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Text
Property Control under U.S. Occupation
of Germany'
H.B. Junz :with E. O'Connor
June 19, 2000
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I
I. Introduction and background.
The Allies declared already in 1943 that they would not recognize property
. tr~nsfers that reflected the spoliation and dispossession of victims of the Nazi regime. l
Accordingly, the military directives and laws that provided the bask authority for the
armed forces to take control of a broad range ofproperty specific;;tlly ~ncluded property
transferred under duress. Indeed, what came to be called "duress property" was cited as a
separate category. However, while the intent to reverse such transactions was patent,
policy directives in the first instance sought merely to locate, block and control, i.e. to
sequester and safeguard, relevant properties. 2 Phase Two, actual return, would be dealt
with later. 3
Allied planning for the post-war period already made a distinction between what
would come to be called "external" and "internal" restitution. External restitution covered
,
.
the return of property looted outside Germany, while internal restitution dealt with
\,
'ownership of assets that resided within G~any. Under the U.S. Military Government
,
(USMG), external restitution fell to the Restitution and Reparations Branches, while
internal restitution became the responsibility of Property Control: (PC). While all three
Branches tended to face similar management problems, the task of PC was vastly more
complicated in that its activities served the denazification and demilitarization
.
I The Lond~n Declaration. See for details and sequence of policy formulation and implementation Junz paper on
"U.S. Restitution Policy regarding Assets seized from Nazi Victims during World War II", March 2000.
Military Government (MG) Law No. 52.
MG Law No. 52 and NARA, RG 338, ACA, Box 3, '.'Annex XIX Property Control to Basic preliminary
Plan, Allied Control and Occupation of Gennany", Property Control Branch, Reparations, Deliveries and
RestitutionDivision, US Group CC, 7 April 1945, p.2, para. 3a.
2
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objectives of the Allies as well as the intent to restore the property rights of
4
persecutees. Internal restitution also involved several property categories, including
duress property, each of which required distinct procedures. 'Thus, while external
restitution could quickly tum to Phase Two (the release of property taken into custody),
there was a rrmch longer g~p in the case of PC. In fact, 'it was not until July 15,1947 that
-.
the intent stated in the London Declaration was turned into action. On that date, the
Directive on U.S. Objectives and Basic Policies in Gennany heralded the beginning of
.
Phase Two for PC properties
I
.
as follows: "It is the policy of your [the U.S.]
government that persons and organizations deprived of their p~operty as a result of
National Socialist persecution should either have their property returned or be
compensated therefore ..... With respect to heirless and unclaimed property subject
to internal restitution you will designate appropriate successor organizations".5 In
the case of duress properties, the wait was yet more prolonged because of the length of
time it tookto adopt and implement the Restitution Law. '
For the U.S. military forces, core control authority was contained in Military
Government (MG) Law No~ 52 on "Blocking and Control of Property", which became
~ffective sequentially,starting in Aachen on September 18,' 19446, as the Anny m:~ved
. across Gennany and in JCS Directive 1067/6, dated April 26, 1945. Thoug~ MG Law
Military Goverrunent Regulation (MGR) 23-2050 in Stanford University Goverrunent Documents Green
Library, Office of Military Goverrunent for Germany (U.S.), Civil Affairs Division, Property Control in the
U.S.-Occupied Area of Germany 1945-1949, 'Special report of the Military Governor, July 1949, hereafter
cited as Special Report 1949.'
.
4
5
Special Report 1949, p.39.
6
MG Law No. 52 is appended in its amended form ofJuly 14, 1945 ..
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. No. 52 governed the actions oftheU.S.forces,its general purpo,se was declared policy
across all Allied Zones as evidenced in the language included in the, Allied Control
Authority Control Council's (Control Council) Proclamation No.2, on "Certain
Additional Requirements Imposed on Germany", dated September 20, 1945. It states in
Section XI, par.42 (b) that: "The German authorities will· comply with such directions
as the Allied representatives may issue regarding the property, assets, rights, title,
and interests of person affected by legislation involvi~g discrimination on grounds
. of race, color, language, or political opinions"}
. II. Reach ofProperty Control.
The Allies were quite clear early on about what assets they would take under
control and from whom these should be sequestered,: This was reflected in the text of MG
.
,
Law No. 52, which, in Art. I specified that the properties of the following would to be
subj~ct
to seizure, blocking or other methods of control:
1) The German Reich, its political subdivision and its agencies and their"
instrumentalities (whether inside or outside Germany);
2) Governments, nationals or residents of nations other than Germany at war with any
of the United Nations as of September 1939 and governments, nationals or residents of
territories occupied since that date by these or by Geimany;
3) The Nazi party, its
office~,
,
entities under Party control, Party officials and leading
members and supporters;
7
Special Report 1949, p.38.
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,
(4) Persons while detained by the USMG;
(5) Organizations and associations prohibited or dissolved by the USMG;
(6) Absentee owners of non-German nationality, including United Nations and neutral
governments and ,Germans outside Germany;
(7) Others specified by the USMG, e.g., war 'criminals and black-listed nationals of the
Allied countries; and, in a separate section,
(8) " Property which has been the subject of duress, wrongful acts of confiscation"
dispossession or spoliation, whether pursuant to legislation or by procedures
purporting to follow forms of law or otherwise....."
8
, In addition, all gold and silver in coin or bullion fomi and all platinuni in bullion
were to be delivered to the Allies,9 all extemai assets of German natural and legal
persons, (or any entity with its principal place of business in Germany), excepting those
of Germans outside Germany who did not enjoy full citizenship rights at any time
since September 1939, were vested in an Allied entity,1O and, finally, 'as part of the ,
exchange control system, all assets denominated in foreign exchange, or representing a
liabilityto o~ claim on persons outside Germany, were to be delivered against receipt to a .'
' . t
centraI pom. II
Asset control, in the first instance, served two purposes:
MG Law No. 52 as amended., emphasis provided by'author.
Allied Control Authority, Proclamation No.2, September 20, 1945.
10 Allied Control Authority Law No.5 on Vesting and Marshalling of German External Assets, 30 October
1945. Note', however, that German assets located Within the United States already had been blocked and/or
vested since the beginning of the War under the provisions of the Trading with the Enemy Act. These
provisions did not exempt victims of the nazi regime.
II MG LawNo. 53 on Foreign ~xchange Control, as promulgated.
8
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a) the Allied denazification and demilitarization (including decart~lization) goals; and
..
b) the safeguarding and management of looted property.
Thus, it was not surprising that the early emphasis was on specifying the what and
howof the control mechanism. Future release was bound up with restitution and .
..
reparations negotiations, the question of whether or not a unified policy could be applied
.
.
across all Zones, the pace of transfer of responsibilities to the Gemian authorities and,
last but not least, the perceived incompatibility of the du~l priorities of restitution and
economic reconstruction - all of which required time. This time path, however, was soon
.
.
to be shortened by necessity: the amount of property that came tinder control of the
military government in the U.S.-occupied area of Germany alonewassimply staggering.
.
.
,
During the lifetime of the Property Control program (1945-September 1949), the military
~'
,
took 154,469 properties, valued at RM 13,883 million, into custody. 12 And these totals do
not include cultural and art objects, foreign exchange assets, properties blocked but not
under P,C and the bulk of external restitution, i.e. material restituted to formerly occupied
United Nations.
To put this in perspective: translated at the admittedly rather overvalued exchange
rate for the RM vis-a-vis the dollar of the late-Thirties through the war, the value of
propertr under the Property Control program equaled US$5.6 billion. This amount
outstrip~
total personal income recorded in the State of New Jersey in 1940 by more
than one half and falls short of the US$ 6.0 billion recorded in Illinois by a bare 7
12 NARA RG 260, Records of the Secretariat, Executive Director, Office of the U.S. High Cotrimissioner
for Gennany, Box 14, PD Monthly Report September 1949.
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percent. It amo.unts to 7.2 :percent of total personal income in the United States in
that year.
13
Given the overwhelming task of seeking out property that should be brought
under control and managing what had been found, it is not surprising that the Property
Control Program at times sacrificed intent to pragmatism and that this particularly tended
to permeate the duress property segment of the program, 'which was fraught with yet
more complications than other categories. General difficulties included the unexpectedly
high workload; the lack of trained personpel, which was exacerbated by continuous
reassi~ent
of military personnel; and the fact that the pool of local expertise was
extremely small, not least because of the high degree of Party membership and
..
.
'
"
collaboration among practitioners of the relevant professions.~ the case of duress
. property, these difficulties were further aggravated by widespread resistance to the
restitUtion process a~ong the German population. The treatment of duress property imd
its righ~ful owners, thus, must be seen first, in the light of larger Occupation policy
.issues, such as:
. a) the decision to effect an early transfer of authority back to the Germans, which
was integral to the ovenill policy of returning government to the Germans as part of the
democratization process;
b) economic policy considerations, especially in the context of the growing
importance of Cold war concerns,;
r)
13 U.S. Dep'artment of Commerce, Bureau of the Census; Historical Statistics of the United States, Colonial
times to 1970, Part 1, Washington, D.C., Government Printing Office, 1975, Chapter F - National II),come
and Wealth, Table F 297-348 - Personal Income by States, pp. 243-244
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c) the overall costs to the U.S. taxpayer; and
d) the overwh~lmirig volume of the Property Control program and the associated
management problems.
Second, while duress property was visible in a policy sense, in practice it did not
appear on the activity screen until sometime in 1946. In fact, in the PC statistical reports,
a distinction.between external and internal loot first appeared only in February 1946 arid
the· category duress property was not introduced until well into 1947. The extent to which
this topic remained a blip in th~ view taken by historians of the U.S. Occupation period of
Germany is also evident from a perusal of the indexes to a number of studies that have
achieved core status in the literature. When restitution is mentioned at all, it generally
refers to external restitution and the topic as such receives a couple ofmentions at best. 14
III. Dimension of Property Control.
. As noted above, the unprecedented breadth and intent, i.e. the what, of the
.
.
Property Control program, as set out in MG Law No. 52, was clear. However, the how
largely remained to be worked out in the field. 15 The full detail of the manner in which
MG Law No. 52. and Control Council Law 2 were to be implemented was finally spelled
out in Title 17 of the MG Regulations, which at the same time put in effect the policy of
early transfer of property control responsibilities to the German authorities. Title 17
See for example, John Gimbel, The American Occupation of Germany: Politics and the Military, 1945
1949, Stanford University Press Stanford, CA,1968; Earl F. Ziemke, The U.S. Army in the Occupation of
Germany', 1944-1946, Center of Military History, United States Army, Washington, D.C., 1975; Harold
Zink, Anlerican Military Government in Germany, MacMillan, New York, 1947.
14
15 The Handbook for Miiitary Government, December 1944, contained a section on the procedures to be
followed by Property Control, part of which were reiterated in the USFET Directive of July 7, 1945 on the
Administration ofMiiitary Government In the U.S. Zone of Germany as cited in Special ~eport 1949, p.48.
