" nationals would be reported to the authorities of those countries with the aim of,
~
promoting certification. For indirectly held blocked assets of Switzerland and Liechtenstein (~,:...omnib~ t.., '~'
accounts), the FFC would presume the lack of certification indicated an enemy interest. A ~us wouI<fl5e,
cJv'"
~ held of all assets, and all applications for certification would have to be received by the d,ate of the census,
(' ) with certification authorities given three months to review the outstanding applications. Thereafter, all non
p
~
certified assets would be subject to vesting.
~~
A Census ofBlocke~ Property was tak~n, as of June 1, 1948, covering a similar group of persons as in
:;'0;the 1941 Census of Foreign-Owned Assets. 3., The asset classes to be reported were also comparable to the
_1~
,
~\!Y'I\
earlier Census,64 and the total reported approached V$1 billion. About half of this total was held in the
(Jf. r"'iI
names of nationals of countries that were receiving aid from the U.S. under the Marshall Plan,65as the
A...N ()
,
66
~,y
~..Jl.--¥ following table shows:
vV' ~
Ol'
Jt
~ bl
"vi'
f
59 Letter from Treasury Secretary John Snyder, in his capacity as Chairman of the National Advisory
",
.n I af}:J..v
Council on International Monetary and Financial Problems, to Senator Arthur Vandenberg, Chairman,
Senate Foreign Relations Committee, February 2,1948, NACP, RG 131, FFC Subject Files, Defrosting #2, eA.,dp~t:L ~
Box 95 [302743]. The conditions of the program had previously been outl~temall¥..in,
,
fRmr'Attorney General Tom Clark to Treasury Secretary John Snyder ( rJ. The countries which eventua ~ 316ifiCl
received aid under the European Recovery Program were Austria, Belgium, Denmiuk, France, Greece,
1-~ L
Italy, Luxembourg, Norway, the Netherlands and Sweden. Draft Press Release of March 11, 1952, RG 131,
Le;ttQA
Acc. 61-A-I09, Foreign Funds Control, Defrosting #2, Box 95[302674].
' ' f \. \'\..... ~
60 Estimates oflong-term assets were based on TFR-300 data ofJune 14, 1941, adjusted for transactions,
I JCM
price changes and other factors, and the calculations were made by the Commerce and Treasury
{2. ~ ,~ ,
Departments.
.
f'f't. \
61 Other significant amounts were held in France ($647 million), Belgium ($317 million), Sweden ($222
q)~i~h
million). Italy ($171 million) and Norway ($112 million); Austria, Denmark, Ireland, Greece, and
Vu' 1..
Luxembourg combined amounted to only $196 million. Because Turkey, Switzerland and Portugal were
I;,cJ?I'r ~ ~
not expected to receive financial assistance under the European Recovery Program, they were not included
in the total. In addition, about $858 million of the total were regarded as "not readily subject to liquidation"
even though valuable sources of current income, and another $900 million were pledged as col\ateral by the
British Government an RFC loan: the effective "available" assets werethus about $3.3 billion.
Memorandum to National Advisory Council from National Advisory Council Staff Committee, Subject:
U.S. Assistance in Tracing the Private Dollar Assets in the U;S. ofNationals of Countries Receiving Aid
under the European Recovery Program, National Advisory Council Document No. 580, Jal). 14, 1948,
NACP, RG'l3l, Acc. 6l-A-109, Foreign Funds Control, Defrosting, Vol. 2, Box 95[302703].
62 Isadore Alk and Irving Moskowitz, "Removal of United States Controls over Foreign-owned Property,"
Federal Bar Journal 10 (1948), 21.
"
.
63 That is, individuals in the U.S. who were nationals ofblocked countries, persons and corporations or
trusts who held property, securities or other assets in which blocked countries or their nationals had
'interests, and agents for blocked countries or nationals. The blocked countries covered by the Census
included Austria, Belgium, Czechoslovakia, Denmark, Estonia, Finland, France, Greece, Latvia,
Liechtenstein, Lithuania, Luxembourg, Monaco, the Netherlands, Norway, Poland, Portugal, Sweden,
Switzerland, and Yugoslavia as well as Germany, Italy, Hungary, Bulgaria, Romania, and Japan. See U.S.
