In September 1939, Germany invaded Poland, beginning World War II. Public sentiment in the United States demanded that the country stay out of the conflict, but it also generally favored assistance to the states fighting Germany and Japan. In any case, the cash-and-carry provisions of the 1937 act had expired in May 1939, with the consequence that U.S. merchant vessels were free to sail into the war zones, albeit with the possibility that they would be sunk and the United States drawn into war. At the same time, the Western democracies could not purchase arms in the United States.
On 27 October 1939, the U.S. Senate voted 63 to 31 to repeal the embargo on arms to belligerents, and a week later, the House of Representatives followed suit, with a majority of 61 votes. Under the November 1939 act, cash-and-carry remained in effect. The United States could sell war materials to belligerents provided that they could pay cash for the goods and transport them in their own vessels. This act was, in fact, a compromise: the noninterventionists yielded on the arms embargo in order to secure the provision preventing U.S. ships from sailing into the war zones, and the repealists accepted the latter in order to secure an end to the ban on arms .
The terms of the act were intentionally crafted to favor the Atlantic sea powers that possessed merchant and naval forces to transport the material. To remain within the legal bounds of American neutrality, cash-and-carry was extended to all belligerents, both Axis and Allied, that could meet the specific requirements of the act. Japan was thus able to take advantage of its provisions—until the U.S. government embargoed war goods and froze Japanese assets in 1941, precipitating Tokyo's decision to launch an attack on the United States.
British Prime Minister Neville Chamberlain informed U.S. President Franklin D. Roosevelt that he thought the November 1939 act would have a "devastating effect upon German morale," but that was hardly the case, as U.S. factories were only just beginning to produce quantities of weapons. The act also opened up the dilemma of how to allot the few weapons that were being produced. U.S. rearmament was barely under way at that point, and the armed services would have to compete with the Western democracies for American weapons. Many Americans also opposed the act because it provided assistance to the Soviet Union, and the legislation became an issue in the 1940 presidential campaign.
James T. Carroll and Spencer C. Tucker
Kennedy, David. Freedom from Fear: The American People in Depression and War, 1929–1945. New York: Oxford University Press, 1999.; Lash, Joseph P. Roosevelt and Churchill, 1939–1941: The Partnership That Saved the West. New York: W. W. Norton, 1976.