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Trading with the enemy : legislative and executive documents concerning regulation of international transactions in time of declared national emergency online

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TRADING WITH THE El

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



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NOVEMBER 1076



Printed for the use of the Committee on International Relations



U.S. GOVERNMENT PRINTING OFFICE
68-002 WASHINGTON : 1976



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For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price $2.75

*JMmrm university school of uw library



COMMITTEE OX INTERNATIONAL RELATIONS



THOMAS E. MORGAN, Pennsylvania, Chairman



CLEMENT J. ZABLOCKI, Wisconsin
WAYNE L. HAYS, Ohio
L. H. FOUNTAIN, North Carolina
DANTE B. FASCELL, Florida
CHARLES C. DIGGS, Jr., Michigan
ROBERT N. C. NIX, Pennsylvania
DONALD M. FRASER, Minnesota
BENJAMIN S. ROSENTHAL, New York
LEE H. HAMILTON, Indiana
LESTER L. WOLFF, New York
JONATHAN B. BINGHAM, New York
GUS YATRON, Pennsylvania
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



WILLIAM S. BROOMFIELD, Michigan
EDWARD J. DERWINSKI, Illinois
PAUL FINDLEY, Illinois
JOHN H. BUCHANAN, Jr., Alabama
J. HERBERT BURKE, Florida
PIERRE S. nu PONT, Delaware
CHARLES W. WHALEN, Jr., Ohio
EDWARD G. BIESTER, Jr., Pennsylvania
LARRY WINN, Jr., Kansas
BENJAMIN A. GILMAN, New York
TENNYSON GUYER, Ohio
ROBERT J. LAGOMARSINO, California



Marian A. Czarxecki, Chief of Staff



Subcommittee on International Trade and Commerce
JONATHAN B. BINGHAM, New York, Chairman



DONALD M. FRASER, Minnesota
ROY A. TAYLOR, North Carolina
DON BONKER, Washington
GERRY E. STUDDS, Massachusetts



EDWARD G. BIESTER, Jr., Pennsylvania
CHARLES W. WHALEN, Jr., Ohio



9



R. Roger Majae, Subcommittee Staff Consultant

Thomas E. PorovicH, Minority Subcommittee Staff Consultant

Susan Gustafson, Staff 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 regu-
late 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 con-
trols 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 pur-"
pose 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 Emer-
gency "to conduct a study and investigation with respect to the matter
of terminating the national emergency proclaimed dv 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, includ-
ing the national emergency declared by President Roosevelt on
March 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 emer-
gency 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.*'

(in)



IV

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
94-442 ). x The act terminates all powers and authorities possessed by
the executive branch as a result of any declaration of national emer-
gency, and prescribes procedures governing the declaration, conduct,
and termination of any future national emergency. Exempted, how-
ever, 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, pur-
suant 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 amend-
ment, 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 5(b) ; the legislative his-
tory of relevant sections of two others acts (the "Knox Resolution" of
1921 and the Gold Reserve Act of 1934) which pertain to 5(b) with-
out 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 his-
tory" 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 pait III, the current regulations

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



governing financial transactions, issued under the authority of 5(b),
are reprinted from Title 31 of the Code of Federal Regulations. 1

This volume was edited by Victor C. Johnson, of the subcommittee
staff. The subcommittee wishes to acknowledge the invaluable assist-
ance of Messrs. Groyer S. Williams and Walter S. Albano of the
American Law Division, Congressional Research Service, Library of
Congress, in compiling the documents.

Jonathan B. Bingham,
Chairman, Subcommittee on
International Trade and Commerce.



1 The following comprehensive collections of documents relating to emergency powers
are also available: U.S. Congress, Senate, "Emergency Powers Statutes: Provisions of Fed-
eral Law Now In Effect Delegating to the Executive Extraordinary Authority in Time of
National Emergency," report of the Special Committee on the Termination of the National
Emergency, 93d Congress, 1st Session (Nov. 19, 1973) ; U.S. Congress, Senate, "Executive
Orders in Times of War and National Emergency," report of the Special Committee on
National Emergencies and Delegated Emergency Powers, 93d Congress, 2d Session (June
1974) ; U.S. Congress, Senate, "Executive Replies" (Part 1 : Evaluation of Emergency
Powers Statutes ; Part 2 : Summaries of the Executive Branch and Committee Recom-
mendations ; Part 3: Statutes At Large), prepared by the staff of the Special Committee
on National Emergencies and Delegated Emergency Powers, 93d Congress, 2d Session
(November 1974).



