United States v. Curtiss-Wright Export Corp

[Tenure]

Something caught me eye whilst traversing through Wikipedia. I was skimming through a list of inventors, clicked this one guy, followed through to the company he founded, and eventually came across this court case from the 1930s (1936 to be exact). The essence of it is, that FDR imposed a regulation which conflicted with the issues of an aeronautical company, Curtiss-Wright (more like the company, much like Taggart Transcontinental was the railroad company) which produced military aircraft.

The regulation was a foreign policy maneuver (of importance which I don't really understand) to prohibit the sale of military weaponry or vehicles to countries involved in a conflict. Curtiss-Wright disobeyed this regulation and went to the Supreme Court over the matter, which ruled in favour of FDR/Executive Branch. The details being that they sold illegal (at least in terms of foreign trade) products to Bolivia during the Chaco War, I believe. It is also interesting to note that apparently, these sales made up a vital portion of the company's foreign sales.

The importance of the case seems to be in terms of abuse of power and regulation of the economy, however I'm wondering under what justification such a legislation was introduced, and whether the economy can ever be regulated when dealing with foreign affairs.

Is it ever justifiable to intervene with exports, if those exports somehow conflict with the interests of ones nation (I'm thinking the most extreme example would be selling nuclear-weapon technology to individuals in a hostile nation)? Also, does the power to regulate sales to foreign markets really count as a justifiable action of the executive branch?

I would argue not, according to the very strict guidelines (or lack thereof) of Laissez Faire capitalism, although there may be dissent over the nuclear weapons issue.

Edited May 14, 2007 by Tenure

[softwareNerd]

Is it ever justifiable to intervene with exports, if those exports somehow conflict with the interests of ones nation (I'm thinking the most extreme example would be selling nuclear-weapon technology to individuals in a hostile nation)?

This depends on what exactly is meant by "conflict of interest". If a country is at war with another nation, and if it makes sense to disallow people from trading with the enemy, then such a restriction would be legitimate. It does not have to be nuclear weapons, it could be chocolate and bubble-gum. If one is not yet involved in a war, but another country is objectively hostile (i.e. potentially heading to war), then too, restrictions are fine.

[DavidOdden]

Is it ever justifiable to intervene with exports, if those exports somehow conflict with the interests of ones nation

The principles of LFC would say that the fact of being a business and making a profit should make no difference. So for example, LFC does not say "murder for hire is okay because it's for money". Some acts (theft, murder) are obviously the direct initiation of force so they can be rightly prohibited. On the other hand, driving the getaway car in a bank robbery is not force (using the term "force" literally), but it is an act that materially contributes to an act of force, and should be punished and prevented just as much as the actual gun-holders. In addition, actually implemented force and threated force have the same moral status, that is, you don't have to wait until the bullets start flying to know that force has been initiated.

The proper function of government is to prevent and punish initiation of force. This includes threats as well as fully-implemented force; and this includes restricting people from aiding the initiation of force. That's the moral basis for such restrictions. There is a separate issue whether it's proper to for the government to randomly declare "Enemy mine!" to justify restrictions. In all cases, if there are restrictions, they must be absolute -- not just restrictions on trade, but a total embargo on any and only actions that contribute to the ability of the enemy to attack the nation. In the modern context where we are no longer dealing directly with nation-on-nation aggression but have proxy and terror wars, it just isn't effective to say that no trade with Albania is allowed. Cuba, Iran, Iraq, Libya, North Korea, Sudan, Syria, Afghanistan, Pakistan, Yemen could go on a list of nations to prohibit dealing with; well, we can add Egypt, Algeria, Lebanon, Colombia, Georgia... because inefficacy in controlling terrorists is not so different from actively supporting terrorists. (The point being that if you trade with a company in a terrorism-tolerating nation, you may well be trading with the terrorists themselves). The nature of modern international threats makes it very hard to define where these restrictions should be. The principle is clear -- "don't tolerate aiding aggression against the nation" -- but identifying the specific acts is now very hard. We've seen leftists jump on the terrorist-naming bandwagon by declaring that SUVs support terrorism, since they consume more gas than mopeds, showing how easy it is to turn a meaningful principle into a pile of crap.

[Tenure]

Ok, so I understand that if we were involved in a war, it would obviously make sense to introduce legislation to cut off exports to enemy powers. My question however, is whether it is wrong to cut off those exports when they are aiding a neutral country, involved in a war with another country?

Maybe this is a contextual issue. I'll present two problems:

1) County A provokes war with Country B. Country B retaliates. War ensues, as these things often do. Country B has the capita, but not the time or industrial quality to produce war winning weapons. It buys weapons from Country C, to help win its war. Is this permissable?

2)Country C is fighting for liberation. Perhaps rebels fighting for a free-society from socialist oppressors, or from an occupying, tyrannical country D. Is it permissable to supply Country C with weapons in this instance?

Perhaps I'm just not just grasping where the exact cut off point for an 'illegal' initiation of force lies. Does it lie as far back as simply selling weapons to a country at war, fighting for liberty?

[softwareNerd]

As such, selling weapons should not be banned. For instance, suppose US companies were making and selling weapons to U.K. in the 30's and 40's, to help it fight the Nazis, that would not be a problem.

The question is: are their objective reasons to think that those weapons will be used to initiate force against the people this government is supposed to protect?

So, in your two examples, there's nothing to suggest the sale of weapons should be banned.

[Tenure]

Well that seems perfectly reasonable. I just can't understand, and I know FDR had a lot of crazy policies, why on earth this policy was implemented. What on earth could anyone hope to gain from this sort of restriction? These sales to Bolivia were a large source of income for Curtiss-Wright, and greater income means a greater economy. Why then, in the depths of depression, would FDR want to institute policy that prevented exports?

[DavidOdden]

I just can't understand, and I know FDR had a lot of crazy policies, why on earth this policy was implemented. What on earth could anyone hope to gain from this sort of restriction?

This is a serious history guy question. A resolution was passed by Congress enabling Roosevelt to prohibit arms exports, and he issues such an order that day. You'd have to look at the record of discussion, if any, to see why that power was granted in the first place. The US interest probably stems from the belief that there was oil, and that Standard had an interest in the Bolivian part of the region, so a war would not be a good thing for oil exploration (or other living things). I find a dearth of sources on the topic here.

[Tenure]

Heh, quite ironic that it ended up being such a poor choice in the end, oil wise.

Thanks for the help with this, David and sN.

[DavidOdden]

Heh, quite ironic that it ended up being such a poor choice in the end, oil wise.

Well, my understanding is that it's worse. Bolivia got its ass kicked, and apparently this idiot war contributed to the prevalent anti-capitalist, anti-American POV that characterises Bolivia and has made it a great place for commies.

[Colonel Rebel]

If I remember correctly, the case of US v. Curtiss-Wright was not about matter of selling goods to other countries, but rather, about the limits and scope of Executive Power in handling foreign affairs (versus domestic affairs) and where Congress, the Legislative Branch, fit into that scheme.