This article originally appeared in the Jan. 30, 1942, edition of the United States News, which later merged with World Report to form U.S. News & World Report.
On the evening of Sunday, December 7, “day of infamy” at Pearl Harbor, a grim group of Government agents entered a New York clubhouse, locked the door, arrested the habitues, and took over the place. It was a Japanese clubhouse and the captives were enemy aliens.
Elsewhere in New York, in San Francisco, Seattle and many points between, the scene was re-enacted. Without waiting for Congress to declare war, Uncle Sam moved silently and swiftly to take over all Japanese-owned property in the United States. Restaurants, banking agencies, apartment houses, vineyards, silk caches in storage warehouses, bakeries, importing firms, stores, many a lesser business–all were caught in the dragnet. The next afternoon and night, Government agents moved in on properties of German and Italian aliens. From corner delicatessens and barbershops to mammoth business firms, these businesses were closed. A guard, a manager, a small group or a large force was posted at each. Alien enemy business ceased throughout the country. The Government found itself in possession of seized properties whose value may run to $5,000,000,000 or more. The total has never been tabulated.
Virtually every national bank examiner in the United States was told by wire December 8 to drop what he was doing and proceed in all haste to New York or San Francisco. The Mississippi River was the dividing line; Those east of it hurried to New York, those west to San Francisco.
Some 600 bank examiners, thus borrowed from the Comptroller of the Currency, plus, thousands of clerical assistants hurriedly assembled, have been working on the books of seized properties from that day to this-and it still is impossible to get more than an estimate of their value. Best guess is that these Axis-owned properties, together with those of 29 other Axis-dominated nations whose assets previously had been “frozen,” will total between $7,000,000,000 and $8,000,000,000.
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What is the Government going to do with all those properties? What will happen to the owners, managers and agents in charge when the properties were seized?
The latter question is the easier to answer: Thousands of aliens have been sent to American concentration camps–in Montana, the Dakotas, the East, the Middle West, the Southwest–where today they are housed, fed, and humanely treated. If they want it, they are given light work, at a daily dole, to occupy them. Some of the camps are for women, others for men.
Families have been broken up. Enemy alien husbands have been parted from enemy alien wives and in scores of cases from native American wives. Where young children are involved, the wives usually have been allowed to remain at home, under surveillance. Where there are no children, enemy alien wives generally have been sent to concentration camps for women. Locations are not disclosed.
After weeks of work, the Government has taken over practically all enemy alien business properties. Those missed in the roundup will be taken over later. There are plenty of data to work from. Hundreds of thousands of enemy aliens registered somewhat more than a year ago at post offices. Their records are being studied by the Department of Justice. The forms they filled out furnish invaluable information as to who’s who among enemy aliens. Even so, a new registration may be ordered soon.
In general, the Government plans to conserve all the seized properties. At present, they are in a state of custody, distinct from confiscation.
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Some, such as apartment houses, hotels, little retail establishments, are still transacting business under Government-named managers. But the great bulk of them, including big and little corporations, are closed tight while federal agents go over their records. Probably most of these will be liquidated. They may, later, become bargains for American buyers. A few will be permitted to resume operations under Government managers.
Tens of thousands of managers, assistants and clerical workers must be appointed by the Government to undertake and carry through the gigantic job of operating or liquidating alien businesses. Regional setups are projected. Under the terms of an executive order drafted for the President’s signature, this machinery soon is to be put in motion. It was designed to operate under the Department of Justice. Attorney General Biddle on Dec. 10 announced that Leo T. Crowley had been selected to head the division and that the essential executive order would be issued in due time.
Mr. Crowley, who long has headed the Federal Deposit Insurance Corp., is a pleasant, graying native of Wisconsin who also is closely identified with the civic affairs of Minnesota. He is chairman and president of the Standard Gas & Electric Co. His friends say he will retain this office as well as his FDIC connection.
Problems of administration facing the new Alien Property Custodian will be legion. Future of each seized property must be determined on the bases of merit, public need for its continued service, ownership and other factors. Individual license for each operation will be necessary. Each property, it is contemplated, must pay its own custodial costs–operating properties to pay from revenues, liquidated properties to pay from final receipts.
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Problems to personnel will supply the bigger headache. Only big scandal of the Wilson Administration–to be exposed several years later–broke in the office of the Alien Property Custodian. Dishonest employees feathered their nests with ill-gotten money; a few became wealthy; some finally went to prison.
President Roosevelt, keenly aware of these scandals, had determined they shall not be duplicated in his Administration. Creation of a sleuthing unit is among possibilities now under consideration. Extraordinary care in appointing personnel is contemplated, possibly with every appointee being investigated by G-men.
Problems of law will be knotty. Already they crowd upon the Government. For instance, a New York City branch of the Bank of Naples was taken over. The branch was chartered in 1930 by the State. State authorities, deeming the Federal Government to have ended the branch’s usefulness, decided to liquidate it. A special force of more than 100 federal employees worked for weeks to separate the nonalien accounts that could be paid from those to be blocked; another bank, American, took over thousands of payable accounts and administered them. Uncle Sam yielded to the State and long litigation thereby was avoided.
Problems of patent rights run to the thousands. A special force now is examining every patent which seized concerns own. What are these patents worth? The answer lies in far distant pages of the calendar. But there will be no sales en bloc, it is contemplated, such as the sale of 5,000 chemical and related patents at $50 each to a single buyer after the last World War.
This time no federal official will be permitted to carry $7,000,000 checks in his pocket from Washington to New York–as one did in World War I–to cover alien property transactions. That incident, subsequent court testimony disclosed, was followed on the official’s arrival by a gorgeous party at which the guests received gold cigarette cases as souvenirs.
How many German-Italian-Japanese patents and copyrights are seized or yet to be seized? Nobody knows yet; in World War I, Government sold 16,800 such rights to American buyers. There may be more this time. Will they be sold? Probably–as liquidation of seized properties is decided upon, case by case. Some doubtless would be tempting business prizes to own. How will they be sold? By private negotiation? At a sort of public auction? Or will they be pooled, licensed, or disposed of in some other way?
These and related questions may call loudly for answer in the early days ahead. Decisions cannot be made now, officials say; the task now is to take the job’s dimensions. Then will come the brass-tack details and their solution. Months and maybe years will be needed. One notable case hung over from the first World War in litigation that ended only last autumn.
Problems of real ownership already have engaged numerous federal investigators and probably will continue to engage them for years. Here and there, dummy owners have been found; Axis sympathizers, as well. Naturalized Americans of Italian birth, for instance, were officers of the New York branch of the Naples bank. They were sent from Naples in 1930 and immediately took steps looking to U.S. citizenship. But, the Government charges, their real sympathies were with the homeland.
In the case of a mammoth German-dominated corporation, General Aniline and Film Co., the Government recently removed from executive authority five American citizens. Their backgrounds and sympathies, said the Treasury, were clearly German. One was receiving an $80,000 salary.
German, Italian and Japanese sympathizers, even though they be American citizens, will be removed, it is contemplated, from alien property management as fast as they are ferreted out. G-men probably have lots of work ahead on this score.
Who will stay, who must go, which plants will be licensed, which plants liquidated, who will get the management plums–all these and many related problems are wrapped up in the multi-billion dollar package Uncle Sam is just beginning to inspect.
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From the Archives: Government Seizes Firms, Puts Axis Citizens in Concentration Camps originally appeared on usnews.com
