A.—s.

Seeing that considerable economies tad already been effected, and that the rationalization of the Secretariat is still proceeding, it was felt unwise to offer much criticism on items which were in the course of modification, but an attempt was made to reduce still further other items, and I proposed a motion to reduce the estimate for entertainment allowances by 20,851 francs, in order to make the vote correspond with the actual expenditure under this head in 1932. Unfortunately, much of this expenditure rests on a contractual basis, and in view of this, and also in view of certain explanations given, I did not think it advisable to press my motion to the vote. Salaries were, of course, the subject of discussion, but the considerable reductions which might be immediately effected are prevented by the contractual nature of the appointments, and, except in the matter of temporary posts, reductions are possible only as contracts expire. On the other hand, I think I should state, in fairness to the staff, that the cost of living in Geneva does not decrease. The estimates of the International Labour Office show careful preparation and a desire on the part of those who frame them to effect economy. lam glad to think that Mr. Butler, its able Director, and the governing body of the organization have shown such wisdom in connection with financial administration. The estimates of the Permanent Court of International Justice do not require comment. The minutes of the Committee are not yet available, and the Journal does not give a complete picture of the discussion, but when you receive the printed minutes I think you will find they repay study. The results obtained in the committee in the direction of economy have been good : not so good as one would wish, but the promise for the future is distinctly encouraging. As rationalization in both the Secretariat and the International Labour Office, particularly the former, is still going on, I will not offer any comments. You will find some particulars in the reports of the Supervisory Commission to which I have referred, but the document giving the fullest information is that numbered A. 10, entitled " Technical Concentration of the Activities of the League of Nations and Rationalization of the Services of the Secretariat and International Labour Office." May I draw your attention to some sections of this latter document —i.e., the section on page 4 devoted to the activities of the League, and paragraph 14 on the same page which deals with the " representation " of various nations in the different administrations of the League. Whilst lam sorry that the suggestion I made last year—that there should be a centralization of League statistics —has not found favour, I am glad to think that my motion to abolish the Branch Offices is still being studied, and that if not subsequently abolished they will at any rate undergo a process of modification which will make for economy. The total Budget for 1934 as presented to and passed by the Assembly on the 11th October amounts to 30,827,805 francs, showing a reduction of 2,601,327 francs on the Budget of the current year. The Fourth Committee's report to the Assembly (Document A. 58) gives an excellent account of the tendencies displayed in the debate in Committee, and it contains some pertinent references to aspects of finance and financial administration on which I have not touched : for instance, the financial position of the League (see also Documents A. 21 and A. 21 (a) ) and the Staff Pensions Fund (see also Document A. 9). It is unfortunate that there have been losses on investments made on behalf of this fund, and also a loss in respect of the new building fund (see page 5 of Document A. 5 (a)), but losses are almost inevitable in these days of crisis. I should draw your attention to section 4, entitled " Collection of Contributions," of the second supplementary report by the Supervisory Commission to the Assembly (Document A. 5 (b) ). The recommendations made in the section have been accepted by the Assembly. Contributions in Arrears. I am glad to say that the problem created by contributions in arrears was attacked this year with great resolution, and, although achievement is meagre, the methods adopted will surely have effect. Of these methods the most important is publicity. It is true that the sub-committee to which, as is usual, the matter was referred met in secret, but its report was presented at a public sitting of the Fourth Committee, and for the first time in the history of the League the report is made public as an annex to the Fourth Committee's report to the Assembly. Not only this, but the reportto the Assembly is a report of the debate in the Fourth Committee and on the decisions taken, and not merely a brief introduction to a draft resolution. I myself spoke very strongly on this problem of unpaid contributions, and referred in no measured terms to a passage in the sub-committee's rej>ort to the effect that " there was not one of the defaulting States which could not have paid at least a part of its contributions." I have long felt that, whilst some States have found difficulty in meeting their foreign payments, others have made no real attempt to pay even a portion of their contributions to the League, and 1 referred to this in a letter I wrote to the Minister of Finance on the 2nd August last. I now find that the opinion I then held, and had long held, is confirmed by the sub-committee. Will publicity have its effect ? I hope so; but it may ultimately be necessary to examine the problem from the constitutional aspect, as I suggested might be the case when I spoke in Committee. At any rate, a forward step has been taken, and the world is now put in possession of the facts. Since the Fourth Committee's report to the Assembly (Document A. 56) was printed, Columbia has made a payment of 30,000 dollars on account of arrears, which stand at well over 21,000,000 francs in respect of countries owing arrears. It will be observed that the resolution (on page 5 of the report) which, was passed by the Assembly at its meeting on the 11th October includes a decision to excuse the Dominican Republic from payment of its contribution for 1931 (see also Document A. IV/2).

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