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became operative in the four Laender in the U.S. Zone onvarying dates during the four
months between May and September 1'946.
Initially, MG Law No: 52 could not be put fully in effect in Berlin because the'
quadripartite nature of the administration of the city required approval by each of the
, Allies. And concern that the Soviets would interpret and apply' some of the seizure
.
,
elements of the Law in a way detrimental to U.S. interests prevented USMG officials
from 'seeking such approval in'the Kommandatura (the Allied governing body). Thus, in
the early days, the U.S. authorities applied,the Law unofficially to the extent possible
without actually issuing it. The problem was solved when, at the end of August 1945, the
Komniandatura decided to allow each Ally to apply in its sector of Berlin the property
control laws in effect in its respective zone of occupation in Germany.16 As a result, the
provisions ofMG Law No. 52 wound up governing all three Western Zones of Berlin.
,
This was important in that Berlin was the locus of a relatively large volume of property
,
'
subject '~o the Law. The. Law was applied "aggressively" in the U.S. Zone as of 1946;
and during the course ofUSMG more than 9,000 properties (6 percent of the total under
.
.
.
control by USMG), valued at RM 1.5 billion (10.6 percent of the total) were taken into
control in the 'area ..This included more than 2,200 duress properties (6 percent of all
duress properties) valued at RM III million (7.4 percent of their totalvalue).17 .
p~
seized and controlled a vast array of assets (especially after property of all
influential Nazis and Militarists in all walks of life was included in the list of properties
NARA RG 466, Historical Division, Publications Relating to the U.S. Occupation of Gennany, 1945
1953, Box 1, Six Months Report 4 July 1945-: 3 January 1946, Office of Military Government U.S. ,
Berlin District, p. 98.
'
17 Ibid. p.88 'and NARA RG 260, Records of the Secretariat, Executive Director, Office of the U.S. High
Commissioner for Gennany, Box 14, PD Monthly Report September, 1949.
16
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subject to control). 18 These ranged from real property (including agricultural, industrial,
retail, public and private); business enterprises, including IG Farl?en; inventories; and
livestock; to financial assets( including cash, securities, participations, and precious
metals). PC functioned in the early days with 298 U.S. personnel, supported by 2,176
German civilians. "As the program became fully operative and after the transfer of part of
the responsibilities to the German authorities, U.S. direct participation diminished, but
.:
"
the German involvement burgeoned: 4 Land Property Control Offices and 240 County
!
,
(Kreis) Property Control agencies employed 3,053 people, who oversaw some 80,000
Property Control custodians. At the end ofUSMG PC, on July 1, 1949, there still were 40
U.S. personnel assisted by 300 German civilians, while the German agencies continued to
employ some 2,500 personnel. 19
To locate properties subject to control, Allied Control Authority Proclamation No.
I
2, dated September 25, 1945, required all p'ersons, whose property fell under the
,
provisl~ns ofMG Law No. 52, to report them. While penalties for failure to report were
foreseen, they were unspecified, except in the case of external assets, where it was a ,
I
criminaloffense. 2o Thus, self-reporting proved, to say the least, not the strongest basis
for a thorough trawl. Accordingly, main reliance was placed on existing documentation
of ownership and on enquiries by original owners or their heirs. The former was most
extensive for absentee ownership: the U.S. Treasury's Census of U.S. Assets Abroad, the
records ofthe Office of the German Alien Property Custodian-and U.S. Consular reports
USFETDirective of August 15, 1945, Special report 1949, p.50.
Special Report 1949, p,l.
"
,
- 20 NARA RG 331, SHAEF G-5, Economics Branch, Box 82, Military Government Germany, Financial and
Property Control Technical Manual, December 1944, p. 214.
'
18
19
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all helped document such ownership. In other areas records were harder to come by.
,
,
Accordingly, PC depended in part on German officials to search through county property
,
,
records, income tax and other documentation to pinpoint assets that should be taken,into
control and, in larger part, on enquiries of original owners or their heirs. The latter was
particularly important in the case of duress property.
Table 1: PROPERTY CONTROL: PROPERTIES HANDLED THROUGH
SEPTEMBER 30, 1949 ..
(Units, RM million and percent)
CATEGORIES
TOTAL
PERCENT OF
TOTAL
1. NSDAP members and
blacklisted persons
74,301
48.1
24.1
2. NSDAP organizations
7,696
5;0
8:9
3. Reich
4,892
3.2
21.2
17,047
11.0
17.0
7,221
,4.7
0.6
168
0;1
5.7
7. Miscellaneous
1,301
0.8
6.7
8. Discrepancy
5,043
3.3
5.0
117,669
76.2
89.2
36,800
23.8
10.8
154,469
100.0
100.0
4. United Nations and other
owners
5. External Loot
6. IG Farben
TOTAL'other 'than Duress
9. Duress
GRAND, TOTAL
,
Source: NARA RG 260, Records of the Secretariat, Executive Director, Office of the
U.S. High Commissioner for Germany, Box 14, PD Monthly Report September, 1949.
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.I
The value of duress properties under control was dwarfed by the other categories
in the PC program. At 10.8 percent it constituted one-ninth of the total, and was'
'outstripped by far by the values recorded for the properties of the Reich and of Party
me~bers and their sympathizers (almost one half of the total). (See Table 121 ). However,
in te~s of volume, at just under one quarter (23.8 percent), duress property was the
second most important category under the PC program. It was also the most complicated
and politically difficult to handle. '
Whereas, in the case of absentee owners in many instances ~ those where the
German Enemy Property Custodian was able to resist Party demands for outright
confiscation - there had been no transfer of ownership, this was, by definition, not so for
duress property.22 Furthermore, present ownership was widespread making locating
duress property a formidable, though as was shown later, not undoable task.
~owever,
as
noted above, this soon came into conflict with the practical limitations thatinexperience
,
"
with wide-scale property management and shortage of trained personnel imposed on PC.
And perhaps more tellingly, priorities weighed in favor of the other control categories.
Not surprisingly thus, that PC was largely passive in its efforts to locate duress
property relying primarily on. enquiries by original owners and on local reporting.
. ,
,.
;
Thus, it engaged in little active search for duress property on the basis of still
21 Although USMG PC tenninated activities on July 1, 1949, transferring residual duties'to aCentral
Gennan Coordinating Committee composed of the four Heads of the Laender Civilian Agencies and
remaining functions to the office of the Military Governor's Economic Adviser, data in Table 1 are shown
as of end ':"'September, 1949, the month the U.S. High Commission offiCially took over.
22 Th~ Gennan Enemy Property Custodian was, indeed, a "custodian". That is, by law enemy property was
not vested but taken into trusteeship. However, the Party argued that property belonging to enemies of the
Reich was forfeit and should be confiscated. Thus, what property remained in the hands of the Enemy
Property Custodian was not subject to any ownership ,dispute.
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existing German records on the transfer of such property to Aryan owners· and/or
outright confiscation by the Reich or the Party. In fact, one of PC's own employees
repeatedly pointed to the existence of such records, but apparently recdved'no
resp~nse.23 It was left to the Jewish Restitution Successor Organization, once it was
empowered to petition for heirless and unclaimed Jewish-owned property, to make
.
"
'
an extensive search of the relevant documentation and lodge just under 165,000
claims in the four months between the date when it began operations in Germany
and December 31, 1948, when the USMG deadline for fIling petitions in connection
with duress property expired.
IV. What Do the Numbers Mean?
a) Volume.
The volume of properties handled by PC provides a'dramatic picture of the
.
.
J
,
enormity of the management task involved. However, its sheer size together with the
decentralization of the administration ofproperty control consequent upon its early
devolution to the German civil authorities, made the num.hers softer than they might have
been.
In classifying properties taken under control errors of assignment were rife.
This affected the du~ess category particularly in two ways: first, because of the large
percentage of owners residing overseas, what· should have been. classified as duress
.
.
23 NARA.RG260, Records of the Property Control and External Assets Branch, Box 13, "Jewish
Displaced Persons and Property File," memo from Klein to the Chief, PC Branch, December 5, 1946
(308344) and NARA RG 260, Records of the Property Control Division,'Box 13, Jewish Displaced Persons
file, memo from Klein to the Chief, Property Control Branch, November 21, 1947.
.
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property often was recorded as United Nationsor absentee-owned. Second, property of
Nai:i Party members or Nazi organiz~tions often included assets obtaine~underduress.24
The frequency of such misclassifications motivated PC in- early 1947 to order a complete
review of all properties under control because the then evolving plans for disposition
"indicated the absolute necessity ofhaving "duress" property correctly classified in
Property Control records.,,25
Aside from misdassification, much duress property simply remained outside
the ~ontrol mechanism. First, as a conscious decision, property was excluded from
control when PC considered that the. iI;tegrity of the property was well protected and
simply blocking would suffice - as in the case of bank accounts- or that its value was
too insignificant. For example, the head of the Property Control Branch instructed Hesse
PC officials to release duress properties "not sufficiently important or valuable enough to
warrant control',.26 Although no monetary limit was set, further explanation was·
provided: "Reference is made specifically to small plots of land of inSIgnificant value
which are not income producing either because the structure thereon has been completely .
destroyed or because the land itself is not suitable for agricultural purposes: Itappears
that no purpose is served in exercising custody with respect to such properties since
nothing of value can be removed therefrom and no income is received which will warrant
the appointment of a custodian." The memo concluded with the instruction to review "all
.
NARA!RG229, Correspondence relating to Foreign Claims, Property Control Circulars, Box 3, PC Cir.
No.1, dated 3 January, 1947 (327544).
.
24
Ibid.
26 NARA RG 260, Land and Sector Military Gov.ernments, Box 1252, Duress Property file, "Application of
MGR l7-?01," August 22, 1947.
25
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such properties undeccontrol" and to take "necessary action to release those properties
where Property Control action is not deemed warranted in light of the criteria set forth
above. ,,27 .
But rather more important, property failed to be included because of the
relative passivity, noted above, that characterized the efforts to locate it. An
indi~ation
ofthe gap between the volume of duress property taken into control and the
potential number is found in comparing the 36,800 in control in September 1949 with the
220,551 restitution petitions received by the Central Filing Agency. This 6 to 1 ratio
gives a somewhat exaggerated picture as there may h::tve been double counting - to the
tune of around 80,000 - with the same property being claimed by both individuals and
the JRSO. However, this would be partly offset by the fact that each petition may cover
more than one ptoperty?8 Even when ignoring the latter, a 4 to 1 ratio between
\
.
.
I
property claimed and property under control remams a telling number.
b) Value and Impact of Valuation Problems on Restitution.
While the volume figures describe best the dimensions'ofPC's management task,
it is really the value numbers that could have provided a guide to the extent to which the
program. approached its promise of restoring property taken under duress to its rightful
owners or their heirs. While any such test requires an estimate of the spolia~ion that .
occurred in the U.S. Zone, existing data could have,yielded at least a benchmark
27 NARA RG 260, Land and Sector Military Governments, Box 1252, Duress Property file, "Application
ofMGR 17,501," August 22, 1947.