Treasury Department, Foreign Assets Control, Chronology of Important Regulatory Documents, 1940
�\1
10
(.
Results ofTFR-600 ReI1orts, June I-August 13, 1948
(in millions of dollars, ranked by total amount)
No. of
Cash &
Dollar
Recipient
Securities
Other
Countries
ReI10rts
DeI10sits
Ne'therlands 1,495
331.04
13.67
21.86
France
1,861
12.27
27.48
14.31
3.78
Italy
611
3.36
5.16
0.98
2.38
Norway
175
1:97
0.39
Belgium
256
1.79
2.80
0:40
2.38
Greece
195
1.31
Sweden
151
1.21
1.76
0.54
Luxembourg
54
0.85
1.74
0.50
1.45
Denmark
93
0.82
0.50
---.LQQ
0.56
Austria
0.72
----.2.1
40.01
Sub-total
4,985
46.20
372.97
No. of
Other
Countries
ReI10rts
Portugal
372
Switzerland 1,692
Yugoslavia
156
Rumania
326
Germany
1,587
Latvia
46
Estonia
32
Lithuania
38
Hungary
251
Japan
491
Bulgaria
60
Czechoslovakia 70
Poland
120
Liechtenstein
9
Finland
--.11
5,127
Sub-total
Cash &
DeI10sits
171.81
53.00
50.92
21.31
3.61
9.12
5.73
3.44
1.44
1.65
2.57
0.96
0.63
0.21
TOTAL
372.79
10,202
~
326.58
Dollar
Securities
2.75
66.03
0.19
0.65
4.02
0.04
0.01
0.02
1.50
0.28
0.06
0.63
0.16
0.27
0.26
76.95
449.92
Other
0.90
14.95
1.13
0.34
7.43
0.02.
0.005
0.02
0.20
1.04
0.07
0.81
0.34
0.008
0.01
27.32
67.34
Total
366.58
54.07
12.31
5.34
5.00
4.10
3.52
3.09
2.78
2.34
459.19
Total
175.47
133.99
52.15
22.31
15.07
9.20
5.75
3.49
3.15
2.98
2.71
2.41
1.14
0.50
0.48
430.87
890.06
1946, v. 6, No. 48.12, Public Circular No. 37.
The list also reflected the changes brought about by the war, so that securities "blocked pursuant to
General Ruling No.5, including those held in a General Ruling No.6 account" had to be reported, for
example, but in many other respects - reporting on patents, trademarks, copyrights, franchises, precious
stones, silver bullion, bank deposits, mortgages, and so forth - the requirements were very similar. Property
whose total value was less than $1,000 did not have to be reported. U.S. Treasury Department, Foreign
Assets Control, Chronology ofImportantRegulatory Documents, 1940-1946, v. 6, No. 48.12, Public
Circular No. 37.
65 Treasury Department Annual Report 1949,99. The TFR-600 forms themselves that were used for this
Census were destroyed in October 1987 as part of an ongoing records disposal program at the National
Archives; the only information about the Census that has been found thus far therefore comes from partial
summaries in Treasury Department docJments.
,
66 This is adapted from a table sent by Rella Shwartz to Mr. Southard (as well as to EltingAmold, Henry
Hilken and Mr. Rains of the Treasury General Counsel's Office), on Aug. 16, 1948, entitled "Statistical
Results ofTFR-600 Reports through August 13, 1948," NACP, RG 131, FFC Control Files, TFR-600
Information, Box 369 [312121].
64
�\.1
:..;
11
"
The Treasury Department had estimated beforehand that about $700 million of the total was in liquid assets
($400 million held directly, $300 million held indirectly through Switzerland), and $400 million was in
illiquid assets such as controlling shares in corporations, estates and trusts (with French nationals holding
the largest share of such assets). 67
Treasury officials had maintained. a policy of not giving foreign governments information about the
identity and location of blocked assets, though they did acknowledge an exception in cases where persons
had been executed or had disappeared during the occupation without leaving adequate records of their
assets. 68 (i3ut the number of such cases was limited, and the effect on overall policy therefore negligible. A .
