by Hannah Tyler, PhD Student, Lausanne University
"We have a set of regulations based, I think, on the Dutch financial system. We have a budgetary system based on the British and the French systems, and a control and audit system which is entirely Italian." Jacklin Seymour, 28 June 1934
Between 1919 and 1945, the League of Nations generated a substantive amount of income to finance the extensive activities of the League, the International Labor Organization (ILO) and the Permanent Court of International Justice (PCIJ). It needed this money to pay the salaries and pensions of its employees and the upkeep of its facilities in Geneva.
Hannah Tyler 2022
Hannah Tyler 2022
Hannah Tyler 2022
Over the more than 25 years of existence, the total expenditures of the League grew exponentially and are in proportion with the League's increasing number of institutions. In addition to forwarding payments from the member states to the ILO and the PCIJ, the League was funding the work of its more than a dozen technical and political sub-organizations. In 1921 the expenses of the League secretariat and sub-organizations mirrored the still small size of the organization, amounting to only about 8 million Gold Francs. In 1924, this number rose by more than 25% to over 13 million Gold Francs due to the massive expansion of the various technical organizations such as the Health Organization and the Economic and Financial Organization. The League incurred the highest amount of expenses, amounting to over 15 million Gold Francs, in 1931 due to the world financial crisis and the inflation of global prices.
The Economic and Financial Organization received over 10% of the budget, while the Health Section received approximately 7%. At the other end of the spectrum was the High Commissioner for Refugees, which got 1%. When it came to the distribution of money, the League organizations that were the most popular got the most money from the League budgeting committee.
In terms of cost, the League was, in many ways, quite expensive. The costs for the yearly Assembly meetings, which lasted several weeks and brought together several hundred delegates, journalists, and visitors, ranged annually between 500,000 and 750,000 gold francs. The printing costs of the League were also high, amounting annually to about 300,000-500,000 francs between 1920 and 1933. The League was, for most of its existence, always in good financial health. The administrative personnel always calculated its budget with a 10% buffer and, in addition, was steadily working on ways to find additional forms of income, such as by selling League films and publications or by outsourcing the printing costs from Switzerland to France.
The audits of the League of Nations, available for all years of the organization's existence, record that the League had several income streams beyond its member states' voluntary and mandatory contributions. Although the contributions paid for about 80% of the League expenses, about 20% of its funds came from bank credits that it took out, the interest it earned on working capital funds, the grants of the American foundation, and the investments it made in international stock markets. The interest earned on the building funds of the League was quite extensive during the 1920s as the League built its new home, the Palais de Nations, in Geneva. To finance the building of the Palais, officials of the League collected more than 30 million Swiss Francs during the 1920s and 1930s. They kept the interest they earned on it to reduce the expenses of the general secretariat. Between 1921 and 1939, the working capital funds produced significant income. The records show that the interests of the eight operational capital funds added nearly one million Swiss francs in revenue to the overall budget in 1928, for instance.
There are two primary sources: the budgets and the audits. They each hold the exact financial information for all parts of the League, the PCIJ and the ILO. However, the first one estimates and the second tallies what was spent. The annual budget reports can generally be found in the League of Nations Official Journal. The League treasurer generated these budget numbers in advance. They were to calculate the cost of the League’s activities for the next year, which were to be approved by the Assembly in its annual session. These estimates were generally based upon the previous year's expenditure, and the League planned activities that were known before the Assembly. The second sources are the confidential financial audits, in which the auditors of the League collected all the information on the actual income, expenditure and working capital of the League, the ILO and the PCIJ. These audits include all the budget changes that were made throughout the year, like the reduction of salaries of personnel that were dismissed or quit, the actual profits that were made on the sales of League publications, etc.
Unlike most international organizations, the League budget and audits were, for the most part, recorded in the gold francs. This currency, essentially, only existed on paper. The League officials introduced it in the 1920s to standardize the various accounts it was managing. Then as an international organization, the League handled British pounds, French and Swiss francs, U.S. dollars, etc. The easiest way to calculate the amount of money the League officials were taking is to use the same exchange rates the League used. In the case of U.S. dollars, the conversion calculated internally for the GF-US Dollar exchange was stated in its 1920 budget and put 1 USD at 5,1826 GF. The League set three different rates for Swiss France in the 1923 budget. This table might provide an essential tool for converting and understanding the League financial numbers.
