time of emergency and that any losses suffered as a result of "money expended or obligations incurred", within the statutory period must necessarily be taken into account in determining the net losses reimbursable within the meaning of the acts. While it is true that the final decision of the Supreme Court above cited has prevented the Secretary from the payment of losses to some by reason of interest payments and accruals after the date of the passage of the act March 2, 1919, your committee construes this opinion as calling attention only to the insufficiency of the wording of that act to accomplish what was evidently the intention of the Congress when it was passed wherein it stated that losses due to "money expended and obligations incurred" in compliance with request or demand of the Government to supply the needs of the Nation in the prosecution of the war should be reimbursed. In the hearings it was shown your committee that not exceeding $1,250,000 would be required to reimburse the losses covered by this bill, H. R. 7984; your committee has therefore amended the same accordingly. It is considered pertinent to call attention to the fact that losses due to interest paid and accrued on borrowed capital have been certified by the Secretary in amounts over and above what he is permitted to pay under the present statutes as interpreted by the Supreme Court. It is apparent that losses have been suffered by reason of such payments and accruals which are in "equity and justice" as much entitled to reimbursement as payments and accruals of interest previous to March 2, 1919, and it is believed that unless the Congress authorizes and directs the Secretary to adjust and liquidate and pay such losses as provided for in this bill, H. R. 7984, that many private claim bills will hereafter come before Congress for payment and probably ultimate payments including heavy accruals of interest still running in which event much greater amounts will ultimately be paid by the Government in settlement of these claims than if now made promptly by the Secretary of the Interior under the provision of this bill, H. R. 7984, and receipts taken by him in full settlement of all claims against the United States Government connected with the production of the war minerals needed by the Government and supplied by those producers in time of emergency. Many precedents have been established by the Congress in reimbursements of interest on money borrowed to supply the needs of the Nation in time of emergency. It is considered by your committee that these claimants are exactly in the same class and sooner or later must have the attention of Congress in form of some amendment to existing law or on private claim bills. Your committee is further of the opinion that the prompt settlement and payment of these just claims will be in keeping with the present policy of the Congress. They are widely scattered among more than 35 States of the Union. The distribution of awards which may be made hereunder would seem to be in keeping with the present national recovery program. No appropriation is asked for the reason that these awards are payable from the appropriation carried by the original act of October 5, 1918. But they must come through as items of future deficiency bills by reason of the fact that the unexpended balance of the appropriation carried by the act of 1918 has been covered back into the Treasury surplus. It has been found by your committee that claimants in good faith accepted the provisions of the act of March 2, 1919, providing that "net losses" should be paid in lieu of the rights they enjoyed under the act of 1918, under which they were due "just compensation" and waived their rights to sue the Government. It is therefore considered that until "net losses" have been paid, including interest paid and accrued upon borrowed capital, the Government has not discharged its obligations to these producers. It is expected that the Secretary of the Interior under authority of this bill will promptly certify for payment such amount as he shall find to be due in each case as it shall come before him or is already before him under judgment or decree of the court, so that the administration of these war mineral relief statutes may be concluded as quickly as is consistent with justice and equity. Hon. JOE L. SMITH, DEPARTMENT OF THE INTERIOR, Chairman Committee on Mines and Mining, House of Representatives. MY DEAR MR. SMITH: Your letter of February 17 requesting a report on H. R. 7984, Seventy-third Congress, which bill is now before your committee for consideration, has been received. The United States Supreme Court in the Vindicator-Chestatee case (284 U. S. 231), rendered December 7, 1931, held that March 2, 1919, was the date to which interest was allowable for money borrowed and lost in producing and preparing to produce chrome, manganese, pyrites, and tungsten under the war minerals relief act. The effect of this bill, if enacted into law, will be to extend the date from March 2, 1919, to the date of the approval of this act, for the payment of interest. The records of the Department disclose that 126 cases already given awards and 44 cases certified by the Supreme Court of the District of Columbia to the Secretary of the Interior for review, and 161 cases awaiting action of the Supreme Court of the District of Columbia, making a total of 351 cases, would be subject to review by the Secretary of the Interior upon petition by the claimant under authority of this bill. There is no way of reasonably approximating the total amount of interest losses involved by the enactment of this bill into law, for the reason that the only evidence before me at this time is that in the cases upon which awards have been made. In many of the awards made by my predecessor, since the amendment of February 13, 1929, the claimants have accepted such awards in "complete and final settlement of their rights under the war minerals relief act." One exception to this is the case of the Chestatee Pyrites & Chemical Corporation in which awards to the amount of $829,850 have been made, of the last of which, on February 23, 1933, acceptance was made by claimant "as payment of its losses in full to March 2, 1919, as stated in the award." From our records in the case the approximate interest which would be claimed under the proposed act, if passed as to April 1, 1934, would be $608,221.24. In all awards which I have