Neutrality Act

The Neutrality Act was an Act of Congress providing for the prohibition of the export of arms, ammunition, and implements of war to belligerent countries; the prohibition of the transportation of arms, ammunition, and implements of war by vessels of the United States for the use of belligerent states; for the registration and licensing of persons engaged in the business of manufacturing, exporting, or importing arms, ammunition, or implements of war; and restricting travel by American citizens on belligerent ships during war.

Background

At the White House on March 20, 1935, President Franklin Roosevelt told members of the Nye Committee that an Act should be prepared which would guarantee, in the event of a European war, the absolute neutrality of the American people. The Neutrality Act was introduced in the Senate and House and passed by very large majorities. It had a time limit of two years and at the expiration of the time limit it was passed again by enormous majorities in both houses.

President Roosevelt promptly applied the law when Italian Premier Benito Mussolini invaded Ethiopia in October 1935. When the Spanish Civil War broke out in July of 1936 Roosevelt discovered the Neutrality Act did not apply to civil wars, but only to wars between countries. Roosevelt requested of Congress to have the law amended immediately to apply to civil war, which Congress did and Roosevelt promptly declared the Neutrality Act in force as to Spain.

During the Presidential Election of 1936 Roosevelt said "We shun political commitments which might entangle us in future wars; we avoid connection with the political activities of the League of Nations...­ the effective maintenance of American neutrality depends today as in the past on the wisdom and determination of whoever at the moment occupies the office of President of the United States and Secretary of State." And he warned that in the event of war abroad the United States would have to be on guard against arms manufacturers seeking "fool's gold," or war profits from arms trafficking, those who would find it hard to look beyond, "to realize the inevitable penalties, the inevitable day of reckoning that comes from a false prosperity." America could keep out of war, "if those who watch and desire have a sufficiently detailed understanding of international affairs to make certain that the small decisions of today do not lead toward war and if at the same time they possess the courage to say no to those who selfishly or unwisely would lead us into war." This is what was called isolationism.

Cash and Carry law

The public debt in 1932 when FDR took office was $22 billion and largely was a heritage of World War I. Widespread public disillusionment felt that a handful of arms producers had benefited from the war while the nation had been left with a public debt in the form of credits which had been extended to foreign purchasers of arms. Bernard Baruch described how the law functioned: "We will sell to any belligerent anything except lethal weapons, but the terms are 'cash on the barrel-head and come and get it."

The original Neutrality was extended to expire on May 1, 1936. It was renewed with a "cash and carry" provision for two years. The basic feature, a prohibition on loans to belligerent governments remained intact. The new act required that, if the president proclaimed the existence of a state of war between others nations, or a civil war that endangered the peace of the Untied States, the shipment of arms, ammunition, and implements of war, excluding raw materials, would be embargoed.

Second Sino-Japanese War

In 1937, when Japan invaded the Chinese mainland in the Second Sino-Japanese War, the United States economy had relapsed into a depression and Roosevelt refused to apply the Neutrality Act but rather permitted arms shipments to China and Japan from United States arms manufacturers. The Neutrality Act did not require a declaration of war by an aggressor; it merely required the fact of war. The United States was the Nationalist Chinese government's only source of defense materials, while at the same time the United States was shipping six times as much to Japan as to China. The New Deal social programs needed the arms trafficking with Japan to keep people from becoming unemployed. As one commentator observed, President Roosevelt defied the mandatory provisions of the Neutrality Act because his administration required that at this moment America needed some of that "fool's gold" from Japan.

In December 1937 an American gunboat, the Panay, was bombed in the Yangtze River in China in the heart of the Sino­-Japanese war area. Japan immediately apologized and agreed to pay full damages and to punish the guilty officers. Critics have observed, had the President taken care that the laws be faithfully executed under the Neutrality Act, ­ the Panay would not have been protecting American oil tankers delivering oil in the midst of two warring armies in China. The purpose of the Neutrality Act was to avoid precisely an incident of this nature.

Molotov-Ribbentrop pact

After the signing of Molotov-Ribbentrop pact in what was called the Communazi alliance, American Communists denounced President Roosevelt for proposing that the Neutrality Act's embargo provisions be repealed to aid the countries that were fighting Hitler.

Two weeks after World War II started, Roosevelt called Congress into extraordinary session to repeal the arms embargo provisions of the Neutrality Law and thus permit the sale of war materiel to England and France on a "cash and carry" basis, that is to say, the United States Treasury would not finance the purchase of U.S. produced arms to foreign powers. A Roper poll taken in September, 1939 showed a total of 2.5% public support for entering the war on the side of England, France and Poland, 8.9% support for remaining neutral but supplying England, France and Poland with materials and food and refuse to ship anything to Germany, and the by the largest margin of any choice 37.5% support for remaining neutral but allowing arms sales to anyone on a cash and carry basis.