The 1936 Neutrality Act imposed a general embargo on trading in arms and war materials with all parties in a war and forbade all loans or credits to belligerents. However, this act did not cover "civil wars" or materials such as trucks and oil. During the Spanish Civil War some U.S. companies such as Texaco, Standard Oil, Ford Motor Company and General Motors sold such items to General Francisco Franco on credit.
The 1937 Neutrality Act, passed in May, included the provisions of the earlier acts, this time without expiration date, and extended them to cover civil wars as well. Further, U.S. ships were prohibited from transporting any passengers or articles to belligerents, and U.S. citizens were forbidden from traveling on ships of belligerent nations.
Gerald Nye was a supporter of the Popular Front government and strongly opposed the support given to Franco's forces during the conflict. In May, 1938, he introduced a Senate resolution that proposed the lifting of the embargo on shipment of arms to the Spanish government. President Franklin D. Roosevelt made it clear he was opposed to this resolution and it was defeated in the Foreign Relations Committee by seventeen votes to one.
After Adolf Hitler ordered the invasion of Czechoslovakia, President Roosevelt lobbied Congress to have the 1937 Neutrality Act amended. His views were rejected but after the invasion of Poland, which led to the outbreak of the Second World War, Roosevelt argued that the Neutrality Act may give passive aid to an aggressor.
The 1939 Neutrality Act was passed on 4th November. This allowed for arms trade with belligerent nations on a cash-and-carry basis, thus in effect ending the arms embargo. The following year, William Stephenson, the head of British Security Coordination (BSC), admitted that: "The procurement of certain supplies for Britain was high on my priority list and it was the burning urgency of this requirement that made me instinctively concentrate on the single individual who could help me. I turned to Bill Donovan." William Donovan arranged meetings with Henry Stimson (Secretary of War), Cordell Hull (Secretary of State) and Frank Knox (Secretary of the Navy). The main topic was Britain's lack of destroyers and the possibility of finding a formula for transfer of fifty "over-age" destroyers to the Royal Navy without a legal breach of U.S. neutrality legislation.
On 22nd August, 1940, William Stephenson reported to London that the destroyer deal was agreed upon. The agreement for transferring 50 aging American destroyers, in return for the rights to air and naval basis in Bermuda, Newfoundland, the Caribbean and British Guiana, was announced 3rd September, 1940. The bases were leased for 99 years and the destroyers were of great value as convey escorts. Lord Louis Mountbatten, the British Chief of Combined Operations, commented: "We were told that the man primarily responsible for the loan of the 50 American destroyers to the Royal Navy at a critical moment was Bill Stephenson; that he had managed to persuade the president that this was in the ultimate interests of America themselves and various other loans of that sort were arranged. These destroyers were very important to us... although they were only old destroyers, the main thing was to have combat ships that could actually guard against and attack U-boats."
Winston Churchill developed a strong personal relationship with Franklin D. Roosevelt and he asked him for help to beat Nazi Germany. On 17th December, 1940, Roosevelt made a speech to the American public: "In the present world situation of course there is absolutely no doubt in the mind of a very overwhelming number of Americans that the best immediate defence of the United States is the success of Great Britain in defending itself; and that, therefore, quite aside from our historic and current interest in the survival of democracy in the world as a whole, it is equally important, from a selfish point of view of American defence, that we should do everything to help the British Empire to defend itself... In other words, if you lend certain munitions and get the munitions back at the end of the war, if they are intact - haven't been hurt - you are all right; if they have been damaged or have deteriorated or have been lost completely, it seems to me you come out pretty well if you have them replaced by the fellow to whom you have lent them."
On 11th March 1941, Congress passed the Lend-Lease Act. The legislation gave President Franklin D. Roosevelt the powers to sell, transfer, exchange, lend equipment to any country to help it defend itself against the Axis powers. This effectively brought an end to the Neutrality Acts. A sum of $50 billion was appropriated by Congress for Lend-Lease. The money went to 38 different countries with Britain receiving over $31 billion.