Control of Goods and Materials
In surveying the possible alternatives of a nation aware of a threatened or existing shortage of strategic raw materials or finished products it is appropriate to review first negative and general controls and thereafter to consider those which become increasingly particular and positive. An initial precautionary move in such circumstances is to prevent the escape of scarce materials from the country. Also relevant thereto is the conservation of domestic supplies. Beyond conservation, implementing these safeguards are affirmative programs encouraging increased domestic production of such materials as well as their importation from abroad. Such programs have been reviewed under the heading of government acquisition. It will be recalled that in addition to stockpiling strategic materials, the government created and operated new productive facilities in an effort to insure adequate supply. However, in addition to these measures the government generally has been unable to escape the necessity of establishing priorities and allocations systems to insure that whatever supply is available is utilized for successful prosecution of the war or to combat effectively any other domestic emergency.
Restrictions on Export: Congress, in the Tennessee Valley Authority Act of 1933, stipulated that no products of the Corporation could be sold for use outside of the United States, its Territories and possessions, except to the United States government for the use of its Army and Navy, or to its allies in case of war.[318]
In a series of enactments, commencing with a joint resolution of May 1934, Congress sought to insulate the United States from the danger of involvement in foreign wars by embargoing the shipment of arms to foreign belligerents. The resolution mentioned enabled the President after consultation with the governments of other American Republics to proclaim that the prohibition of the sale of arms and munitions of war in the United States to those countries then engaged in armed conflict in the Chaco might contribute to the reestablishment of peace between those countries, after which it would become illegal to sell such material to the disputants or their agents.[319] On the same day that he signed the Chaco resolution, President Roosevelt issued the proclamation contemplated by the Act.[320] In August 1935 the embargo method was imposed uniformly without limitation as to area. The Neutrality Act of that year provided that if war broke out between two or more foreign states, the President should proclaim this fact, and thereafter it would be unlawful to export arms, ammunition or implements of war from any place in the United States, or its possessions to the belligerents, or to any neutral area for eventual trans-shipment to a belligerent country.[321] In addition, the Act placed a blanket prohibition upon the export or import of arms, except insofar as authorized under license procured from the National Munitions Control Board established by the Act.[322] When he had cause to believe a given ship was about to carry material to a belligerent, but the evidence was not deemed sufficient to justify forbidding the departure, the President could require the owner or commander to give a bond to the United States, with sufficient sureties, that the vessel would not deliver the men, or the cargo, or any part thereof to a belligerent.[323]
Congress maintained a vigilant oversight over enforcement of its neutrality policy. Since the embargo authorized by the 1935 Act could be applied only on the occurrence of war between, or among, two or more foreign states, it could not be invoked in the Spanish Civil War. This situation Congress immediately rectified upon assembling in January 1937. Public Resolution No. 1, which became law on January 8, 1937, specifically prohibited the export of war material for use of either of the opposing forces in Spain.[324] Thereafter it amended the 1935 statute, retaining its provisions virtually intact, but directing it at instances of internecine as well as international war.[325] The same day that the President signed this law, he issued a proclamation finding that a state of civil strife unhappily existed in Spain and prohibited the direct or indirect export of material of war to either of the opposing armies.[326]
A series of proclamations were issued under this and other contingent emergency statutes in September 1939.[327] The prohibition on export of war material was narrowed to a prohibition on the export of such material until title had unconditionally passed to the foreign purchaser—the cash and carry system.[328] A number of Presidential proclamations effected application of the new statute.[329]
Presidential proclamations also reflect the change in emphasis of statutory prohibitions of the export of war materials. In September 1939, the President issued a clearly neutrality-oriented proclamation prohibiting enlistment in, or recruitment for, belligerent armed forces, provisioning of belligerent ships,[330] and subsequent proclamations of 1940 and 1941 were equally clearly concerned with preserving adequate domestic stocks of strategic materials.[331]
