I found this somewhat lengthy, but fascinating nevertheless, historical background here:
As most of this unpleasantness was going on in the Indian theatre, the problem was tackled in situ and was solved at a place whose name must rank as one of the most over-used, misquoted and poorly understood terms in the history of firearms in general and projectiles in particular. The place was Dum-Dum arsenal in India. It was here that the full metal jacketed .303 bullet was changed to one having a small amount of lead core exposed at the tip, creating in effect a soft-nosed bullet which would expand in flesh - as did the previously used Martini-Henry lead bullets - and thus greatly increase its effectiveness. Any hunter having observed the differing terminal effects of solid bullets as compared to soft noses on lighter, thin skinned game will readily appreciate the difference. The .303 and the .450 Martini- Henry rounds were almost identical in their actual muzzle energies, but now the .303 could more effectively deliver that energy to the target. The infamous Dum-Dum bullet was born, and real-life fighting showed it to be far more effective than the old Mark 2 bullet. Troops engaged in savage warfare, but still equipped with the older Mark 2 ammunition, would sometimes file down the tips of the nully jacketed bullets to make them like the “Dum-Dum” projectiles. In those days the Indian contingent of the British army had considerable autonomy in equipment and procurement of same, so while the Indian theatre was equipped with the soft nosed Dum-Dum bullet the same was never adopted by the rest of the British army. The same problem was appreciated, but dealt with in a different way by the adoption of a hollow-nosed bullet called the Mark 3...It was at about this time, when Britain started to feel the heat politically over these expanding bullets. While such bullets were generally felt to be okay in outer corners of the globe where one’s opponents wouldn’t know acceptable codes of conduct in warfare if such codes ran up and bit them, the general consensus was that it would be a sorry thing if such bullets appeared in so-called “civilised” warfare. In view of what the First World War was to usher in in the not-too-distant future, one wonders what “civilised” warfare actually is. My view is that it is an oxymoron. Be that as it may, much political hay was made by Britain’s rivals over these allegedly “inhumane” bullets. All this culminated in the signing of the Hague Convention of 1899 (not the Geneva Convention, which is so often erroneously supposed, which deals with other matters). It was the Hague Convention which, among other things, specifically bound nations at war to refrain from using bullets which would “expand or flatten easily in the human body...” and which was specifically aimed at soft or hollow nosed bullets.
Britain could have argued the point, but was walking a bit of a political tightrope at the time in the form of the Boer War. The Boers did not wage war in any form of barbarous or inhumane fashion, and the use of expanding bullets on such an opponent was not justified by any means. What to do now? Britain responded by withdrawing all hollowpoint ammunition from the South African theatre, and went back to the drawing board. What was needed was a bullet which would abide by the letter of the Hague Convention for use in Europe, should the necessity ever arise, but which would still retain adequate effectiveness in other theatres of conflict should one desire one’s hit foe to realise this and stay hit. The Mark 6 bullet was briefly flirted with in 1904, having a thinner jacket, but this was far from satisfactory and did not solve the problem at all. However, in 1905 the Germans startled the military world with the adoption of their revolutionary new bullet for the 8mm Mauser. This was the sharply pointed lightweight 154 grain bullet at nearly 2900 fps, which by virtue of its greater speed and superior ballistic coefficient bestowed by its streamlined shape gave ever greater advantages of range and trajectory. This once again shook the military world, and the new German “Spitzgeshoss” (or “pointed bullet”) lives on in modern bullet designation in the “spitzer” term, meaning the same thing. The exterior ballistic advantages of this new bullet were certainly not lost on the British, and the terminal effects of the enhanced velocities were beginning to be appreciated as well.
At these greatly increased velocities not only was there another quantum leap in even flatter trajectories, but now there was a greater effect evident on those hit by such bullets. Not only were the lighter, pointed bullets more unstable, tending to deform in flesh, but the velocity of the bullet was causing damage to tissue even some distance away from the actual bullet track, and exit wounds were now large, gaping, unpleasant affairs. Although not fully understood at the time, these were manifestations of hydrostatic shock. “Hydro” is, of course, anything to do with water. Among its other properties, one of the physical characteristics of water is that it is incompressible. This means that shock waves radiate through water very efficiently (just watch ripples on a pond when you throw in a stone, a half brick, the dog or whatever). Guess what the human body is largely made up of. That’s right - water. This is the same phenomenon that causes the familiar blood-shot, bruised meat in an animal when hit with a high velocity hunting bullet. All in all, anyone hit by one of these new bullets stayed hit! You can be sure that this was not lost on the British Army. ...
To all intents and appearances, the new Mark 7 bullet was a fully jacketed pointed bullet weighing 174 grains. However, things were not as they may have appeared. Beneath the full metal jacket lurked a radical bullet design, for anyone who sectioned one of the new bullets found an aluminium tip under the point, which extended fully one third of the bullet’s length. Beneath this aluminium tip was the conventional lead core. This design firstly ensured that the bullet was long for its weight, which is not a bad thing at all for enhanced long range performance. Mainly, however, the bullet’s centre of gravity was now further to the rear, which caused it to be unstable on impact and prone to tumbling. This of course greatly increased its wounding potential, but never mind - it had a full metal jacket to keep the politicians happy! Hypocritical, isn’t it? Here was a bullet far more devastating than the original “dum dum”, but which was now acceptable because it didn’t actually expand - it just tumbled through like a buzz-saw! That’s politics for you. Are you surprised? No, I didn’t think you would be.
If you do any shooting with semi auto rifles chambered for NATO 7.62 (.308) you will be quite familiar with 150 grain hardball. It's the standard fodder for non-handloaders (like me) that shoot M-1A or FN rifles. This is an accurate round with an extremely stable boat tail bullet. If I were designing ammo with "wounding" in mind, it's what I would have supplied NATO.
However, the most common NATO 7.62 round was a 147 grain bullet characterized by a longer spitzer shape and a flat bottom. The reason for this is that this bullet has a center of gravity behind the middle of the round, that is , behind the center of rotation.
As a result, while quite accurate, it is not as stable as the boat tail round, and has a much higher perpensity to tumble after hitting someone. The tumbling after initial penetration creates a much larger wound cavity and a substantial increase in lethality
The M-16 (or really the AR-15) was designed by Eugene Stoner with a tumbling round in mind - hence the original design used a very high velocity .223 with the barrel rifled at only one twist in 16 inches.
As I said, the idea that military ammo is supposed to wound rather than kill doesn't hold up to scrutiny