The Franklin Roosevelt administration promoted change in two areas of foreign policy. Using the groundwork for change laid by Hoover, Roosevelt adopted the Good Neighbor policy
and formally abandoned military intervention in the Western Hemisphere. Another important change was the extension of diplomatic recognition to the Soviet Union. As peace in Europe became increasingly fragile — with the Fascists in power in Italy and Adolph Hitler as chancellor of Germany — Congress passed a series of laws designed to keep Americans from fighting in another European war. The president initially supported and then strongly opposed this move toward isolationism.
The Good Neighbor policy. Roosevelt announced the intention of the United States to be a “good neighbor” in his first inaugural address. The administration deemed improving relations with countries in the Western Hemisphere essential to increasing trade and strengthening the nation's strategic position in the region. The first concrete results of the new policy came at the Pan‐American Conference held in Montevideo, Uruguay, in December 1933, when the United States accepted a nonintervention provision in the Convention on Rights and Duties of States. A new treaty with Cuba (May 1934) ended the Platt Amendment that had restricted the Cuban government's powers and had authorized U.S. military intervention in Cuba. American troops were withdrawn from Haiti (August 1934), and Panama gained additional commercial rights in the Canal Zone through an agreement signed in 1936 and ratified by the Senate in 1939. When Mexico nationalized the property of American oil companies in 1938, Secretary of State Cordell Hull recognized Mexico's right to take the property but demanded that a compensation plan be negotiated between the two countries. Even with these nonintervention approaches to Latin American countries, American foreign policy in the region continued to support conservative governments that promoted stability and protected U.S. economic interests. Following the 1933 meeting in Montevideo, the United States continued to push hemispheric solidarity through a series of international conferences, especially as the threat from Nazi Germany grew.
Recognition of the Soviet Union. The United States had refused to recognize the Soviet Union because the Soviet government would not assume Russia's debts, and it actively promoted revolution. For their part, the leaders of the Soviet Union found it difficult to forget that American troops had participated in the Allied intervention during the Russian revolution in 1918. As with Central and South America, a combination of economic and security concerns contributed to the development of a new policy toward the Soviet Union. For the Roosevelt administration, the possibility of extensive trade with the USSR and the potential value of the Soviet Union as an ally against Japanese expansion led to the reestablishment of diplomatic relations in 1933. As the price for recognition, the Soviet Union agreed not to spread propaganda in the United States, to protect the rights of Americans residing in the USSR, and to consider a settlement of the war debt question. None of these promises were kept.
The Nye Committee and neutrality legislation. Between 1934 and 1937, Gerald P. Nye of North Dakota chaired a Senate committee investigating American involvement in the First World War. The committee concluded that bankers and arms dealers, the so‐called “merchants of death,” had made enormous profits during the war. Although unable to show a direct cause‐and‐effect relationship between either the finance or the munitions industry and the U.S. declaration of war, Congress believed that identifying the way the United States had been drawn into war in 1917 was key to keeping the country out of a future conflict. The neutrality laws passed between 1935 and 1937 reflected this attitude.
Enacted in response to the Italian invasion of Ethiopia in May 1935, the Neutrality Act of 1935 prohibited the sales of arms and munitions to countries that were at war and prohibited Americans from traveling on warring countries' ships, except at their own risk. The Neutrality Act of 1936 extended the legislation and added an additional ban on making loans or extending credit to belligerents (nations at war). In 1937, Congress reacted to the outbreak of the Spanish Civil War (which pitted the pro‐Fascist forces of Generalissimo Francisco Franco against those loyal to the Spanish government) by expanding the neutrality laws to cover civil conflicts. Legislation adopted in May completely banned travel by Americans on warring countries' ships and empowered the president to identify commodities that could be sold to belligerents on a cash‐and‐carry basis only. With the cash‐and‐carry policy, goods had to be paid for immediately, and belligerents' ships (not the U.S. merchant marine) had to pick up and transport the goods.
Although support for isolationism as expressed in the neutrality acts was strong, some Americans believed that collective security — determined action by the nations of the world against those who committed aggression — was the best way to prevent war. During a speech in Chicago in October 1937, the president called on countries to “quarantine the aggressor” through economic boycott, a statement viewed by many as a call for collective security and a change in American foreign policy. Public response to the speech was mixed. Isolationists criticized Roosevelt's stance, while others supported his internationalist approach to the problems in Europe and Asia. A sentiment was growing in the United States that blanket neutrality laws that did not distinguish between aggressor states and victims actually encouraged more aggression.