28 In fact, the cases (number ofproperties) covered by petitions handled between November 10,1947 and
end-February 1950 indicates that cases outstrip petitions by 17.5 percent. NARA, RG 466, 160A, File
261.1, Box Office of US High Commissioner for Germany, Office of Economic Affairs, Property
Division, (327174).
6;
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indication. Unfortunately, it would appear that the PC value numbers have at least as
manY, if not more, question marks against them as do the volume ones. This, however, is
the more important because valuation problems had also very immediate and practical
,
implications. Valuation entered into PC activities in two ways:
, a) it formed the basis for testing the performance, and hence the accountability of
custodians; and
b) it was a key factor in reaching amicable settlements, a basic tenet of the restitution law.
The determination of property values for both accounting and settlement
purposes, however, was beset with problems. There was not only the obvious question of
.
.
how to bridge the difference between the current value and that at the time of spoliation,
but also that of finding and enforcing a uniform measurement of current values. The lack
of experienced personnel - the number of quaiified, denazified accountants could be·
count~d
in the tens rather than hundreds - combined with the early flood of properties
into PC - requiring some 80,000 custodians - made a pragmatic approach the norm.
Unif0o/tity across the Zone and eve~ consistency within a locality were the first· victims.
Thus, the Chief Auditor of the PC Accounts and Audits Section reporting on an
,
.
examination of the Berlin Office notes: "In stating the value of property .... some
.
custodians use an appraised value at the present time, others use the last taxable value
,
less war-damages and
sti1~
.
other custodians state no v:alue because of total war damage
destruction. The two former cases are acceptable especially when percentage of
destruction is determined and a calculation of the remaining value of th~ property can be
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derived. However iqs not acceptable to use tenns such as "heavily damaged", "totally
destroyed" and list no value as in all cases the land value must remain. ,,29 'The report then
goes on to detail important lapses in following instructions, such as failure to submit
. initial balance sheets for operating properties and neglecting to account for all assets and
,
.
liabilities before arriving at the valuation of a property. For example, "Sundry reports
fourid within the property files revealed cases of blocked bank accounts, cash in bank,
securities and mortgages which were not considered on the fonn ... ".30 . In addition it was
found that chief custodians more often than not failed to submit financial reports and all
had their own methods of charging custodian fees and distributing administration costs.
Although the special position of Berlin was reflected also in the operations of its PC
sectio;n, it can be taken for granted that the auditor's findings typified the situation across
the U.S. Zone as well.
, The general difficulties in valuing properties and accounting for the
management results under custodianship - aside from actual fraud - are reflected in
the fact that the values recorded in PC's monthly statements are described as
estimates?1 Then,with currency reform becoming effective on June 20, 1948, these
estimates became yet more problematic.
29 NARA, 'RG 260, Rec~rds of the Berlin Sector, Property Control Branch, Box 660, General
Correspondence 1945-48, Vol. II, Examination of the Property Control Section, Office of Military
Government - Berlin Sector, dated 13 December 1946, (327574).
30 Ibid.
.
.
31 See for d.ample NARA"RG 260, Records of the Secretariat, Box 14, Fil~ PD Monthl)' Report, Office of
Economic Affairs, Report for the Month Ending December 31. 1949, (225522)'.
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Currency reform;
The need for rehabilitating the c~e~cyas an i~tegral element ofGerman
eco'nomic stabilization and reconstruction had figured into Allied thinking well before the
.
,
end of the war. Actual planning, therefore, had an early start. But implementation was
held up by disagreements amongthe Allies about the shape ofthe banking system: the
Americans were determined to effect decentralization and reshape the banking system on
a Federal basis, while the British considered a centralized system more suitable for'
Germany. French thinking eventually was more in line with that of the Ameri~ans. 32 As
the Potsdam Agfeement, as well as the Bizonal agreement of September 5, 1946,
explicitly madefiriance, e.g. banking, a matter of uniformity among the Occupying
Powers, this po,1icy disagreement paralyzed forward movement. Thoughthe Laender
authorities were loath to see the big banks broken up, they had no reservations in seeing
this done to the Reichsbank. Accordingly, the U.S. Zone Laender were not at all reluctant'
to follow the USMG order to establish Laender Central Banks and issued the
I
implementing laws at the end of 1946. The French MG followed suit, so that by March 1,
1947 Laender Central Banks were in operation in both Zones.
I
Finally, after the Americans codified their decentralization policy for Germany in
general and for the banking sector in particular inJCS 1779, dated July 15, 1947, a
compromise began to be wrought. On October 3, 1947 the Americans agreed to a unified
Central'Bank, the Laender Union Bank, later renamed the Barik Deutscher Laender, as
well as to the British demand for support for a Reconstruction Loan Corporation
,
,
32 Carl-Ludwig Holtfrerich , "The Deutsche Bank 1945-1957: War,'Militruy Rule and Reconstruction" in
The Deutsche Bank 1870 - 1995, Weidenfdd & Nicholson, London, 1995, pA14ff.
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(~editanstalt
18
fuer Wiederaufbau). In turn, the British would establish Laender Central
Ba~s and decentralize the big banks. The Central Bank was to be run by a Board of
.
Managers (a British concept), which ~ould carry out the policy deci~ions fonnulated by a
'
,
Board of Directors composed of the presidents of the Laender Banks (an American
concept mirroring the Federal Reserve System).
The Bank Deutscher Laender opened its doors on March '1, 1948 and the French
, integrated their three Laender Banks i~to the system on June 19, 1948. 33 With the
establishID.ent of the Central Bank, the long-planned currencyrefonn could go forward.
Indeed, it was implemented in the three Western Zones on the following day, June,20,
1948. Though the Western Allies hadbecome convinced that quadripartite currency
refonn was not realistic, one last attempt'was made in early 1948, which, as expected,
came to nought. The Soviets, however, responded to the June 20 measures by
i
implementing, thr,ee days later, an apparently hastily cobbled together currency refonn of
, their own. It was to operate in the Soviet Zone and in all of Berlin., This in turn elicited a
prompt response from the Western Allies, who, one day later on June 24, 1948,
inttoduced the DM in their sectors of Berlin. 34
"
Currency refonn was promulgated in the U.S. Zone as MGLaws 61, 62 and 63. 35
Under it, the old Reichsmark(RM) was replaced by the Deutsche Mark (DM). 'Exchange
F~ench MG Ordinance 155a, dated June 19, 1948, but effective retroactively as of March 25, 1948.
Because of the close iinkage between the populations of East and West Berlin, the East,Gennan mark
still.circulated on a I for I basis in the W:est for purchases of price-controlled items; for other purposes it
was 'devalued quickly, Holtfrerich, op.cit.
"
35 Civil Affairs Division, Dept of the Army, Reports and Analysis Branch, "Tripartite Currency refonn in
We~t~rn Germany Background Summary, 30 September 1948, MG Law No. 61 established the Deutsche
Mark and invalidated the Reichsmark; MG Law No. 62 appointed the Bank Deutscher Laender as sole
agerlcy of issue ofDM to a maximum ofDM 10 billion and established a Federal Reserve type monetary
33
34
,I
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19
ratios varied according to the nature qf the asset and liability in question, ranging from 0
!
'
.
'
(public debts), 6.5 percent (bank deposits and cash), 10 percent (mortgages and other
private debts), up to 100 per cent (rents, wages, and prices). The result was that those
who had primarily money savings and fixed interest securities suffered a reduction in
wealth; while those with capital
asset~ enjoyedanincrease. 36.
Heads of German Land Restitution Agencies (LCAHs) reported mounting
problems associated with the effects of currency reform. These ranged from presentation
problems in preparing the Final reports (required as USMG PC prepared to wind up
operations by July, 1949,.in which DM and RM values would be mixed) to valuation
problems generally, to the much more exacting management and investment decisions
required of custodians and supervisors alike in the cash and credit short post-reform .
I
period. 37 PC itself continued to carry property values for acco'\IDting purposes in-RM,
often d.e'signated DMIRM, even after currency reform. To the extent that the majonty of
duress properties was real estate, this may not have impacted actual valuation to a large
degree. But there also were significant amounts ofliquid assets, which should have been
revalued, and
securities~
which continued to be carried in both, custodian balance sheets
and in PC reports at lRM=lDM.
control system in which banks would hold minimum reserves at their Land Central Bank:, which in tum
would hold reserves at the Bank: Deutscher Laender.
36 Braun"Rans-Joachim, The German Economy in the Twentieth Century (1990). London: Routl~dge, pp.
154-155;'Stolper, Gustav, The German Economy: 1870 to the Present (1967), pp. 210-214; Kramer, Alan,
The West German Economy. 1945-1955 (1991). New York/Oxford: Berg, pp. 134-140; Leaman, Jeffrey,
The Political Economy of West Germany, 1945-85 (1988). New York: St. Martin's Press, pp. 130-132.
NARA, RG 260, records of the Office ofMG Resse,PropertyDivision, Box 1257, report ofLCAH on
the Activities in the Field of Property Control arid Restitution in 1948 (225591).
37
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While the acCounting and balance sheet effects of currency reform may have led
to :distortions of actual values, these were no different' from those. experienced by large
management concerns throughout Germany. And any such problems were easily offset
by the virtually immediate positive economic response to the reform: However, the
effects of currency reform on the restitution process were seriously negative: they
.
,
,
tended to delay settlements, ,to reduce the number of amicable agreements and pari
passu to increase the burden on restitution courtS. 38 The question of the conversion
rate'l to be applied reportedly gave rise to "greatest difficulties and l'robl~ms to
I
restitution authorities" especially in cases involving real estate. 39
Under the restitution law, MG Law No. 59, a case could be settled in one of two .
ways:
a) the current owner, the restitutor, could keep the property and make a cash
pa~ent to bring the duress transfer price, to the eitent that it could have been freely
disposed of by the original owner, the restitutee, in line with true market values; and
.
"
'.
.
,
b) title was transferred back to the restitutee upon
i) repayment of the duress transfer price, again to the extent that these proceeds were his
to dispose of freely;
ii) indemnification for improvements made and amortization of mortgages; and, ifit
concer,ned an operatjng property;
Kapralik, C. I., Reclaiming the Nazi Loot (1962). London: Sidney Press, pp. 33-34.
NARA. RG 466, Property Office, Records Relating to Restitution of Property under MGL 59, Box 3,
"Court Decisions" file, Monthly Report on the Analysis of Court Decisions, November 22,1949, p.,6,
(225580).
'
38
39
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21
iii) less the amount of income flows and profits after· payment for services rendered ..
The stick;ing point niised by currency reform was that the ~estitutee, when taking back
.
"
.
titl¢, would make any paYments due in DM at the 10 RM=l DM rate, but in the case of
title being left with the restitutor require top-up payments to present value in DM.