more significant precedent lay in the wartime exchange of data with the British, Canadians and South
Africans in the context of the Lend-Lease program, justified at the time as a way to reduce the costs to
American taxpaye~~fter the announcement of the Marshall Plan, the view that financial data should be
provided to other
ernments gained ground, and the National Advisory Council, chaired by the Secretary
of the Treasury, concluded that this break with prior policy, while generally undesirable, was necessary
under current conditions. 70 So, in fact, following requests from recipient country governments, Foreign
Funds Control transmitted TFR-600 reports to the financial attaches of these governments "disclosing, with
respect to each such country, information on assets blocked in the United States.,,7l
67 Treasury Department Annual Report 1948, 290-291. These estimates are also contained in a letter sent by
Treasury Secretary John Snyder, in his capacity as Chair of the National Advisory Council, to Senator
Arthur Vandenburg, Chairman of the Senate Foreign Affairs Committee, who then released it to the press
on February 2, 1948. RG 131, ACC 61-A-109, Foreign Funds Control, Defrosting #2, Box 95 [302743].
An FFC memorandum, "Possible Questions and Suggested Answers, possibly prepared in anticipation of
congressional questions during hearings, suggested "approximately $800 million represents directly-held
assets which are blocked," and also indicated that based on the 1941 Census, about 30 percent of Swiss
asse~s were held by French interests. RG 131, ACC 61-A-109, Foreign Funds Control, Defrosting #2, Box
95 [302737]. The reasoning for these estimates can be found in the Memorandum to National Advisory
Council from National Advisory Council Staff Committee, Subject: U.S. Assistance in Tracing the Private
Dollar Assets in the U.S. of Nationals of Countries Receiving Aid under the European Recovery Program,
National Advisory Council Document No. 580, Jan. 14,1948, NACP, RG 131, Acc. 61-A-109, Foreign
Funds Control, Defrosting, Vol. 2, Box 95 [302705-302707].
68 Isadore Alk and Irving Moskowitz, "Removal of United States Controls over Foreign-owned Property,"
Federal Bar Journal 10 (1948), 21; Memorandum for the Files ofEIting Arnold, Feb. 19, 1946, NACP, RG
FFC Subject Files, Release ofInformation, Box 367, [
).
.
(
69 emo from Frank Southard to Treasury Secretary John Snyder, "TFR 300-Tuming over Information to
eign Governments," Oct. 8, 1947, I
], Box 368, I
); "Factual Background and argument on
\
certain major controversial issues covered in the memorandum of August 14, 1944 with regard to
unfreezing ofliberated are~f'~August 17, 1944, NACP, RG 131, FFC Subject Files, Defrosting,
Box 95 [ - j .
~310=t-"-'l20
.
70 Letter of Henry.;.G:'HilKen, Chief, Operations Branc of w~ to David L. Bazelon, Assistant Attorney
General, Director, Office of Alien Property, Department of ustice, October 29, 1948, NACP, RG 131, FFC
General"'Correspondence, Switzerland Defrosting Vol. XI ,Box 459, [
Treasury Department
....~~ual Report 1948,291; Isadore Alk and Irving Mosk itz, "Removal of United States Controls over
,/~;:::?" Foreign-owned Property," Federal Bar Journal 10 (19 8),21-22.
/,- . ')
7l Memorandum for the files by Rella Shwartz, "Re: t ansmission ofT -600 material to governments of
f.. \\~ ltJt' recipient countri~s,".Sep~. 28, 1948, ~ACP, RG 131 ~C Control Files T:R-600 In~o~tion, Bo~ 3.69
\"J
[312122]. Mention ill thIS memo, WhICh was sent t Eltmg Arnold, Mr. Rams, Mr. WIlliS, Henry HIlkm
.~,,~ii
(OAP) and Seymour Rubin (State), is made to "an verall statistical tab e," which may have been the
C1~ "SlatistiC'fl\esults ofTFR-600 Reports dtrOU7ugust 13, 1948" alre dy noted [312121 J.
r; 0
'
t, ];
~.,
t..-p
?,IO"\''lJ>
'r
0~
tJ!II'
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12
fl.
.
l'
h
.
\I ,
, A key component 0 f the gOY nment s new po ICY was t e presumptIOn 0 enemy mterest III noncertified omnibus accounts, an is e the New York financial community had seized rpon in its opposition to
the government's policy, claim' g the presumption unfounded. 72 The presumptioniof enemy interest was at
the heart of the government' olicy and it characterized almost every official doc ment covering the issue
.
