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We understand that General Bray is chairing an interagency steering group which is engaged in such a study. In the meantime, we plan to maintain emergency preparedness programs at the Board and at the Reserve Banks at their present levels until we are advised differently by the Administration or by the Congress.

In conclusion Madam Chairwoman, you have asked about the need for such emergency preparedness plans. In my opinion the national emergency plans on the civil side of Government are a necessary complement to the defense efforts on the military side. As long as there are such emergency plans, and in this disturbed and unsettled world they seem to be a requirement, the plans and programs I have outlined for the Federal Reserve are a fundamental feature underlying all other plans since the others assume a functioning monetary system.



This memorandum is submitted in response to your request concerning the above subject. Specifically, you have asked the following questions concerning the possible repeal of Section 5(b) of the Act:

1. What authorities are currently or potentially exercised
under 5(b), and thus possibly affected by a repeal?


Do other statutory bases exist for the exercise of any
of those authorities which could be used by the
Executive branch if 5(b) were repealed?

3. Is 5(b) in any respect necessary for the effectiveness
of the rest of the Act as a wartime trade control measure;
that is, if 5(b) were repealed, could the remainder of the
Act stand on.its own?

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We will respond to each of these questions in turn.

Authorities Currently or Potentially Exercised Under Section 5(b)

Section 5(b) of the Act currently provides the legal basis for

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A. Office of Alien Property, Department of Justice

8 C.F.R.

501, 103-10. The regulations contained in these provisions govern the operations of the Office of Alien Property in the Department of Justice. There are rules relating to general procedure (Part 501); claims procedure (Part 502); availability of records (Part 503); vesting orders (Part 504); specific prohibitions against certain types of transactions (Part 505); patent, trademark, and copyright transactions (Part 507); and reports of royalties due and payable under vested

patent, copyright, or trademark interests (Part 510).

B. Monetary Offices, Department of the Treasury, 31 C.F.R. 120-128. These regulations contain President Roosevelt's bank holiday Proclamation No. 2039 of March 6, 1933, as well as associated Proclamations and Executive Orders (Part 120), emergency bank regulations (Part 121), and bank licensing authority (Part 122). Also included are Roosevelt's Executive Order No. 6560 of January 15, 1934 (Part 127) and implementing regulations (Part 128) concerning the regulation of transactions in foreign exchange, transfers of credit, and the export of coin and currency.

C. Office of Foreign Asset Control, Department of the Treasury, 31 C.F.R. 500-520. These provisions contain regulations controlling foreign asset transactions with China, North Korea, Cambodia, and Vietnam (Part 500); transactions involving the shipment of certain merchandise from any foreign country to designated foreign countries (Part 505); transactions involving Cuban assets (Part 515); and foreign funds (Part 520).

D. Office of Foreign Direct Investments, Department of Commerce, 15 C.F.R. 1020-1050. The regulations contained herein implement E.0. 11387, issued January 1, 1968, which, in order to strengthen the balance of payments position of the United States, prohibits certain capital transfers abroad. The Office of Foreign Direct Investments, Department of Commerce is responsible for monitoring compliance with the Foreign Direct Investments Program as embodied in E.0. 11387. Accordingly, the regulations establish procedures for investigations (Part 1020), settlements (Part 1025), administrative proceedings (Part 1030), appeals (Part 1035), compliance (Part 1040), and miscellaneous rules (Part 1050).

E. United States Customs Service, Department of the Treasury,

19 C.F.R. 161. The regulations indicate that in addition to its enforcement responsibilities under the customs laws of the United States, the Customs Service conducts enforcement for other agencies, including the exportation of articles subject to the requirements of laws administered by the Department of Commerce [Part 161.2(a) (5)]

F. Domestic and International Business Administration, Department of Commerce, 15 C.F.R. 368-398. Section 5(b) of the Trading with the Enemy Act is cited as authority in E.0. 11940, issued September 30, 1976, which provides for the continuation of the Export Administration Regulations, notwithstanding the expiration of the Export Administration Act of 1969, as amended (50 U.S.C. App. 2401-2413).

The virtual impossibility of determining what authority might potentially be exercisable by the President pursuant to Section 5(b). of the Act leads us to avoid speculation on this question. determination can only be made with any degree of assurance in the

Such a

context of a specific claim of authority advanced by the President. As will be noted infra, with respect to judicial interpretations of Section 5(b), the courts have sustained broad-gauged regulations based upon the authority of this provision.


One aid in determining the type of authority which might be

up on Section 5(b), however, is to note the various subject areas which have been regulated under the statute over the years. In this regard, reference may be made to the listing of Presidential

Proclamations and Executive Orders which have been issued pursuant to Section 5(b) and which are contained in the Subcommittee's Committee Print entitled Trading With the Enemy--Legislative and Executive Documents Concerning Regulation of International Transactions in Time of Declared National Emergency, 94th Cong., 2d Sess. VIII-X (Nov. 1976). The subject matter diversity reflected in this listing is summarized by Chairman Bingham's statement that "[Section 5(b)] has been construed over the years as providing statutory authority for 'emergency' actions as diverse as the 'bank holiday' of 1933, an alien property freeze and consumer credit controls imposed during World War II, foreign direct investment controls imposed in 1968, and routine export controls in 1972, 1974, and 1976. It provides a major statutory basis for the trade embargoes currently in effect against North Korea, Vietnam, Cambodia, and Cuba," Committee Print, at III.

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