Restitutors considered these terms a hardship and the conversion issue was said to
be ,I'decisive in 9 out of 10 cases which might have been settled by means of an amicable
settlement. ,,40 ' As a result, they tended to appeal cases eveJ:.l though the tenor of
Restitution Chamber decisions ran in support of the restitptees. Nevertheless, restitutors
,
,
would generally play for delay based on the belief that the restitution policies would
eventually be relaxed.
41
In this they were aided by the effects of the currency reform
itself, which brought about, as intended,. a significantly greater budget stringency, which
I
in tum reduced personnel available,for restitUtion agencies, including the Restitution
Ch~bers. The bottom line wa~ an increase in the already heavy backlog of claim
processing at all levels.
V.; ~rom Property Control to Release.
a) Control.
The USMG never intended a long-term involvement in property control and
restitution.'Overall policy aimed at devolution of civil functions of government to the
40 NARA RG 466, Property Office, Records Relating to Restitntiqn of Property under MGL 59, Box 4, File
254.2, Restitution Hesse, memo from Land Central Office in Wiesbaden, April 21, 1950, "Report on .
'
typical cases where conclusion of an amicable settlement has failed due to the question as to whether the
payments to be effected by the parties concerned should"be converted at the ratio of 1:1 or 1:10."
41 NARA RG 466, Property Office, Records Relating to the Restitution of Property under MGL 59, Box 4,
File 254.2, Restitution Hesse, memo from Ministry of Justice for Wuerttemberg-Baden, "Effect of .
Currency Reform on Willingness of the Parties Concerned to Conclude Amicable Settlements," Al'ri128,
1950, p.l 2.
I
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German authorities at the earliest date possible. With respect to property control, the size
,
'
of the program already mandated the involvement of a large number of German
personnel and the nature of the program required it to be imbedded in the German lega~
structure. All this argued for yet greater commitment'to early transfer of responsibilities.
These views recur at frequent intervals in PC correspondence, e.g. "As a matter of
policy, MG was interested in winding up the entire Restitution Program as early as
I
.
.
.
po~sible and within a two to three year period.,,42 The overall policy line and the'
desire of USMG to withdraw from the property management business was given
, further impetus as the PC process was seen as both a drai~ on the German economy
and an impediment to economic decision making: "Most of the presently existing
uncertainty with regard to titles to properties and the present burden on the German
ec~nomy and people should be eliminated at the earliest practical date", 43
Transfer of responsibility: Title 17 and MG Law No. 59
USMG PC began planning the progressive transfer of its functions to the German
authorities a bare six months after it started its operations. Devolution began with Hesse
j
,
'
'
•
and; Wuerttemberg-Baden in May-June, 1946 and covered all fQur Laender of the U.S.
Zone by the fall ofthat year: Title 17, or'the, MG Regulations spelled out ~e limits of this
transfer of responsibility as well as the manner in which it should be executed. The
Getman authorities would be responsible for custody and operational management of
,
,
,
controlle9. properties, while supervision, any policy changes and' disposition remained the
NARA RG 260, Records of the Property Division, Box II, PH-l29 file, "Report of Field Trip by Mr.
Hartzsch and Mr. Porter to the Various Laender in the U.S. Zone," p. 5.
43 Ibid, p. 12.
42
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.
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23
.
'
purview of the USMG. Thus,Title 17 -300 stated that German property control
authorities would "establish and maintain Property Control over all properties ...owned or
i
,
'
,
controlled, directly or indirectly, in whole, or in part, by the various categories of persons
and~organizations described in Articie I ofMG Law No. 52" and otlier relevant laws.
Title 17 - 380 added that, except for those properties lodged in the Foreign Exchange
Depository, the German property control authorities "will establish and maintain
control over property obtained through duress, looting, or confiscation". 44
,
I
Section D of Title 17 set out the conditions for release of property. It specifically
"
'
made no mention of duress property as this was nbt to be released until a full restitution
law had been promulgated. Thus, USMG Bavaria stated in an order to Branch staff:
.
L
'
"
"...All settlements of claims regarding duress properties must await, and be made in
accordance with, the forthcoming Restitution Law on Identifiable Property. Any private
settle~ent of duress claims made siiI~e the publi~ation of Law No. 52 is void... ".45
Even where a claimant indicated willingness to renounce his claim, once he ,had indicated
that a transfer under duress was involved, it would be pres~med that a'private negotiation
was taking place and the property would not be released. Until such time that claims
could ~e resolved, the claimant was denied even arm's length involvement with the
.
,
,
property, including access to balance sheets. By the same token the restitutor was to be
I
'
,
•
I
The structure of the property contrormechanism as set out in Title 17-110 to 116.3 was as follows:
USMG officials: at Zone Level: Chief Property Control branch (CPCB), his Deputy (DCPCB); at Land
level: Land Property Control Chief and Asst. Chief (LPCC and LPCAC); in the field: Property Controller.
German Officials: Land Civilian Agency Head (LCAR); Regierungsbezirk Civilian Agency Head (RCAR),
a function not often established; Civilian Agency Head (CAR), head German Property Control Office at,
Kreis level.
45 NARA, RG 260, Land and Sectors Military Governments, file 386, Office for MG for Bavaria, order to
Branch St,affNo. 15, 17 October 1947, p. 6, Section 5, sub. b. (308533).
'
44
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24
equally removed from dealings with a claimed property, except when a dwelling was
involved.
Although Title 17 was quite specific in setting out the operational base upon
whIch the Gennan authorities would act, there remained ample room for interpretation.,
For, example Title 17 stated, "Military Government retains general superVision over the
Gennan Property Control Agencies," but did not define the extent .of such supervision.
As ,it went on to emphasize the discretion assigned to the Gennan'property control
authQrities (e.g., 17-123, described the need for "local control" over property decisions;
and 17-501, stated that Gennan property control heads will "do what is reasonable,
,
,
depending on the circumstances of each case"), there was considerable leeway for each
LCAH to construe his room for action. And this became yet more ample with the
adoption of the Internal Restitution Law and the start of the official claim's and release
procedure.
The Internal Restitution Law, finally promulgated as MG Law No. 59, was'
, developed through a difficult, protracted process. As early as 1946, the USMG asked the
Laenderrat, through its Property Control Committee, to prepare a law that would
implement the restitution of identifiable property that, for reasons of race, religion,
nationality, ideology, P9litical conviction, had been transferred under duress during the
,
"
. , '
.r
Nazi regime. By March 1947 a draft emerged that satisfied the USMG Property
Disposition Board, but against which the Laenderrat posted reservations. At that point
USMG sought to reach agreement on a unifonn restitution law first,at quadripartite level,
.
'.
"
.
'
.
,
and, when seven months of deliberation produced no results, at tri- and bipartite levels.
This
~lso failing, it was decided to proceed unilaterallywith a law covering only the U.S.
,
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Zone. When the Laenderrat could not reach agreement on enactment of a restitution l;:tw
that was confined to the U.S. Zone, it was promulgated as'MG Law No. 59 on November
,
10, 1947, nine years and one day after Kristalnacht.
, The Laenderrat had particularly objected to Article 30, "Strict Liability," which
extended the same liability to those directly obtaining property by way of aggravated
confiscation and those who engaged in such transactions "if [they] knew or should have
;
.
.
known under the circumstances ... at the time [they] acquired the property that it had been'
obtained at any time by way of an aggravated confiscation." Any transfer of property
,
I
.
'
.
'
•
made by a person "who belonged to a class of persons which ... was to be eliminated in its
entirety from the cultural and economic life of Germany" between January 30, 1933 and
I
,
May 8, 1945 would be presumed to have been an act of confiscation (Article 3,
"Presumption of Confiscation").'
Implementation problems.
'For the most part, German civil servants and citizens performed the routine
I
tasks of property control and administration. The scale of PC 'as a whole was vast: about
80,000 "property control custodians" were charged with the caretaking and safeguarding
, of all properties under contro1. 46 As noted above, an audit of activities in the U.S. sector
'of Berlin, surfaced extensive violations with regard to all properties, including duress,
!
'
due to understaffing and poor understanding of procedun!s'.47 'A later audit also indicated
"organizational deficiencies" in Bavaria and pointed out problems in recordkeeping and
Special report. 1949, p.l.
,
NARA, RG 260, Records of the Berlin Sector, Property Contro,l Branch, Box 660, "General
Correspondence 1945-48, v. II" file, memo to the Chief, Accounts & Audits Section of the Property
Control Branch, Finance Division, from the Chief Auditor, December 13, 1946. '
46
47
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26
accounting in other areas of the u.s. Zone. 48 Custodians were at times removed.
Grounds for such action included "inefficiency, black market activities, political
urireliability as indicated by falsification of Fragebogen (denazification survey form),
.
fai,lure to comply with MG directives, embezzlement, illegal sale of assets, and gross
,
negligence. ,,49
But most .important, the discretion conveyed by Title 17 to German civil
administrators led some to be bold about interpreting Title 17 in ways that
questioned, if not undermined, the spirit and intent of the management of duress
property. This, combined with the progressive relaxation of the drnazification process,
,
led to actual, or attempted, Qreaches of the regulation removing Aryanizers, Party
. members and sympathizers from any position dealing with duress property. At one point,
LCAHs banded together to make the case for keeping Aryanizers in their present place,
citing the discretion to make management decisions assigned to them under Title 17. The
LCAHs argued that, just as they were responsible for detennining whether a property
should be taken into custody, in the same way, they should be able to detennine the
employment of individuals in properties taken under custody. They posited that " ... [I]n
.
.
post-war Europe, administering and maintaining properties is a question of elasticity and
dynamics which tasks require in any case Cooperation of business-men who have .
I
.
initiati've and are disposing of first-class sources from where to procure the essential raw
48 NARA RG 260, Records of the Property Division, General Records of the Director, Box 11, PH-:129
Property Division file, "Report of Audits of the Four LCAHs Accounting Offices arid Property Control
Branch," November 12, 1948, pA.
.
49 Hoover Library, Stanford University, Government Documents Germany, Germany, Territory under U.S ..
, Military Occupation, 1945"-, U.S. Zone; Military Governor: Property Cqntro1 in the U.S.-Occupied Area
ofGermaily, 1945-1949, Special Report of the Military Governor, July 1949, pp. 12-13.
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27
materials. In almost any case those qualifications are vested in the Aryanizer who has
managed the property for 10 or more years ...Any rigid application of fixed rules and any
,
,
attempt to solve this problem by issuing directives of a general nature are bound to result
in 'damaging the properties concerned."so
In one illust~ative case, the Aryanizer, aHerr Hessberger, who took over the
formerly Jewish firm, Dornberg and Co., was described as being the only person in the
firI? with appropriate connections to procure raw materials. Arguing that "forced
, removal of all Aryanizers would not merely result in losses by the individual enterprises
concerned, but also necessarily in difficulties arising to the economy as a whole," the
German PC officials asserted the need for individual discretion on a case-by-case basis. 5I
The statement was forwarded, without comment, by the USMG PC official in Hesse to
the head ,ofUSMG Property Control. While no' follow-up was' found, in a July 1949
, metilo concerning a similar case, the USMG Economic Adviser wrote that he would not
,
I
interfere, on the basis of "the necessity of keeping production at a. high level.,,52
, Other examples show that those directly involved in managing duress property
affairs also fell under suspicion of a not too clean past. One of the lawyers prominently
acting pn behalf of claimants and obviously well-connected in German official circles,
though Jewish himself, was reported to have "retained a practice ,of some volume during
,
"
so NARA RG 260, Records ~f the Property Division, Box 7, Duress Properties file, Re: Discussion held on
3 December 1948 between Mr. Porter and the LCAHs of Laender Bavaria, Wurttemberg-Baden and Hesse,
December 13, 1948, p. 2.