.
• ,
,
that "in the abs nce of definite evidence
at the time. 73
of non-enemy ownership full weight will be given to the presumption of enem1 ownership arising from
their failure to obtain ertification.,,74 Attorney General Clark stated that the] failure to certify assets
appeared to support a resumption of enemy interest, only qualifying this assessmbnt by acknowledging that
75
a mnesty program or tax evasion in the European countries would further Streflthen the presumption.
Evidence fro
e Swiss case indicated at least that some hiding was going on, though not necessarily
only of enemy ass ts. By August 1948, eighteen !1lonths into the Swiss certifica .on program, assets valued
at approximatel 3. billion Swiss francs had been certified. 76 But in July 1948 Treasury officials learned
that French owners were obtaini.ng false certifications of Swiss residence with,but the Swiss Certification
Office checking back with the French government. 77 The Swiss blamed this
the "unilateral" American
demands for an end to the certification program, insisting they needed a deadline extension to complete the
outstanding certifications, smce some certifications were possibly fraudulent. 71 The Treasury Department
was in any case already aware of the possibility of fraudulent certifications, hating communicated with the
U.S. Treasury Representative in Bern in early 1947 about allegations of Swiss Bank Corporation
falsification of affidavits of ownership for foreign securities during the war. lhe Swiss relied on the banks
themselves to perform the investigations necessary for certification of onpnibus accounts, leading the
Treasury Representative to believe that accusations regarding the faldification of affidavits were
significant.79
??
.!:
Memorandum for the Files: Meeting with representatives of the New York financial community
_______
concerning the termination of Foreign Funds Control, written by Elting Arno' cN~tificatronfS)ct. 8,
1947, NACP, RG 131, FFC Subject Files, Defrosting I, Box 95, [
]. 3 () 3~l\ - LiOO
12
73~,,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
~
AS'IQject Files, Defrosting JUs :B@1i Pe, r
]; letteri~yfHaroid Ba ton, Direc~or, Offi;e of Alien
/ ' / Property to Willard Thow, Department of State fti.eatiHllllti6n? Aug. 30, 950, NACP, RG 131, FFC
Subject Files,.Defr~g III, Box 95, [
]. 3 I 0 (t;. '-I ')
7~ocumeiit No. 580, National Advisory Council, Jan. 14, 1948, NACP, G 131, FFC Subject Files, .
, ,,~ ~
DefroSting II, Box 95, (
]. NB. I can not find the quote you cited in he first 17 pages of this' .
\if....,
National Advisory Council document! [/ have cited it above as: Me;Jorandum to National Advisory
dloc.. (f"'l
~..f t. ~dl) Council from National Advisory Council Staff Committee, Subject: U.S.JAssistance in Tracing the Private
~ \ b ~ "j.. 0
~ ~(,d'
Dol~ar Assets.in the u.s. ~fNationals ofCountries Receiving Aid under the European Recovery Pro~ram,
)\
~v, "
\ NatIOnal AdVISOry Councd Document No. 580, Jan. 14, 1948, NACP'tRG 131, Ace. 61-A-J09, ForeIgn
r., 1,Jc;-tt." \
. Funds Control, Defrosting, Vol. 2, Box 95 [302702-302718]. Howel' r, this phrase DOES appear in the
I...:l'"' ~ \ 0 0 yO
Snyder letter of January 14, 1948 - according to a memo from Le n Brooks to Henry Hilken of
(]'A.
!
I
•.•1.
February 11, 1949 [either 302661 or 3111041. Please straighten his out...
.
...... \1""-c/'-
75 Letteli_pJ101lf"~8t'l Attorney General Tom Clark to Treasu Secretary John Snyder, Jan. 14, 1948,
POI.,j •. ,
NACP,RG131,FFCSubjectFiles,DefrostinglI,Box95 [
1- :)'b~bO-1~1. ~-fw~"ol..<lvE'
4,0., III.
_ Legation of Switzerland to Rella Shwartz, Acting Dire tor, Foreign Funds Control,2.§ AJ'ril@"]I/(Ie.)
.
.
