Trading with the Enemy Act

“ Every dollar that may be drawn by nonenemies from the assets of an enemy-dominated corporation reduces the sums available for national and individual indemnification for war damage. [2] As the objective of the Trading with the Enemy Act is not only the sterilization of funds against enemy use during war but also the creation of a reparation pool of enemy and enemy-tainted assets for indemnification of war injuries, such diminutions imperil the purposes of the Act. ”

“ Underlying the claimed right of petitioners to intervene is an important question of the power of the Alien Property Custodian under the Trading with the Enemy Act, namely: What part of the assets of a corporation organized under the laws of a neutral country may the Custodian retain where part of the corporate stock is owned by enemies, part by American citizens, and part by nonenemy aliens? ”

“ But Congress did not do so; it definitely adopted the policy of disregarding stock ownership as a test of enemy character and permitted property of domestic corporations to be dealt with as nonenemy. The prescribed plan was to seize the shares of stock when enemy owned rather than to take over the corporate property.
The Trading with the Enemy Act, approved October 6, 1917 (chapter 106, 40 Stat. 411 (50 USCA Appendix, § 2 (a) , Comp. St. ”

“ Provided that a person shall not be deemed to have traded with the enemy by reason only that he has
(i) done anything under an authority given generally or specially by, or by any person authorised in that behalf by, a Secretary of State, the Treasury or the Board of Trade, or (ii) received payment from an enemy of a sum of money due in respect of a transaction under which all obligations on the part of the person receiving payment had been performed before the commencement of the war by reason of which the person from whom the payment was received became an enemy. ”

“ No assignment of a chose in action made by or on behalf of an enemy shall, except with the sanction of the Treasury, be effective so as to confer on any person any rights or remedies in respect of the chose in action; and neither a transfer of a negotiable instrument by or on behalf of an enemy, nor any subsequent transfer thereof, shall, except with the sanction of the Treasury, be effective so as to confer any rights or remedies against any party to the instrument. ”

“ Every individual of the one nation must acknowledge every individual of the other nation as his own enemy, because the enemy of his country. But, after deciding what is the duty of the citizen, the question occurs, what is the consequence of a breach of that duty? The law of prize is a part of the law of nations. In it, a hostile character is attached to trade, independently of the character of the trader who pursues or directs it. Condemnation to the use of the captor is equally the fate of the property of the belligerent and of the property engaged in anti-neutral trade. ”

“ Where a trader during war is engaged in trading with a portion of the enemy country that has been reduced to subjection, and his trading there is permitted and encouraged by the invading army, his goods cannot be seized on the ground that he is engaged in an unlawful trade with the enemy. ”

“ That a neutral is friendly to our enemy, and continues to interchange good offices with him, can furnish no subject of complaint; for, then, all commerce with one belligerant would be deemed hostile by the other. The effect of commerce is to augment his resources, and enable him the longer to prosecute the war; but this augmentation is produced by an act entirely innocent on the part of the neutral, and manifesting no hostility to the opposing belligerant. ”

“ Direct consequence of the rule as established in those cases is that as soon as war is commenced, all trading, negotiation, communication, and intercourse between the citizens of one of the belligerents with those of the other, without the permission of the government, is unlawful. No valid contract therefore can be made, nor can any promise arise by implication of law from any transaction with an enemy. ”

“ Whatever may be the conjectural conclusions to be drawn from trade statistics, which, when stated by value, are of uncertain evidence as to quantity, the United States maintains the right to sell goods into the general stock of a neutral country, and denounces as illegal and unjustifiable any attempt of a belligerent to interfere with that right on the ground that it suspects that the previous supply of such goods in the neutral country, which the imports renew or replace, has been sold to an enemy. ”

“ It is a very old principle that, during a conjoint War, no subject of an ally can trade with the common enemy without liability to forfeiture, in the prize courts of the ally, of all his property engaged in such trade. ”

