Loans and Subsidies on the part of Neutrals.
§ 351. His duty of impartiality must prevent a neutral from granting a loan to either belligerent. Vattel's (III. § 110) distinction between such loans as are granted on interest and such as are not so granted, and his assertion that loans on the part of neutrals are lawful if they are granted on interest with the pure intention of making money, have not found favour with other writers. Nor do I know any instance of such loan on interest having occurred during the nineteenth century.
What is valid regarding a loan is all the more valid regarding subsidies in money granted to a belligerent on the part of a neutral. Through the granting of subsidies a neutral becomes as much the ally of the belligerent as he would by furnishing him with a number of troops.[695]
[695] See above, §§ [305], [306], [321].
Loans and Subsidies on the part of Subjects of Neutrals.
§ 352. It was formerly a moot point in the theory of International Law whether a neutral is obliged by his duty of impartiality to prevent his subjects from granting subsidies and loans to belligerents for the purpose of enabling them to continue the war. Several writers[696] maintained either that a neutral was obliged to prevent such loans and subsidies altogether, or at least that he must prohibit a public subscription on neutral territory for such loans and subsidies. On the other hand, a number of writers asserted that, since money is just as much an article of commerce as goods, a neutral was in no wise obliged to prevent on his territory public subscription by his subjects to loans for the belligerents. In contradistinction to the theory of International Law, the practice of the States has beyond doubt established the fact that neutrals need not prevent on their territory subscription to loans for belligerents. Thus in 1854, during the Crimean War, France protested in vain against a Russian loan being raised in Amsterdam, Berlin, and Hamburg. In 1870, during the Franco-German War, a French loan was raised in London. In 1877, during the Russo-Turkish War, no neutral prevented his subjects from subscribing to the Russian loan. Again, in 1904, during the Russo-Japanese War, Japanese loans were raised in London and Berlin, and Russian loans in Paris and Berlin. The Second Peace Conference, by enacting in article 7 of Convention V. that a neutral is not bound to prevent the export ... of anything which can be of use to an army or fleet, has indirectly recognised that a neutral need not prevent the subscription on his territory to loans for belligerents.
[696] See Phillimore, III. § 151; Bluntschli, § 768; Heffter, § 148; Kleen, I. § 68. The case of De Wütz v. Hendricks (9 Moore, 586) quoted by Phillimore in support of his assertion that neutrals must prevent their subjects from subscribing to a loan for belligerents, is not decisive, for Lord Chief Justice Best declared only "that it was contrary to the Law of Nations for persons residing in this country to enter into any agreements to raise money by way of a loan for the purpose of supporting subjects of a foreign State in arms against a Government in alliance with our own."
But matters differ somewhat in regard to subsidies to belligerents by subjects of neutrals. A neutral is not indeed obliged to prevent individual subjects from granting subsidies to belligerents, just as he is not obliged to prevent them from enlisting with either belligerent. But if he were to allow on his territory a public appeal for subscriptions to such subsidy, he would certainly violate his duty of impartiality; for loans are a matter of commerce, subsidies are not. It must, however, be emphasised that public appeals for subscriptions of money for charitable purposes in favour of the wounded, the prisoners, and the like, need not be prevented, even if they are only made in favour of one of the belligerents.
The distinction between loans and subsidies is certainly correct as the law stands at present. But there is no doubt that the fact of belligerents having the opportunity of getting loans from subjects of neutrals is apt to lengthen wars. The Russo-Japanese War, for instance, would have come to an end much sooner if either belligerent could have been prevented from borrowing money from subjects of neutrals. Therefore, what has been said above in § [350] with regard to the supply of arms and ammunition on the part of subjects of neutrals applies likewise to loans: they will no longer be considered lawful when the standard of public morality rises.