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suance of the General Claims Convention of September 8, 1923. This protocol provided for the decision of claims by Commissioners appointed by each Government, whose terms expired on October 31, 1937, at which time the duration of the Commission was permanently ended. There is no agency of any kind functioning at the present time to decide claims filed with the General Claims Commission which are still undecided.

It is thus seen that there have been four extensions of the term of the Commission adding more than 10 years to the time originally set for the finishing and deciding of claims; and there still remain undecided 850 claims of American nationals and 220 such claims of Mexican nationals. No method, machinery, or program now exists for deciding those undecided claims, and their disposition depends altogether upon future negotiations and agreements with Mexico. In the view of the committee, this situation renders it utterly unfair to citizens who hold awards and have already been compelled to wait all these years for payment to postpone such payment further.

Article IX of the Convention of September 8, 1923, relating to the settlement of awards, is as follows:

“The total amount awarded in all cases decided in favor of the citizens of one country shall be deducted from the total amount awarded to the citizens of the other country, and the balance shall be paid at Washington or at the city of Mexico, in gold coin or its equivalent, to the Government of the country in favor of whose citizens the greater amount may have been awarded."

As it was not known at the time the Convention was entered into which Gov. ernment would be adjudged to be entitled to the larger amount, and as each Government is required by the foregoing provision to appropriate any award made in favor of its citizens to offset awards made in favor of the citizens of the other Government, it must have been contemplated that each Government would settle with its own citizens in respect of awards made in their favor. Such interpretation has been approved before the committee by representatives of the State Department,

The committee considers that the convention, under a fair interpretation of all of its provisions, means that the United States undertook to have adjudicated the claims of its citizens against Mexico, and to collect awards that might be allowed thereon and to make settlement with its citizens therefor, and it further undertook to do this within the named and specified time, and for this purpose required its citizens to turn over to it such claims. The United States, is therefore, under at least a moral obligation to pay to its citizens who cooperated in that program the awards allowed them on claims thus turned over to the Government for such purpose.

Inasmuch as the United States is thus morally obligated in the matter of such awards, and the citizens holding them have already waited years for their payment, and many, if not all, of them are in financial distress and urgently need the money represented by the awards in their favor, the committee feels that it is the duty of the Government to take affirmative steps at this time toward paying them, and thus affording them that “Just and adequate compensation for their losses and damages” declared by article V of the convention to be the purpose for its execution.

The principal amount of the awards already entered in favor of citizens of the United States is $2,789,509.33 and the principal amount of awards in favor of Mexican nationals is $431,431.82. The purpose of the bill is to anticipate the ultimate payment by Mexico of the full amount of the awards which have been entered up to this time in favor of American nationals, and at the same time to recognize the validity of the awards entered by the Commission in favor of Mexican citizens, which latter amount the United States will eventually be required to pay to Mexico. By advancing the amount of awards in favor of American nationals the United States does not waive any of the rights under the terms of the convention and when the time arrives for a final settlement between the two Governments there will be an offset against the awards in favor of American citizens of the amount awarded by the Commission in favor of Mexican nationals.

The committee recognizes that the United States was seeking for the Government and its citizens at large, substantial benefits in the negotiation of the claims conventions in 1923. Diplomatic relations were restored at that time and all the benefits of renewed commerce and customs revenues were realized thereby. Citizens of the United States holding claims against Mexico having cooperated in that program, and the Government and its citizens generally having obtained the benefits sought therein, it is only fair that the citizens having such claims should be now paid for the awards that had been allowed thereon.

The committee recognizes that there is sufficient precedent for payment of the American awards in full at this time, inasmuch as nearly 100 years ago, under the convention of April 11, 1839, between the United States and Mexico, the liquidated or adjudicated claims of the Commission then established were later paid by the United States before collection had been made from Mexico, and the treaty between the two Governments signed at Guadalupe Hidalgo on February 2, 1848, obligated the United States as part of the consideration for the territory then acquired from Mexico to pay the unpaid balance of the awards in favor of American citizens and to liquidate the unadjudicated claims of our citizens which had not previously been disposed of.

For the information of the Senate there is attached hereto a letter dated January 18, 1938, to the chairman of the committee from the Secretary of State. In this connection, the State Department advised the committee informally that the unadjudicated claims are undoubtedly grossly overstated in amount and to a large extent lacking in merit, and that at the present time any diplomatic negotiations with Mexico in regard to the remaining unadjudicated claims is a matter which will be long-drawn-out and of dubious procedure. The committee therefore feels that a cutting-off point has been reached, and that American citizens who are award holders should not be faced with further indeterminable delay in the payment of their awards.

