On April 1934 a joint resolution of Congress was passed giving President Roosevelt the power to forbid the sales of arms to Boliva or Paraguay in the Chaco War.
Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That if the President finds that the prohibition of the sale of arms and munitions of war in the United States to those countries now engaged in armed conflict in the Chaco may contribute to the reestablishment of peace between those countries, and if after consultation with the governments of other American Republics and with their cooperation, as well as that of such other governments as he may deem necessary, he makes proclamation to that effect, it shall be unlawful to sell, except under such limitations and exceptions as the President prescribes, any arms or munitions of war in any place in the United States to the countries now engaged in that armed conflict, or to any person, company, or association acting in the interest of either country, until otherwise ordered by the President or by Congress.
Sec. 2. Whoever sells any arms or munitions of war in violation of section 1 shall, on conviction, be punished by a fine not exceeding $10,000 or by imprisonment not exceeding two years, or both.
President Roosevelt then issued an executive order
Now, therefore, I, Franklin D. Roosevelt, President of the United States of America, acting under and by virtue of the authority conferred in me by the said joint resolution of Congress, do hereby declare and proclaim that I have found that the prohibition of the sale of arms and munitions of war in the United States to those countries now engaged in armed conflict in the Chaco may contribute to the reestablishment of peace between those countries, and that I have consulted with the governments of other American Republics and have been assured of the cooperation of such governments as I have deemed necessary as contemplated by the said joint resolution, and I do hereby admonish all citizens of the [p313] United States and every person to abstain from every violation of the provisions of the joint resolution above set forth, hereby made applicable to Bolivia and Paraguay, and I do hereby warn them that all violations of such provisions will be rigorously prosecuted.
And I do hereby enjoin upon all officers of the United States charged with the execution of the laws thereof the utmost diligence in preventing violations of the said joint resolution and this my proclamation issued thereunder, and in bringing to trial and punishment any offenders against the same.
And I do hereby delegate to the Secretary of State the power of prescribing exceptions and limitations to the application of the said joint resolution of May 28, 1934, as made effective by this my proclamation issued thereunder.
Curtis Wright Corporation, sold machine guns and airplanes to Bolivia, and was charged with a violation of the act. It defended itself in Court arguing that Congress' resolution and President Roosevelts order were unconstitutional granting of power to the Executive and an overextension of power in commerce.
After the lower Court ruled against the government, the issue was brought before the U.S. Supreme Court. In the landmark case, U.S. v. Curtis Wright the Supreme Court ruled in its full decision that the President had supremacy in national security and foreign affairs This case is required reading in Civil Procedure and Constitutional Law classes in U.S. Law Schools. This doctrine of executive supremacy has also led to furious debates the past 80 years, and been used as a justification by FDR in WWII, LBJ in Vietnam, Bush's 1 and 2 in Iraq, etc.
As this summary states
Bolivia Wrights and Standard
Going back to Bolivia, the Chaco War,and in particular back to the original Resolution and Executive order, it has also had long term effects.
While Curtis-Wright fought F.D.R.'s executive order in order to continue its war-profiteering, other American companies were not so eager to challenge an assertive Roosevelt Administration. Standard Oil Company found itself in a situation where selling aviation fuel to Bolivia's Air Force (as in to fill-up said Curtis-Wright warplanes), could be construed as violatiing the arms and ammunition embargo. Rather than face potential administration sanction (money and potential jail time), the New Jersey company refused to sell aviation fuel to Bolivia's Military.
This failure to sell fuel has been used to justify the Bolivian governments decision to nationalize all Standard Oil holdings after the War. Diplomatic cables from that time show the many excuses the Bolivian government used to justify this decision. And from the tone of the communications, it also appears that it was not a priority of the Roosevelt administration from Secretary of State Cordell Hull down to punish Bolivia for expropriating the assets of the company.
However none of this has done anything to dissuade Bolivians from the national myth that Standard Oil was sabotaging Bolivia's war efforts and that Bolivia rightfully expropriated this companies holdings facing huge opposition from U.S. Imperialism.. For all its many misdeeds worldwide - as befitting a Rockefeller monopoly- there is little real evidence of Standard Oil misbehaving in Bolivia in the latter part of the Chaco War years.. It must be remembered that any spoils in the Chaco were: merely "potential." in the 1920's and 30's. Standard Oil in the 1930's was focused on an intense fight for the very lucrative Argentine oil fields and market.
In the end, feuding over some Bolivian airplanes contributed to expanded Presidential powers in the United States and fueled (no pun intended) Bolivian resource nationalism.