During World War II, the United States began to provide significant military supplies and other assistance to the Allies in September 1940, even though the United States did not enter the war until December 1941. Much of this aid flowed to the United Kingdom and other nations already at war with Germany and Japan through an innovative program known as Lend-Lease.
FDR Signing the Lend-Lease Bill
When war broke out in Europe in September 1939, President Franklin D. Roosevelt declared that while the United States would remain neutral in law, he could “not ask that every American remain neutral in thought as well.” Roosevelt himself made significant efforts to help nations engaged in the struggle against Nazi Germany and wanted to extend a helping hand to those countries that lacked the supplies necessary to fight against the Germans. The United Kingdom, in particular, desperately needed help, as it was short of hard currency to pay for the military goods, food, and raw materials it needed from the United States.
Though President Roosevelt wanted to provide assistance to the British, both American law and public fears that the United States would be drawn into the conflict blocked his plans. The Neutrality Act of 1939 allowed belligerents to purchase war materiel from the United States, but only on a “cash and carry” basis. The Johnson Act of 1934 also prohibited the extension of credit to countries that had not repaid U.S. loans made to them during World War I—which included Great Britain. The American military opposed the diversion of military supplies to the United Kingdom. The Army’s Chief of Staff, General George C. Marshall, anticipated that Britain would surrender following the collapse of France, and thus American supplies sent to the British would fall into German hands. Marshall and others therefore argued that U.S. national security would be better served by reserving military supplies for the defense of the Western Hemisphere. American public opinion also limited Roosevelt’s options. Many Americans opposed involving the United States in another war. Even though American public opinion generally supported the British rather than the Germans, President Roosevelt had to develop an initiative that was consistent with the legal prohibition against the granting of credit, satisfactory to military leadership, and acceptable to an American public that generally resisted involving the United States in the European conflict.
British Prime Minister Winston Churchill
On September 2, 1940, President Roosevelt signed a “Destroyers for Bases” agreement. Under the terms of the agreement, the United States gave the British more than 50 obsolete destroyers, in exchange for 99-year leases to territory in Newfoundland and the Caribbean, which would be used as U.S. air and naval bases. British Prime Minister Winston Churchill had originally requested that Roosevelt provide the destroyers as a gift, but the President knew that the American public and Congress would oppose such a deal. He therefore decided that a deal that gave the United States long-term access to British bases could be justified as essential to the security of the Western Hemisphere—thereby assuaging the concerns of the public and the U.S. military
In December 1940, Churchill warned Roosevelt that the British were no longer able to pay for supplies. On December 17, President Roosevelt proposed a new initiative that would be known as Lend-Lease. The United States would provide Great Britain with the supplies it needed to fight Germany, but would not insist upon being paid immediately
Instead, the United States would “lend” the supplies to the British, deferring payment. When payment eventually did take place, the emphasis would not be on payment in dollars. The tensions and instability engendered by inter-allied war debts in the 1920s and 1930s had demonstrated that it was unreasonable to expect that virtually bankrupt European nations would be able to pay for every item they had purchased from the United States. Instead, payment would primarily take the form of a “consideration” granted by Britain to the United States. After many months of negotiation, the United States and Britain agreed, in Article VII of the Lend-Lease agreement they signed, that this consideration would primarily consist of joint action directed towards the creation of a liberalized international economic order in the postwar world.
The United Kingdom was not the only nation to strike such a deal with the United States. Over the course of the war, the United States contracted Lend-Lease agreements with more than 30 countries, dispensing some $50 billion in assistance. Although British Prime Minister Winston Churchill later referred to the initiative as “the most unsordid act” one nation had ever done for another, Roosevelt’s primary motivation was not altruism or disinterested generosity. Rather, Lend-Lease was designed to serve America’s interest in defeating Nazi Germany without entering the war until the American military and public was prepared to fight. At a time when the majority of Americans opposed direct participation in the war, Lend-Lease represented a vital U.S. contribution to the fight against Nazi Germany. Moreover, the joint action called for under Article VII of the Lend-Lease agreements signed by the United States and the recipient nations laid the foundation for the creation of a new international economic order in the postwar world.