CONTENTS



Page
FOREWORD Hi

I. A LEGISLATIVE HISTORY OF SECTION 5(b) OF THE TRADING
WITH THE ENEMY ACT:

A. Trading With the Enemy Act :

1. Text of Act 3

2. Conference Report 21

3. Senate Debate (excerpts) 32

4. House Debate (excerpts) 43

5. Senate Report 158

6. House Report 179

7. Statements of Hon. William G. McAdoo, Secretary of

the Treasury, and Milton C. Elliott, Esq., General
Counsel, Federal Reserve Board, before the Senate

Committee on Commerce 184

8. Statements of Albert Lee Thurman, Solicitor of

the Department of Commerce, and Hon. Milton C.
Elliott, General Counsel of the Federal Reserve

Board, before the Senate Committee on Commerce 202

B. Supplement to Second Liberty Bond Act :

1. Partial Text of Act 231

2. Conference Report (excerpts) 232

3. House Report (excerpts) 234

C. The Knox Resolution :

1. Text of Act 235

2. House Debate (excerpts) 237

D. Emergency Banking Relief Act :

1. Partial Text of Act 241

2. Senate Debate (excerpts) 242

3. House Debate (excerpts) 247

E. Gold Reserve Act of 1934 :

1. Partial Text of Act 251

2. House Debate (excerpts) 252

3. House Report (excerpt) 257

4. House Minority Report (excerpt) 258

F. Joint Resolution of May 7, 1940 :

1. Text of Act 259

2. House Debate 26 °

3. Senate Debate (excerpts) 261

4. Senate Report 300

G. First War Powers Act, 1941 :

1. Partial Text of Act ° 07

2. Senate Debate of December 16, 1941 (excerpts) 309

3. House Debate of December 16. 1941 (excerpts)

4. Senate Debate of December 17, 1941 (excerpts) 32S

5. House Debate of December 17, 1941 (excerpts) 330

6. House Report (excerpt) 331

7. Senate Report (excerpt) 335

H. Trading With the Enemy Act, As Amended :

1. Current Codification at 12 U.S.C.A. 95 337

2. Current Codification at 50 U.S.C.A. App. 1-44 351

I. National Emergencies Act (Public Law 94-412, approved

Sept. 14, 1976) 43 ~

(vro



VIII

II. PRESIDENTIAL PROCLAMATIONS AND EXECUTIVE ORDERS
ISSUED UNDER THE AUTHORITY OF SECTION 5(b) OF THE
TRADING WITH THE ENEMY ACT:

A. Presidential Proclamations :

1. Proclamation of June 26, 1916 (unnumbered and un- P a &e

titled) 445

2. Proclamation 2039— March 6, 1933: Bank Holiday,

March 6-9, 1933, Inclusive 447

3. Proclamation 2040 — March 9, 1933 : Continuing in force

the bank holiday proclamation of March 6, 1933 449

4. Proclamation 2070— December 30, 1933: The restora-

tion of non-member banks to the jurisdiction of their

own state banking authorities 450

5. Proclamation 2497 — July 17, 1941 : Authorizing a pro-

claimed list of certain blocked nationals and con-
trolling certain exports 452

6. Proclamation 2725 — April 7, 1947 : Amending the proc-

lamations of March 6 and March 9, 1933, and the
Executive order of March 10, 1933, to exclude from
their scope member banks of the Federal Reserve

System 454

B. Executive Orders :

1. Executive Order 6073— March 10, 1933 : Regulations

concerning the operation of banks 457

2. Executive Order 6260— August 28, 1933: Relating to

the hoarding, export, and earmarking of gold coin,
bullion, or currency and to transactions in foreign
exchange 459

3. Executive Order 6359— October 25, 1933 : Relating to

gold recovered from natural deposits 464

4. Executive Order 6556 — January 12, 1934 : Amendment

of Executive Order No. 6260 of August 28, 1933 465

5. Executive Order 6558 — January 15, 1934 : Relating to

receipt of gold on consignment by the mints and
assay offices 466

6. Executive Order 6559 — January 15, 1934: Amending

the Executive order of March 10, 1933, and the proc-
lamation of December 30, 1933, concerning the op-
eration of banks 467

7. Executive Order 6560 — January 15, 1934 : Regulating

transactions in foreign exchange, transfers of
credit, and the export of coin and currency 469

8. Executive Order 8389— April 10, 1940 : Amendment of

Executive Order No. 6560, dated January 15, 1934,
regulating transactions in foreign exchange, trans-
fers of credit, and the export of coin and currency. 471

9. Executive Order 8405 — May 10, 1940 : Amendment of

Executive Order No. 8389 of April 10, 1940, amend-
ing Executive Order No. 6560, dated January 15,
1934 473

