Johnson Act (US, 1934)

The Johnson Act of 1934, now codified at 18 USC section 955, restricts specified United States financial transactions with a foreign government that is in default on obligations to the United States. It was enacted amid disputes over First World War debts. It remains in the United States Code as amended, but its exceptions make it narrower than a blanket ban on lending to every sovereign debtor in default.

The section applies to a person within the United States who buys or sells post-13 April 1934 bonds or other obligations of the defaulting government or its covered instrumentalities, or makes a loan to them. Renewals or adjustments of existing indebtedness are excepted. Violation is punishable by a fine, imprisonment for up to five years, or both.

The current text does not apply while the foreign government is a member of both the International Monetary Fund and the International Bank for Reconstruction and Development. A 1992 amendment also excludes obligations of the former Soviet Union and its successor states. These provisions limit the statute's present operational reach.

The Act mattered historically because it constrained private credit to European debtors during the neutrality era. Later United States support for allies, including Lend-Lease, used different public-law forms rather than treating ordinary private sovereign lending as available. That history illustrates how a statutory credit restriction can shape the design of later assistance without proving that section 955 was the sole cause of that design.

Record checked against the United States Code in effect on 28 July 2026. Application to a transaction requires current legal advice on the debtor, default, instrument, parties and statutory exceptions.

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.
2. United States, Act of 13 April 1934, chapter 112, 48 Stat. 574.
3. United States, Freedom for Russia and Emerging Eurasian Democracies and Open Markets Support Act of 1992, 106 Stat. 3320.
4. Warren F. Kimball, *The Most Unsordid Act: Lend-Lease, 1939-1941* (Johns Hopkins Press, 1969).