The Inter-Departmental Committee on Reparations has studied the question of compensation for loss or damage suffered by Canadians as a direct result of operations of war and has decided to recommend that action be taken without undue delay to ascertain the claims of Canadian citizens therefor, particularly claims against the ex-enemy countries with which Canada has concluded Peace Treaties. Under the provisions of the Treaties with Italy, Roumania and Hungary, the Canadian Government has the right to retain the assets of those countries or their nationals vested in the Custodian, up to the amount of the claims of Canada and Canadian citizens against those countries and their nationals. Anything in excess of that amount requires to be returned. Under the Treaty with Finland, Canada is obliged to return property which was vested in the Custodian.

2. Under the Trading with the Enemy (Transitional Powers) Act, the Custodian is required only to keep a record of Canadian claims which are filed with him on a voluntary basis. At the present time, no department or agency of the Government has the authority to advertise for claims, investigate the validity of claims, make awards or otherwise dispose of claims. The Government has not yet publicly invited or required the filing of claims by Canadians. The claims presently registered with the Custodian amount to approximately $250,000,000.

3. The claims of some Canadians will be satisfied in whole or part from one or more of the following sources:

(a) Peace Treaties. Under the terms of the Peace Treaties with Italy, Roumania, Hungary and Finland, the Governments of these countries have undertaken to restore Canadian property to the rightful owners. They are also obliged to make restitution of looted property. Moreover, in the event that property cannot be restored, these Governments undertake to compensate the Canadian claimant in local currency to the extent of two-thirds of the damage suffered.

(b) Equal Treatment Agreements with Certain Countries. Canada has concluded Equal Treatment Agreements with the Netherlands and with France. It is expected that such an agreement will he concluded with Belgium in the near future. Under these agreements, the Governments of the countries mentioned will extend the same treatment to Canadians who have suffered property losses in those countries as they give to their own nationals. ]t is not expected that agreements will he negotiated with any other governments.

(c) United Kingdom War Damage Compensation Legislation. This legislation embraces all property within the jurisdiction of the United Kingdom Government in respect of which compensation is claimed, regardless of the nationality or residence of the owner, and Canadians are therefore eligible for compensation without the necessity of any formal agreement with the United Kingdom.

4. Apart from the claims which will receive some compensation from the sources mentioned in (3) above, there remains the residue which will require the Government's attention. Unless Parliament is asked to appropriate money, it appears that the fund for meeting this residue of claims will he relatively small, in view of the fact that it will be derived from the following sources:

(a) The liquidation of any reparation in kind which Canada is to receive from Germany. Under the Paris Reparation Act, Canada's share is 1.5% of industrial plant and equipment and 3.5% of the total pool of German external assets.

(b) The liquidation of enemy assets presently vested in the Custodian, which amount to approximately $19 million. However, vested property may not be available as a source of payment without specific legislation of the Parliament of Canada to that end.

(c) The liquidation of whatever reparation Canada may receive under the Peace Treaties yet to be signed with Germany, Austria and Japan.

5. When all Canadian claims have been assembled, it will probably be necessary for the Government to appoint an independent government agency, preferably a Royal Commission similar to that established after World War I, to investigate and assess the validity of these claims, and also to recommend awards with respect to their settlement. ]t may also he desirable to establish a fund from which interim payments could be made to deserving claimants who would not otherwise benefit from compensation should the final settlement he delayed for any length of time.

6. It is therefore recommended that the Secretary of State he authorized to rake such steps as may be necessary to ascertain the claims of persons residing or carrying on business in Canada, or of Canadian citizens residing outside of Canada, for loss or damage arising directly from operations of war, including claims, the partial or full settlement of which is provided for under the Peace Treaties, Equal Treatment Agreements or the national legislation of certain countries. After ascertaining such claims, the Secretary of State should have them arranged in categories according to country, or in any other manner which he deems would be useful for Government purposes. It should be clearly indicated in any notice, press release or other form of advertisement that at the present time, such claims are required for purposes of information only, and that the action of the Secretary of State should in no way commit him or the Government of Canada to responsibility for the correctness of the claim, to taking action for the recovery of the claim or property in question, or with respect to settlement thereof or otherwise.¹³

7. This memorandum has been concurred in by the Secretary of State.

[L.S. ST. LAURENT]

¹³Approuvé par le Cabinet le 6 mai.
Approved by Cabinet, May 6.