Two major issues undermined the standing of the League during the 1930s. In September 1931, following an assault on a Chinese garrison in Mukden (the northern Chinese province of Manchuria) the Japanese invaded Manchuria and set up its own government.
China appealed to the League and the matter was considered under Article 11, which gave members the right to raise matters that might be a threat to peace. As unanimity applied, Japan vetoed a resolution on partial withdrawal. The League appointed the Lytton Commission, which in October 1932 recommended that Manchuria become a state under Chinese sovereignty. But as the British had feared, Japan had already consolidated its hold on Manchuria. The Japanese government rejected the Commission's findings and withdrew from the League in March 1933. Despite China's appeals, it was decided not to extend sanctions on Japan.
In 1935 this blow to the League's credibility was compounded by Italy's invasion of Abyssinia (modern Ethiopia). The matter was considered under Article 16, which allowed economic and military sanctions against states that made war in contravention to their obligations under the League. Arms sales and loans to Italy were embargoed, but Britain and France, who were seeking Italian cooperation against Germany, watered down the sanctions to exclude key raw materials such as iron and steel. Sanctions were applied a little at a time and, though they damaged the Italian economy, they failed to stop invasion. Considered too harmful to Italy's economy, sanctions were abandoned in July 1936, leaving Italy in control of Abyssinia.
Without military intervention, it had proved impossible to control the actions of the larger powers, causing Britain to doubt the future role of the League. The peacekeeping role of the League had been discredited, and following Hitler's accession to power, was further damaged by an increasingly aggressive Germany abandoning the League in October 1933. The League ceased to play a role in collective security and finally came to an end in 1946.