Lend-Lease

Abstract

Two American laws shaped the economic relations of other countries with the United States at the beginning of the Second World War: the Johnson Act of 1934 prohibited loans to governments that had defaulted on First World War loans; and the Neutrality Act of 1937 prohibited the sale of arms to belligerents and required that strategic materials be fully paid for before export and that they be carried in non-American ships. After the fall of France in the spring of 1940, these “cash and carry” provisions placed heavy burdens on British dollar reserves, particularly because of the need for aircraft. By December, 1940, the reserves were exhausted, and massive United States assistance was required. The Lend-Lease Act of March 11, 1941, reversed previous American policy and allowed the British build-up to continue.