1948, NACP, RG 131, FFC General Correspondence, Switzerland efrosting, Box 459, [ ......L
C;.~~a~
letter/Ill! lID'? slIh;8et1 Walter Ostrowjg.wtification? to Rei a Shw
, Acting Director, Foreigi1Fun~
\.
Control, Sept. 8, 1948, NACP.,.R61-:n, FFC General Correspondence, Switzerland Defrosting, Box,459, ~ 2116.oc:::{? .. IIi
-~.
7
,
7~.S
"? Swiss Compensation Office to Walter Ostr~~tification?, July 22, 1948, NACP, RG 131,
"""""":'-FF Correspondence 1942-1960, Swiss Defro~tingrBox ~~59 I,.
[
~-!~ 78 T legram No 984 ofV~. ll'n'ii'ile?'identification~2~a 0 ? To Secretary of State~d"Ju1y 29;- - t"~o..J'" (e-\\]J 194 , NACP, RJl.59rEntry 3067, Dept. 0 State, Econo 'cairs Branch, Records Relating to .
~l
•
T
NetiatiQiiS';ithSwitzerland, 1943-1957,File: Switzerlan<J,uethlsting, 1947-1956, [
I.
C13cn.....
Co espondence and negotiation with the Swiss on certifi~clion exte}' ed through February and M~
...:.,7: '30,
Il...o .[ ' "
194 :see Note from Legation of Switzerland to Southard; riedman, A old, Sham and Metzger, Feb. 4,
194 , RG 131, Ace. 61-A-I09, Foreign Funds con/trOI,f efrosting Vol. 2, ox 95 [302752], Memorandum
~r
.
~
Da
&
~
[
]. ____
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~
~\v.4(P'),.
,;\01 4S~
L.O~
~ ~-
.
~ V1.ff
<O~
tJI
\L
rr.:, t'~1)
C
c.ut-''''''
�•
13
The desire to prevent loot d securities om reaching the market was still present after the war.
Registered securities were not sucIlan.. issue ~they were blocked on the books of the issuing companies.
"The immense amount of dollar bearer securities," however, were another matter, and "if it was to be dealt
with at all, it would have to be handled by the foreign governments of the countries in which the securities
were located."so To help these governments identify ownership, the Treasury Department continued to
control the import of securities until July 25, 1947, by which time those governments which could do so had
created lists of securities they believed had been looted. SI
Indeed, the FFC seemed to feelthat "the foreign governments had had ample opportunity" by mid-1947
to determine which securities may have been looted from their nationals. s2 Treasury then compiled a list of
"scheduled securities," published it in the Federal Register in three installments in 1947 and 1948,s3
whereby securities were added to the list or deleted if their title had been cleared. In rnid-1947, a figure of
"35,000 individual securities known to have been looted by the Nazis" was cited by the Director of the
FFC. 84 By October 1948, nearly all securities other than those on the "scheduled" list were freed from U.S.
import, freezing and certification restrictions - though if a security was registered in the name of a blocked
national, a license was still required to deal in the security. Also, if a scheduled security was brought into
the U.S., General Ruling No.5 still applied, and such a security had to be deposited with the Federal
Reserve Bank of New York. 85 This would enable the owner to attach the security and to assert a claim in the
courts. S6
(ao.~'/
for the Files of John Richards re: Tentative Swiss reaction to Foreign Funds Control termination plan, Feb.
11, 1948, RG 131, Acc. 61-A-I09, Foreign Funds Control, Defrosting Vol. 2, Box 95 [302749-302751];
Memorandum for the Files of John Richards re: Further Swiss reaction to Foreign Funds Control
termination plan, Feb. 17, 1948, RG 131, Acc. 61-A-I09, Foreign Funds Control, Defrosting Vol. 3, Box
95 [302753-302754]; Memorandum for the Files of Rella Shwarz re: Technical Committee for Swiss
Problems, March 3, 1948, RG 131, Acc. 61-A-109, Foreign Funds Control, Defrosting Vol. 3, Box 95
[302625-302630]; Memorandum to National Advisory Committee from Treasury Department, "Swiss
Proposal for Handling the Private Blocked Dollar Assets in the United States held through Switzerland to
Aid in the European Recovery Program," National Advisory Council Document No. 638, March 17, 1948,
RG 131, Acc. 61-A-109, Foreign Funds Control, Defrosting'vOC3:-S0X"9§-~302638-302639]. _ _ _,_ _ _ _
04~P1 .
