Powers of the President during crises

by J. Malcolm Smith; Cornelius P. Cotter

Chapter VI
REGULATION OF PROPERTY

We have seen that the effort to rationalize the national economy in time of economic or war emergency may lead democratic governments to assert a power to acquire the raw materials of production and productive facilities. This power of acquisition may be designed or exercised as a sanction for the coercion of “co-operation” upon the part of the private units of the economy, or it may express the finding that particular stockpiling or production functions can only, or most efficiently be conducted by public agencies.

Significant as may be the readiness of democratic governments in time of critical economic or crucial war emergency to enter the market place or to produce, either to the exclusion of private enterprises or in competition with them, these are exceptional circumstances; rationalization of the economy is principally achieved by coercing private owners and producers to act consistently with a governmental definition of the public interest. It is such examples of direct governmental control of private entrepreneurs, producers, and distributors that are to be examined in this chapter.

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]