,
51 NARA RG 260, Records of the Property Division, Box 7, Duress Properties file, Re: Discussion held on
3 December 1948 between Mr. Porter and the LCAHs ofLaenderBavaria, Wuertemberg-Baden and Hesse,
'December 13, 1948, p, 2.
,
"
'
' "
'
52 N~ RG 260, Records of the Property Control Division,Box II, PH-129 file, letter from Wilkinson
to Erhard, July 2, .1949, p. I.
'
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28
Nazi times. ".;.when expropriati.on.or c.onfiscati.on .ofJewish property was under taken ...it
is:undetst.o.od that he frequently was c.onsulted by Nazis and SS .officials t.o determine
what Jewish property w.ould be taken .over".53 The note g.oes.on t.o say that, while his
current acti.ons in advising the Ministry .on restituti.on procedure b.ordered .on the exercise
.of-improper influence, there were n.o gr.ounds f.or'imniediate acti.on. H.owever, the
I
I
"
si~ati.on
__
w.ould need t.o be watched "in view .of the previ.ous problem that has .occurred-in
c.o~ecti.on witp.app.ointments t.o the Restituti.on chambers".54 It was the qu~sti.on.of
propriety rather than a p.ossible murky past that prompted the advice f.or watchfulness.
In an.other case, ,the Vice President .of the Land Office f.or C.ontrol and Restituti.on
in Bavaria (Dr. Endres) was rep.orted by a Genilan Pr.operty C.ontroller't.o have been
involved in Aryanizing a firm, which he then geared t.o war producti.on, and in which he
"empl.oyed slave lab.orers wh.ose drastic punishment he c.ond.oned, if n.ot enc.ouraged."
,
The Chief.ofUSMG Property C.ontr.ol Branch referred the matter t.o Berlin f.or further
inv~stigati.on. Six m.onths later the German Property C.ontr.oller submitted d.ocumepts in
supp.ort of his allegati.ons; but, because a rep.ort c.ompiled by Ge~an investigat.ors was
deemed t.o be deficient in' style and c.ontent, it was decided t.o wait lintil USMG Land
Property C.ontr.ol w.ould submit a properly c.ompiled rep.ort, w.hich they did after a further
m.o~th
had lapsed. In the meantime, the .only c.opy .of the German investigat.ors' rep.ort
was'held in the files within the Chiefs .office. During this period, arestituti.on claim was
l.odged against Dr. Endres by his wife's c.ousin in the United States. Five m.onths after
53 NARA RG 260, Records of the Property Division, Box 9, Amicable Settlements, file 18, memorandum
from Charles H. Kraus, Chief, Administration of Justice Branch to Col. Raymond, dated 7 July 1948,
(308374).
54 Ibid.
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29
USMG Land Properly Control sent its report forward Berlin responded, focusing
pri~arily
on the questions regarding the restitution claim, concluding that matters related
largely to personal and political frictions and advising "to maintain a ne~tral, but
watchful 'attitude ... ".55
I
Thr~e months later a complaint was lodged against Endres by a
'
clai~ant's representative for interference in his case. The complaint was found justified:
Endres, indeed, had advised the restitutor "to objecUo any control measures and to refer
!
,
'
.
all persons approaching him on the subject to me [Dr. Endres]"~56 The U.S. supervisors
!
.
.
also conCluded that, because of Endres' interference, the property inquestion would not
I
have been taken in control but for the eventual interest taken by USMG PC. In the end,
;
.
Endres was told that his interference, ''which sometimes resulted in damages to ,
claimants ... ".57 would not be tolerated. Nothing further was done except to reCommend
that the Land Minister Presidents, "who are immediately responsible for t!I.e proper.
adminIstration of the Program," be advised as to the need for impartial officials in
administering the Law. Neither penalties nor attempts to rectify injustices were
mentioned. 58 Endres continued to occupy his top PC position in Bavaria and the case in
question continued to drag on with further complaints alleging bias lo~ged again in
1951. 59 Quite separately, officials working on amicable se~lements ~nd~r Endres were
I
,
55 NARA, RG 466, Records of the U.S. High Commission in Gennany, Box 9, file Endres, letter from
Frank J~ Miller, Chief Property Group, dated 19 September 1949, (327516).
56 NARA, RG 466, Records of the U.S. High Commission in Gennany, Box 9, file Endres, letter from
George E. Dickerson, Land Supervisor, Internal Restitution.8upervision Branch, dated 12 December 1949,
(327517).
'
57 Ibid.
58NARA, RG 466, Property Office, Records Relating to Restituti~n of Property Under U.S. M.ilitary Law
59, Box 6, Reports General file, memo from the Chief of the Property Division, April 28, 1949.
,
59 NARA, RG 466, Records of the U.S. High Commission in Gennany, Box 9, file Endres, letter from
William G. Daniels, Chief PropertY Division, dated April 23, 1951, (327532). '
I
, WORKING DRAFT - NOT FOR CIRCULATION
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30
found to have belonged to the'Nazi party and themseive~ to be in possession of duress
,
\"
"
property.60 According to the documentation, 'Endres "rectified the situation"Y
,
. These documents lend support to a letter written by an attorney working with the
I
German PC
officials~
who wrote to the Chief of the Legal Division, "In dealing with
Property Control instrumentalities, one feels the strong influence of the individuals who
promoted Aryanizing actions.,,62 ,
: b) Release under MG Law No. 59.
MG ~aw No. 59' addressed the practical aSpects of restitution and became the basis for
,
'
the release of duress properties. It provid~d that petitions for restitution be filt~d with ~e
Central Filiqg Agency (CFA), a MG,unit. The deadline for filing:of claims was set at
December 31, 1948, however additional claims could be filed by German Public
Proseyutors on behalf of a successor agency. The only such agency s() appointed was the '
JRSO,as trustee for Jewish-owned heirless and unclaimed property.63 For pUrposes of the
.
,
,
"
regulation establishing the JRSO (Reg. NO',3 of Law No. 59), Jewish property was
defined as "the property rights and interests of Jewish indivi?uals and of Jewish
organizations". A Jew was anybody persecuted because lie was a Jew; or of the Jewish
I
•
raye orreligion; or a member of the group to be eliminated from German cultural and
'econoniic life through measures by the Nazis on the grounds that they considered
60 NARA RG 260, Records of the Property Control and Externai Assets Branch, Records of the Branch
Chief, Bcix' 23, Restitution Law file, "Minutes, Meeting of LPCCs and Heads ,of Restitution Agencies," '
, September 2-3, 1948, p. 21.
'
'
61,
'
IbId., p. 21. '
62 NARA,RG 260, Records of the Property Division, Law 59 Legal Opinions file, Box 9, letter to the
Deputy C~ief, Property Control and External Assets Branch, June 24, 1948, p. 2.
,63 Regulation No.3 under Law No. 59,23 June 1948.
. '
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, 31
,
.
.
members of this group to be Jewish. This definition prevailed over the agreed working
lev~l position within the State Department, which would ha:~e adopted a much ~arrower
/
defi~nition than "that which would be inferred from the NurerhbutgLaws", namely JewIsh
heirless property would be that "formerly owned by persons who were registered
members of the Jewish religious communities in Germarty and which were taxed for the
support of the Jewish religious establishments. ,,64
The CF A would forward the petitions it received from individuals and from the
JRS0 to the relevant" local German RestitutionAgency, which would seek to reach
amicable settlement If no such agreement could be reached the case would be referred to
the local Restitutior: Chamber for adjudication and from there, if necessary, wind its way
through an appeal procedure.
By the time the deadlines had expired over 220,000 petitions had been filed: about
55,000 by individuals,163,000 by the JRSO and about 3,000 by Public Prosecutors for
I
.
the JSRO. However, the deadlines presented serious problems for claimants. The Law
prescribed the form and co~tent of the petitions in detail. They were to contain a
description ofthe'confiscated property, state as exactly as possible th~ time, place and
circumstance~ of confiscation and, if possible, the names and addresses of all persons
j
.'
•
•
•
"
having Or claiming to have an interest in' ~he 'property and any encumbrances at the time
of confiscation. 65 While, in order to meetthe deadlipe"petitions could be incomplete and
depart from the required form, there was only a four months respite: they had to be
.
.
NARA, RG 59, 381, Restitution Claims, Box 2, Memorandum dated February 2, 1948 ..
65 Hoover Library, Stanford University, Government Documents - Germany, Germany - Territory under
. '
U.S. Military Occupation, 1945--, Military Governor, "Property Control History, Policies, Practices and
Procedures of the United States Area of Control, Germany," Special Report of the Military Governor,
November 1948, pp. 24-25.
64
,
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31
members of this group to be Jewish. This definition ~revailed over ,the agreed working
level position within the State Dep'artment, which would ha~e adopted'a much ~arrower
definition than "that which would be inferred from the Nuremburg Laws", namely JewIsh
heirless property would be that "formerly owned by persons who were registered
members of the Jewish,religious coinmunities in Germarty and which we~etaxed for the
~upport of the Jewish religious establishments.,,64
The CFA would forward the petitions it recei~ed from individuals aQ.d from the
JRSO to the relevant loc~l German Re~titution Agency, which would seek to reach
amicable settlemeJ;1t. If no such agreement could be reached the case would be referred to
the local
Restitutio~
Chamber for adjudication and from there, if necessary, wind its way
th!ough an appeal procedure.
.
,
By the time the deadlines had expired over 220,000 petitions had been filed: about
55,000 by individuals, 163,000 by the JRSO and about 3,000 by Public Prosecutors'for
the JSRO. However, the deadlines presented serious problems for claimants. The Law'
prescribed the form and content of the petitions in detail. They were to contain a
description of the confiscated property, state as exactly as possible the time, place and
drc~mstances o~ confiscation and, if possible, the names and addre~ses of all persons .
.'
,
.'.
,"
having Or claiming ~o have an interest in the property and any encumbrances at the time
of confiscation. 65 While, in order to meetthe deadlipe"petitions could be'incomplete and
depart from the required form, there was only a four mop,ths respite: they had to be
NARA, RG 59, 381, Restitution Claims, Box 2, Memorandum dated February 2, 1948.
Hoover Library, Stanford University, Government Documents - Germany, Germany - Territory under
U.S. Military Occupation, 1945--, Military Governor, "Property Control History, Policies, Practices and
Procedures of the United States Area of Control, Germany," Special Report of the Military Governor,
November 1948, pp. 2 4 - 2 5 . '
.
