Foundational Information about the Trading with the Enemy Act

The Trading With the Enemy Act (TWEA) of 1917 is a United States federal law to restrict trade with countries hostile toward the United States. The TWEA prohibits trading and commercial relations with enemies and allies of enemies, except with the license of the President. TWEA provides for the seizure of enemy-owned property and its custody by an Alien Property Custodian. Seized property may be returned upon the termination of war after settlement of claims against the property. Provisions in the act are made for determining who is an “enemy,” the persons and property subject to the Act, and proceedings for obtaining possession and sale of property seized, claims for restitution of property seized, and claims against property and funds in the hands of the custodian. TWEA prevents property within the United States of an alien enemy country from becoming appropriated by the enemy and utilizes in attack upon the U.S. and to capture such property and employ for for defense and support of the U.S.

TWEA has two basic objectives for modern economic warfare. First, it is to prevent an enemy of the United States from using, for his own purposes, any property that he owns or controls that is located within the United States. Second, it is to make that same property of the enemy available for use by the United States. The Alien Property Custodian achieves the second purpose of the TWEA – the seizure and utilization of enemy property in the interest of and for the benefit of the United States. It accomplishes this objective by transferring the ownership of the property to the United States, there to remain unless the former owner can fit himself into one of the sections of the Act that provides for return. The scope of this power is considerably narrower than that of the regulatory power. Regulatory power covers any property in which a foreign national has any interest. Power granted under TWEA extends only to the foreign interest itself and in practice, only to the enemy interests.

In 1942 the Wyoming Supreme Court held a buyer’s resale contract with purchasers in Japan to be dissolved by war between the United Sates and Japan, where the property in controversy was an important raw material, and would, if sent to Japan give aid and comfort to the enemy. Takahashi v. Pepper Tank & Contracting Co., 58 Wyo. 330, 131 P.2d 339, 347 (1942). The U.S. Supreme Court upheld in 1923 that TWEA is strictly a war measure that empowers Congress to declare war and make rules concerning captures of property. Commercial Trust Co. of New Jersey v. Miller, 262 U.S. 51, 52, 43 S. Ct. 486, 487, 67 L. Ed. 858 (1923). During World War I the Supreme Court did not honor the Alien Property Custodian’s grant of power when the Custodian filed suit to enforce a demand that was identical to taking and the Custodian alleging that it cannot be defeated or delayed by defenses, as the determination that such property belong to the enemy.