1 US Dollar = 5,1826 Gold franc
1 Gold franc = 1.196322 Swiss francs;
1 Gold franc = 1.0612125 Swiss francs;
1 Gold franc = 1.00 Swiss francs.
UN Archives Geneva
The officials included various members of the League leadership. The first was the British Secretary-General of the League of Nations, Sir Eric Drummond (1920-1933), who acted as the "Chief Financial Agent" and the League's trustee. He was responsible for the League's liquid and physical assets. In the first years of the League, all of the League bank accounts were, theoretically, his as Swiss banking law did not yet fully permit international organizations to have a bank account. Furthermore, he could authorize money transfers without having to consult the Treasure and it was his name that appeared in the land registry entry and on the leases of the League buildings. He also could, in the name of the League, inherit money from individuals seeking to leave the League some money in their will.
On the executing side were the two treasurers, Herbert Ames of Canada (1920-1926) and Seymour Jacklin of South Africa (1926-1945). They oversaw the financial setup and administration of the League. In their position, they supervised managing the League's bank accounts and investment portfolio. They also drafted and defended their annual budgets to the member states during the annual General Assemblies.
Overseeing the budgets and enforcing the expense policy was the League's unofficial "Minister of Finance," the Czechoslovakian lawyer and delegate, Štefan Osuský. He was the Chairman of the League of Nations Supervisory Commission (1922-1937). He thus implemented the League sensible expense policy while drafting the League's financial rulebook: Financial Administration and Apportionment of Expense. This handbook provided the League with administrative rules, policies, and procedures to financially manage the organization.
Providing the financial oversight were two Italian auditors, Mr Ceresa and his deputy, Dr Vivaldi. They were employed by the Italian Ministry of Finance and conducted audits until 1938 on a monthly financial report for the League, the ILO and PCIJ. Finally, there also was the League council. As the highest organization of the League, the council approved changes to the budget during the fiscal year.
This status remained even throughout the war. Then not only the League personnel moved abroad during the 1940s. The League's second treasurer, Seymour Jacklin, also ensured that the League financial papers found their way into the London treasury, where they were stored away for safekeeping until the dissolution of the League in 1946. In that year, all the League money, its physical assets like the Geneva buildings, and its financial knowledge were transferred to the UN and its financial staff. This transfer is only the tip of the financial iceberg. More historical investigations into the League finances needs to be made to uncover how much money it accumulated through the war and what kind of financial knowledge it transferred to the UN systems.
Budgets: File Numbers in Geneva for 1919-1933:
Budget for 1.4 – 31.12.1920 R1479/31/5184
Budget for 1921 R1502bis/31/17895/17895
Budget of 1922 R1493/31/16350/13093
Budget of 1923 R1512/31/20603/20551
Budget of 1924 R1519/31/31388/28150
Budget of 1925 R1522/31/40510/33977
Budget of 1926 R1526/31/47520/42366
Budget of 1927 R1529/31/54444/49421
Budget of 1928 R1532/31/57269/57269
League of Nations: General Budget for the Eleventh Financial Period (1929), League of Nations Official Journal 9 (1928), S1787/1856. Available at Heinonline.com
Budget of 1930 R3401-R3402/18/10172
League of Nations: General Budget for the Thirteenth Financial Period (1931), League of Nations Official Journal vol. 11, no. 10 (October 1930), S. 1174-1248. Available at Heinonline.com
League of Nations: General Budget for the General Budget for the Fourteenth Financial Period (1933), League of Nations Official Journal 13 (1932), S. 1909-1985. Available at Heinonline.com
Budget of 1933 R5295/17/10271/3751
Audits 1919–1933: File Numbers in Geneva for 1919-1933:
5.5.1919 – 31.3.1920 - R1476/31/2698/2698
1.4.1920 – 30.6.1920 - R1479/31/6419/6419
1921 - R1483/31/24506/9160
1922 - R1518/31/27543
1923 - R1523/31/35665/34978
1924 - R1524/31/37857
1925 - R1522/31/44335/33977
1926 - R1527/31/53105/42366
1927 - R3376/17/4351/445
1928 - R3398/17/11604/6073
1929 - R3386/17/19846/1387
1930 - R3402/17/28115/10172
1931 - R3407/17/36012/17118
1932 - R5274/17/3724/691
1933 - R5295/17/10271/3751
Ames, Herbert: The Financial Administration of the League, 1923. in: League of Nations Official Journal, Geneva 1923, S.5-42.
Mumby, Victoria Jane. The quiet death of the League of Nations, 1945-48. Diss. Birkbeck, University of London, 2022.
Singer, J. David. "The finances of the League of Nations." International Organization 13.2 (1959): 255-273.
Ranshofen-Wertheimer, Egon F. "The International Civil Service of the Future." Int'l Conciliation 24 (1946)
Tyler, Hannah. "Breaking Even for the Future: The Financial History of the League of Nations Between 1919 and 1933." Monde (s) 1 (2021): 119-138.
Tyler, Hannah. Show me the money: Die Finanzen des Völkerbundes zwischen 1920 und 1933, 2018, MA Thesis (available upon request to the author).