10. Executive Order 8446 — June 17, 1940: Amendment of

Executive Order No. 8389 of April 10, 1940, as
amended 476

11. Executive Order 8484 — July 15, 1940 : Amendment of

Executive Order No. 8389 of April 10, 1940, as
amended 477

12. Executive Order 8493— July 25. 1940 : Amendment of

Executive Order No. 8389 of April 10, 1940, as
amended 478

13. Executive Order 8565 — October 10, 1940 : Amendment

of Executive Order No. 8389 of April 10, 1940, as
amended 480

14. Executive Order 8701 — March 4, 1941 : Amendment of

Executive Order No. 8389 of April 10, 1940, as
amended 481



IX

II. PRESIDENTIAL PROCLAMATIONS AND EXECUTIVE ORDERS
ISSUED UNDER THE AUTHORITY OF SECTION 5(b) OF THE
TRADING WITH THE ENEMY ACT— Continued

B. Executive Orders — Continued

15. Executive Order 8711 — March 13, 1941 : Amendment of

Executive Order No. 8389 of April 10, 1940, as Pag«
amended 4S2

16. Executive Order 8721 — March 24, 1941 : Amendment of

Executive Order No. 8389 of April 10, 1940, as
amended 483

17. Executive Order 8746 — April 28, 1941 : Amendment of

Executive Order No. 8389 of April 10, 1940, as
amended 484

18. Executive Order 8785 — June 14, 1941: Regulating

transactions in foreign exchange and foreign-owned
property, providing for the reporting of all foreign-
owned property, and related matters 485

19. Executive Order 8832— July 26, 1941 : Amendment of

Executive Order No. 8389 of April 10, 1940, as
amended 490

20. Executive Order 8843 — August 9, 1941 : Regulation

of Consumer Credit 491

21. Executive Order 8963 — December 9, 1941 : Amendment

of Executive Order No. 8389 of April 10, 1940, as
amended 496

22. Executive Order 8998— December 26, 1941 : Amend-

ment of Executive Order No. 8389 of April 10, 1940,

as amended 497

23. Executive Order 9095— March 11, 1942 : Establishing

the Office of Alien Property Custodian and defining

its function and duties 49S

24. Executive Order 9142 — April 21, 1942: Transferring

Certain Functions, Property, and Personnel from
the Department of Justice to the Alien Property
Custodian 500

25. Executive Order 9193 — July 6, 1942 : Amending Exec-

utive Order No. 9095 establishing the Office of Alien
Property Custodian and defining its functions and
duties and related matters 502

26. Executive Order 9567 — June 8, 1945 : Amending Exec-

utive Order No. 9095, as amended by Executive Or-
der No. 9193, to define further the functions and
duties of the Alien Property Custodian with respect
to property of Germany and Japan and nationals
thereof 507

27. Executive Order 9747— July 3, 1946 : Continuing the

functions of the Alien Property Custodian and the
Department of the Treasury in the Philippines 50S

28. Executive Order 9760— July 23, 1946 : Conferring cer-

tain authority upon the Secretary of State with
regard to diplomatic and consular property of Ger-
many and Japan within the United States 509

29. Executive Order 9989— August 20, 1948 : Transferring

jurisdiction over blocked assets to the Attorney
General 510

30. Executive Order 9788— October 14, 1946 : Terminating

the Office of Alien Property Custodian and transfer-
ring its functions to the Attorney General 512

31. Executive Order 10348— April 26, 1952 : Continuing in

force orders and regulations relating to blocked
property 513

32 Executive Order 10896— November 29, 1960: Amend-
ment of Executive Order No. 6260 of August 28,
1933 514

33. Executive Order 10905— January 14, 1961 : Amend-
ment of Executive Order No. 6260 of August 28,
1933, as amended 51 °



II. PRESIDENTIAL PROCLAMATIONS AND EXECUTIVE ORDERS

ISSUED UNDER THE AUTHORITY OF SECTION 5(b) OF THE
TRADING WITH THE ENEMY ACT— Continued

B. Executive Orders — Continued Page

34. Executive Order 11037— July 20, 1962 : Amendment of

section 12 of Executive Order No. G260 of August

28, 1933, as amended 516

35. Executive Order 11281— May 13, 1966: Transferring

jurisdiction over certain blocked assets from the
Attorney General to the Secretary of the Treasury 517

36. Executive Order 11387 — January 1, 196S : Governing

certain capital transfers abroad 520

37. Executive Order 11677 — August 1, 1972 : Continuing

the Regulation of Exports 522

3S. Executive Order 11683— August 29, 1972: Revoking
Executive Order No. 11677 of August 1, 1972, and
continuing in effect Executive Order No. 11533 of
June 4, 1970, relating to the administration of
export controls 523

39. Executive Order 11796— July 30, 1974 : Continuing the

regulation of exports 524

40. Executive Order 11798— August 14, 1974: Revoking

Executive Order No. 11796 of July 30, 1974, and
continuing in effect Executive Order No. 11533 of
June 4, 1970, relating to the administration of
export controls 525