made under the war minerals relief act, with one exception, the claimant has signed a release in complete and final settlement of all rights under the act. The exception is the case of the Hanna Minerals Co. to which awards have been rendered in the amount of $314,924.31. The approximate interest which would be claimed under the proposed act, if passed as of April 1, 1934, would be $324,367.68. A decision by the Court of Appeals of the District of Columbia, February 19, 1934, in the case of Harold L. Ickes, Secretary of the Interior v. Cuyuna Mining & Investment Co., holds that awards under the war minerals relief act are purely in the nature of a gratuity by the Government and are not legal claims, nor does the act create in the claimants any vested legal right. I am not at this time able to give your committee the effect which this decision will have on the 161 cases pending in the Supreme Court of the District of Columbia. It may be a timely observation to say that all these claims are based upon World War operations during the period between April 6, 1917, and November 12, 1918, and that good administration would require that complete and final settlement should be made in all claims at the earliest opportunity, consistent with justice and equity. I therefore find myself disposed to object to the passage of this bill. Sincerely yours, MARCH 4 (calendar day, MARCH 5), 1935.-Ordered to be printed Mr. GLASS, from the Committee on Appropriations, submitted the following REPORT [To accompany H. J. Res. 117] The Committee on Appropriations, to whom was referred the joint resolution (H. J. Res. 117) making appropriations for relief purposes, report the same to the Senate with various amendments, and present herewith information relative to the changes made: SECTION 1 It is recommended by the committee that the following language be stricken from section 1 of the resolution: "protect and to promote the general welfare, by (1) providing relief from the hardships attributable to wide-spread unemployment and conditions resulting therefrom, (2) relieving economic maladjustments, (3) alleviating distress, and/or (4) improving living and working conditions," and the words "provide relief and work relief" inserted in lieu thereof. It is also recommended by the committee that the following language be stricken from the resolution: "in such manner, and for such purposes and/or such projects, Federal or non-Federal, as shall be adapted to the accomplishment of any one or more of the objectives specified in clause (1), (2), (3), or (4).' It is recommended by the committee that the following provision allocating the $4,000,000,000 appropriated by the joint resolution be inserted: : Provided, That except as to such part of the appropriation made herein as the President may deem necessary for continuing relief as authorized under the Federal Emergency Relief Act of 1933, as amended, this appropriation shall be available for the following classes of projects, and the amounts to be expended for each class shall not, except as hereinafter provided, exceed the respective amounts stated, viz: highways, roads, streets, and grade-crossing elimination, $800,000,000; rural rehabilitation settlement of these claims. Your committee has found upon examination of the records that some 350 cases were filed in court under the authority of the act of February 13, 1929, and of this number approximately 200 decisions have been rendered, in practically all of which the questions of law contended for by the petitioner have been affirmed by the courts, and adjustments and settlements thereunder are now proceeding as the Secretary of the Interior shall determine the facts. On the subject of interest paid and due to be paid on legal obligations incurred within the statutory period (Apr. 6, 1917, to Nov. 11, 1918), the Supreme Court in the case of the Chestatee Corporation decided December 7, 1931 (284 U. S. 231), ruled that interest paid and due to be paid on borrowed capital is a loss reimbursable within the meaning of the War Minerals Relief Statutes. The Secretary of the Interior construed this decision as meaning that interest losses could not be reimbursed by him to include any interest which had accrued after the date of the amendment of March 2, 1919, notwithstanding the fact that interest was paid and further interest accrued thereafter on "obligations incurred" within the statutory period, and further, notwithstanding the fact that the principal of said loans have heretofore been determined and allowed as losses reimbursable. In fact, in some instances the Secretary of the Interior cut off interest on notes only to March 2, 1919, notwithstanding the fact that notes and indebtedness bearing interest did not mature until dates thereafter. The hearings before your committee disclosed the fact not only by testimony from witnesses but by documents over the signatures of various Secretaries of the Interior who have heretofore administered the war minerals relief acts that the Government was in effect, or at least morally, a party to the loans which were made to producers in order to enable them to comply with the demands of the Government to produce these minerals urgently needed by the Nation in the prosecution of the war. In the Chestatee case above cited it has been shown conclusively that written requests were made by the then Secretary of the Interior for the enlargement of this enterprise which was well known to the Geological Survey and the Bureau of Mines as capable of supplying a large part of the Government requirements if operations were enlarged. In reply to this demand the Chestatee Co. tendered its property to the Government giving a full description of its then operations and stated that it would not enlarge the enterprise unless the Government would in some way "underwrite the enlarged enterprise" which was so urgently needed for war emergencies but which could not exist after the war after normal conditions had been restored, furthermore the corporation showed that it could not finance the enlarged enterprise under the financial conditions which existed at that time. Whereupon the Secretary of the Interior personally appealed to financial interests to finance the enlarged enterprise. This they did and the Chestatee Co. thereupon abandoned its small operations, ceased shipping its then small tonnage output and devoted all of its energies to the enlarged enterprise to supply the