The Secretary to the Treasury has forwarded me the following minute for advice:

I desire to inform you that, in the Loan Bill now before Parliament, provision is made for a loan of £10,000 to the Administration of the Territory of New Guinea. This amount forms portion of a larger sum which the Government proposes to lend to the Administration up to the 30th June, 1925.

In this connection, the Treasurer desires to be advised as to what legal authority exists for the Commonwealth to recover any moneys lent to the Administration of the Territory.

I shall be glad if you will kindly treat this matter as one of urgency, as the question has a direct bearing upon the Budget for 1924/25, with which the Treasurer is now closely engaged.

The matter of the repayment of loans made by one Government to another is one for arrangement between those Governments and I am not aware of any case in which the creditor Government has resorted to legal process to recover an admitted liability of another Government incurred by way of loan.

The relationship of the Commonwealth Government and the Administration of New Guinea is unusual in its character, and there is always the possibility of the Commonwealth’s Mandate being transferred to another Government, although the attitude of the Commonwealth in this connection is that the Mandate is irrevocable except with the consent of the Commonwealth.

In the circumstances, I think it desirable that the sanction of the Council of the League of Nations should be obtained before any loan is made by the Commonwealth to the Administration of New Guinea. This would protect the Commonwealth to the extent of enabling it to require that, in the event of a transfer of the Mandate, the future Mandatory Power should recognise the Commonwealth’s claim upon the Administration of the Territory for the repayment of its loan.

[Vol. 21, p. 72]