Saturday, August 30, 2014

emergency powers, buried in the law

I came across an interesting piece of historical trivia in a book about U.S. financial sanctions against Japan in the decade before Pearl Harbor, Edward S. Miller's Bankrupting the Enemy (Naval Institute Press, 2008). After the United States declared war against Germany in April, 1917, the government needed new laws to control trade and it did not want the British system of deciding on each transaction.

The result was a Trading with the Enemy Act [let's call it TWEA]. The House approved its version of the measure, giving control to the Department of Commerce. In the Senate, however, the Secretary of the Treasury pressed for his department to be in charge and for the measure to include financial transactions as well as physical goods. In the bureaucratic food fight, Treasury came out ahead.

In the process, Senators accepted Treasury language giving the President overall broad authority. What became section 5(b) gave the President power to "investigate, regulate,or prohibit ... any transactions ... between the United States and any foreign country, whether enemy, ally of enemy, or otherwise..." Although TWEA was intended to be temporary and limited to the wartime situation, section 5(b) was permanent law. And its language was not limited to enemy nations -- probably just because Treasury lawyers wanted flexibility to deal with loophole situations.

Once in the statute books, there it stayed. And it was used by FDR to declare a bank holiday on the day he was inaugurated and to take other domestic economic measures including ending the gold standard pending congressional approval of emergency relief legislation, though Congress did limit the authority to "national emergencies" declared by the president.The authority is still there under the International Emergency Economic Powers Act.

This resort to long-buried legal authorities helps explain why Congress has not declared "war" since 1942 even while authorizing force on at least eight other occasions. Use of the "W word" triggers a broad range of legal changes such as the voiding of contracts and giving the President enormous domestic economic powers.

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