The United States adopts cash and carry

At 12.04 p.m. on 4 November 1939 President Franklin Delano Roosevelt signed a joint resolution of Congress that went down in history as the Neutrality Act of 1939. It repealed the earlier neutrality acts and lifted the mandatory arms embargo which since 5 September had prevented Britain and France from buying aircraft, guns and ammunition in America. From then on belligerent states could purchase any goods in the United States, weapons included, on two conditions: they had to pay for them before they left America, and they had to carry them away in their own or neutral ships. The principle became known as “cash and carry”. In return the act barred American ships from sailing to the ports of belligerent states in Europe, and barred American citizens and ships from entering combat zones designated by the President. Congress passed it after six weeks of fierce debate, which Roosevelt won against the isolationists.

The dispute over the embargo

The arms embargo was the heart of the Neutrality Act of 1935 and the further laws of 1936 and 1937. It banned the sale of arms to all belligerents, regardless of who was the aggressor and who the victim. In 1939 it worked in Germany’s favour. The Reich, cut off by the British blockade, could not have shipped American weapons across the Atlantic anyway, whereas Britain and France, which commanded the seas, could have done so with ease. In the spring and summer of 1939 Roosevelt and Secretary of State Cordell Hull tried to persuade Congress to lift the embargo. They failed: on 30 June the House of Representatives adopted an amendment restoring the ban on the sale of arms and ammunition, and on 11 July the Senate Foreign Relations Committee put the matter off until the next session. When war broke out, the President had to proclaim the embargo on 5 September against Germany, Poland, France, Britain and the Dominions.

On 13 September Roosevelt summoned Congress to a special session, and on 21 September he addressed both houses. He assured them that he wanted to keep America out of the war, and that this was precisely why he proposed a return to the traditional law of nations: selling to anyone who came for the goods and paid for them, while keeping American ships and citizens away from the combat zones. He did not say openly that the aim was to help Britain and France, though everyone understood it.

Six weeks of debate

The bill was drafted by the chairman of the Senate Foreign Relations Committee, the Democrat Key Pittman. Formally it was a substitute for the resolution passed by the House of Representatives in June. The committee endorsed it at the end of September, and at the beginning of October the debate opened in the Senate, the longest and noisiest part of the whole battle.

Repeal of the embargo was opposed by the leading isolationists of both parties, but chiefly Republicans: Senators William Borah, Hiram Johnson, Gerald Nye, Arthur Vandenberg and Robert La Follette Jr., and in the House of Representatives Hamilton Fish III. Johnson and Vandenberg promised to fight “from hell to breakfast”. They argued that selling arms to one side was the first step towards war, just as in 1914–1917, when trade and loans to the Entente had bound America to its fate. Outside Congress the same case was made by the aviator Charles Lindbergh, who in October gave a second radio address against changing the law, and by the radio priest Charles Coughlin, whose listeners flooded Congress with letters.

The administration, most Democrats and some Republicans stood for the change. Supporters of aid to the Allies also organised outside Congress: William Allen White, a well-known Kansas journalist and a Republican, headed the Non-Partisan Committee for Peace through Revision of the Neutrality Law. The committee argued that helping the democracies fighting Hitler was the best way to spare America from having to fight alone. Former President Herbert Hoover proposed a compromise: the sale of “defensive” arms, but not bombers. Public opinion favoured the President. Polls showed that most Americans wanted to help Britain and France as long as they did not have to send their own soldiers, and Poland’s defeat and the Soviet invasion strengthened that view. The City of Flint affair, much publicised in those weeks, also played its part: the seizure of an American freighter by a German “pocket battleship” showed that American ships on the routes to Europe were exposed to incidents, and gave further arguments to those who wanted them withdrawn from the war zones.

The Senate rejected one isolationist amendment after another: to retain the embargo, to strike out the cash-and-carry principle, to bar belligerent warships from American ports, and a proposal for a national referendum on war. On 27 October it passed the bill by 63 votes to 30. The debate in the House of Representatives was shorter. On 2 November the House three times rejected motions to restore the ban on arms sales, the most important of them by 243 votes to 181. On 3 November both houses adopted the text agreed by the conference committee: the Senate by 55 votes to 24, the House of Representatives by 243 to 172. The next day, Saturday 4 November, Roosevelt signed the act.

