Abstract: Confiscation is always a dirty business: Wartime Expropriations of German Companies in the United States

Corinna Ludwig

Abstract

War creates the highest political risk for multinational companies. From the twentieth century, military wars mostly co-occurred with economic warfare in which governments intervened heavily in the economic sector. This paper deals with the expropriation of German companies in the United States in World War II and its aftermath. It asks the question of how governments deal with alien property at wartime and, more interestingly, what happens to the seized assets when political dynamics change, the war is over, and the former enemy becomes a new ally. After the United States entered World War II, the Office of Alien Property Custodian, which originated from the ''Trading with the Enemy Act'' of 1917, began seizing enemy property in the American market. Soon the freezing policy turned into the confiscation and liquidation of those assets. Vesting German property continued until April 1953. In fact, most of those orders were decreed after Germany's defeat in 1945. The ''War Claims Act'' of 1948 linked alien property assets with the compensation of American war claims. A pressure group of German industrialists, politicians, and various American cold warriors aimed to urge the U.S. Congress to change the law in favor of a return of German property. Although legislation did not change in the end, the debate on whether confiscating private companies and using the liquidation proceeds for the compensation of war claims was not an uncontested matter, as it violated private ownership rights. This case study will lead to the more general question of how governments and foreign companies interact in times of conflict. Are we able to locate the different interest groups that act in changing political environments within a spectrum between ethical idealism, opportunism, and pragmatism?