In response to growing Italian and German aggression in Europe, Congress passed the Neutrality Act of 1935. This legislation - reflecting a response to the Nye report - made it illegal for Americans to sell arms to any country at war. Then, in 1936, a rebellion erupted in Spain that soon became a civil war. Congress responded by passing a second neutrality act, banning the sale of arms to either side in a civil war.
Soon after the Spanish Civil War began, Hitler and Mussolini pledged to cooperate on several international issues, and Japan aligned itself with Germany and Italy. Together, the three nations became known as the Axis Powers. As European tensions worsened, Congress passed the Neutrality Act of 1937, continuing the ban on selling arms to warring nations and also requiring them to buy all nonmilitary supplies from the United States on a “cash-and-carry” basis. Countries had to send their own ships to pick up goods and had to pay in cash. Loans were not allowed. Isolationists knew that attacks on American ships had helped bring the country into World War I. They wanted to prevent such attacks that could bring the nation into another European war.