The culmination of 1937 saw a deliberate attack by the Japanese on the US warship Panay in Chinese waters. The boat had clearly been flying the American flag. Unlike the Spanish attack on the Main in 1898 (which precipitated the Spanish-American War), there was no national outcry against this attack. The sentiment of the country was partially represented by the isolationist Senator Borah who stated: "I am not prepared to vote to send our boys into the Orient because a boat was sunk that was traveling in dangerous waters. The Roosevelt administration tried to downplay the incident and when the Japanese apologized, Roosevelt considered the incident closed.
On March 14, 1938, German forces entered Austria and announced the Anchluss, the incorporation of Austria into greater Germany. The world did not react. Roosevelt's only action was to inaugurate a public program to rescue overseas victims of the Nazis, both Christian and Jews. Roosevelt's actions were limited, but between Anchluss until Pearl Harbor close to 150,000 refugees were admitted into the United States. At Roosevelt's urging, the Evian Conference on refugees took place, where nation after nation claimed it could take no refugees. The United States took the lead in stating that it would not lift its immigration quotas. This typified Roosevelts actions throughout the developing Holocaust of European Jewry (where six million Jews were murdered) ; he took whatever actions he could as long as there were no significant political or military risks.
By the summer of 1938, Germany had begun pressuring for the incorporation of the Sudetenland, part of Czechoslovakia, as part of Germany. The Czechs were well armed and resisted German demands. Europe girded for war. At the last moment, war was averted for the time being, when British Prime Minister Chamberlain led the British and French to agree at Munich to German demands and forced the Czechs to go along.
A Jewish refugee assassinated a German diplomat on November 7, 1938. The result was the complete destruction of Germany's Jewish synagogues, the looting of Jewish businesses and the massive murder of Jews. The night became known as Kristalnacht - the night of the broken glass. The scenes from Germany revolted most Americans and forced Roosevelt to comment thus: "I myself could scarcely believe that such things could occur in the twentieth century civilization."
By the spring of 1939 war seemed unavoidable in Europe. The Germans annexed the rest of Czechoslovakia. The Nazis then turned their attention to Poland. They demanded the Danzig corridor. Poland refused to capitulate and this time England and France stood by it. Roosevelt's response was to urge ever-larger arms production. On September 1, 1939, the Nazis attacked Poland and World War II had begun. Chamberlain had called the Munich accords "Peace in our times", however, within weeks of the signing, it became evident that the accords had merely extended the fragile peace of Europe for a few more months. The cost was Czechoslovakia.
Roosevelt's reaction to events in Europe was to urge American rearmament, both for itself and to provide weapons for the British and French. The French placed large orders for aircraft, while the American armed forces began ordering large quantities of planes for themselves. In March, the Germans annexed the rest of Czechoslovakia despite their promises.
President Roosevelt began urging Congress to repeal the neutrality legislation. Isolationist Senators led by Senators Austin, Vandenberg, Taft and Lodge, defeated the attempt. After the annexation of the rest of Czechoslovakia, Roosevelt began urging the Senate to repeal the Neutrality Act, which he stated would hurt America's potential allies.
The British King and Queen made a first ever visit to the United States in June. Roosevelt used the visit as a means of underscoring the strong ties between Britain and the United States.