'
64
65
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completed by May 1, 1949, though in indiv.idual cases the Restitution Chambers could
grant an extension for cause. Obviously, this was considered a hardship among those who
knew enough to complain. Many, despite efforts at publicizing the contents of the Law,
however, remained unawary or where not in a position, mentally or physically to respond.
Documentation, and even IqlOwledge, had been wiped out by the war and
communications with Germany rem~ned closed until early 1947. Under the Trading with
the Enemy Act (TWEA), Ruling No, 11, dated Marc:h 18, 1942, foreclosed all activity
that directly or indirectly involved any trade or communication with an enemy nationa1. 66
On January, 2 1947, this tot~l communication prohibition was relaxed to allow
resumption for informationa~ purposes; including the transmission of civil docu~ents,
such as death certificates, wills, etc. 67 The remaining provisions of Regulation No. 11,
.
,
'.
however, continued infull force, incl~ding the prohibition of commu~ications for
transactional purposes, whic~ was not lifted until several months later. \
The inability to communicate with Germany, except through the U.S. Military,
added to the already considerable difficulties claimants had in searching for
documentation regarding their property rights and in locating and paying local attorneys.
And without the latter their ch;mces of successfully guiding a claim through the nearKafkaesque procedures ,were l~kely to be limited. 68 This view was underlined in the
February 28, 1949 Report of ~e Acting Adviser on Jewi~h Affairs and echoed by th~
U.S. Department of the Treasury, Office of the Secretary, E.H. Foley Junior, Acting Secretary, March 18,
1942.
'
.
,
67 U.S. Department of the Treasury, Press Release no. S-l97, January 2, 1947~
68 NARA RG 260, Records of the Property Division, Box 13, letter to Clay, Dec. 20, 1948.
66
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JRSO in their Report on their Operations in the Years 1947-72. 69 They note that the
complexity ofthe provisions ofMG Law No. 59 w.as such that private claimants required
the assistance oflegal representatives. This led to the founding ofthe United Restitution
Organization (U.R.O.) in 1948. However, after negotiations with USMG on recognizing
the U.R.O., conducted by Major Hyman's predecessor, Dr. William Haber, appeared at
the verge of success, the license application was abruptly turned down as USMG proved
.unwilling to authorize a non-U.S. agency to represent claimants under,MG Law No. 59.
In the end, the JRSO opened Legal Aid Departments, but too late to have any influence
, ' on the deadline problem.
The ~eadline question.
As. the deadline neared, requests for extension from Jewish organizations,
individual claimants and Jawyers dealing with .claims in Germany mounted. This
motivated USMG PC to seek General Clay's approval of their recommendation not to
extend the deadline. In a decision memorandum, USMG PC set the pros and cons for
their position out as follows 7o :
1.Arguments pro strict adherence to the deadline:
a) claimants had had ~hirteen months to file;
b) the German property owners and the German economy had to live under
uncertainty regarding property titles;
.
.
American Jewish Archives, Cincinnati,Records of the WJC: files on the papers of the Jewish Advisers,
Report by Abraham S. Hyman; February 28, 1949, p.7 (328190) and JRSO., op. cit. p.28.
70 NARA, RG 260, Records of Property Control Division. Box 11, memorandum to General Clay from
Cassoday, 4 November 1948.
'
69
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34
c) extending the deadline would open the way for other changes, "leading to some
of the results encountered in denazification,,7l; ,
d) MG wanted to remove the burdens of uncertainty imposed by MG before the
Occupation Statute would become effective; and
. e) the elimination of Property Division would be delayed.
2. Cons, i.e ..arguments for extension of the deadline:
a) the war in Palestine had stopped mail service for some time, but that it had.
been resumed;
\
b) individual lawyers and the JRSO are coping with so many claims that it is
almost physically impossible to meet the deadline. Part of this is attributable to the late
start of the JRSO ..;
c) "Under. the provisions of the law, the JRSO may claim all unclaimed Jewish
property.... An informal opinion of a recent visitor from the War Departmerit was that
JRSO would profit at the expense of individual claimants .... and that extension, therefore
would be advisable, as a matter ofjustice to the true claimant";
d) the French and the British have deadlines of May 1949 and December 1949,
71 The defmitiori who had been a Nazi for denazification pUrposes on June 29, 1945 was watered down
from anyone who had been a Party member at any time or had been in an important appointive position
since January 1933 to anyone who had joined before 1 May 1937 or had joined later and was more than a
nominal member. This was done because the earlier directive would not have left enough persons able to
reorganize the German administration. Denazification in the private sector was fmally ruled by MG Law
No.8, dated 26 September 1945, which excluded Party members from employment in any capacity other
than common labor. Reg. No.1 of Law No. 8, issued in the first week of October, transferred part of the
administrative responsibility for administering Law No. 8 to the German authorities. This resulted in a very
loose appeals procedure,·with virtually all appeals succeeding. In Bavaria of90,000 appeals heard, over
65,000 were decided in favor of the appellant. Those whose appeals were accepted"': in Bavaria close to
three-quarters - returned to their jobs and recovered their propertY. Ziemke, op.cit., pp. 383~390.
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35
respectively.
General Clay agreed with USMG PC's position that the cons were not
sufficiently strong to warrant an extension of the deadline, largely because it was feared
that delay would undennine the successful implemtmtation (If the Law. Consequently, he
approved their recommendation with thehandwritten~otation: "JRSO representative has
infonned me he will not seek extensio~."72 The JitSO set' their position out as follows:
"Many Jewish groups appealed to the State Department and to the Military governor for'
an extension 'of the 31 December, 1948 deadline for the filing ofclaims. It was felt that
. . . .
..
'
. the JRSO would complete the filing of its claims' before the deadline date and as far as
.
.
.
'.
"
.
.
)
the JRSO was concerned any extension would merely delay and thereby enfeeble the
.
. .
entire restitution program. Believing that no substantial injustices' would result from
failure to extend, the JRSO following a resolution of the Board of Directors took. no
.
, ' " .
'
action in: connection with extension." 73
In refusing to extend the deadline, the Military Governor gave as one of
his main reasons the fact that it "w~uld be more detrimental to the entire program of
restitution than the benefit to the comparatively few claimants would justify".74
In view of the tight and unmovable .deadline, JRSO had sought to locate all
potentially relevant property and to submit claims so as to prevent any duress property
reverting to the Gennan authorities; This meant that a large number of duplicate 'claims
Ibid.
IDC Archives, AR 45/64, JRSO file 4266, JRSO, Report No.2 of the JRSO on the Restitution of Jewish
Property in the U.S: Zone ofGennany, Nurnberg, February 1st, 1949, p. 10 (326701).
74 Ibid.
' .
. .
72
73
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."
�12/4/004:45 PM
36
.
were filed - over 80,000 - which needed sorting out after the deadline had passed. But it
also gave rise to a problem that tended to subordinate individual property rights to
cominunal ones ..
Article 11 ofMG Law No. 59 stated that "Ifthe claimant himself has not filed a
petition on or before 31 December 1948; the succe'ssor organization by virtue of filing the
petition shall acquire thelegal position ofthe claimant...". Against this Art. 56 provided
that "a petition filed by a person who is not entitled to restitution of the property, shall be
deemed to have been, effectively filed in favor ofthe true claimant.. ... The same shall
.
apply to the filing of a petitio~ by any such successor organization." This was seen as "a
rather difficult legal and moral problem" by the head ofthe JRSO in Germany.75
However, the legal opinion within the JRSO held that Art. 11 was ruling and they sought
and received Court confirmation. 76 Pressure from a host of individual claimants
,
motivated JRSO nevertheless to create a Board of Equity, that would accommodate late
claims, albeit for a fee. The fee was scaled according to the claimant's r~lationship to the
original owner and the value of the property. It-ranged from 5 to 40 percent for
assignment of rights back to the claimant and an additional 10 percent if the property had
already by-en recovered by JRSO. Upon proof of Indigence the fee could be waived. 77
In the end,. JRSO dealt with 5,042 equity claims, of which 949 wererejected for
insufficient 'proof of property rights, payments were made in 2,084 cases and rights were
75 St~ford University, Special Collections,Papers ofSalo W, Baron, B~x234, Files 2-3, Letter of
Benjamin B. Fere~cz to Eli Rock, dated 10 June 1949, (326603) and reply from Eli Rock, dated June 14,
1949, (326606); a]so see Report No.2 of the JRSO, op.cit., p. 11, (326702).
76 NARA ??, OMGUS, Office of the Military Governor, Memorandum on Interpretations of Articles 11 and
.
.
...
56 ofMG Law,. No. 59, dated June 1949 (308370),
77 NARA, RG 466, Records of US High Commission for Germany, Box 6, File JRSO 257.1.
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37
assigned in 1,587 cases. The values involved were DM 10.3 million and an estimated DM
12.7 million respectively for payments and assignments for a total ofDM 23.0 million.
Fees collected amounted to DM 1.5 million. 78 In commenting on these claims, the
Report on the Operations of the JRSO, 1947-1972 took the view that the right to the
propc.rty involved was indisputably that of the JRSO and that the demands of the living
claimants posed the following moral dilemma: " ..'should it [JRSO] proceed with the
recovery of properties to which it was legally entitled or should it reduce the funds
. . '
" ,
available for the relief and rehabilitation of Nazi victims by accepting claims of heirs who
retained at least equitable rights?,,79
While there is no doubt that without the intensive efforts of the JRSO much ,
duress property would have reverted to the German authorities or been left in the hands
ofthe restitutors
there also is no doubt t~at the strict application ofthe deadline
deprived many rightful owners from asserting their rights. The significance of the
deadline was so great because the ,Law did not convey a basic right to petition upon the
claimant, but merely a right that, with the passing of the deadline, ceased to exist in the'
, petitioner, and with it the basis for his claim,.ln their effort to pro~ect the rights of
claimants by giving exclusive jurisdiction to the Restitution Courts, the formulators of the
Law also created a typical Catch-:22 situation: Art. 73 made it incumbent upon anyone
who possessed; or at any time had I'il his possession, duress property, to report this fact to
the CFA: However, a rightful owner, who missed the deadline be~ause he had remained
ignorant of the existence of claimable property as'a consequence of the restitutor's failure
,
,
78 Stanford University, Special Collections, Papers ofSalo W. Baron, Box 44, Folder 2 JRSO,Anmial
Report November 1,1955 - October 31, 1956, pA, (326552)
"
79 JRSO, Report on the Operations of the Jewish Restitution Successor Organization 1947 -1972,
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38
to report - whether because of negligence or of fraudulent intent - had no recourse under
the Law. The right to petition had ceased on December 31, 1948; wit~out a valid petition:
the Restitution Chambers and Courts could not, under the La~,hear a case; tort action for
damages for negligence or fraudulent intent against the restitutor would have been
possible under German law, but pursuit of this or other legal avenues was precluded
because the questionwas a MG LawNo. 59 matter, which could be heard only by.
