<P> The Neutrality Act of 1936, passed in February of that year, renewed the provisions of the 1935 act for another 14 months . It also forbade all loans or credits to belligerents . </P> <P> However, this act did not cover "civil wars", such as that in Spain (1936--1939), nor did it cover materials such as trucks and oil . U.S. companies such as Texaco, Standard Oil, Ford, General Motors, and Studebaker exploited this loophole to sell such items to General Franco on credit . By 1939, Franco owed these and other companies more than $100,000,000 . </P> <P> In January 1937, the Congress passed a joint resolution outlawing the arms trade with Spain . The Neutrality Act of 1937 was passed in May and included the provisions of the earlier acts, this time without expiration date, and extended them to cover civil wars as well . Furthermore, 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 . </P> <P> In a concession to Roosevelt, a "cash - and - carry" provision that had been devised by his advisor Bernard Baruch was added: the President could permit the sale of materials and supplies to belligerents in Europe as long as the recipients arranged for the transport and paid immediately with cash, with the argument that this would not draw the U.S. into the conflict . Roosevelt believed that cash - and - carry would aid France and Great Britain in the event of a war with Germany, since they were the only countries that controlled the seas and were able to take advantage of the provision . The cash - and - carry clause was set to expire after two years . </P>

Discuss the effects of the us neutrality laws