The United States Congress passed a series of Neutrality Acts during the 1930s under the presidency of Franklin Delano Roosevelt in an attempt to maintain neutral status in the European conflicts. The first Neutrality Acts prohibited the sale of arms or the making of loans to belligerent countries. The U.S. Congress passed a significant Neutrality Act in 1937 that allowed trade with other countries under the condition that American ships were not used -- the so-called “cash-and-carry” principle. This policy was renewed in November 1939 with the Neutrality Act of 1939.
Origin of Cash-and-Carry
The Neutrality Act of 1937 allowed warring and war-prone countries to purchase any goods from the United States except for war materials such as arms. Fighting nations could, however, purchase important wartime resources such as oil from the United States. There was a provision in the act that said the goods had to be transported, or “carried,” on non-American ships. Another provision required that the fighting powers had to pay for the goods with cash. It was referred to as the “cash-and-carry” principle.
Ban on Arms Transportation
The Neutrality Act of 1939 prohibited the arming of American merchant vessels. American ships engaged in international commerce were only allowed to have small arms and the appropriate ammunition to go with them. The Act also made it unlawful to transport arms or ammunition that might be used by warring powers. Section 6 of the Neutrality Act said that the ban would remain in effect until the president of the United States revoked it.
National Munitions Control Board
The Neutrality Act of 1939 made it unlawful to export any “arms, ammunition, or implements of war” without the explicit permission and licensing from the secretary of state. A National Munitions Control Board (NMCB) was placed in charge of monitoring international trade and preventing arms manufactured in the U.S. from reaching warring governments. Twice a year, the NMCB distributed reports to the U.S. Congress, The NMCB was intended to help mitigate the munition industry's influence on the war department.
Expansion of Cash-and-Carry
In the 1939 Neutrality Act, President Roosevelt succeeded in renewing “cash-and-carry” and expanding the policy to include arms sales. Loans to the warring nations were still prohibited in the Act and American ships still were not allowed to “carry” the weapons to foreign ports. Cash-and-carry would be expanded further in the months prior to the U.S. entering the war. The U.S. Congress revoked the ban on arming American merchant vessels on Oct. 17, 1941 and repealed the ban on American ships entering combat zones in November, 1941.