“ In the public treaties down to the present time, do we in fact see any prohibition than that of transportation of contraband goods to an enemy? No nation, not even the most powerful, or those who could, with impunity, exercise the right of the strongest, have ventured, in their declarations of war, dictated by the most violent animosity, to prohibit neutrals from the impartial sale of any goods in their own territory. ”

“ Neutral friends, or ever citizens, who remain in the enemy country after the declaration of war, have impressed upon them so much of the character of enemies, that trading with them becomes illegal, and all property so acquired is liable to confiscation. ”

“ If any person, for the purpose of obtaining any authority or sanction under this Act, or in giving any information for the purposes of this Act or of any order made thereunder, knowingly or recklessly makes a statement which is false in a material particular, he shall be liable on summary conviction to imprisonment for a term not exceeding six months or to a fine not exceeding one hundred pounds or to both such imprisonment and such fine. ”

“ Executory contracts with an alien enemy, or even with a neutral, if they cannot be performed except in the way of commercial intercourse with the enemy, are ipso facto dissolved by the declaration of war, which operates to that end and for that purpose with a force equivalent to that of an act of Congress. ”

“ Courts and jurists everywhere also agree that all trading in time of war with a public enemy, unless by permission of the sovereign, is interdicted when war is declared or duly recognized by the belligerent parties. ”

“ This rule is enforced by every consideration of sound policy and national justice. If the flag of the neutral can protect the property over which it waves, the entire commerce of the belligerent might assume this neutral garb, and be as safe in time of war as peace. To prevent such an abuse, the comity of nations has conceded the general principle, that all commerce flowing to or emanating from a mercantile house, established in the enemy’s country, shall be deemed hostile, and be held liable to seizure. ”

“ It is asserted by counsel that a British merchant, as a neutral, had, during the late civil war, a perfect right to trade, even in military stores, between their own ports, and to sell at one of them goods of all sorts, even to an enemy of the United States, with knowledge of his intent to employ them in rebel war against the American government. ”

“ It is not extravagant to affirm that the effective organization of these resources is more likely to determine the result of the present conflict than armies and navies. Therefore, everything reasonably possible should be done to prevent our enemy from reaping the advantages of commercial transactions with the people of the United States. ”

“ They may insist that a neutral shall allow no hostile operations to be carried on within its territory, but they have no right to demand that it shall punish its private citizens for engaging in trade in articles that may be helpful to the enemy, for that would be imposing too much trouble and expense upon a nation which has no concern in the quarrel. Such trade is punishable, but it is the business of the nation injured by it to catch the ships engaged in it and enforce the penalty—which is usually confiscation of the goods as "contraband of war." ”

“ But a citizen or an ally may be engaged in a hostile trade, and thereby involve his property in the fate of those in whose cause he embarks.' Again, the court say: 'If by trading, in prize law was meant that signification of the term which consists in negotiation or contract, this case would not come under the penalties of the rule. But the object and spirit of the rule is to cut off all communication or actual locomotive intercourse between individuals of the belligerent nations. ”

“ And it must be emphasised that the act by which a neutral merchantman acquires enemy character need not necessarily be committed after the outbreak of war, for she can, even before the outbreak of war, to such a degree identify herself with a foreign State that, with the outbreak of war against such State, enemy character devolves upon her ipso facto, unless she severs her connexion with the State concerned. ”

“ The principle does not go to the extent of saying that a man, having a house of trade in the enemy's country, as well as in a neutral country, should be considered in his whole concerns as an enemy's merchant, as well in those which respected solely his neutral house, as in those which belong to his belligerent domicile. ”

“ On similar principles, all Contracts made with the Enemy during War are utterly void. This applies to Insurances on the enemy's property and trade; to the drawing and negociation of Bills of Exchange, whether the subject of this country or of the alien enemy be the acceptor; to the sending of Money or Bills to the enemy's country; to Commercial Partnerships. All endeavours to trade by third persons are equally illegal. ”