19th February, 1925
PERSONAL & CONFIDENTIAL
Dear Mr. Bruce,
NEW PREFERENCE CONDITIONS
The announcement of the final form of the new conditions governing preference to British goods in Australia has so far been very well received here.  The Board of Trade and the Federation of British Industries both seem really pleased. The Manchester Guardian and the Yorkshire Observer, both Free Trade papers, have expressed the view that the Commonwealth Government has seriously tried to meet the difficulties of the British manufacturer. The Times has not yet commented, but the Editor of the Times Trade Supplement  came to see me and I think that his article will be on favourable lines.
The chief comments that I have heard have been, firstly, great interest as to how the Commonwealth Government will interpret the words 'commercially possible' and, secondly, surprise that the list, which the Department of Trade and Customs will issue, of goods which can be regarded as being not made in Australia for the purposes of preference, should be compiled on that negative basis.
The hope is expressed that the Commonwealth Government will include in the list of all goods that are not of some industrial importance in Australian manufactures.
My own feeling is that there would be some advantages from the Commonwealth Government's standpoint in having a positive list. In other words that the Department should schedule all the important Australian industries and put the onus on small and inefficient Australian manufacturers to show that other goods that they desire included in the list were manufactured in Australia on a real commercial basis.
I am extremely glad that the conditions have been revised in the way that they now appear for this reason: that before the final conditions appeared, there was a rather unpleasant undercurrent of feeling that the Commonwealth Government was trying to whittle away the chief purpose of the preferential tariff. As an example of this, I was lunching with d'Egville  and Mr. Samuel , the Head of the Department of Overseas Trade. Mr. Samuel said 'what is the use of our trying to inaugurate a real policy of Empire development, when Australia brings in these new conditions which will destroy the very meaning of preference.
2. THE LABOUR PARTY AND FISCAL POLICY
I have been in touch with Haden Guest , Tom Johnston  and other Members of the Labour Party and I gather that a very interesting development is taking place inside their ranks.
On Monday, in the debate on the Safeguarding of Industries, Haden Guest spoke and voted with the Government against Ramsay MacDonald's  resolution.  He tells me that, instead of being ostracized as a result of this action, he is receiving appreciation from many Members of his own Party.
Tom Johnston, who you may remember is one of the Clydeside group, tells me that he and Wheatley  (who is aspiring to the leadership of the Labour Party) are determined to do everything that they can to prevent the importation of competitive goods produced by sweated labour into Great Britain and that they are prepared to extend their idea to goods, the product of what they would regard as sweated labour, that compete with Dominion produce. If this development is encouraged, it ought to result in very considerable benefit to us.
3. THE LABOUR COMMONWEALTH GROUP
Sir Howard d'Egville tells me that, in the new Parliament, the Labour [Commonwealth] Group consists of 60 members of whom from 30 to 40 regularly attend the meetings of the Group, which are held in d'Egville's rooms. Apparently the seed that Australia has sown in this soil is growing well and should bear interesting fruit.
On the initiative of an official representative of the British Columbian Growers, a private Committee has been established to consider the possibility of an Empire Central Committee for assisting the Empire Apple industry. This is chiefly the result of the British Government's proposal to place a million pounds at the disposal of the Imperial Economic Committee.
The view that is taken by the Members of the Committee is that the most essential improvement that could be achieved to help Empire Apple producers would be some method whereby the whole of the finance of packing and shipping should be met from a source entirely separate from the Commission Agents and Brokers in this country.
The Agent-General for Tasmanian  has put forward the views of the Tasmanian Fruit Advisory Board, which are, roughly speaking, the views which Ashbolt  and I discussed with you.
5. MEAT PRICE FIGURES
I am enclosing figures showing the average price obtained for Argentine frozen and chilled and Australian frozen beef for the years 1913, 1914, 1923 and 1924 because I think that you will be interested to see that the margin between frozen and chilled has not been as great as is frequently stated.
6. MALTING BARLEY
Mr. E. A. Box, who was Official Secretary at Australia House and is now the Managing Director, I believe, of the White Horse Distilleries, is very much impressed with the possibilities of a large trade in Malting Barley from South Australia to this country. He tells me that, for the purposes of distilling, South Australian Barley in good condition is worth a number of shillings per quarter more than any other Barley in the world but that the trouble is that distillers will not buy in any large quantities unless they can obtain a guarantee that shipments will be free from weevil.
This matter was discussed in January 1922 and referred to the Department of Trade and Customs in Melbourne. I am forwarding copies of this correspondence which Mr. Box has provided me with.
I believe that there are possibilities of a very substantial development in this direction which you might feel inclined to take up some time when you are visiting South Australia.
With reference to my letter of February 5th , Section 4, I am enclosing Appendix No. 8 to my Memorandum for Sir Arthur Balfour  Committee.
I understand that the Colonial Office are anxiously awaiting your nominations to the Imperial Economic Committee as they desire it to function immediately.
Yours sincerely, F. L. MCDOUGALL