Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

414.008/5–1954

Memorandum by the Assistant Legal Adviser for International Claims (English) to the Assistant Secretary of State for Inter-American Affairs (Holland)¹

secret

[Washington,] May 19, 1954.

Subject:

• Controls Over Foreign Ships Carrying Munitions to Guatemala

You have asked whether there is existing legal authority pursuant to which the Executive could take action respecting foreign ships which carry munitions to Guatemala. Particularly you have asked if there is any legal authority pursuant to which the Executive could deny United States port privileges to such foreign vessels, and prevent the use of the Panama Canal to such vessels.

Section 5(b) of the Trading With the Enemy Act, as amended (Title 50, app. U.S.C.) provides as follows:

“(b) (1) During the time of war or during any other period of national emergency declared by the President, the President may, through any agency that he may designate, or otherwise, and under such rules and regulations as he may prescribe, by means of instruction, licenses, or otherwise—

(A) investigate, regulate, or prohibit, any transactions in foreign exchange, transfers of credit or payments between, by, through, or to any banking institution, and the importing, exporting, hoarding, melting, or earmarking of gold or silver coin or bullion, currency or securities, and

(B) investigate, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest,

by any person, or with respect to any property, subject to the jurisdiction of the United States …”

The United States is presently in a “period of national emergency declared by the President”; the President declared such an emergency on December 16, 1950. Consequently, at the present time the President possesses the authority set forth in the section. Since under this section the President through any agency designated may prohibit … transactions involving any property in which any foreign country or national thereof has any interest by any person, or with respect to any property subject to the jurisdiction of the United States”, he is authorized to prohibit any person subject to the jurisdiction of the United States from leasing docking space, bunkering, or dealing in any other manner with a foreign national or any property of such foreign national within United States jurisdiction. Hence, an order issued pursuant to the authority of this section could prohibit persons subject to the jurisdiction of the United States from having any transactions with a foreign ship which comes within United States territorial waters; this could effectively prevent the use of United States port facilities. Criminal penalties for violation of the section or orders issued pursuant thereto are provided for in the Act. Such action would not be effective to prevent foreign vessels from plying munitions to Guatemala since it is not necessary to touch United States ports or the Canal in order to do so.

Apart from the technical legal situation summarized above, there are important policy problems involved in such a use of Section 5(b) of the Trading With the Enemy Act. It is my understanding that the Treasury Department, which currently exercises the President’s authority under Section 5(b), has exercised it in the international field only in situations involving actual hostilities with the exception of the blocking of the Czech Steel Mill in 1952; and that Treasury Department has been reluctant to utilize the section in other than a most serious type of situation, particularly because the authority granted by the section is extremely broad and use of it otherwise might result in curtailment of the authority itself. In the instant situation, a finding by the President that the shipment of arms to Guatemala is injurious to the security of the United States, and a directive to the Secretary of the Treasury to take action such as that set forth above, would in all likelihood be deemed necessary before the action could be taken.

In addition to the authority available to the Executive under Section 5(b) of the Trading With the Enemy Act, Section 191 of Title 50, U.S.C., provides broad authority to regulate anchorage and movement of vessels in the territorial waters of the United States and within the territory and waters of the Canal Zone during a declared national emergency. That section reads as follows:

“Whenever the President by proclamation or Executive order declares a national emergency to exist by reason of actual or threatened war, insurrection, or invasion, or disturbance or threatened disturbance of the international relations of the United States, the Secretary of the Treasury may make, subject to the approval of the President, rules and regulations governing the anchorage and movement of any vessel, foreign or domestic, in the territorial waters of the United States, may inspect such vessel at any time, place guards thereon, and, if necessary in his opinion in order to secure such vessels from damage or injury, or to prevent damage or injury to any harbor or waters of the United States, or to secure the observance of the rights and obligations of the United States, may take, by and with the consent of the President, for such purposes, full possession and control of such vessel and remove therefrom the officers and crew thereof and all other persons not specially authorized by him to go or remain on board thereof.

“Within the territory and waters of the Canal Zone the Governor of the Canal Zone, with the approval of the President, shall exercise all the powers conferred by this section on the Secretary of the Treasury.

“Whenever the President finds that the security of the United States is endangered by reason of actual or threatened war, or invasion, or insurrection, or subversive activity, or of disturbances or threatened disturbances of the international relations of the United States, the President is authorized to institute such measures and issue such rules and regulations—

(a) to govern the anchorage and movement of any foreign-flag vessels in the territorial waters of the United States, to inspect such vessels at any time, to place guards thereon, and, if necessary in his opinion in order to secure such vessels from damage or injury, or to prevent damage or injury to any harbor or waters of the United States, or to secure the observance of rights and obligations of the United States, may take for such purposes full possession and control of such vessels and remove therefrom the officers and crew thereof, and all other persons not especially authorized by him to go or remain on board thereof;

(b) to safeguard against destruction, loss, or injury from sabotage or other subversive acts, accidents, or other causes of similar nature, vessels, harbors, ports, and waterfront facilities in the United States, the Canal Zone, and all territory and water, continental or insular, subject to the jurisdiction of the United States. Any appropriation available to any of the Executive Departments shall be available to carry out the provisions of this chapter.”

1. Drafted by the Assistant Legal Adviser for Economic Affairs, Stanley D. Metzger.