large tonnage needed. During the progress of this work the Government had its engineers and other representatives almost constantly on the ground and various reports were made by them to the Government practically approving the loans, stating "that the enterprise was in the hands of capable men and financed on a fine clean basis." For the above reasons and others clearly brought out by your committee in its hearings we cannot feel that "just compensation" has been paid or "justice and equity" done until interests actually paid and accrued at not exceeding lawful rates on money actually borrowed and accrued on credit purchases made in good faith in an effort to comply with the Government demands to supply the urgent Government needs in time of war shall have been reimbursed. Your committee is not unmindful of the fact that the Supreme Court of the United States in its decision of May 29, 1933 (289 U. S. 510), interpreted the act of March 2, 1919, as amended, as not permitting the Secretary to include in his adjustment and payment of losses interest paid and accrued after the date of the passage of that act. This decision quotes the wording of the act losses which "have been suffered" to mean as of March 2, 1919, without regard to maturity of interest-bearing obligations thereafter and construing the language of its previous decision wherein it used the words "obligations incurred", it said that the word "incurred" was used to mean interest "accrued" to the date of the passage of the act. In the course of this opinion the court said that the "method of determining the net losses during a particular period' or in a 'particular adventure' is well settled." Your committee is of the opinion that these war-minerals operations were all or practically all "particular adventures" to supply the needs of the Nation in time of emergency and that any losses suffered as a result of "money expended or obligations incurred", within the statutory period must necessarily be taken into account in determining the net losses reimbursable within the meaning of the acts. While it is true that the final decision of the Supreme Court above cited has prevented the Secretary from the payment of losses to some by reason of interest payments and accruals after the date of the passage of the act March 2, 1919, your committee construes this opinion as calling attention only to the insufficiency of the wording of that act to accomplish what was evidently the intention of the Congress when it was passed wherein it stated that losses due to "money expended and obligations incurred" in compliance with request or demand of the Government to supply the needs of the Nation in the prosecution of the war should be reimbursed. In the hearings it was shown your committee that not exceeding $1,250,000 would be required to reimburse the losses covered by this bill, H. R. 7984; your committee has therefore amended the same accordingly. It is considered pertinent to call attention to the fact that losses due to interest paid and accrued on borrowed capital have been certified by the Secretary in amounts over and above what he is permitted to pay under the present statutes as interpreted by the Supreme Court. It is apparent that losses have been suffered by reason of such payments and accruals which are in "equity and justice" as much entitled to reimbursement as payments and accruals of interest previous to March 2, 1919, and it is believed that unless the Congress authorizes and directs the Secretary to adjust and liquidate and pay such losses as provided for in this bill, H. R. 7984, that many private claim bills will hereafter come before Congress for payment and probably ultimate payments including heavy accruals of interest still running in which event much greater amounts will ultimately be paid by the Government in settlement of these claims than if now made promptly by the Secretary of the Interior under the provision of this bill, H. R. 7984, and receipts taken by him in full settlement of all claims against the United States Government connected with the production of the war minerals needed by the Government and supplied by those producers in time of emergency. Many precedents have been established by the Congress in reimbursements of interest on money borrowed to supply the needs of the Nation in time of emergency. It is considered by your committee that these claimants are exactly in the same class and sooner or later must have the attention of Congress in form of some amendment to existing law or on private claim bills. Your committee is further of the opinion that the prompt settlement and payment of these just claims will be in keeping with the present policy of the Congress. They are widely scattered among more than 35 States of the Union. The distribution of awards which may be made hereunder would seem to be in keeping with the present national recovery program. No appropriation is asked for the reason that these awards are payable from the appropriation carried by the original act of October 5, 1918. But they must come through as items of future deficiency bills by reason of the fact that the unexpended balance of the appropriation carried by the act of 1918 has been covered back into the Treasury surplus. It has been found by your committee that claimants in good faith accepted the provisions of the act of March 2, 1919, providing that "net losses" should be paid in lieu of the rights they enjoyed under the act of 1918, under which they were due "just compensation" and waived their rights to sue the Government. It is therefore considered that until "net losses" have been paid, including interest paid and accrued upon borrowed capital, the Government has not discharged its obligations to these producers. It is expected that the Secretary of the Interior under authority of this bill will promptly certify for payment such amount as he shall find to be due in each case as it shall come before him or is already before him under judgment or decree of the court, so that the administration of these war mineral relief statutes may be concluded as quickly as is consistent with justice and equity. Hon. JOE L. SMITH, DEPARTMENT OF THE INTERIOR, Chairman Committee on Mines and Mining, House of Representatives. MY DEAR MR. SMITH: Your letter of February 17 requesting a report on H. R. 7984, Seventy-third Congress, which bill is now before your committee for consideration, has been received. |