When the combatants are NOT recognized by the people they are fighting. Normally only a recognized government which consists of courts, police, a capital city, a President/King/Emperor/Chairman/etc., is a recognized government. Then the rules of war can apply. If it's simply a group of people creating violence with guns, hand-grenades, etc. then they are criminals or terrorists or insurgents...all of which can be considered illegal. Those particular people would not warrant protection under the rules of war...they would warrant protection under the criminal justice system.
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Of course it was legal. Congress would not or could not "openly" fund an illegal war.
National Security Act
Is any weapon illegal in war? Not if someone can rationalize its use in the given conditions and it helps them win such that they can't be tried in a court convened by the winners as war criminals for using it. History is almost always written by the ones who won the war to make them look good and the losers bad. According to the Geneva Convention, which existed before World War I, the uses of chemical and biological weapons were deemed illegal. Therefore, mustard gas, nerve gas, and any other type of similar chemical weapon was illegal. (This did not restrict their use, however, as both sides used notoriously high quantities of these.)
War!
A person that makes money from selling war material or items needed by combatants fighting the war.