Cash and carry policy

Definition

The cash and carry policy was a system established during the late 1930s that allowed nations at war to purchase non-military goods from the United States on a cash-only basis and required them to transport the goods themselves. This policy aimed to support allies while avoiding the risks associated with lending and shipping military supplies, thereby keeping the U.S. neutral while still aiding countries like Britain and France in their fight against Axis powers.

5 Must Know Facts For Your Next Test

1. The cash and carry policy was established as part of the Neutrality Act of 1939 to help European allies without directly involving the U.S. in the war.
2. Under this policy, countries had to pay for goods in full at the time of purchase and must arrange their own transportation, minimizing risks for American ships.
3. The cash and carry policy was seen as a compromise that allowed the U.S. to support its allies while still maintaining an official stance of neutrality.
4. This policy was significant in gradually shifting public opinion in favor of aiding Britain, as it provided necessary supplies without risking American lives directly.
5. The eventual shift towards the Lend-Lease Act marked a departure from cash and carry, as it allowed for greater flexibility in aiding allied nations.

Review Questions

• How did the cash and carry policy reflect the United States' stance on neutrality during the early years of World War II?
  • The cash and carry policy illustrated the United States' desire to maintain neutrality while still supporting its allies. By allowing nations to purchase goods on a cash-only basis and requiring them to handle transportation, the U.S. minimized its involvement in the conflict and reduced the risks associated with direct military aid. This policy was a middle ground that reflected both isolationist sentiments among Americans and growing recognition of the need to assist countries fighting against Axis powers.
• Discuss how the cash and carry policy set the stage for later changes in American foreign policy leading up to World War II.
  • The implementation of the cash and carry policy laid important groundwork for subsequent shifts in American foreign policy, particularly as global tensions escalated. It helped ease public fears about direct military involvement while showing that U.S. resources could be mobilized to support allies. As more countries faced imminent threats, this initial support paved the way for broader initiatives like the Lend-Lease Act, which allowed for more comprehensive assistance without immediate repayment, marking a decisive move away from strict neutrality.
• Evaluate the impact of the cash and carry policy on international relations during the late 1930s, particularly regarding U.S.-European alliances.
  • The cash and carry policy significantly influenced international relations by strengthening U.S.-European alliances during a critical period leading up to World War II. By facilitating trade with Allied nations while maintaining an official stance of neutrality, it demonstrated America's willingness to assist its partners without direct engagement in conflict. This approach not only bolstered European morale but also shifted public opinion within the U.S., eventually leading to increased support for more direct forms of assistance through programs like Lend-Lease. As a result, it laid a foundation for deeper military and economic ties between the U.S. and its allies, ultimately contributing to the collective effort against Axis aggression.

Related terms

Neutrality Acts: A series of laws passed in the 1930s aimed at keeping the U.S. out of foreign conflicts by restricting arms sales and loans to belligerent nations.

Lend-Lease Act: A program initiated in 1941 that allowed the U.S. to supply military aid to foreign nations during World War II without immediate payment, marking a shift from strict neutrality.

Isolationism: A foreign policy stance that advocates for a nation's avoidance of political or military entanglements with other countries, particularly prominent in the U.S. during the interwar years.