Cash and carry (World War II)

Cash and carry was a policy requested by U.S. President Franklin Delano Roosevelt at a special session of the United States Congress on September 21, 1939. It replaced the Neutrality Acts of 1939. The revision allowed the sale of materiel to belligerents, as long as the recipients arranged for the transport using their own ships and paid immediately in cash, assuming all risk in transportation.

Though "cash and carry" concepts had been introduced in the Neutrality Act of 1936, it only pertained to materials that could not be used in war efforts. Originally presented to Congress by Senator Key Pittman (Democrat-NV) earlier in 1939, the bill was designed to replace the Neutrality Act of 1937, which had lapsed in May 1939. The bill had been defeated repeatedly by the Senate and the House on more than one occasion as Isolationists feared that passing the bill would draw the US into the conflict in Europe. However, President Roosevelt felt that further help was needed in Europe after Germany invaded Poland in September 1939. He then asked Congress to pass the legislation again. The bill passed the Senate in late October, gaining approval from the House on November 5, 1939. The President gave his signature the same day. The purpose was to hold neutrality between the United States and European countries while still giving aid to Britain, exploiting the fact that Germany had no funds and could not reliably ship across the British-controlled Atlantic. Various policies, such as the Neutrality Acts of 1935, 1936, and 1937, forbade selling implements of war or lending money to belligerent countries under any terms. The U.S. economy was rebounding at this time, following the Great Depression, but there was still a need for industrial manufacturing jobs. The cash and carry program helped to solve this issue and in turn Great Britain benefited from the purchase of arms and other goods.

This program also prevented US businesses interests backing the success or failure of any warring nation. Because of the conclusion of the Nye Committee, which asserted that United States involvement in World War I was driven by private interests from arms manufacturers, many Americans believed that investment in a belligerent would eventually lead to American participation in war.

U.S. shipping interests were forbidden from entering into conflict zones and US passengers traveling on foreign ships did so at their own risk.

The "cash and carry" legislation enacted in 1939 effectively ended the arms embargo that had been in place since the Neutrality Act of 1936. It paved the way for Lend-Lease.

Analysis
The “cash and carry” legislation passed in 1939 was not a failure, it simply was not going to be an effective measure after Germany began invading its neighbors. After the fall of the Low Countries (Belgium and the Netherlands) and the invasion and capitulation of France, Roosevelt lobbied for the introduction of Lend-Lease. Further, the concept of “cash and carry” had enabled Japan to continue lots of trade with the US while China’s trade had dropped to practically nothing, given their slim economic resources. Helping an enemy at the expense of an ally was not the effect Roosevelt had been hoping for. It also affected Italy. Lend Lease was a plan in which the European allies didn't have to pay cash or arrange transportation any longer. Instead, the U.S. would demand payment at a later time.

In keeping with the Monroe Doctrine, the U.S. did not actively participate in the war until after the attack on Pearl Harbor and the Japanese declaration of war prompted Congress to reciprocate and declare war on Japan, after which Italy and Germany declared war on the U.S. The U.S. then switched from allied assistance to active engagement.