Office of Alien Property Custodian

The Office of Alien Property Custodian was an office within the Government of the United States during World War I and again during World War II, serving as a Custodian of Enemy Property to property that belonged to US enemies.

World War I

President Woodrow Wilson appointed A. Mitchell Palmer, a political ally and former Congressman, Alien Property Custodian in October 1917. Palmer held the position from October 22, 1917, until March 4, 1919. A wartime agency, the Custodian had responsibility for the seizure, administration, and sometimes the sale of enemy property in the United States. Under the Trading with the Enemy Act, Palmer was allowed to take control of property that might hinder the war effort, including all property belonging to interned immigrants, whether they had been charged with a crime or not. Palmer's background in law and banking qualified him for the position, along with his party loyalty and intimate knowledge of political patronage. Under Palmer's leadership, the Office of the Alien Property Custodian employed hundreds of officials.

The size of the assets the Custodian controlled only became clear over the next year. Late in 1918, Palmer reported he was managing almost 30,000 trusts with assets worth half a billion dollars. He estimated that another 9,000 trusts worth $300,000,000 dollars awaited evaluation. Many of the enterprises in question produced materials significant to the war effort, such as medicines, glycerin for explosives, charcoal for gas masks. Others included mines, brewing, and newspaper publishing. Palmer built a team of professionals with banking expertise as well as an investigative bureau to track down well-hidden assets. Below the top-level positions, he distributed jobs as patronage. Always thinking like a politician, he made sure his group's efforts were well publicized. For example, he appointed one of his fellow members of the Democratic National Committee to serve as counsel for a textile company and another the vice-president of a shipping line.

In September 1918, Palmer testified at hearings held by the U.S. Senate's Overman Committee that the United States Brewers Association (USBA) and the rest of the overwhelmingly German liquor industry harbored pro-German sentiments. He stated that "German brewers of America, in association with the United States Brewers' Association" had attempted "to buy a great newspaper" and "control the government of State and Nation", had generally been "unpatriotic", and had "pro-German sympathies".

Later criticism of Palmer's performance focused less on his appointments or the fees earned by political cronies than on his sales of enemy assets. He campaigned successfully to have his powers to dispose of assets by sale increased to counter Germany's long-term plan to conquer the world by industrial expansion even after the war. There were safeguards in place, but competitive bidding meant nothing when an auction was rigged by withholding information from all participants. More revelations took years to surface and the connections between Palmer and direct profits proved too tenuous to support indictments. Even after Germany's surrender, Palmer insisted on continuing his campaign to make American industry independent of German investment, with major sales in the metals industry in the spring of 1919, for example. He offered his rationale in a speech to an audience of lawyers: "The war power is of necessity an inherent power in every sovereign nation. It is the power of self-reservation and that power has no limits other than the extent of the emergency." Among other sales, the United States assets of the chemical company Bayer were auctioned off and it lost its U.S. patent for Aspirin.

World War II

On 11 March 1942, President Franklin D. Roosevelt issued Executive Order 9095 establishing the Office of the Alien Property Custodian as an independent agency under his direct authority. He appointed Leo Crowley, a former banker and chair of the Federal Deposit Insurance Corporation as APC. During the war the APC amassed a vast portfolio of enemy property including real estate, business enterprises, ships and intellectual property in the form of trademarks, copyrights, patents and pending patent applications. On May 13, 1966, President Lyndon B. Johnson issued Executive Order 11281 which abolished the office, effective June 30 of that year[1].

Sec. 6 of the Trading with the Enemy Act, 40 Stat. 415, 50 U.S.C.App., authorizes the President to appoint an official known as the "alien property custodian," who is responsible for "receiv[ing,] ... hold[ing], administer[ing], and account[ing] for" "all money and property in the United States due or belonging to an enemy, or ally of enemy ... ." The Act was originally enacted during World War I "to permit, under careful safeguards and restrictions, certain kinds of business to be carried on" among warring nations, and to "provid[e] for the care and administration of the property and property rights of enemies and their allies in this country pending the war." Marshall v. Marshall, 126 S.Ct. 1735 (2006) (quoting from Markham v. Cabell, 326 U.S. 404, 414, n. 1 (1945) (Burton, J., concurring)), see also S.Rep. No. 113, 65th Cong., 1st Sess., p. 1 (1917).

References

• Coben, Stanley, A. Mitchell Palmer: Politician (NY: Columbia University Press, 1963)
• Mittelman, Amy, Brewing Battles: A History of American Beer (Algora Publishing, 2008)
• United States Senate, Committee on the Judiciary, Brewing and Liquor Interests and German Propaganda: Hearings Before a Subcommittee of the Committee on the Judiciary, United States Senate, Sixty-fifth Congress, Second and Third Sessions, Pursuant to S. Res. 307 volume 1, volume 2. Govt. print. off., 1919. Original from the University of Michigan.