79 Letter/memo? James Mann to Joseph O'Connell, Jr.'iclentificationJIocati~ch 5,1947, NACP,
('0IJYI S
RG 131, FFC Subjoct FHes, Switzorland Dofrosting, Box 457;-lr:,.MOmo"mrn1'm for tho files by W altor
Ostrmidentification, March 4, 1947, NACP, RG 131, FFC Su ~ect Files, Switzerland Defrosting, Box
)
eft
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80 Isadore Alk and [rving Moskowitz, "Removal of United States Controls over Foreign-owned Property,"
Federal Bar Journal 10 (1948), 15. In this context it may be worth noting that the Trading with the Enemy
Act had specifically provided for seizure of the right, title and interest in a bond even if the actual certificate
or bond was not seized. See "War-Recovery by Government on Bearer Bonds of Enemy Alien Located
Outside United States Held Valid," Virginia Law Review 38 (1952): 524.
81lsadore Alk and Irving Moskowitz, "Removal of United States Controls over Foreign-owned Property,"
Federal Bar Journal 10 (1948), 16.
82 FFC History, Chapter 6, 44.
83 Federal Register July 25, 1947, 1-28; December 30, 1947, 1-7; August 10, 1948, 1-11.
84 Hearings before the Subcommittee of the Committee on Appropriations on the Supplemental
Appropriations Bill for 1948, House of Representatives, Eightieth Congress, 1st Session, June 2, 1947, 180.
85 Isadore Alk and Irving Moskowitz, "Removal of United States Controls .over Foreign-owned Property,"
Federal Bar Journal 10 (1948),16.
~omo~~ndum"'C'? June 6, 1949, NACP, RG 59, Entry 6OD139, Notherlonds Looted Securities, Box
. \
~
14
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I
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A major part of the list of securities came from information from the Netherlands Government, based on
records kept during the German control of Lippmann Rosenthal Bank, an Amsterdam bank that had served
as the repository, after a German decree of August 1941, of Dutch Jewish-owned securities. Initially the
bank functioned normally: it issued bank statements to the securities' owners and even credited their
accounts with interest. 87 Eventually, however, Lippmann Rosenthal transferred dollar securities valued at
approximately $7.5 million to the VermogensVerwaltungs-und-Renten-Anstalt [Wealth and Pension
Administration Institution], a bank formed by the German occupation authorities. The majority of these
assets were then thought to have disappeared into France, while the remainder were thought to have been
transferred back to Germany. 88
To both Dutch and Americans, the Lippmann Rosenthal securities were considered looted property. As far
as the Americans were concerned, these securities had been frozen through their inclusion on the scheduled
list of securities, The Dutch, in their effort to protect the assets of Dutch citizens, had vested title to Dutch
properties pursuant to a Royal Decree dated 24 May 1940.
By 1948, the Dutch were growing worried that neither General Ruling No.5 norJthe scheduled list of
securities were having the desired effect: too many securities were still missing. The Dutch government
thought changed procedures might create incentives for the holders of the securities to deposit them with the
Federal Reserve, and suggested the U.S. government either could threaten to have the Office of Alien
Property vest title to the missing securities or cancel the existing securities and issue new certificates to
replace them. 89 The U.S. decided to amend General Ruling No.5, dividing the list of scheduled securities
between domestic issue securities and foreign issue securities, with the former needing to be deposited with
the Federal Reserve, and if they were not deposited within six months, they would be vested. This obliged
banks to check coupons against the list of scheduled securities before issuing payment to the investor, a
burden they were not happy to take on, and to deflect their criticism, the Office of Alien Property issued a
license that removed the burden of checking every security against the list.
Aftermath
~
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Memorandum concerning the Scheduled Securities Claimed by the Netherlands, author?, Feb. 5, 19~1lI'I .tY\ ~ ~
NACP, RG 59, State Dept ..., Netherlands Defrosting 1947, [
).
( ,..-- '" l(~)
88 NARAlCP, RG 59, 60D139, (State Department, Legal Advisor, Records Relating to German Assets),
'I/'tJ\;'-t,.~
Netherlands Defrosting 1947, Box 13, "Memorandum Concerning Scheduled Securities Claimed by the
Netherlands," Febuary 5, 1948. Is this the same reference as in the previous footnote? If so, please
standardize.