As the following letter from the Secretary of State contains information pertinent to a similar bill (S. 3104, 75th Cong., 3d sess.) which was considered by this committee and reported favorably to the Senate on April 14, 1938, this communication is hereby made a part of this report.

WASHINGTON, D. C., January 18, 1938. MY DEAR SENATOR PITTMAN: I have received your letter of December 10, 1937, transmitting for my consideration and comment a copy of S. 3104, Seventy-fifth Congress, second session, which provides for the immediate payment to American claimants against Mexico of all amounts awarded to them by the various General Claims Commissions under the convention of September 8, 1923, and the protocol of April 24, 1934, between the United States and Mexico. The awards in question are as follows: 1927 (including an award of $1,807,531.36 in favor of the Illinois Central Ry. Co.) -

$2, 221, 659. 46 1929

296, 141. 70 1931

81, 044. 94 1937

190, 343. 23

Total awards_--

2, 789, 509.33 Many of the above awards also call for the payment of interest for varying periods of time, which interest is not included in the foregoing amounts.

During the same period of time awards have been rendered in favor of Mexican nationals and against the United States in the following amounts: 1927

$39, 000.00 1937

392, 431. 82

Total awards--

431, 431. 82 At the termination, in October last, of the period allowed the two national Commissioners by the protocol of April 24, 1934, for the appraisal of claims submitted to their consideration, there remained unadjudicated 850 American claims amounting to approximately $200,000,000, and 220 Mexica a claims amount. ing to about $120,000,000. In pursuance of the provisions of article 5, of the above-mentioned protocol (a copy of which is enclosed for your ready reference), the Department has initiated negotiations with the Mexican Government with a view to arranging an en bloc settlement of the remaining claims or to an agreement referring them to an umpire for final adjudication. You will understand, however, that it is impossible for me at this time to give you any assurances as to the probable outcome of such negotiations or as to the probable date of payment of the net amount finally found to be due from the Mexican Government. Article IX of the General Claims Convention of September 8, 1923, provides as follows:

“The total amount awarded in all cases decided in favor of the citizens of one country shall be deducted from the total amount awarded to the citizens of the other country and the balance shall be paid at Washington or at the


City of Mexico, in gold coin or its equivalent, to the Government of the country in favor of whose citizens the greater amount may have been awarded."

The pending claims accumulating throughout the period of 59 years running from 1868 to 1927, from which fact it will be noted that the claimants and in many cases their successors in interests, have already been required to wait many years for the amounts due them.

Whether, under these circumstances, the Congress should appropriate the necessary funds to pay the above-mentioned awards to the American nationals involved appears to be a matter of legislative policy on which I express no opinion. I have, however, consulted the Acting Director of the Budget concerning the matter and am now in receipt of a letter of January 12 from him stating that “this legislation would not be in accord with the program of the President." Sincerely yours,

CORDELL HULL. Mr. Bloom. Senator Sheppard ?



Senator SHEPPARD. Gentlemen of the committee, bill S. 326 of which I had the honor to be the author was passed by the Senate on April 20 after being favorably reported by the Foreign Relations Committee of the Senate and fully discussed on the floor of the Senate. Except as to one small administrative change suggested by the Secretary of State this bill is identical with S. 3104, which after extensive investigation and favorable report by the Foreign Relations Committee and full floor discussion was passed by the Senate near the end of the last session of Congress and favorably reported after hearings by the House Foreign Affairs Committee, but too late for floor action by the House.

This bill authorizes an appropriation out of the Federal Treasury to pay the amounts due on the respective dates of the 124 awards and appraisals heretofore made on claims of American citizens filed under the General Claims Convention of Steptember 8, 1923, between the United States and Mexico, aggregating approximately $3,000,000. It expressly provides, however, that such paymentshall not be construed as the satisfaction in whole or in part of any such award or appraisal, or as extinguishing or dimishing the liability of the United Mex. ican States for the satisfaction in full of such awards and appraisals, but shall be considered only as an advance by the United States until all of said awards and appraisals have been paid off and satisfied in full to the United States by the United Mexican States.

This bill, therefore, does not propose to have the United States pay the obligations of the Mexican Government to American citizens, as was charged by Senator Adams on the floor of the Senate.

Mr. Johnson. That is one of the chief grounds on which the opposition to the bill is based. As I understand, it is claimed by opponents of the bill that the bill simply has the Government pay off the debts of these citizens of the United States.

Senator SHEPPARD. For that reason, I am referring to—

Mr. JOHNSON (interposing). I am anxious to hear you on that point.

Senator SHEPPARD. For that reason I have referred to the language of the bill itself which especially disclaims any action of that kind, and especially provides that it shall not be considered as a final settlement of the matter.

