SURVEY OF THE ECONOMIC DEFENSE MEASURES IN SWEDEN

From the American Legation, Stockholm1

On June 7, 1939, the Swedish Riksdag passed several economic defense measures designed to meet the requirements of national defense in regard to different commodities, to assure adequate supplies for the population, and for the purpose of maintaining as far as possible the activities of industry and trade during a war, risk of war, or other exceptional circumstances. The laws empower the King in the event of war or risk of war to impose these emergency regulations in the different fields in order to meet the extraordinary conditions caused by the war.

Most of these defense laws were recommended by the Swedish National Commission for Economic Defense Preparedness and are based on substantially identical regulations in force in that country during the World War. The present National Commission consists of a chairman and 10 permanent members, including the Commanders-inChief of the branches of the national defense, the Chiefs of the Royal Social Board, the Board of Agriculture, and the Board of Trade, together with representatives of the Royal Academy of Engineering Science, of industry, and of civic interests in general. In addition to these representatives, the Commission consists of nonpermanent members representing the more important branches of the Government and of industry and trade.

Most of the economic defense laws were recommended by the National Commission for Economic Defense Preparedness and are based on substantially identical regulations in force in Sweden during the World War.

Late reports received in the COMMERCIAL LAWS DIVISION advise that as of September 7, 1939, the Swedish Government has invoked the Law on Maximum Prices, the Civil Expropriation Law, the Military Expropriation Law, the Law on Municipal Duties in War Time, the Law on Commandeering of Hospitals, and various laws on insurance.

FOREIGN EXCHANGE LAW

One of the most interesting in this series of emergency laws is that on the disposal of foreign exchange during exceptional circumstances caused by war. It empowers the King in the event of War or risk of war or otherwise in exceptional circumstances caused by war to issue regulations when the Riksdag is not in session, pertaining to the sale and purchase of foreign exchange. The purpose of the law in particular is to prevent an undesirable expatriation of Swedish capital in the event of war or risk of war in which Sweden may be more or less directly involved, and an undesirable influx of foreign capital in any possible war not immediately involving Sweden. If deemed absolutely necessary for the continuance of the present Swedish monetary policy, the object of which is to maintain a relatively stable domestic price level and to avoid fluctuations in the rates of foreign exchange, the King, upon the recommendation of the Directors of the Riksbank and after approval by the Directors of the National Debt Office, may decree the following:

This article was prepared by Winthrop B. Greene, Secretary of the Legation.

1. That only the Riksbank and such private banks as may be thus authorized (exchange banks) may trade in foreign currency, bills of exchange, checks, other drafts and credits that provide right to receive payment in foreign currency, as well as stocks, bonds, and similar securities which are issued by anyone residing abroad;

2. That foreign currency, foreign credits, and foreign securities may be bought and sold against Swedish currency only to the extent and on the conditions prescribed by the King or, upon the King's authorization, by the Riksbank;

3. That any such assets shall be offered to the Riks bank or to an exchange bank against cash payment in Swedish currency;

4. That Swedish and foreign currency, credits, and securities must not without special permission be exported or otherwise transferred to anyone residing abroad;

5. That such assets must not without special permission be brought into the country;

6. That securities imported into the country or deposited here for the account of anyone residing abroad, as well as payment resulting from the sale of such securities, must not be disposed of to a greater extent than prescribed by the King or the Riksdag; and

7. That otherwise than prescribed under paragraphs 2 to 6 foreign exchange, foreign credits, and foreign securities must not without permission be disposed of otherwise then through sales to the Riksbank or to an exchange bank.

The law is not to infringe on sales and purchases of foreign exchange for legitimate travel requirements.

In the event of disputes concerning the proper value of foreign credits and securities offered for sale to the Riksbank or to an exchange bank, the matter shall be referred to a Board of Appraisal whose three members shall be appointed by the King, the Riksbank, and the Chambers of Commerce, respectively.

LAW ON MAXIMUM PRICES

The law on Maximum Prices provides the King with the following power in the event of war or risk of war when the Riksdag is not in session:

If the price of a commodity essential to the people or to production may be expected to increase to an extent that may cause a continued depreciation in the internal purchasing power of the Swedish currency or a substantial lowering of the standard of living of the people, the King may decree that a certain maximum price fixed by the King must not be exceeded in the voluntary sale of such a commodity. Maximum prices of commodities may be fixed for the country as a whole or for certain provinces; they may also be different for different provinces and for different branches of trade.

Should any one in possession of considerable quantities of a commodity for which a maximum price has been decreed refuse to dispose of the goods at the said price, and if it is deemed essential to make the goods available to meet requirements, the authorities may dispose of the goods for account of the owner at the fixed price and at his expense or, whenever deemed appropriate because of special circumstances, at the fixed price less not more than 10 percent.

It shall rest with anyone, upon the request of the appropriate authorities, to supply information whether and in what quantities he may possess commodities of the nature mentioned. In this connection, the authorities are given power to search the premises of anyone refusing to supply such information or believed to supply misleading information.

CIVIL EXPROPRIATION LAW

In the event of war or risk of war the King is under this law empowered, while the Riksdag is not in session, to issue the following regulations:

If it is deemed necessary for the purpose of assuring supplies of commodities essential to the public or to production or required for military purposes, the owner or possess or of such commodities shall be obliged, whenever ordered by the King, to surrender them to the State insofar as they are not absolutely required for the sustenance of himself and his household. With respect to real property, buildings, railways, and industrial plants, as well as ships, motor vehicles, and other conveyances, these may either be expropriated or merely commandeered by the Crown.