/"
.
c--""""'",
89 Letter/Jlht!iRm.? ubjec. Joseph Broderick ~~nti~ation? To Ely Maurer State Dept., Office of Legal
Advisor, May 9, 19 , ACP, RG 59, Entry 60~ 39, ox 14, r '\.); Memorandum on Netherlands
Looted Securities more precise? June 6, 1949, NA P, R 59, Entry 6 -D-139, Box 13, [
1.
87
J
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,.
II
15
·~ 'iE· In October 1947, it was notounce1steps to secure1,certificationpropertyGeneral License No. and with
"that on M~Y
1948, all
romaining blocked
respect to which persons had
taken
under
95, was
@;.rJ' G
'V
.
(UID
transferred to the Alien Property Custodian, and was presumed to be enemy property and subject to vesting
by that Office.,,90 On January 22,.1948, Attorney General Tom Clark and Treasury Secretary John Snyder,
announced that the residual blocking operations of Foreign Funds Control were to be terminated as rapidly
as possible, and al1 remaining assets not certified as "free of enemy taint" would be transferred .to the Office
of Alien Property in the Justice Department. 9 I On March 1, 1948, the two departments issued a joint \
~hJ
announceme~t.that as of June 1, 1948, Treasury would cease to have juris~iction over blocked foreign funds
\' {t
.
and all remammg blocked assets would be transferred to the Office of Aben Property.92 June 1, 1948, was
t
l f).1 ~, .vA
t~e final deadline for filing applicati?ns for certificati~n i~ the 93
eligible countries~ with certification ~genc.ies
r(\f}A) }.
(t1fV"~I. .Jr gIven three months to complete action on these apph.catlOns.
On September 1, 1948, the certlficatlon~V
v.jcJ-·
.
J..t <; • t,.,..., \t?'. program ended, and on December 31, 1948, General License No. 95 was revoked. 94 .
tV - f--t
In March 1952, the Marshall Plan countries as well as Liechtenstein and Switzerland were
<: ~...
~ unbl~cked, a~d the vesting progra~ of the Ali~n Property Custodian was also com~lete~, leaving only the
d,,1I' rv- ).
Baltic countries, the enemy countnes (exceptmg Italy), Poland and CzechoslovakIa still blocked.95 The
~. ~
. following year, unblocking was extended to West Gennany, leaving only those countries "within the Soviet
[~, 0,rbit," including East Germany, subject to the controls. 96
.'
.
J
J
r /
t
u
r '"
-t ~ /)
Q!.I"" vi
J
F
tt J
If~ FFC History, Chapter 6, 43.
.'
.
• .
Treasury Department Annual Report 1948, 288.-92.
' "
J'P~~'
92 Isadore Alk and Irving Moskowitz, "Removal of United S.tates Controls ove,r Foreign-owned Property,"
r
\...
!I::'
•I
,LJt.. ~ u.• C
..F'
(. I~ \1\.
.,.Federal Bar Journal 10 (1948), 23-24; this infonnation is alsq at ,219626-219627 [NACP references~. ....
~\. lacking on this document, however.]
'. .
. .:
.
r lwlJcJ"
,
93 Isadore Alkand Irving Moskowitz, "Removal ofUnite<;l. States Controls over Foreign-owned Property,"
J"f
Federal Bar Journal 10 (1948), 24.
,
94 Treasury Dept., Foreign Assets Control, "ChronologyofImportant Regulatory Documents, 1940-1946, v.
6, Document 48.
.