Neither does this bill propose a new type of legislation but, on the contrary, it follows an exact pattern already furnished by the congressional act of August 10, 1846, which appropriated $320,000 to pay to American citizens past due installments on awards against Mexico on claims filed under the treaty of April 11, 1839; and it also follows the exact pattern and largely copies the language of the congressional act of March 10, 1928, which appropriated $50,000,000 and made another $50,000,000 available if necessary to pay to American citizens awards by the Mixed Claims Commission on claims against Germany.

This bill proposes nothing more than the discharge of the obligations of the United States to our own citizens under the General Claims Convention of September 8, 1923.

Mr. JOHNSON. There is another question of opposition to the bill and that is it sets a dangerous precedent, and the instances which you cite there show that in fact instead of setting a dangerous precedent it is following precedent.

Senator SHEPPARD. It is following precedent. Of course, all these matters should depend on their own merits and on the particular facts surrounding each case, and when you make a decision based on the merits of each case you do not establish any general precedent or anything else.

The first paragraph of article 9 of that treaty; that is, the General Claims Convention of September 8, 1923, requires the two Governments to settle with one another the awards in all the cases decided by deducting the total amount awarded against one Government from the total amount awarded against the other Government, the balance then to be paid by the Government owing it to the other Government. That provision completely eliminates the citizen in whose favor an award has been made unless it be implied therefrom that his Government is under the duty of paying him; and our State Department has uniformly held that such payment is contemplated by the article of the convention referred to.

Of course, there can be no balance unless the amounts had been paid by each Government to its citizens, amounts of the claims that had been due them in its proceedings.

Mr. JOHNSON. In other words, as I understand, under that convention or treaty, they would have this joint commission which would hear claims against both Governments and the Government that owed the most could then offset one payment against the other Government, and after that payment would pay to the other Government ?

Senator SHEPPARD. Yes. And unless they had paid or were obligated to pay something to their citizens there would not be any balance.

Mr. BLOOM. And then they transferred their claims to the Government of the United States?

Senator SHEPPARD. That is right. And that was done in advance. Mr. KEE. The amount to be used as an offset against the claims of Mexico

Senator SHEPPARD. That is true.

Mr. KEE (continuing). Would be due from us to the individual claimants?

Senator SHEPPARD. That is right.

Mr. Bloom. Does the Government give any interest on this after having paid that?

Senator SHEPPARD. I don't know about that. This bill provides that no interest shall be paid claimants which shall accrue after the time of the award.

Without such implied obligations of the Governments that treaty becomes an instrument of pure confiscation. Through it the Government decreed that all claims comprehended by it must be presented for adjudication to a tribunal created under it and all claims not so presented are declared forever barred. In order to get a claim presented to that tribunal it had to be surrendered to the Government by the claimants which thereby acquired the exclusive and untrammeled right to control it, to determine whether to prosecute it or abandon it, and to appropriate any award made on it to pay the Government's debt by offsetting such award against like awards in favor of Mexico; and the citizen is bound by any action taken by the Government. Those provisions of the treaty completely separated the citizen from his claim and stripped him of all rights with reference to it. He could not thereafter either seek its collection or accept its payment from Mexico; and there remained no source to which he can look for pay, unless he can look to his own Government. All this amounted to vesting title to the claims in the Government and, unless confiscation was intended, necessarily imposed upon the Government the obligation to pay the awarded value of each claim.

Mr. JOHNSON. As I recall at a hearing on this bill before, there were some claims that the claimants were negotiating with Mexico on claims they held against the Government, and then when this treaty or convention was adopted they had to

Senator SHEPPARD (interposing). They had to cease all attempts.
Mr. JOHNSON. They had to cease.
Senator SHEPPARD (continuing). Or proceedings.
Mr. JOHNSON. And present their claims pursuant to the convention.

Senator SHEPPARD. That obligation became complete with the enforced surrender of the claim to the Government, and its maturity thereafter depended only on the adjudication of the claim; and the binding quality of that obligation is not affected by the circumstance that the total of awards in favor of the United States exceeds the total in favor of Mexico, a circumstance clearly not in contemplation when the treaty was signed, because it was not then known and could not then be anticipated.

That implied obligation of the Government is further shown by the reasons which caused that treaty to be entered into and the highly important public ends sought by it. The claims comprehended by that treaty originated in a long succession of wrongs and injuries to American citizens residing in Mexico or having business interests there which, together with the indifference of Mexico thereto, had finally caused the severance of diplomatic relations between the two Governments, destroyed commerce between the two countries, depleted customs revenues, and created a very costly and

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