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94th Congress }

COMMITTEE PRINT

TRADING WITH THE ENEMY

Legislative and Executive Documents Concerning
Regulation of International Transactions in

Time of Declared National Emergency

PREPARED BY THE

SUBCOMMITTEE ON INTERNATIONAL TRADE

AND COMMERCE

OF THE

COMMITTEE ON INTERNATIONAL

RELATIONS

NOVEMBER 1976

Printed for the use of the Committee on International Relations

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1976

68-002

For sale by the Superintendent of Documents, U.S. Government Printing Office

Washington, D.C. 20402 - Price $2.75

COMMITTEE ON INTERNATIONAL RELATIONS

THOMAS E. MORGAN, Pennsylvania, Chairman CLEMENT J. ZABLOCKI, Wisconsin WILLIAM S. BROOMFIELD, Michigan WAYNE L. HAYS, Ohio

EDWARD J. DERWINSKI, Illinois L. H. FOUNTAIN, North Carolina

PAUL FINDLEY, Illinois DANTE B. FASCELL, Florida

JOHN H. BUCHANAN, JR., Alabama CHARLES C. DIGGS, JR., Michigan

J. HERBERT BURKE, Florida ROBERT N. C. NIX, Pennsylvania

PIERRE S. DU PONT, Delaware DONALD M. FRASER, Minnesota

CHARLES W. WHALEN, JR., Ohio BENJAMIN S. ROSENTHAL, New York EDWARD G. BIESTER, JR., Pennsylvania LEE H. HAMILTON, Indlana

LARRY WINN, JR., Kansas
LESTER L. WOLFF, New York

BENJAMIN A. GILMAN, New York
JONATHAN B. BINGHAM, New York TENNYSON GUYER, Ohio
GUS YATRON, Pennsylvania

ROBERT J. LAGOMARSINO, California
ROY A, TAYLOR, North Carolina
MICHAEL HARRINGTON, Massachusetts
LEO J. RYAN, California
DONALD W. RIEGLE, JR., Michigan
CARDISS COLLINS, Illinois
STEPHEN J. SOLARZ, New York
HELEN S, MEYNER, New Jersey
DON BONKER, Washington
GERRY E. STUDDS, Massachusetts

JARIAN A. CZARNECKI, Chief of Staf

SUBCOMMITTEE ON INTERNATIONAL TRADE AND COMMERCE

JONATHAN B. BINGHAM, New York, Chairman DONALD M. FRASER, Minnesota

EDWARD G. BIESTER, JR., Pennsylvania ROY A. TAYLOR, North Carolina

CHARLES W. WHALEN, JR., Ohio
DON BONKER, Washington
GERRY E. STUDDS, Massachusetts

R. ROGER MAJAK, Subcommittee Staf Consultant
Thomas E. Porovich, Minority Subcommittee Staff Consultant

SUSAN GUSTAFSON, Staf Assistant
VICTOR C. JOHNSON, Research Assistant

(11)

FOREWORD

The Trading With the Enemy Act of 1917 has been on the books for nearly 60 years. As amended during that period, section 5(b) has provided the President with progressively broader authority to regulate the nation's international (and domestic) finance during periods of declared national emergency. This section has been construed over the years as providing statutory authority for "emergency" actions as diverse as the “bank holiday” of 1933, an alien property freeze and consumer credit controls imposed during World War II, foreign direct investment controls imposed in 1968, and routine export controls in 1972, 1974, and 1976. It provides a major statutory basis for the trade embargoes currently in effect against North Korea, Vietnam, Cambodia, and Cuba.

But despite the obvious importance of section 5(b), its legislative history has never before been assembled and fully reviewed. The

purpose of this committee print is to provide such a legislative history. It is designed to serve as a set of working documents for the use of the Subcommittee on International Trade and Commerce and of the full International Relations Committee. These documents should also be of interest and use to other Members of Congress working on related matters, and to the interested public.

In January 1973, Senate Resolution 9 established a bipartisan Senate Special Committee on the Termination of the National Emergeney “to conduct a study and investigation with respect to the matter of terminating the national emergency proclaimed by the President of the United States on December 16, 1950. * * * This national emergency, proclaimed to aid in prosecuting the Korean war, had never been terminated. The Special Committee soon discovered that not one but four "national emergencies" continued in effect, including the national emergency declared by President Roosevelt on Jarch 6, 1933, to meet the problems of the depression, and the national emergencies declared by President Nixon on March 23, 1970, because of a Post Office strike, and on August 15, 1971, to deal with balance of payments and other international problems.

The Special Committee also discovered that no inventory existed of the hundreds of statutes delegating powers to the President which were activated by these Presidential declarations. In the words of Senator Mathias, Special Committee cochairman, “a majority of the people of the United States have lived all of their lives under emergency government.” The other cochairman, Senator Church, pointed out that the basic question before the Special Committee was "whether it is possible for a democratic government such as ours to exist under its present Constitution and system of three separate branches equal in power under a continued state of emergency."

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An exhaustive 2-year study by the Special Committee, followed by extensive consideration by the appropriate legislative committees of each house, has produced the National Emergencies Act, which was signed into law by the President on September 14, 1976 (Public Law 94-412). The act terminates all powers and authorities possessed by the executive branch as a result of any declaration of national emergency, and prescribes procedures governing the declaration, conduct, and termination of any future national emergency. Exempted, however, from the National Emergencies Act are certain laws deemed especially important to the functioning of the government. Among these is section 5(b) of the Trading With the Enemy Act.

Given the jurisdiction of the Committee on International Relations under the Rules of the House, it is the responsibility of the committee and its Subcommittee on International Trade and Commerce, pursuant to Section 502 of the National Emergencies Act, to conduct a thorough review of section 5(b) of the Trading With the Enemy Act and to recommend revisions to the House within 9 months.

Two problems arise in attempting to determine congressional intent with regard to section 5(b). The first is that the legislative history of 5(b) is short and sketchy. There was virtually no discussion of it at the time of the passage of the original Trading With the Enemy Act, and subsequent amendments generally occurred in times of crisis when apparently it was felt that there was no time for the luxury of extensive debate. The most striking example is that the 1933 amendment, which authorized the President to invoke the powers of 5(b) simply by declaring a national emergency, was debated and passed by both houses in 1 day, without hearings and before the bill was even in print. The second is that the relationship of 5(b) to the rest of the Trading With the Enemy Act was ambiguous from the beginning, in that there was no language in that section limiting its application to the “enemy” in time of “war” as defined in section 2 of the act.

In these circumstances, the subcommittee has sought to include in this volume all the legislative history which might conceivably be relevant. Part I includes the following: the text of the entire Trading With the Enemy Act as originally passed, and those portions of the floor debates, committee reports, and hearings which pertain to the general purposes of the bill or to 5(b); the complete legislative history of all four subsequent amendments to section 57b); the legislative history of relevant sections of two others acts (the “Knox Resolution" of 1921 and the Gold Reserve Act of 1934) which pertain to 5(b) without actually amending it; and the current status of the entire Trading With the Enemy Act as it appears in the United States Code Annotated.

If the legislative history of section 5(b) is short, its "executive history” is extensive. The authority of 5(b) has been invoked in numerous Presidential proclamations and Executive orders. These are reprinted in part II of this volume. Finally, in part III, the current regulations

1 The text of Public Law 94-412 appears on p. 437.

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