The Finance of the League of Nations

BETWEEN the public finance of an ordinary Sovereign State and that of the League of Nations there is one preliminary difference. The former regulates its expenditure by the revenue it hopes to collect-; the latter regulates its revenue by 'the expenditure it means to incur.- The distinction affects appreciably the ethics of the League's annual budget.

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PREPARING THE BUDGET.

It is in the :spring of 1928 that the preparation of that document begins for 1929;. the detailed estimates of the various , administrative departments under , the Secretary- General, .0. f the International . Labour Office, and of the Permanent Court. of International Justice being compiled and "subMitted in May to the Supervisory Commission. That hody,_a group of five experts appointed by the Council, handles the various demands for money much as the-British Treasury deals with the estimates of the Whitehall' departments, analyzing, testing and trimming. Only, however, with the consent of the estimating authorities . can it prune them, and its ultimate criterion is not the available revenue, but the policy of the Assembly and the most economical method of rendering that policy effective. Ilaving run this gauntlet, the draft budget is sent to the Governments of the countries which are members of the League, in order that they may study it before . its presentation to the Assembly in September. Immediately on meeting, the Assembly hands over the figures .to its fourth, or financial, committee, by whom they are, again scrutinized, along with any further projects of expenditure* that may have materialized in the course of the September session. When finally discussed by the Assembly at a plenary sitting, the Budget of expenditure is formally passed and sent out to the Member-States.

TILE EMPIRE PAYS ONE-QUARTER OF THE LEAGUE EXPENSES.

At this stage the -Secretary-General steps in to say how the necessary money is to be found. First of all, he takes possession of any surplus that may have accrued on the budget of the last year (1927). Then, deducting this from the total figure of expenditure passed by the Assembly for 1929,- he distributes the balance among the Member-States in accordance with a table of ratios which the Assembly has approved. He asks, for .example, France to provide 7.7 per cent. of the.total, Japan 5.9 per cent., Cuba 0.9 per cent., and so on. This scale of contributions is one of the most difficult of the League's domestic problems. The endeavour is to base it upon the relative national wealth of the fifty-six countries composing the League, or on their relative capacity to pay. Such a calculation is obviously a perfectly impossible task ; but it is the. special care of a very competent committee under a French judicial officer of high standing, and they do their best. The ratios are always being revised and adjusted ; for shorn lambs are constantly pleading for the wind to be tempered, new members frequently come in, and old members have been known to refuse remit- tances (to the envy of the humble tax-payer) as demonstration that they have been over-assessed. At present, the total expenditure is divided into 1,015 shares,, of which Great Britain shoulders 105; France and Germany corning next, with 79 each ; Italy and Japan, -with 60 each ; and so down the line to the smallest • members, like Albania, Liberia, Nicaragua, and several others who only take- one share apiece. India and our self-governing -Dominions have- their separate quotas ; -and the British Empire as a whole bears one-quarter of the whole burden.

EXPENSES OF VARIOUS DEPARTMENTS.

Por 1929 the Budget has for the second time in the League's history, exceeded the £1,000,000 mark. , Savinas however, .

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are usually assured and, in order to sec what the League . . .

does" with its money, we had better take theactual audited expenditure of the completed year, 1927. It came to 1896,000, of .whieh155,000 was a sort of sinking-fund payment towards the mist of the new buildings which will shortly replace the old hotel where the Secretariat is housed, and the unsuitable conventicle where the. Assembly meets. Of the main expen- diture, - the departments under the Secretary-General- were

• * The machinery for examining these "supplementaries "is... aatiefactory, and is being overhauled at the moment. responsible for £402,400; the Labour Office for £806,400; and the International Court at The Hague for 172,200. Any exact analysis of these figures is defeated by the wide range of activities in which the League engages ; but as examples of spending departments may be mentioned the Economic and Financial Organization under Sir Arthur Salter (148,400), the International Health Organization under Dr. Rajchman (06,500 apart from generous grants by the Rockefeller Foun- dation), the office for the study of Disarmament (118,100), and the department which cares for Russian and Armenian refugees (t13,000). To man the various offices there is of necessity a large personnel, and they are paid on the whole better than a corresponding staff in Whitehall ; but it has to be remembered that most of them are exiles and that the cost of living for the foreigner in Geneva is distinctly high.

POLICY AND EXPENSE.

In these days of grievously burdened national exchequers, it is not surprising that the larger contributors, France and ourselves in particular, are vigilant against any rise in the League's expenditure. Equally vigilant at all times is the Secretary-General, Sir Eric Druminond, in co-operation with the Supervisory Commission, against extravagance in the administration. But it is policy, quite as much as adminis- tration, that runs away with money ; and policy is exclusively the business of the Assembly. Every time that the Assembly resolves on a new conference, say, for the codification of inter- national law, every time that it establishes a new board, say, for the international control of opium, it adds some thousands of pounds to the next year's budget. In its work for public health and the reform of social evils it has received generous support from private—particularly from American —sources ; nevertheless, the growth of its economic and humanitarian activities means a steady call on the pockets of its Member-States. Thus arises the frequent question whether the League confines itself sufficiently to business which is immediately relevant to the great issues of peace and war, or whether it is not too often tempted into " side- shows." The doubter asks if conferences on quarantine rules or bills of exchange really tend to diminish the risk of war ; if intellectual co-operation counts as a bulwark against militarism ; if the League is not in many ways undertaking work which the Member-States ought to be doing for themselves.

LEARNING TO WORK TOGETHER.

Were the Assembly put to it to answer those questions, the reply would probably be twofold. In the first place it would be argued that no avenue to better relations between nations should be left unexplored. Disarmament holds off ; arbitration is still distant ; security hangs on the slender thread of the Kellogg pact. We cannot force the pace ot universal peace.; meanwhile let us get nations accustomed to work together in peaceful pursuits. If they learn to co-operate systematically in economic or intellectual or humanitarian fields, they will find less difficulty in friendly consultation over weightier matters. The second answer to criticism on the diffused activities of the League would take us on to more delicate ground. It would remind us that the League embraces a number of nations which arc only remotely concerned with European politics. Questions which are of vital moment to France or Poland leave China and Uruguay cold ; they did not suffer from the war ; they have no part in the conflicts which imperil peace. Apart from occasional grumbles at the rising costs, do the Member-States pay their contributions cheerfully and punctu- aliy ? On the whole, yes. China, owing to domestic trouble, is badly in arrears, and several South American States, of which Peru is the chief sinner, make a habit of default ; but the Collections steadily improve, and 67 per cent. of the year's requirements are now -paid in tune. To avoid bank over- drafts in the early part of the year, before contributions arrive -freely; a- Working Capital Fund of 1200,000 -has been built up by a special effort of the More solvent States in earlier years. -There are many other-funds and cOmplications, of which soiree- forbids any enumeration, •