Trading With the Enemy Act

The information below is discussed in more detail and placed into context under menu item "Emergency Declared".  The below version is distilled to promote quicker and easier understanding.

In 1917, under President Woodrow Wilson, the U.S. Congress passed legislation titled Trading With the Enemy Act.  The objective was to stop any American from trading with our enemies and the allies of our enemies, during  World War I.

Sec. 2(c) of the act defined "enemy" as foreigners and countries who were at war with the United States.  It specifically excluded American citizens as enemies.  Sec. 5(b) specifically excluded transactions of the American people. 

Public Law No. 65-91
(40 Stat. L. 411)
October 6, 1917

CHAP. 106. - An Act To define, regulate, and punish
trading with the enemy, and for other purposes.

Sec. 2(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."

Sec. 5(b) - That the President may investigate, regulate or prohibit, under such rules as he may prescribe by means of foreign exchange, export or earmarkings of gold or silver coin or bullion or currency, transfers of credit in any form other than credits relating to transactions to be executed wholly within the United States..."

The war powers were terminated following World War I, in 1921.  However, The Trading With the Enemy Act of 1917 was granted an exemption.

The "Roaring Twenties," then arrived, a decade of greed and decadence.  This culminated with the notorious stock market crash of '29.  Franklin D. Roosevelt was placed in the White House.   Speaking of the economic crisis during his inaugural address, Roosevelt said, "...I shall ask the Congress for the one remaining instrument to meet the crisis - broad Executive power to wage war against the emergency, as great as the power that would be given me if we were in fact invaded by a foreign foe."

On March 6, 1933, President Roosevelt relied on Sec. 5(b) of the Trading With the Enemy Act as authority for his Proclamation 2039 which closed all banks for five days. This was clearly a time of financial crisis, not of war, and hence was not within the literal terms and purposes of the Act.  Importantly, the Act was amended so as to include every citizen and every transaction and any form of national emergency.

Trading With the Enemy Act Sec. 5(b)

"During time of war or any other period of national emergency declared by the President, the President may, through any agency that he may designate, or otherwise, investigate, regulate, or prohibit, under such rules and regulations as he may prescribe, by means of licenses or otherwise, any transactions in foreign exchange, transfers of credit between or payments by banking institutions as defined by the President, and export, hoarding, melting, or earmarkings of gold or silver coin or bullion or currency by any person within the United States or any place subject to the jurisdiction thereof; and the President may require any person engaged in any transaction referred to in this subdivision to furnish under oath, complete information relative thereto, including the production of any books of account, contracts, letters or other papers in connection therewith in the custody or control of such person, either before or after such transaction is completed "

On March 9, 1933, Roosevelt issued Proclamation 2040.   It referred to the national emergency and again asserted Sec. 5(b) as authority for it.  Roosevelt then proclaimed that the Proclamation of March 6, 1933, would remain in full force and effect until proclamation by the president.  It remains in force to this day.

Therefore, an effectively permanent law exists that allows the president, by declaring an emergency, to assume the role of dictator.  He may designate agencies of his choice to investigate, regulate, and license any transaction of any person (enemy) within the United States, by means of rules and regulations he may prescribe.

In the event the reader has lingering doubt concerning the nature and effect of the Trading With the Enemy Act, it is suggested that he read Senate Report 93-549.

From Senate Report 93-549:

A majority of the people of the United States have lived all their lives under emergency rule. For almost 40 years, freedoms and governmental procedures guaranteed by the Constitution have, in varying degrees, been abridged by laws brought in force by states of national emergency.

The preeminent legal researcher on the subject of the War Powers is Dr. Eugene Schroder.  His treatise on the subject can be reached by clicking on "Emergency Declared," within this site's menu.   Video presentations are available here.