Restitution authorities, who, in tu~, could not hear it because a petition had !lot been'
filed on time!8o
Problems of implementation: structural
If there had been difficulties in the implementation and subsequent proper
functioning of the transfer of control and administration activities to the German civil
authorities under Title 17, these would appear minor in comparison with those that arose
in the implementation ofMG Law No. 59. The capacity of the system was limited, which
became increasingly obvious as the filing deadline neared and the inflow of petitions rose
I
exponentially. As ,noted above, much of this was due to the fact that the JRSO had only
four months in which to file its claims. The delay in naming the JRSO was caused by the
reluctance in the War Department to see an institution incorporated in the United States,
albeit of international character, appointed to take title to heirless assets in Germany.
They believed this required an institution organized under German lawY After
considerable wrangling, the JRSO finally was r~cognized on June 23, 1948, with a
NARA, RG 260, Rec'ordsofthe Property Control Division, Box 9,Law 59 file, "Legal Opinions,"
correspondence dated March 1, 1949 note on "Effect on Claimant of Failure to Report underArt. 73 ,ML
59 by James E. Heath, Chief Legal Advice Branch, (308368).
.
81 NARA, RG 59, 381, Restitution Claims, Box 2, memorandum dated January 27,1948,
80
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39
subsidiary corporation to be set up in Germany.S2 In the interim, theJRSO was.
authorized to start up operations in August of that year. S3 But it was not the flood of
claims that presented the main problems. These were inherent in the structu're of
the claim process and in the environment in which it proceeded.
Although the central objective of the Law· was to bring abo~t "speedy and
complete restitution" (Art. 49), the machinery designed for the purpose was cumbersome.
.
.
.
The C~ A would receive petitions and pass them on to the several Land Restitution
.
,
Agencies; these, if no amicable agreement could be reached, would forward them to
RestihItion Chambers, consisting ofthree judges. A decision of the Restitution Chamber
could be appealed to the Civil Division of the High Court of the Land.
through the German judicial p~ocess was exhaust~d, a final
Aft~r
the path
app~al could be mad~ to a
"
Board of Review appointed by the Military Governor and consisting of four members, all
U.S. citizens. Though the objective of speedy conclusion of the restitution process
depended upon
achi~ving
amicable agreements in the main, the procedures
supported litigation and, in the event, proved conducive to delay. The limited number,
of Restitution Chambers and Courts and the limited time spent on restitution cases·
inevitably produced bottlenecks.· This was especially true for the Courts. An undated
report, prepared for Judge William A. Clark, comments that ''the chambers have only
averaged 4 sittings per month on law 59 and the Oberlandsgerichte [Laender High
,
'
American Jewish Archives, Cincinnati, Records of the WJC, files on the papers of the Advisers on '
Jewish Affairs, Report by William Haber, dated June 10, 1948, (328163):
'
83 JRSO, Report No.2, op. cit., pp.' 9-10 (326691), notes on February I, 1949, that under Regulation No.3,
which appointed the JRSO, the German entity was to have been established by 31 December 194~. They'
thought that "it would appear that the actual need for such an entity is being reconsidered in Berlin and
Washington. The JRSO has taken the position that the transfer of title [of unclaimed property] to a German
legal entity is undesirable."
'
82
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Courts] have only a~eraged 2 such sittings and even then only part of the day... ,,84 That
this was not an isolated finding is confirmed in: the report of the O'Sullivan Committee,
which assessed the functioning of the internal restitution program in the British Zone. It
"
makes essentially the same points, but its findings are much harSher, and it probably
reports at a later date. 85
A further cause for delay was that, aithough MG Law No. 59 was quite
comprehensive, it left a number of serious problems unresolved. These involved mainly
tax and currency control issues:
a) the Equalization of Burdens Law. This law was desigried, as its title says, to
spread the financial losses suffered as a consequence of the war equitably. A main
component was a tax to be levied on owners of real estate, who had benefited from the
currency reform. This tax was to fall on duress property as well. The representatives of
.
"
,
persecutees, and especially the JRSO, argued that " ... the property of those who
w~re
victimized by the Nazis should be relieved of the burdens of the Equalization of Burdens
law, present and future ..... people, understandably, are unable to reconcile what happened
to them, with their present liability for part of t?e losses sustained by those who, directly
or indirectly, participated in their expropriation 'and expulsion.,,86 Beside the incongruity
.of demanding that those who had suffered most under the regime that had caused
NARA, RG260, External Assets, Box 15, file Law No. 59, Memorandum Concerning the Oper~tion of
the RestitUtion Program under Military Government Law 59, submitted at the request of the Hon.William
A. Clark, Chief Judge, MG Courts for Germany, (308485).
,
85 Report of the O'Sullivan Committee on the progress made in the disposal of internal restitution claims in
the British Zone of Germany, 30th June 1951, London, HM Stationery Office, 1951, p.9-11.
86 Major Abraham S. Hyman, Final Report, op. cit, pA (327493).
84
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41
the war should indemnify those that had supported it, the effect of this contingent
tax liability was to make the settlement of claims more difficult;
b) Currency restrictions conferred a hardship on successful claimants who lived
abroad as they were not able to transfer proceeds back home; they also made th~ pursuit
of claims ,more diffic~lt because payment for representation, without,which a claim was
not likely to succeed necessitated transfer of hard currency; and
c)thequestion of the 'effect of currency reform on RM liabilities continued to be a
matter-of conflict and to delay settlement of claims~
Problems of implementation: political
All these structural problems were set in a steadily worsening political
environment. The restitution program never was" a popular onc:!;" and as some USMG '
PC officials anticipated, the climate would worsen 'over time. 87 •"It was inevitable that
sooner or later the dormant hostility to the zonal restitution laws would come to the
surfa,ce.,,88, The no longer so dormant hostility emerged"on the national scene first when
the Freie DemokratischePartei,on November 4, 1949, floated a trial balloon by ,
introducing a resolution that.would both substitute a Federal restitution law for MG Law
No. 59 and suspend all restitution cases in the meantime. Rumors that it was just a matter
~ I
of time until the Law would be softened, eventually going the way of denazification
,
,
which was relaxed significantly over time, particularly as the 9erman civilian
NARA R'G 260, Records of the Property Control Division,Box 10, Law 59 E~pediting Plan file, Minutes
of Conference held at Bad Nauheini on December 14, 1949, p. 1.
"
88 Hoover Institution, Grossman Collection, Box 49, file Jews in Germany, Final report of Major Abraham
S. Hyman, Acting,Adviser on Jewis~ Affairs to US Commands, Germany and Austria, p.6, (328138).
87
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42
ad~inistration took charge of it89 - multiplied. And this produced visible effects on the
restitution process: the number of amicable agreements fell, the nu~ber of court cases
.
"
('
rose and delays were being introduced at every point. 90
The mounting and well-organized opposition to the program produced in the
. spring of 1951 a further attempt to emasculate the Law. The Federal Asso~iation of Loyal
Restitutors, a group organized to protect the interests of restitutors, unde~ the guise of
wanting to achieve uniformity across the Western Zones, submitted a draft restitution
law, that would have reversed the basic principles ofMG Law No. 59, to the Law .
Committee of the Federal Parliament. This situation prompted the High COI~missioner,
Mr. McCloy, to write to the four Minister Presidents of the U.S. Zone Laender to reassert
the' earnest in which the U.S. Government held MG Law No. 59 and to release the text to
the Press. '
While the restatement of U.S. commitment to the implementation 'of the Law
brought clarity; the paucity of trained personnel and the relatively large number ,
sympathetic to the restitutors' arguments, continued to produce delays. Thus, in Bavaria,
PC officers considered that many Law 59 claims were simply "grievances against
neighbors".91 A confidential, unsigned report, written by an attorney who had
represented claimants before 17 different Restitution Chambers in the U.S. and French
Zones, offered candid and detailed reflections on this experience: .
Gimbel, John, The American Occupation of Gennany: Politics and the Military, 1945-1949, Stanford
University Press_Stanford, CA.., pp. 103-107 and 172-174.·.
'
.
90 See for example, NARA ??, Office of the U.S. High Commissioner for Gennany, Memorandum from
Loewenthal to Miller, dated December 1, 1949, on "Conditions Impeding Resti~tion Programs", (308365).
91 NARA RG 260, Records of the Branch Chief, Property Division, Box 15, Law 59 file, Letter from OMG
.
.
Bavaria Property Control dated February 1, 1949.
89
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43
"I have come to believe that the fate of,restitutiori is ...strictly a personality'
problem. Wherever the German officials charged with the conduct of attempts for
settlement...take their duty seriously in the spirit of the restitution laws ...the overall
spirit of willingness to reach speedy settlements ...causes approximately 80% of the
cases: .. to ~e settled on a moreor less satisfactory basis. In contrast thereto settlements
are reached to a much smaller percentage and are far less satisfactory in such districts,
where the German officials in a more or less open manner make known to the defendants
that they approve of their standard defenses, i.e., that the respective laws are unjust, that
they, constitute new unlawfulness and that they could not stand enforced, for all times.
German officials which I have met in the courts or restitution agencies in all three zones,
but particularly in the American and French zone, are rarely free from such
considerations, even when they do not (as it has happened in a number of cases) openly'
and flagrantly make a point to state their opinion ,as definitely opposed to those restitution
laws. Only in a few instances I gained the conviction that I was pleading before a
German official or judge, who was trying to the best of his ability to live up to the spirit
of [Law 59]."
The report went on to describe one judge as being intent on "sabotag[ing] restitution .by
.
.
.
.
the most forrn,alisticadministration of Law 59."
He and his assistant reportedly "m~[de]
, no attempt ofliiding [the] conviction that. . .law 59 represented by no means their idea of
settling the restitution problem." Accordingly, the judge typically pressured claimants to
forego their restitution rights in favor of certain additional payments although, in the
writer's opinion, such an outcome was "detrimental to the true interest of the plaintiffs."
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44
He described other examples of overt actions that sabotaged MG- Law No. 59, including
anti-Semitic statements made in court by judges. 92
These problems ofatlitude ,were spread broadly. A case in point was the Land
Hesse, which had an "awful" reputation with regard to property contro1. 93 USMG
Property Control officials considered it an "extremely pro-Nazi" area. 94 "Many' quarters
, of the population" in the ru:ea were regarded PC actIvities as "closely connected with the
implementation of the denazification program and in consequence thereof put on the,
same level with that most unpopular measure.,,95, Hesse officials tended to undercut the
general presumption of duress directives on the basis that" .. .it has been felt that the
placing or all property transfers since 1933 regardless of the extent of the applied duress
would so hinder the German economy, that it was deemed more wise to take into custody
only property which was unquestionably clear cu~ cases of duress.,,96 In other cases,
blocked property in the names of wives and children of Party members and sympathizers
was released without apparent further questton. 97
Evidence of the draining of assets from duress properties prompted the senior
USMG PC official to suggest in December 1947 . "that complete independence in
".