Upon amendment of the July 1940[332] Act in June 1942, the President was authorized to prohibit or curtail the exportation of any articles, technical data, materials, or supplies, except under such rules and regulations as he might prescribe.[333] Unless the President otherwise directed, the functions and duties of the President under this section of the Act were to be performed by the Board of Economic Warfare.[334] The Export Control Act of 1949 empowered the President to prohibit or curtail the exportation from the United States, its Territories and possessions, of any articles, materials, or supplies, including technical data but excluding agricultural commodities in excess of domestic requirements.[335] The purpose here was to protect the United States from the excessive drain of scarce materials.[336] The Atomic Energy Act also prohibited the export from or import into the United States or curtail the exportation from the United States, its Territories and as authorized by the Atomic Energy Commission upon a determination by the President that the common defense and security would not be adversely affected thereby.[337]
Obviously embraced within the power to embargo is the power conditionally to permit exports. Thus, in December 1941 following Pearl Harbor, Congress permitted the President, whenever he deemed it to be in the interest of national defense, to authorize the Secretary of War to sell, transfer title to, exchange, lease, lend, or otherwise dispose of, to the government of any country whose defense the President deemed vital to the defense of the United States, any defense article procured from funds appropriated for the military establishment prior to or since March 11, 1941.[338]
In formulating an export policy for the period following World War II era, Congress doubtless has been influenced by the post war inflation. The Export Control Act of 1949, in granting the President power to prohibit or curtail the exportation of certain materials, including technical data,[339] made explicit the Congressional intent to protect the domestic economy from the excessive drain of scarce materials and to reduce the inflationary impact of abnormal foreign demand.[340]
Domestic Conservation: With a view to stabilizing prices and encouraging the conservation of deposits of crude oil situated within the United States Congress in 1935 prohibited the interstate shipment of contraband oil (i.e., oil produced in excess of state imposed quotas).[341] Two different provisions of the Second War Powers Act of 1942 related to conservation of strategic materials. Section 801 empowered the President to direct the Administrator of the Federal Security Agency to assign the manpower of the Civilian Conservation Corps to the extent necessary to protect the munitions, aircraft, and other war industries, municipal water supply, power and other utilities, and to protect resources subject to the hazards of forest fires.[342] Section 1201 permitted the Director of the Mint to vary the metallic composition of five cent pieces to conserve strategic metals.[343]
Priorities and Allocation: In late May 1941, Congress provided that whenever the President was satisfied that the fulfillment of requirements for the defense of the United States would result in a shortage in the supply of any material for defense or for private account or for export, the President could allocate the material in whatever manner he deemed necessary or appropriate in the public interest and to promote the national defense.[344] This provision was retained in the Second War Powers Act of 1942.[345] In a joint resolution of March 1947 declaring the need for maintenance of a technologically advanced and rapidly expandable domestic rubber-producing industry and for a Congressional study of the problem, Congress provided that in the interim, pending the enactment of permanent legislation, the government should continue allocation, specification, and inventory controls of natural and synthetic rubber.[346] A year later this power was continued. The President was authorized to exercise allocation, specification, and inventory controls of natural rubber and synthetic rubber to insure the consumption of general-purpose synthetic rubber as a part of the estimated total annual consumption of natural rubber.[347]
The First Decontrol Act of 1947, providing for the termination of certain of the provisions of the Second War Powers Act, permitted the continued exercise of power to allocate materials which were certified by the Secretaries of State and Commerce as necessary to meet international commitments.[348] Section 101 of the Defense Production Act of 1950 empowered the President to allocate materials in such manner, upon such conditions, and to such extent as he deems necessary or appropriate to promote the national defense.[349] A related section provided that no person should accumulate (1) in excess of the reasonable demands of business, personal, or home consumption, or (2) for the purpose of resale at prices in excess of prevailing market prices, materials which had been designated by the President as scarce materials or materials the supply of which would be threatened by such accumulation.[350] The Atomic Energy Act of 1946, as amended in 1951, expands the allocation power to its logical extreme by allocating all fissionable material to the federal government, making it unlawful for any person to possess or transfer any fissionable material, except as authorized by the Atomic Energy Commission.[351]