As global tensions increased in the 1930s, Congress enacted a series of Neutrality Acts between 1935 and 1941 aimed at preventing the United States from entering war again as it had during World War I. To maintain American neutrality, yet permit sales of raw materials and other nonmilitary goods that might help the U. S. economy, a “cash-and-carry” provision was included in the 1937 Neutrality Act. It permitted nations at war to buy nonmilitary goods from the United States if paid for in advance by cash and carried away on ships not under United States registry. The cash-and-carry provision was set to expire in two years.
By the beginning of World War II in 1939, cash-and-carry, like the Neutrality Acts generally, fit uncomfortably with the growing anti-Axis sentiment in the United States. In the Atlantic, cash-and-carry helped Britain and France, which had significant trade contacts with the United States as well as ample shipping. In the Pacific conflict between China and Japan, however, the cash-and-carry principle favored Japan, with its shipping capacity and trade with the United States. And even for Britain and France the requirements of cash-and-carry had the potential to limit the acquisition of needed materials.
The Neutrality Acts had imposed an embargo on military items to nations at war, and these goods were also included under cash-and-carry after the beginning of the war in Europe in September 1939. Over the objections of isolationists, pro-Allied interventionists helped President Franklin D. Roosevelt eliminate the arms embargo from the Neutrality Act of November 1939. Those opposed to intervention succeeded, however, in renewing cash-and-carry, which had expired in the spring and which now applied to the sale of military as well as nonmilitary items. The new legislation also continued the ban on loans to nations at war.
By late 1940, England was no longer able to pay cash for the war materials and other goods it needed. The Battle of the Atlantic, moreover, was reducing British shipping at an alarming rate. In his annual address to Congress, on January 6, 1941, Roosevelt announced that he was sending Lend-Lease legislation to Congress for action, so that England could acquire the materials it needed for its defense. Passage of the Lend-Lease Act removed the cash requirement of cash-and-carry, and the subsequent Neutrality Act of November 1941 allowed American ships to carry cargo to nations at war.
See also eoreign policy.
Further reading: William L. Langer and S. Everett Gleason, The Challenge to Isolation, 1937-1940 (New York: Harper & Row, 1952);-, The Undeclared War, 1940
1941 (New York: Harper & Row, 1953).
—Edwin C. Cogswell