What the act changed

The new act had twenty sections and was to replace all the previous ones. The most important changes were these:

• The end of the embargo. Arms, ammunition and implements of war ceased to be prohibited goods. Their export still required the registration of manufacturers and a licence from the National Munitions Control Board, headed by the Secretary of State.
• “Cash”. Before any goods left the United States bound for a belligerent state, title to them had to pass to the buyer. Belligerent governments could not raise loans or credits in America, and Americans were forbidden to buy their new bonds. The old war debts of 1917–1918, which Britain and France had not repaid, in any case excluded them from the American capital market under the earlier Johnson Act of 1934.
• “Carry”. American ships could carry no cargo or passengers to belligerent states. Exceptions covered ports in the Western Hemisphere, on the Pacific and Indian Oceans, and in Africa south of the 30th parallel, provided they did not lie within a combat zone.
• Combat zones. The President could designate areas which American ships were forbidden to enter and American citizens forbidden to visit. Breaking the ban was punishable by a fine of up to 50,000 dollars or up to five years’ imprisonment.
• Other prohibitions. Americans could not travel on belligerent ships, and American merchant ships were not to be armed. Fund-raising for belligerent governments was banned, except for humanitarian relief, carried out among others by the American Red Cross.

The act applied only once the President had proclaimed that a state of war existed. Roosevelt did not do so for the Sino-Japanese War, nor later for the Soviet attack on Poland, so those conflicts remained outside its scope. Nor did it apply to American republics at war with a state outside the hemisphere, unless they were cooperating with another non-American state.

The proclamations of 4 November

On the same day the President issued three proclamations. The first declared, under the new law, that a state of war existed between Germany on the one hand and France, Poland, Britain, India, Australia, Canada, New Zealand and the Union of South Africa on the other. Poland, although its territory was already occupied by Germany and the Soviet Union, still appeared in it as a state at war. At the same time Roosevelt revoked the September embargo proclamations. The second proclamation closed the ports and territorial waters of the United States to belligerent submarines, except in cases of force majeure, and even then only on the surface and flying their flag.

The third proclamation defined the combat zone. It covered the Bay of Biscay, all the waters around Britain and Ireland including the English Channel, the whole North Sea up to the Norwegian coast south of Bergen, and the entire Baltic. In a statement the President explained “in plain language” that American ships could no longer call at any port of Britain, France or Germany in Europe, or in Africa as far south as the latitude of the Canary Islands, nor at the ports of Ireland, Belgium, the Netherlands, Denmark, Sweden, the Baltic states and southern Norway. Neutral ports on the Mediterranean and the Black Sea remained open, as did all ports on the Pacific and Indian Oceans. Ships that had put to sea before the act came into force could complete their voyages.

The first effects

Britain and France took advantage of the new law almost at once. Deliveries held up since September, including French orders for aircraft such as Curtiss H-75 fighters and Douglas DB-7 bombers, could now cross the Atlantic. At the end of 1939 the two countries set up a joint purchasing commission in New York, which placed orders with American manufacturers. Cash purchases, however, quickly drained gold and dollar reserves, especially Britain’s.

For American shipping the act was a blow. Ships that had until then sailed to Britain, France or the Scandinavian countries lost their most important routes. Shipowners looked for a way out by transferring some vessels to foreign flags, Panama’s among them, which caused disputes within the administration itself.

Significance

The act of 4 November 1939 was the first clear departure of the United States from neutrality understood as equal treatment of both sides. Formally anyone could buy arms; in practice only the states that commanded the sea could, namely Britain and France. At the same time the ban on sailing into combat zones protected America from incidents such as the sinking of the Lusitania in 1915, which the isolationists regarded as the start of the road to war. Roosevelt showed that he could steer a pro-Allied policy through Congress as long as he wrapped it in the language of keeping America out of the war.

The limits of this policy soon became apparent. After the fall of France in June 1940 Britain fought alone, and by the end of 1940 its dollar reserves were running out. In September 1940 the United States handed over fifty old destroyers in exchange for bases (the Destroyers-for-Bases Agreement), and in March 1941 the Lend-Lease Act replaced cash and carry with deliveries on credit and lease. In the autumn of 1941, after clashes between American destroyers and German U-boats and the sinking of USS Reuben James, Congress in November repealed the provisions banning the arming of merchant ships and their voyages into combat zones. A few weeks later the attack on Pearl Harbor brought American neutrality to an end.