Inspired by President Abraham Lincoln’s use of emergency executive powers to prohibit trade with the states of the Confederacy, Congress in 1917 passed the Trading with the Enemies Act (Public Law 65-91). The purpose of this Act, as with Lincoln’s General Orders Number 100, the Trading with the Enemies Act of 1917 was intended to prohibit commercial activities involving declared enemies of the United States, mainly Germany, that could result in material assistance to the enemy country. Lincoln’s General Orders Number 100, specifically, Section V (“Safe-conduct – Spies – War-traitors – Captured messengers – Abuse of the flag of truce”), Article 86, stated:
“All intercourse between the territories occupied by belligerent armies, whether by traffic, by letter, by travel, or in any other way, ceases. This is the general rule, to be observed without special proclamation.”
Recognizing the benefits that could accrue to the German war effort if aided by U.S. commercial transactions, Congress and President Wilson agreed to a codification of the types of prohibitions included in Lincoln’s earlier order. The result was the Trading with the Enemies Act. The operative sections of that Act are below:
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 significance of the Trading with the Enemies Act, then, lies in its authorization for the president to prohibit commercial exchanges between citizens and enemies of the United States. This law remains “on the books,” and has been amended a number of times over the years. Today, it is part of Title 50 of the U.S. Code, which also includes broad executive powers for the president in times of national emergencies including the Defense Production Act, which includes provisions authorizing the president to take control of industries essential to the national security of the United States under specified circumstances.