1. We must now take a decision as to:- (a) Whether our contribution to the League of Nations for the year 1940 – amounting to over £15,000 – should be paid at all and (b) what, if any, provision we should make in the estimates for 1941/42 for the payment of a contribution to the League of Nations in respect of the year 1941.

2. The League budget for 1940 was duly voted. When we were asked by the League last May when we would pay our subscription, we said we hoped to do so in September. Since May, however, the League has completely foundered. Part of it is now in the United States; another section is in Geneva, and the most recent information we have about a further section, comprising some of the principal officials of the Secretariat, is that it is stranded between Switzerland and Portugal, unable either to get back to Switzerland or go forward to the United States. We have ceased to receive any evidence that the League is able to do more than publish from time to time a few statistical publications. The last return of contributions which we have received – dated 31st March, 1940 – shows that at that date only one State had paid its contribution for 1940 in full and only four had made part payments.

3. Under these circumstances, it is difficult to see how we could justify paying over more than £15,000 of the public money to the League. It would be virtually impossible to answer the argument that, as most of the activities for which the budget for 1940 was voted, had been abandoned, we had no right to pay over our full contribution. It might be said, of course, that as the budget for 1940 was duly adopted and voted, we are under some legal obligation to make the payment. It is unlikely that anybody would raise the legal question when the whole basis of the League itself has obviously broken down, but, in view of this element in the case and the possibility of our having to make the payment at a later stage, it would be well, I think, if we decided to withhold payment, to secure the concurrence of the Department of Finance beforehand.

4. The second question is that of the provision, if any, to be made for a contribution to the League of Nations in the estimates for the year 1941/42. Provision for our contribution to the League of Nations has hitherto always been made by means of a special Vote separate from that for the Department of External Affairs.

5. A provision for a normal contribution seems to be quite out of the question because the Supervisory Committee of the League has apparently been unable to meet and, therefore, no League budget for the year 1941 has been drawn up or agreed to. That being so the only alternatives before us seem to be either to make no provision at all or to make a merely token provision of £10. To my mind the former course is the only one we can reasonably take. The appropriate League regulations provide that the budget estimates, once drawn up by the Secretary-General, must be examined by the Supervisory Commission appointed by the Assembly and, after examination by the Commission, circulated to all the members of the League, together with the Commission's report, not less than three months before the Meeting of the Assembly. They must then be discussed by the Finance Committee of the Assembly and adopted by the Assembly unanimously before they have any binding force. None of this procedure has been complied with, and the possibility of following it in present circumstances is practically nil. The fact that there is no proper League budget for 1941, therefore, would be a completely satisfactory reason for our not making any provision for League contributions in our 1941/42 estimates.

6. If, on the other hand, the Minister felt that not to make any provision at all for the League in the estimates would have the character of a positive political act and expose the Government to the criticism that it was taking the initiative in abandoning the League and setting a bad example to other small States, our proper course would be to make a token provision of £10, as evidence of our willingness to make whatever provision we were bound to make as a member of the League but of our inability to assess the amount of our contribution owing to the breakdown of the League budgetary machine.

7. The simplest course seems to be not to make any provision for the League in the 1941/42 estimates.