Throughout most of its history, the United States followed George Washington's advice to "avoid permanent alliances." During the First World War, America fought as an "Associate Power," not as a formal ally of Britain and France. The Neutrality Acts were designed by Congress to keep the United States safely insulated from the armed conflicts breaking out in Asia and Europe during the 1930s. The ironic effect of this isolationist policy, however, was that it sent a message to aggressor nations that the United States would not come to the aid of their victims.
While America isolated itself, a threat was brewing in Europe. The Spanish Republic, a liberal democratic government, was established in 1931. Five years later, General Francisco Franco led the Spanish forces in Morocco across the strait, and began an uprising against the Republicans, or Loyalists. In October 1936, Hitler and Mussolini established the Berlin-Rome Axis, and agreed to aid Franco. A month later, Germany and Japan joined in the Anti-Comintern Pact, directed against the Soviet Union and global communism. Italy formally signed the pact a year later, and the alliance of the Axis Powers was complete. In the meantime, Hitler and Mussolini sent military aircraft, artillery, tanks, and tens of thousands of troops to bolster the fascist rebel forces under Franco. To a lesser degree, the Soviet Union supported the Republic. Britain and France also favored the Loyalists, but did not intervene militarily in the Spanish Civil War.
President Roosevelt worked with Congress to keep the United States scrupulously neutral. This generally pleased American Roman Catholics, who tended to support Franco against the leftist Republic and its communist ally. Many other Americans, however, viewed the war as an epic struggle between democracy and fascism. Senator Gerald Nye, a staunch supporter of the Neutrality Acts, introduced a resolution to repeal the arms embargo against the Loyalists. Several thousand Americans joined the Abraham Lincoln Brigade and fought for the Republic. Those that survived discovered that the State Department had revoked their passports. Franco's forces ultimately prevailed in the spring of 1939, after providing Hitler and Mussolini a training ground for the larger war that soon broke out in Europe.
In Asia, the Japanese broadened the military offensive against China that had commenced in 1931 with the invasion of Manchuria. In July 1937, Japanese and Chinese forces clashed at the Marco Polo Bridge outside Peking (Beijing), in what was dubbed "the China incident." The Japanese also served notice that they would no longer abide by the Washington and London naval limitations treaties. Ambassador Joseph Grew reported from Tokyo that the Japanese were the aggressors in China, but he warned that economic embargoes or military action by the United States would strengthen the hands of the extremists within the Japanese army.
President Roosevelt chose not to invoke the Neutrality Act in this case, and arms and munitions reached the beleaguered Chinese Nationalists under Chiang Kai-shek (Jiang Jieshi). The Japanese continued to purchase war material in even greater quantities, and the onslaught continued. Peking fell within weeks, and the Chinese were forced to abandon Shanghai in early November. After heavy fighting that claimed hundreds of thousands of lives and brutal atrocities that culminated in the "rape of Nanking" by Japanese troops, the Chinese moved their capital to Chungking. In a very real sense, the Second World War had commenced—the fighting in China did not end until 1945.
American sentiment went out to the Chinese people. The loosely organized "China Lobby," led by novelist Pearl Buck and Time magazine publisher Henry Luce, acted as a public relations agency and churned out press releases on behalf of the Chinese government. Congressional leaders hoped to keep alive the fiction of the "Open Door" and America's "special relationship" with the Chinese, but public opinion was clearly opposed to military intervention in Asia.
On December 12, 1937, an incident occurred that threatened to draw the United States into the war raging in China. Japanese pilots bombed and sank an American gunboat, the USS Panay, on the Yangtze River as its crew helped evacuate the embassy at Nanking. Two Americans were killed and 30 wounded. Several American and British oil tankers were also attacked. The Japanese Foreign Office, not nearly as aggressively expansionist as the military command, moved quickly to defuse the tension. The foreign minister extended a personal apology to Ambassador Grew, and more than two million dollars was paid in reparations. The diplomatic crisis passed, but the Panay incident stimulated Congress to vote on the "Ludlow amendment." Louis Ludlow, a representative from Indiana, introduced a constitutional amendment that would prohibit war—except in case of invasion—without the majority approval of voters in a national referendum. It took tremendous political pressure from the White House to defeat the Ludlow resolution by an uncomfortably narrow vote of 209 to 188.
With the escalation of fighting in China, the Roosevelt administration called for a "moral embargo" of military technology against nations that bombed civilians. This was directed at the Axis Powers aiding Franco, as well. An informal private boycott of Japanese goods was also expanded, and President Roosevelt authorized the purchase of Chinese silver. This allowed the Nationalist government to meet the "cash-and-carry" provisions of the Neutrality Act. Japan ominously responded in November 1938, by announcing a "New Order" in East Asia based upon the exploitation of China and Manchuria.
Conditions continued to deteriorate in Europe. Adolf Hitler began implementing his plan to unite all ethnic Germans within the Third Reich. In early 1938, the Fuhrer demanded that the Austrian chancellor appoint local Nazis to his cabinet. Kurt von Schuschnigg responded by calling a plebiscite—or vote—to rally popular support against the German pressure. Hitler acted too quickly, however, and stationed troops menacingly close to Austrian border. Schuschnigg resigned to prevent bloodshed. He was replaced by an Austrian Nazi, Arthur Seyss-Inquart, who invited the Germans into Austria to keep order. The Anschluss, the political unification of Austria and Germany, was completed by the middle of March. A subsequent plebiscite revealed overwhelming Austrian support for joining the Third Reich.
In November 1938, Americans were shocked with news of "kristallnacht." Nazi thugs, spurred on by black-shirted SS (Schutztaffeln) secret police forces, rampaged through Jewish neighborhoods. They vandalized homes, synagogues, and shops—shattering windows in the "night of the broken glass." This began a systematic confiscation of Jewish property and the restriction of German Jews to "ghettos." Roosevelt recalled the American ambassador in protest, and the State Department refused to apologize for Secretary of the Interior Harold Ickes's characterization of Adolf Hitler as a "brutal dictator."