Compansation for commodities, services, and electric power expropriated or commandeered by the State under this law shall be calculated on the basis of normal costs for production or sale, normal commercial profit, and other factors normally determining prices. The rates shall be fixed by the State Assessment Board whose decisions cannot be repealed. Payment shall be made in cash or by sight draft. Upon the request of the appropriate authorities, all persons shall be obliged to supply information whether and in what quantities he may possess commodities liable to expropriation or in what quantities he has produced, manufactured, prepared, or refined such commodities or in what quantities he is producing electric power. Refusal to supply such information shall entitle the authorities to order a search of the owners' or producers' premises and books.

As a supplement to the Civil Expropriation Law, certain amendments have been added to the several existing laws governing commandeering by the various branches of the national defense.

MILITARY EXPROPRIATION LAW

This law aims at supplementing and, in some measure, combining some of the existing laws on expropriation and commandeering by the military authorities. These latter laws cannot be applied unless the country is mobilizing, actually having been ordered. The primary purpose of the present law was explained by the Minister of Defense who, when recommending the law for enactment, made the following

statement:

Under existing conditions it is essential that the country's defense preparedness in a threatening international situation may rapidly be strengthened and that this strengthening be effected in a manner that causes as little attention as possible. Should mobilization be ordered, expeditious measures may certainly be taken for bringing about the necessary material 188896 0-39 -4

preparedness on the strength of existing laws on a commandeering by the military authorities of supplies and services, but mobilization is a sensational measure which for apparent reasons should not be resorted to when the same result may be attained in a less conspicuous way.

The law provides for the right of the military command in special circumstances to expropriate foodstuffs, conveyances, quarters, and any other indispensable material that cannot immediately be obtained through normal channels, and also to commandeer horses, vehicles, ships, aircraft, and land.

LAW PROHIBITING THE SALE OR LEASE OF SHIPS

This law which was drafted by the National Commission for Defense Preparedness and revised by the Royal Board of Trade, is practically identical to a similar law in effect in Sweden during the World War. It empowers the King in the event of war or risk of war or otherwise in exceptional circumstances caused by war to prohibit, while the Riksdag is not in session, any unauthorized transfer, lease, or time chartering of Swedish ships to aliens (including alien juridical persons), or to a Swedish corporation whose stock may be issued to the bearer or more than one-third of whose capital stock is controlled by aliens. The corresponding prohibition shall apply also to the subscription or transfer of stock in a Swedish corporation which owns ships or stock in a ship.

These regulations, however, shall not apply to the right of a stockholder to subscribe to or receive that portion of new stock which corresponds to his share in the previous capital stock of the company. Nor shall the law apply to the right of an alien to transfer or dispose of such stock in a ship or in a shipping company which is already in the hands of an alien at the time the law may be put into effect.

The fundamental reason for the new law was stated by the Minister of Commerce to be based on World War experience and the necessity of preventing the Swedish merchant marine from being acquired to a greater or lesser extent by foreign interests during a war or risk of war.

A translation of the law will be found at the conclusion of this article.

LAW PROHIBITING TRADING IN FOREIGN

WATERS BY SWEDISH SHIPS

This law also was drafted by the National Commission for Defense Preparedness in conjunction with the Board of Trade and is based substantially on similar laws in effect during the World War. It enables the King, while the Riksdag is not in session, to prohibit Swedish ships from trading between foreign ports or between Swedish and foreign ports. Special permission for such trading may be granted by the King or by any one authorized by the King. The prohibition shall apply to ships of a gross tonnage of not less than 200 register tons, whether steam, motor, or sailing vessels. Notwithstanding the prohibition, however, loading and unloading of goods in a foreign port may in specific cases be permissible. The prohibition shall extend also to voyages in ballast as well as to the laying-up,

dismantling, or signing-off of the crew of a ship in a foreign port for purposes other than necessary repairs. Experience in the World War had given clear evidence of the necessity of extending the regulations to apply also to travel in ballast.

Certain temporary provisions as follows are included in the law. In accordance with recommendations made by the Board of Trade it is prescribed that a ship, which at the time the law enters into effect may be time-chartered or leased to an alien, shall be exempt from the provisions of the law during the time such a time-charter remains in effect. Moreover, if the ship at the time the law may be applied has already sailed from a port where goods have been loaded or if at that time is on the sea in ballast, the goods may be carried to the port of destination or the voyage be continued, notwithstanding the provisions of the law.

In recommending the law for enactment by the Riksdag the Minister of Commerce made the following statement:

Experience during the World War clearly indicates that a very far-reaching regulation of overseas shipping may become necessary in a critical situation. As is the case with the prohibition against the sale of ships to aliens I deem it desirable that a law with respect to freight shipping also be enacted at this time empowering the Government to resort to the necessary measures. This legislation should be based on the two shipping laws of 1917 and 1918.

A translation of the law will be found at the conclusion of this article.

LAW ON MUNICIPAL DUTIES IN WAR TIME

This law lays down the conditions under which the King, in the event of war or risk of war, may place certain obligations on the municipalities of the Kingdom deemed necessary to meet the requirements of the people, including the production of essential commodities and for the employment of available labor or for assuring other supplies essential to the sustenance of the people. It provides for the establishment of local emergency commissions which shall be under the jurisdiction of the respective Provincial Governments. The municipalities shall meet the cost of the activities of these emergency commissions.

In recommending the enactment of this law the Minister of the Interior made the following statement in the preamble to the Government bill:

As set forth by the National Commission for Economic Defense Preparedness, it appears necessary in arranging for local emergency administration to seek contact with the existing municipal organization. For the fulfillment of the different and often extensive tasks to be solved during a war or a crisis it would be impossible to employ only already existing local State organs or to establish new organs of this kind. It would also be easier to create a better understanding of the measures to be taken if the local emergency administration be handled in cooperation between the State and the municipalities. It should be added that the personal acquaintance, experience, and common interest usually to be found in a municipality