William G. McAdoo to Woodrow Wilson

I am just in receipt of your letter of the 29th instant, enclosing the Attorney General's letter of the 27th, in reference to the “trading with the enemy” bill. The amendments I suggested to the bill are strictly those I discussed with you with the single exception to which I shall refer later. The day before I submitted the amendments to the Senate Committee I sent them to Mr. Warren, who was present the next day when I discussed these amendments with the Senate Committee. The Attorney General is laboring under a number of misapprehensions about the scope of the proposed amendments. I can't imagine how he gets them, since what he says about Mr. Warren's attitude does not in all respects coincide with what Mr. Warren said before the Committee in my presence.
I have not sought to change the status of the custodian of alien property, except to require him to submit duplicate reports to the Secretary of the Treasury of all stocks, bonds and securities of a financial character that may come into his hands. It was suggested to the Committee that it might be better if he should turn over to the Secretary of the Treasury all such securities, just as he turns over all money under the Act, and while I said that that might be better, I did not insist upon it; in fact, I do not think it material.
The amendment giving the Secretary of the Treasury power to supervise and control foreign exchange and foreign credits is not in the bill as it passed the House. This has been the subject of very thorough consideration by me and the Federal Reserve Board, and I feel that it is of vital importance to the financial situation in this country during the period of the war that such powers shall be conferred upon the Secretary of the Treasury.
The Attorney General says as to the desirability (of this amendment), “I can express no opinion without having read the section itself and given it very careful thought.” I had not understood that you desired the opinion of the Attorney General upon the policy involved in this amendment. As it relates wholly to financial matters I had supposed that the opinion of the head of this Department and the Federal Reserve Board would be looked to.Mr. Warren stated to the Committee that this bill as originally drawn gave jurisdiction to the Secretary of the Treasury and not to the Secretary of Commerce. It was subsequently changed, as I understand it, at the instance of the Secretary of Commerce. I distinctly stated to the Committee that I wished to make no changes in the bill, except to preserve the jurisdiction of the Treasury Department over financial matters, and my testimony will so show. I am sure you will agree with me that as to financial policies and financial matters the views of this Department, always subject to your approval, ought to prevail as against the views of other Departments, which are charged with no responsibilities in respect thereto.
I have not sought to transfer to the Treasury Department “authority to issue clearances,” and I can't imagine how you got such an impression.
The bill as it passed the House provides that the Collectors of Customs shall refuse clearances, their action to be subject to review by the Secretary of Commerce. In other words, an independent power is conferred upon the Collectors of Customs–– my subordinates –– subject to review by the Secretary of Commerce, who undertakes to transmit orders to the Collectors of Customs independently of the head of the Department, frequently causing confusion and irritation. It is not only bad administration, but bad practice. The amendment I suggested was as follows: “Provided that all instructions to Collectors of Customs or other customs officers in the enforcement of the provisions of this act or other provisions of law shall be issued by the Secretary of the Treasury.” This merely means that when the Secretary of Commerce wishes to give instructions to Collectors of Customs he shall, in the proper and orderly way, transmit them to the Secretary of the Treasury, who will then direct the Collectors of Customs to carry out the orders and instructions of the Secretary of Commerce.
No man can serve two masters. We find that our subordinates are instructed sometimes by bureaus of the Secretary of Commerce direct, and at other times through the Treasury Department. Collectors of Customs frequently have to inquire of the Treasury Department whether they shall carry out the instructions of the Secretary of Commerce and for further information, and again, we sometimes find that if a Collector is jacked up for not having done his duty, he claims he was busy carrying out the orders of the Secretary of Commerce, and when we jack him up because he hasn't carried out the orders of the Secretary of Commerce, he claims he was too busy carrying out the orders of the Treasury Department. If all orders proceed through the Treasury Department, which is the proper procedure, these difficulties will not arise. It is merely for the sake of good administration that I have suggested this amendment. It does not in any way interfere with the Secretary of Commerce; on the contrary, it will facilitate the carrying out by Collectors of Customs of the orders and regulations promulgated by him.
As to difficulties about passing the bill with the amendments I have proposed: There is not the slightest difficult about passing the bill with these amendments. I think I can say that unequivocally. There certainly will be none if the Attorney General and the Secretary of Commerce assist in carrying out your policies and do not raise objections or put impediments in the way.The President,The White House.