Johnson Act (US, 1934)

The Johnson Act of 1934, now codified at 18 USC section 955, restricts specified United States financial transactions with foreign governments and related bodies in default on obligations to the United States. Enacted amid disputes over First World War debts, it remains in the Code as amended. Its defined parties and exceptions make it narrower than a blanket prohibition on lending to sovereign debtors in default.

The section covers a person within the United States who buys or sells bonds, securities or other obligations issued after 13 April 1934 by a defaulting foreign government, its political subdivisions or organisations acting for them, or makes a loan to those bodies. Renewals or adjustments of existing indebtedness are excepted. The default must concern obligations, or part of them, to the United States. Violation carries a fine under Title 18, imprisonment for up to five years, or both.

The section excludes public corporations created by or under special congressional authorisation and corporations in which the United States has or exercises a controlling interest. It also does not apply to the specified transactions while the foreign government belongs to both the International Monetary Fund and the International Bank for Reconstruction and Development. Section 902 of the 1992 FREEDOM Support Act separately disapplies section 955 to obligations of the former Soviet Union, its independent successor states and their covered subdivisions, organisations and associations. These are different exceptions and must be checked separately.

The State Department's historical account identifies the Act as one constraint on credit to Britain before United States entry into the Second World War. The Lend-Lease Act of 11 March 1941 then authorised specified government transfers of defence articles, notwithstanding other law, on terms that could include repayment in kind or other benefits. Those public powers were distinct from ordinary private sovereign lending. The statutes and historical account support that institutional distinction; they do not make the Johnson Act the sole cause of Lend-Lease's design.

The official Code text retrieved on 22 October 2026 states that it includes laws in effect through Public Law 119-120 of 7 October 2026. That is the source's stated currency, not a claim that every transaction is prohibited or cleared. Application requires the current debtor, default, instrument, parties and statutory exceptions to be established.

See also

United States Neutrality Acts (1935-1939) · Financial warfare · sovereign debt · Foreign aid conditionality

Sources

1. United States House of Representatives, Office of the Law Revision Counsel, 18 USC section 955, Financial transactions with foreign governments, text current through Public Law 119-120, 7 October 2026, retrieved 22 October 2026.
2. United States, Act of 13 April 1934, chapter 112, sections 1 and 2, 48 Stat. 574.
3. United States, FREEDOM Support Act of 1992, Public Law 102-511, section 902, 106 Stat. 3355, 24 October 1992.
4. United States, An Act to Promote the Defense of the United States, Public Law 77-11, section 3, 55 Stat. 31-32, 11 March 1941.
5. United States Department of State, Office of the Historian, Lend-Lease and Military Aid to the Allies in the Early Years of World War II, undated historical account, retrieved 22 October 2026. The Milestones series is retired and no longer maintained.