41. Executive Order 11810— September 30, 1974: Con-

tinuing the regulation of exports 526

42. Executive Order 11818 — November 5, 1974 : Revoking

Executive Order No. 11810 of September 30, 1974.
and continuing in effect Executive Order No. 11533
of June 4, 1970, relating to the administration of
export control 527

43. Executive Order 11825 — December 3, 1974 : Revoca-

tion of Executive Orders pertaining to the regula-
tion of the acquisition of, holding of, or other
transactions in gold 52S

44. Executive Order 11940— September 30, 1976: Con-

tinuing the regulation of exports 529

III. REGULATIONS GOVERNING FINANCIAL TRANSACTIONS

ISSUED UNDER THE AUTHORITY OF SECTION 5(b) OF THE
TRADING WITH THE ENEMY ACT (TITLE 31 C.F.R.) :

A. Part 121 — Emergency Banking Regulations 533

B. Part 122 — General Licenses Issued Under Executive Order

6073, As Amended 541

C. Part 127 — Executive Order of January 15, 1934, Regulating

Transactions in Foreign Exchange, Transfers of Credit, and
Export of Coin and Currency 542

D. Part 128 — Transactions in Foreign Exchange, Transfers of

Credit, and Export of Coin and Currency 549

E. Part 500 — Foreign Assets Control Regulations 557

F. Part 505 — Regulations Prohibiting Transactions Involving the

Shipment of Certain Merchandise between Foreign Coun-
tries 603

G. Part 515 — Cuban Assets Control Regulations 605

H. Part 520— Foreign Funds Control Regulations 646



PARTI

A LEGISLATIVE HISTORY OF SECTION 5(b) OF THE
TRADING WITH THE ENEMY ACT



A. Trading With the Enemy Act
[40 Stat. 411, 12 U.S.C. 95a, 50 U.S.C. App. 1-44, approved October 6, 1917]

1. Text of Act

AN ACT To define, regulate, and punish trading with the enemy, and for other

purposes

Be it enacted by the Senate and Souse of Representatives of the
United States of America in Congress assembled, That this Act shall
be known as the "Trading With the Enemy Act."

Sec. 2. That the word "enemy," as used herein, shall be deemed
to mean, for the purposes of such trading and of this Act —

(a) A.ny individual, partnership, or other body of individuals, of
any nationality, resident within the territory (including that occu-
pied by the military and naval forces) of any nation with which the
United States is at war, or resident outside the United States and
doing business within such territory, and any corporation incorpo-
rated within such territory of any nation with which the United
States is at war or incorporated within any country other than the
United States and doing business within such territory.

(b) The government of any nation with which the United States is
at war, or any political or municipal subdivision thereof, or any officer,
official, agent, or agency thereof.

(c) Such other individuals, or body or class of individuals, as may
be natives, citizens, or subjects of any nation with which the United
States is at war, other than citizens of the United States, wherever
resident or wherever doing business, as the President, if he shall find
the safety of the United States or the successful prosecution of the
war shall so require, may, by proclamation, include within the term
"enemy."

The words "ally of enemy," as used herein, shall be deemed to
mean —

(a) Any individual, partnership, or other body of individuals, of
any nationality, resident within the territory (including that occu-
pied by the military and naval forces) of any nation which is an ally
of a nation with which the United States is at war, or resident outside
the United States and doing business within such territory, and any
corporation incorporated within such territory of such ally nation, or
incorporated within any country other than the United States and
doing business within such territory.

(b) The government of any nation which is an ally of a nation
with which the United States is at war, or any political or municipal
subdivision of such ally nation, or any officer, official, agent, or agency
thereof.

(c) Such other individuals, or body or class of individuals, as may
be natives, citizens, or subjects of any nation which is an ally of a

(3)



nation with which the United States is at war, other than citizens
of the United States, wherever resident or wherever doing business,
as the President, if he shall find the safety of the United States or the
successful prosecution of the war shall so require, may, by proclama-
tion, include within the term "ally of enemy."

The word "person," as used herein, shall be deemed to mean an
individual, partnership, association, company, or other unincorpo-
rated body of individuals, or corporation or body politic.

The words "United States," as used herein, shall be deemed to
mean all land and water, continental or insular, in any way within
the jurisdiction of the United States or occupied by the military or
naval forces thereof.

The words "the beginning of the war," as used herein, shall be
deemed to mean midnight ending the day on which Congress has
declared or shall declare war or the existence of a state of war.

The words "end of the war," as used herein, shall be deemed to
mean the date of proclamation of exchange of ratifications of the
treaty of peace, unless the President shall, by proclamation, declare
a prior date, in which case the date so proclaimed shall be deemed
to be the "end of the war" within the meaning of this Act.

The words "bank or banks," as used herein, shall be deemed to
mean and include national banks, State banks, trust companies, or
other banks or banking associations doing business under the laws
of the United States, or of any State of the United States.

The words "to trade," as used herein, shall be deemed to mean —



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