From Pierre Raton’s Liechtenstein: History and Institutions of the Principality.
Nicolas Politis describes neutrality as “the attitude of a state which, during a war betweent wo or more states, does not participate in the fighting and strives to maintain insofar as possible the same relations with all participants as it had had before the outbreak of the conflict.”
Did Liechtenstein behave according to this lengthy definition? The lack of troops since 1868 made it impossible for Liechtenstein to have participated in any military actions. However, individual Liechtensteiners had joined the armies of the Central Powers. Prince Heinrich of Liechtenstein fell in 1915 at the head of troops commanded by him, but as an Austrian Major.
On September 25, 1914, Liechtenstein requested the Emb assy of the United States of America to inform the Powers that the country had declared itself neutral. This declaration was a voluntary act of a sovereign state; and it is entirely within the competence of a state to issue such a declaration. Naturally, a neutral follows the customary and conventional patterns of neutrality. According to Prince Eduard’s “Memorandum”, Liechtenstein seems to have observed these patterns very exactly: French and British nuns, who were living in Liechtenstein, were granted asylum, as were other nationals of the Entente powers; escaped prisoners of war were permitted to transit the country; and the Government refused to hand over to the Austrians deserters and conscientious objectors living on Liechtenstein territory. These facts were gneerally acknowledged by the warring powers.
However, the war was not limited to the battle-field. As it went on, it became more and more a moral, economic, and financial one. And here Liechtenstein was not able to preserve such a strict neutrality. After all, it was connected with Austria by the Customs, Currency and Economic Union and thus was involuntarily drawn into the Austrian war effort. As a result, in 1916 the French GOvernment, through its Ambassador at Berne, let Liechtenstein know that it did not recognize Liechtenstein’s neutrality in economic matters. In fact, Vaduz had gone to considerable effort to demonstrate its backing up those declarations. The Government banned the export of cotton stored in the country to Vorarlberg where it was to be used in a factory; and a weaving mill was not permitted to export to Austria some of its machinery of British origin.