What Is the Cash and Carry Provision?

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Microphones in front of congress.
Microphones in front of congress. (Image: pojoslaw/iStock/Getty Images)

After World War I, the United States was eager to remain neutral when it came to foreign conflicts. During a series of laws that were passed in the 1930s to avoid U.S. entanglement in overseas wars and interventions, a policy called the cash and carry provision was passed by Congress and President Franklin D. Roosevelt.

Background

Leading up to World War II, in the 1930s the United States Congress passed a series of legislation called the Neutrality Acts. The Neutrality Acts were drafted and passed to respond to the growing tensions in Europe and Asia leading up the second World War. The U.S. used the Neutrality Acts as a way to avoid becoming engaged in wars or foreign interventions following America's involvement in World War I.

Neutrality Act of 1937

The third of four acts, the Neutrality Act of 1937, was drafted and passed in May of that year. The Neutrality Act of 1937 included the policies of the former acts, as well as making arms trade with Spain illegal, forbidding American ships to carry passengers or goods to "belligerent" nations and banning American citizens from traveling on the ships of these nations. The Neutrality Act of 1937 also included the cash and carry provision.

What It Is

The provision, which was drafted by President Roosevelt's adviser Bernard Baruch, was a special policy that allowed the United States to sell goods to belligerent European nations as long as these nations picked up the goods themselves and paid in cash. Essentially, paying "cash" and "carrying" these goods away, giving the provision its name. These goods could not include arms.

Importance

The provision was important in that it was a roundabout way of attempting to help U.S. allies in Europe. According to the U.S. Department of State Office of the Historian, the cash and carry provision was included in the Neutrality Act of 1937 to help aid Great Britain and France in war against Germany, since both countries controlled the waters that would make the transport, or "carry," of the goods possible.

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