Bulk Settlements for Property Claims

Benjamin B. Ferencz

The world is so filled with tragedy that it is important to seek some cause for levity to avoid going completely insane. When crying on the inside, if possible, seek a balance by trying to laugh on the outside. That may not be an easy thing to do, but it can be done if you try hard enough. I know. Let us return to a scene in Germany, around 1950, when we were struggling to settle restitution claims quickly to raise money to meet the desperate needs of those who had barely survived the Nazi persecutions. Normally, it was not what one would consider a laughing matter.

A main reason for creation of an outside organization to handle restitution was to prevent the wrongdoing German State from benefiting from its own wrongful deeds. Millions of Jews had been dispossessed and murdered by the Nazis. All Jewish properties had been transferred to Aryan hands. Money received from sales made under duress were seized through special discriminatory taxes. Normally, unclaimed assets for which there are no known heirs revert to the local government. It was unthinkable to allow any German entity to benefit from these illegal confiscations or to retain the fruits of such crimes. The JSRO often cited the injunction: “Thou shalt not kill and be allowed to retain the possessions of your victim.”

Recovering stolen Jewish assets as prescribed by the Military Government law was a complicated legal process. Wherever possible, JSRO lawyers would seek a quick cash settlement with the possessor of property subject to restitution. But that was rarely possible. In the absence of a negotiated amicable accord, the claim would be decided by a special panel of German judges, almost all of whom had been members of the Nazi Party. Their decision could be appealed to a regular German court, then to a superior German tribunal, and from there to the final Supreme Restitution Court then composed of American judges. Those who were ordered to surrender properties they acquired from Jews during the Nazi period were lawfully entitled to get back what they had paid—but there was a problem. The original Reichsmark that had been paid were now worthless. A new currency reform law proclaimed that one new Deutsche mark would be valued as the equivalent of ten of the old Reichmark. The acquirers of Jewish property wanted to get back one Deutsche mark for every Reichmark they had paid. Who should bear the loss caused by the devaluation of the currency was a hotly debated legal and moral issue.

The “Aryanizers” of Jewish property almost invariably argued that they had paid a fair price, had paid off mortgages, had made many repairs, or were purchasers in good faith. They felt they were being unfairly hounded by this strange American-Jewish organization and its Director-General. Old anti-Semitic roots were being watered. Although we won every case in the Court of Restitution Appeals, it became clear that we needed to find a more expeditious and less contentious way to achieve our goals.

We hit upon a plan that might get us out of our difficult and time-consuming dilemma. If the German State governments could be persuaded to “buy” all of the Jewish Restitution Successor Organization claims for a fair price, there would be no unjust enrichment on their part and we would have immediate cash on hand to carry out our urgent charitable obligations. The German authorities could then take their time and make whatever concessions to their citizens that they felt were equitable. It took long negotiations to persuade state governments to accept the principle of a “global settlement.” Difficult appraisals had to be made regarding the fair value of thousands of properties before agreement could be reached. Since the plan offered benefits to all parties concerned, a deal was finally struck. It was a most novel and creative solution to a difficult political problem.

The first state government to agree to accept the arrangement for a quick cash payment was the state of Hesse. They would pay the Jewish successor organization twenty-five million marks in cash. That was a lot of money at that time. Arrangements were made to have the formal contract signing in a splendid royal house situated in the midst of a beautiful park in the state capital at Wiesbaden. This would be the first time that any post-Hitler official was to enter into a settlement of claims with an organization representing the “world Jewry” that Hitler sought to destroy. Other States were expected to follow the example. It was to be a solemn and momentous occasion, symbolic of a new relationship between Germany and the Jews.

I asked my Deputy, Dr. Ernst Katzenstein, to join me for the signing ceremonies. He had fled from Germany to England and Israel before joining the JSRO. I packed the heap of legal papers into a new attaché case I had recently bought in the U.S. Army PX. It was a neat box bound in beautiful red leather and carrying it made me feel like a British Prime Minister. Katzenstein, was so impressed with the beauty and reasonable cost of the case, that he proceeded to the PX and acquired an identical one for himself. He agreed to join me and to stay over in Wiesbaden to do some work at our regional office in the area. We would proceed together by car to the Royal Palace for the auspicious historical event.

When we arrived there, we were greeted by a welcoming party. Our driver handed me the beautiful red attaché case that he took from the trunk compartment. I brandished it conspicuously as I placed it near the center of the large round table in the pompous conference room. The Minister President made the first speech, noting the importance of the special occasion. The Finance Minister and the Justice Minister also made appropriate remarks heralding the event. Then it was my turn. I made some observations about how happy I was that we had finally reached the point of signing such a historic and important document on behalf of Nazi victims. I then reached for the contract in my beautiful red attaché case. I snapped it open with verve. Out popped Katzenstein’s pajamas!