'95 Draft Press Release of March 11, 1952, NACP, RG 131, Ace. 61-A-109, Foreign Funds Control,
Defrosting #2, Box 95 [302674]
96 Draft Instruction on "World War II Blocked Assets Freed for Friendly Countries," sent to Certain
American Diplomatic and Consular Offices, July 31, 1953, RG 131, Ace. 61-A-109, Foreign Funds
Control, Defrosting #3, Box 95 [302691-92; also at 311063-64]
A
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91
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Dublin Core
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Title
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Presidential Advisory Commission on Holocaust Assets
Description
An account of the resource
<p>The Presidential Advisory Commission on Holocaust Assets in the United States, formed in 1998, was charged with investigating what happened to the assets of victims of the Holocaust that ended up in the possession of the United States Federal government. The final report of the Commission, <a href="http://govinfo.library.unt.edu/pcha/PlunderRestitution.html/html/Home_Contents.html"> “Plunder and Restitution: Findings and Recommendations of the Presidential Advisory Commission on Holocaust Assets in the United States and Staff Report"</a> was submitted to President Clinton in December 2000.</p>
<p>Chairman - Edgar Bronfman<br /> Executive Director - Kenneth Klothen</p>
<p>The collection consists of 19 series. The first fifteen series of the collection are composed mostly of photocopied federal records. These records were reproduced at the National Archives and Records Administration by commission members for their research. The records relate to Holocaust assets created between the mid 1930’s and early 1950’s by a variety of U. S. Government agencies and foreign sources.</p>
<p>Subseries:<br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=Art+and+Cultural+Property+">Art and Cultural Property</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=Gold+">Gold</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=Gold+Team+Review+Form+Binders+">Gold Team Review Form Binders</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=Art+and+Cultural+Property+and+%E2%80%9COthers%E2%80%9D+Review+Form+Binders">Art and Cultural Property and “Others” Review Form Binders</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=Non-Gold+Financial+Assets+Review+Form+Binders">Non-Gold Financial Assets Review Form Binders</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=History+Associates+Binder+">History Associates Binder</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=Non-Gold+Financial+Assets+Review+Form+Binders+%282%29">Non-Gold Financial Assets Review Form Binders (2)</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=Financial+Assets+Documents">Financial Assets Documents</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=RG+84%2C+Foreign+Service+Posts+of+the+State+Department%E2%80%94Turkey">RG 84, Foreign Service Posts of the State Department—Turkey</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=Financial+Assets+Documents">Financial Assets Documents</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?search=&advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=%5BJewish+Restitution+Successor+Organization+%28JRSO%29%2C+Oral+Histories%5D&range=&collection=20&type=&user=&tags=&public=&featured=&exhibit=&submit_search=Search+for+items">[Jewish Restitution Successor Organization (JRSO), Oral Histories]</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=PCHA+Secondary+Sources">PCHA Secondary Sources</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=Researcher+Notes">Researcher Notes</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=Unnumbered+Documents+from+Archives+II+and+Various+Notes">Unnumbered Documents from Archives II and Various Notes</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=RG+260%2C+Finance+Inventory+Forms">RG 260, Finance Inventory Forms</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=Reparations">Reparations</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=Chase+National+Bank">Chase National Bank</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=Administrative+Files">Administrative Files</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=39&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=Art+%26+Cultural+Property+Theft">Art & Cultural Property Theft</a></p>
<p>Topics covered by these records include the recovery of confiscated art and cultural property; the reparation of gold and other financial assets; and the investigation of events surrounding capture of the Hungarian Gold Train at the close of World War II. These files contain memoranda, correspondence, inventories, reports, and secondary source material related to the final disposition of art and cultural property, gold, and other financial assets confiscated during the Holocaust.</p>
<p>For more information concerning this collection consult the<a href="http://clinton.presidentiallibraries.us/items/show/35992"> finding aid</a>.</p>
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
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Clinton Presidential Library & Museum
Is Part Of
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<a href="http://clinton.presidentiallibraries.us/items/show/35992" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/1040718" target="_blank">National Archives Catalog Description</a>
Extent
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2954 folders
Text
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Original Format
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Paper
Dublin Core
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Title
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[Paper on Defrosting]
Creator
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Presidential Advisory Commission on Holocaust Assets in the United States
Art & Cultural Property Theft
Is Part Of
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Box 217
<a href="http://clintonlibrary.gov/assets/Documents/Finding-Aids/Systematic/Holocaust-Assets.pdf" target="_blank">Collection Finding Aid</a>
<a href="http://catalog.archives.gov/description/6997222" target="_blank">National Archives Catalog Description</a>
Provenance
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Clinton Presidential Records: White House Staff and Office Files
Format
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Adobe Acrobat Document
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Clinton Presidential Library & Museum
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Reproduction-Reference
Date Created
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6/24/2013
Source
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6997222-paper-on-defrosting
6997222