NARA RG 260; Records of the Property Division, Box 15, Restitution file, "Confidential," unsigned and
undated memor~dum but attached to memo from Kagan to Chief, Property Division, September 19, 1949.
93 NARA RG 260, Records of the Property Control Division, Box 11, PH-129 File, "Property Control
'
"
,
"
,
Interview," p. 17.
94 NARA RG 260, Reco~ds of the Property Control Division, BoX: 11, PH-129 File, "Property Control
'
Interview," p. 17.
95 NARA RG 260, Records ofthe Office ofthe Military Government, Hess'e, Property Division, General
Records 1945-1949, Box 1257, LCAH to PC (General) file, "ReportofLCAH on the Activities in the Field
of Property Control and Restitution in 1948," Jan. 4, 1949, p. 2.
96 NARA RG 260, General Records of the Property Division, Box 1252, "Duress Property" file, Letter from
Rule to the Civilian Agency Head Frankenberg/Eder, November 26, 1946, p. 1.
,
97 NARA RG 260, OMG Hesse Property Division Records, Box 1257, LCAH to PC (General) file, letter
from Hesse Landeszentralbank to the Ministry of Finance, January 26, 1948.
92
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45
handling' of"G" [duress] property by Genmm agencies 'may be premature".98 While
currency reform brought budgetary stringency throughout theU.S. Zone, only Hesse
effected reduCtions in the number of PC personnel so draconian that they elIcited official
comment. "The extent of the reduction in the number ofstaff has possibly already
exceeded the limits to be considered appropriate from the point of view of a responsible
management; that opinion is holding even the more true in view of the importance of the
administration of [duress] properties which presently constitutes the main field of.
activities of Property Controrand implementation of Restitution under MG Law 59,"
wrote one PC official in Hesse. 99 The problems at the implementation level ~ere
exacerbated by the fact that it was difficult to find a sufficient number of politically
"cleared" judges for the Restitution Cha~bers so t4at it was deemed acceptable to have
"exonerated" judges adjudicate restitution ca~es.100 The Hesse situation was all the more
serious because it i~cluded Frankfurt, which in the 'Thirties had a prosperous and large
Jewish population, in fact the second largest in Germany, after B~r1in.
I,'
•
98 NARA, RG 260, OMG Hesse Property Division Records, memorandum from W.R. Rule, LPCC OMG
Hesse, to Hartzsch, 5 December 1947, (308528).
"
'
"
99 NARA RG 260, Records of the Office of Military Government, Hesse, Property Division, General
Records 1945-1949, Box 1257, LCAH to PC (General) File, Report ofLCAH on the Activities in the Field
ofproperty Control and Restitution in 1948, p. 12.
100 NARARG 466, Records Relating to Restitution of Property under U.S. Military Government Law 5~,
Box 3, File 252.2, Restitution Courts Hesse, letter to the High Commissioner for Germany, Dec. 9, 1949, p.
2,
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46
Disengagement of USMG
The purposes and intent of the restitution law were clearly U.S.
government driven, while implementation and further development was ceded to
.
'.
the German authorities. This could not but create a duality of purpose in which the
USMG was loath to interfere. In fact, non-interference was a stated policy. Thus, "it
was the purpose of MG Law No. 59 merely to establish the organization for the
settlement and adjudication of restitution cases and to supply the substantive and
procedural provisions necessary for its administration, while the administration itself
(except for the filing procedUre forthe Central Filing Agency and the reviewing
procedure before the Military Government Board of Review) should be left exclusively to
the German Restitution Authorities". 101 USMG did not want to administer MG Law No.
59, "for that is the job of the Gefmans themselves ...The policy ofthe Military
Government is that the Military Government is not the proper agency to interpret Law 59,
but that this must be done by the Restitution Agencies, the Restitution Chambers and
...the Board of Review." I 02 And in responding to a claimant's letter, the HICOG Staff
Secretary advi!)ed that "[t]heexecution of the Law has been placed in the hands of duly
designated authorities consisting of agencies and courts and it is within their power to
decide if and to what extent restitution has to be made in any particular case. It would
thus be improper for this office to intervene in any manner in the execution of the
.
.
NARA RG 260, Records of the Property Division, Box 4, Conferences-Meetings-Attend. File, "Report
of the Administration ofMG Law 59," undated, p. 7.
102 NARA RG 260, Records of the Branch Chief, Property Division, Box 23, Reports: Property Control
Meetings file, "Minutes of LPCCs with Heads of German Restituti9n Agency," p. 4.
l
101
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12/4/004:45 PM
Restitution Law by these duly designated authorities."I03 Matters of interpre~ation and
application of the Law, thus were in the hands of the Restitution Courts. Consequently, it
was not surprising that a relatively large number of cases, wound tip inthe appeal courts.
A review of the program, undated, but apparently relatively early so that the sample of
I
cases was quite limited, found that 2 percent of Restitution Chamber cases were referred
straight to the Board of Review and as much as 30 percent of the High Court cases were
sent on.
Inthis envirornri.ent'there'was, considerable concern regarding future
developments among those who ~ished to see the intent of MG Law No~ 59 applied
fully. The O'Sullivan Committee', reporting on the British Zone, accordingly"
consider[ ed] it essential that appellate and revisional powers should continue to be
, exercised by Allied Courts after the relinquishm~nt of reserved powers". 104 A general
sentiment obviously also shared by thelewish community.
It is arguable, with
hindsig~t,
that less of a hands-off policy of the DSMG
and greater clarity as to its position ~n some of the issues not dealt with in MG Law
No. 59 would have materially aided the fulfillment of the "complete restitution"
objective ofD.S. policy. As it was, the hostile environment, the pressure to come to
.. ,
.
'
'"
,
amicable agreements, the paucity of access to legal representatives, the lack of access to
.
. .
..
'
validated balance sheets of claimable property and the problems, associated with
restrictions on transactions (both those on the transfer of funds and those !mposed by tp,e
103 RG 466, Property Offic~, Records, Reiatmi t~ Restitution of Property under U.S., Military Government
Law 59, Box 8, 270 Case Inquiry Records, letter from Staff, Secretary dated June 5, 1951, p. 2.
104 O'Sullivan Committee, op,cit., p. 16.
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48
TWEA well into the first year of the operation ofMG Law No. 59) led to settlements that
were well below the assessed taxable value (Einheitswert) of the time, ifnot to the
abandonment of claims. While JRSO was, on the whole, relatively successful in realizing
reasonable agreements, these also tended to average 20-30 percent below the
Einheitswert. Moreover, JRSO would offer a 20 percent discount to reach a quick,
amicable agreement. lOS For individuals, especially when claims were relatively small,
average recovery values were considerably lower. In Hesse, during negotiations with the
JRSO on the proposed lump settlement for unclaimed and heirless assets, the German
authorities asserted that individual settlements were being made at 30 percent of the
Einheitswert. 106
VI. Conclusion,
'This report has identified key laws, policies, and practices that during the U.S.
Military Occupation of Germany ruled the control and restitution of property looted from
Nazi victims within Germany (duress property). There are a number of basic findings:
1) Despite having access to a large body of documentation on the original ownership
of Nazi victim property, the USMG placed the burden of initiative and proof on
, victims and/or their heirs in difficult circumstances ,~e.g. lack of access to records,
105 Given the congestion in 'the Court System and the difficulties in reaching amicable ~greements, the ,
JRSO in 1950 began to neg~tiate bulk agreements with the Laender Governments, In February 1951 the
first such agreement was signed, with Hesse, followed by Bremen and finally, in April 1952 by Bavana.
Baden-Wuerttemberg agreed to a settlement on claims against the public sector, but reasoned that they
would be unable to enforce the restitution claims against their private citizens. See JRSO, Report on the
First Five Years of Operations, Stanford University, ,Special Collections, Papers of Salo W. Baron, '
(326612).
'
'
106 Stanford University, Special Collections, Papers ofSalo W. Baron, letter from Benjamin B, Ferencz to
Eli Rock, dated 20 September 1950, (326582),
.
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�49
12/4/004:45 PM
attorneys, communications, etc.); as a consequence an unknown number of assets
of possibly significant total value Could readily have escaped control. This the
more so given the larger task of property control (at its height, PC had over
80,000 Property Control Custodians overseeing properties), the setting of
different priorities and the lack of adequate staff to bear this burden.
2) The early transfer of responsibility to the Gerrpan authorities, however. well
.supported by overall political objectives, permitted interpretation of policy in
ways that questioned, if not undermined, the spirit of that policy.
3)
The purposes and intent of the restitution law were clearly U.S. government
driven, while implementation and further deve\opmentWAs ceded to the Getman
authorities. The policy of non-interference adopted by the USMG in the face of a
hostile environment could not but create a duality of purpose, that in turn helped
undermine the central goal of speedy and complete restitution.
4) The transfer of responsibility to the German authorities combined with the lack.of
.
.
trained and politically reliable personnel allowed restitutors and/or prospective
buyers to influence the management of duress property and in an unknown, but
apparently not infrequent, number of instances drain assets from restitutable
property.
. 5) Though the objective of speedy conclusion of the restitution process depended
upon achieving amicable agreements in the main"the procedures set but in MG
Law No. 59 tended to support litigation and, in the event, proved conducive to
. delay.
"
.
.
,
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50
6) Though MG Law No. 59 was very'comprehensive, a number of important issues
that ifdid not address also increased delay: conversion problems associated with '
the currency reform tended to delay settlements, to reduce the number of amicable
agreements and pari passu to increase the bll:rden on the restitution courts; strict
application of currency restrictions tended to defeat in part the central purpose of
. restitution, i.e. allowing victims to regain use of the assets looted. them;
from .
,
.
subjection of duress property to the Equalization ofWar Burdens tax reduced
sales values and complicated the settlement process (though JRSO claimed
properties eventually,we~e exempted);
7) The hewing to the strict deadline for filing of claims tended to subordinate , '
individual property rights to those of the community as with the passing of the
deadline petition rights expired, which allowed a petition filed by a'successor
organization to prevail.
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51.
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NOT FOR CIRCULATION
�PROPERTY CONTROL: PROPERTIES HANDELED THROUGH
JULY 31, 1949
(Units, RM million and percent)
11.0
17.0
0.6
5.7
6.7
5.0
Duress
9.
GRAND TOTAL
Source: NARA RG 260, Records of the Secretariat, Executive Director, Office of the U.S. High
Commissioner for Gennany, Box 14, PD Monthly Report September, 1949.
�I
I,
· PROPERTY CONTROL: PROPERTIES HANDELED
THROUGH·
JULY 31,1949
(Units, RM million and percent)
CATEGORY
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
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>
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Clinton Presidential Records: White House Staff and Office Files
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Clinton Presidential Library & Museum
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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>
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2954 folders
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[Property Control and U. S. Occupation of Germany]
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Presidential Advisory Commission on Holocaust Assets in the United States
Art & Cultural Property Theft
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Box 226
<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>
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Clinton Presidential Records: White House Staff and Office Files
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6/24/2013
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6997222-property-control-us-occupation-of-germany
6997222