THE WORLD WAR: PERIOD OF AMERICAN NEUTRALITY 175



belligerent to prevent contraband from reaching an enemy. It is
not the duty of a neutral. The partisans of Germany in this coun-
try appear to assume that some obligation rests upon this Govern-
ment in the performance of its neutral duty to prevent all trade in
contraband. No such obligation exists, and it would be an unneutral
act of partiality on its part to take such action.

  NoTR, 3. TRADE IN CONTRABAND AND WAR LOANS (Letter page 4)

  "Many of the complaints refer more to the unfriendly spirit than
to the actual violation of the law. Here above all belongs the un-
limited sale of ammunition to the belligerents. The administration
originally advised Mr. Morgan that the making of loans to the
nations at war would not be looked upon with favor by the Presi-
dent, and Mr. Morgan cancelled the plans. This attitude has been
given up; the State Department has emphasized that money and
arms may be sold to the belligerents, while evidently the friends of
peace had firmly hoped that the President would denounce the sale
of ammunition or any other sale which would be likely to prolong
the war."
  There is no power in the Executive to prevent the sale of ammuni-
tion to the belligerents.
  Trade in munitions of war has never been restricted by inter-
national law or by municipal statute. It has never been the policy
of this Government to prevent the shipment of arms or ammunition
into belligerent territory, except in the case of neighboring American
republics, and then only when civil strife prevailed. Even to this
extent the European governments have never so far as I know limited
the sale of munitions of war. It is only necessary to point to the
enormous quantities of arms and ammunition furnished by German
manufacturers to the belligerents in the Russo-Japanese war and in
the recent Balkan wars. No country has been able to compete with
Germany in the manufacture and sale of arms and ammunition.
  Furthermore, one of the compensations for the disorganization of
neutral commerce and the restriction of markets has been the sale of
contraband to the warring nations. Such trade has been recognized
as a proper substitute for the loss sustained by neutrals as a direct
result of war. The lack of profit from trade is complained of in
Professor Muinsterberg's letter.
  The reason why the influence of the Government is not exerted
to prevent the sale of contraband to belligerents while such influence
has been exerted in preventing the flotation of war loans in this
country is this: a war loan, if offered for popular subscription in the
United States, would be taken up by those who are in sympathy
with the belligerent seeking the loan. The result would be that great
numbers of our people would become more earnest partisans, having