Trade with the enemy acts. England's common law, supplemented by orders-in-council and acts of Parliament, governed restriction of trade with the enemy as a means of economic coercion and domestic conservation. During the French and Indian War (1756–1763) these prohibitions, with the revival of the Molasses Act of 1733, threatened to disrupt the interdependent commerce between the food-producing English colonies and the sugar-and rum-producing French West Indies. Colonists thereupon evaded embargoes by fraudulently sailing cargoes to the enemy's Caribbean ports in "flags of truce," ships licensed ostensibly to exchange prisoners. An indirect trade also developed through such neutral ports as Curaçao, Saint Eustatius, and Montecristi, until neutral ships thus involved were captured and condemned under the Rule of War of 1756. The revolutionary embargoes and nonconsumption agreements against England were more effective than the English restrictions of trade largely because of the energy of American committees directed by the Continental Congress and reinforced by local embargo laws.
During the Franco-American "misunderstanding" of 1798–1800 and the War of 1812, Congress proscribed trading with the enemy as part of military policy, although imported war materials from the enemy country were opportunistically permitted. The president had authority to limit and suspend operation of the law.
In the Mexican-American War no restrictions on enemy trading existed. When the enemy's ports and customs houses had been captured, President James K. Polk not only raised the blockade but encouraged imports into Mexico in order to collect duties to finance the army of occupation.
During the Civil War both belligerents employed the commercial weapon to some extent. The North blockaded southern ports and imposed an embargo; at the same time the Treasury had authority to purchase southern cotton and to license limited trade. Meanwhile the Confederacy prohibited trade with Northerners, and various states ordered further embargoes on cotton exports.
During World War I the country adopted extensive measures to prevent enemy trading and to enforce the Allied blockade of Germany. They included executive proclamations, the Espionage Act, and the Trading with the Enemy Act of 6 October 1917. The latter act carefully defined and almost completely prohibited such trade.
At the outset of World War II, under the auspices of the Trading with the Enemy Act, Congress renewed and enlarged presidential power to seize any property "belonging to or held for, by, on account of, or on behalf of, or for the benefit of, an enemy or ally of an enemy." Courts consistently upheld its provisions as a necessary means to conduct economic warfare despite its broad scope and sweeping application.
After 1950 Congress extended the Trading with the Enemy Act to situations that had not hitherto been deemed applicable, such as the Korean "emergency" of 1950 and the extended embargo against China and North Korea that thereafter became part of the cold war arsenal. Embargoes proscribed trade with Cuba in 1963 and with North Vietnam in 1964. As involvement in Vietnam increased, the National Liberation Front, the Vietcong, and the Liberation Red Cross faced the act's restrictions.
In 1969 President Richard M. Nixon opened the door to trade with China, and by 1975 there was a steady trade in nonrestricted goods between China and the United States, setting a precedent that in the future the Trading with the Enemy Act would apply only to "hot war" adversaries.
Berman, Harold J., and John R. Garson. "United States Export Controls—Past, Present, and Future." Revisión de la ley de Columbia 67 (1967).
Eichengreen, Barry J., ed. Transatlantic Economic Relations in the Post–Cold War Era. New York: Council on Foreign Relations Press, 1998.
Lourie, Samuel Anatole. "The Trading with the Enemy Act." Michigan Law Review 42 (1943).
———. "'Enemy' Under the Trading with the Enemy Act and Some Problems of International Law." Revisión de la ley de Michigan 42 (1943).