What began as an effort to “define, regulate, and punish trading with the enemy” in the context of a congressionally declared war of limited duration has transformed over the decades into a broad writ of executive authority to wage economic warfare against loosely defined enemies virtually anywhere and at any time.1
Tracing this history sheds light on what might be called the secret life of statutes: the way that laws survive beyond their initial moment of creation, to be revived, reworked, and redeployed in later times of need. Over time, through executive proclamations, congressional amendments, and judicial decisions, the Trading with the Enemy Act concentrated more and more power in the hands of the president. By the 1950s, it served as the legal underpinning of most of the nation's highest-profile economic sanctions regimes—a function that it and its legislative offspring continue to perform. The law has granted presidents the unilateral authority to interfere with private economic transactions—including by freezing assets or imposing trade embargoes—in times of declared emergencies. Though overshadowed by military operations, U.S. economic sanctions have affected the lives of millions of people around the world.2 The story of the act, then, is part of the story of the rise of American global power, and the legal and government foundations that made possible its exercise.
The Trading with the Enemy Act has drawn the attention of political scientists, lawyers, and economists who have debated the efficacy of sanctions or focused on the law's implications for constitutional interpretation and current policy. Far less attention has been given to the act's historical contexts and its unexpected outcomes. Historians have chronicled a few of the episodes of heightened activity that have punctuated the history of the Trading with the Enemy Act—moments when the law justified new government actions, including during World War I, when the act allowed the United States to seize German property, and in 1933, when Franklin D. Roosevelt cited it to proclaim a “Bank Holiday.” Some also note that the Trading with the Enemy Act justified freezing Japanese assets and the assets of European countries occupied by the Axis before Pearl Harbor, as well as imposing embargoes against China and North Korea during the Cold War.