14th April, 1927
PERSONAL & CONFIDENTIAL
My dear Prime Minister,
It was again very pleasant to receive your letter of the 7th of March. It makes my work at this end very much more intelligible if I receive your comments on the letters I send to you. I can quite appreciate your reasons for considering that my suggestion of the memorandum on 'British Cooperation in Australian Developments' was premature.  Probably they would not appreciate the situation yet. I only hope that the country has not to experience still heavier depression before the vital urgency of a sustained policy of Empire Development is realised by those who control affairs.
EMPIRE DEVELOPMENT AND EMPLOYMENT
I feel very weary of the orthodox financial and economic pundits who for four years have prophesied prosperity and for four years have been wrong. I have suggested to Walter Elliot  the formation of a small secret committee to examine whether schemes of Empire development cannot be found which would comparatively rapidly affect employment conditions in Great Britain. My idea is that such a committee might formulate a very tentative policy for Government consideration in the event of the prophesies of prosperity in 1927 proving wrong for the fifth year in succession, for then I feel that by next October people even in high places will be prepared to look towards the Empire with a more genuine interest.
It is obvious that if a comparatively short view is taken, the increase in the purchasing power of an Empire country that obtains from 70% to 45% of its oversea requirements from Great Britain will affect employment in Great Britain more rapidly and more directly than an Empire country such as Canada which takes 16% from Great Britain or than the South American Republics which average 20%. I do not, however, think that this method of assessing the desirability of development schemes from the point of view of the early benefit of Great Britain has ever been considered here.
THE BUDGET AND WINES
I hope that you will have felt satisfied with the Budget decisions on sweet wines. The plan to fix the dividing line on Foreign wines at 25 and on Empire at 27 appears to suit Australia most admirably. I cabled you to-day as follows:-
Following from McDougall-New wine duties should give Australian sweet wines effective preference over cheap Spanish and Portuguese wines, some merchants think Spaniards may try to import at 25 degrees but others regard this limit too low for any type sweet wine stop British made wine much advantaged by budget comma margin between these and Australian sweet wines increased from two shillings to three shillings expect considerable competition from this source stop Suggest new duties give opportunity to urge on industry orderly marketing and continuity of supply. New wine scales represent important additions to preference urged by you (ends). 
There can be no doubt that the Australian Viticultural Council ought to arrange for more systematic marketing, for improved and more regular quality and for the retention of such quantities in Australia as will give some maturity and, perhaps more important still, some guarantee of continuity of supplies. Presentation, labelling and advertising are also important. I do hope the industry will be wise and make the most of their opportunity. I should like to see a well run Export Control Board for our sweet wines. I think we shall experience a considerable degree of competition from the 'British' made wines and I therefore hope that the Commonwealth Government will not further reduce the bounty and draw back, at least until a year has shown how the market here has been affected by the Preference. The failure of the Chancellor  to give us any increase in preference on dry wines is perhaps not to be wondered at in a year of such financial difficulty as this has been. His failure to reduce the whisky duties has infuriated the distillers who had confidently expected a big reduction. I imagine the Cabinet may have overruled the Chancellor on that point. The high whisky duty, however, should mean a continued expansion of a market for Port type wines in spite of the increased duties on wine.
THE AUSTRALIAN DELEGATION
At to-day's meeting of the Empire Marketing Board, Amery  asked for sanction for a grant of 5,000 to meet the expenses of sending the Business Delegation to Australia. He explained that this would create a precedent which could be followed if any other part of the Empire desired to follow Australia's example. I rather regret this charge being put upon the Empire Marketing Board vote because:-
(a) I think the Treasury might have borne the charge with better grace; and (b) I am anxious to obtain all I can reasonably obtain for Australian agriculture and the Geophysical proposal plus the Business Delegation gives a slight atmosphere of Australia being specially treated under this vote.
However, it does not really matter and I date say my keenness on the general work has made me a little unduly nervous of wrong items being charged to the vote.
E. J. Harding  to-day showed me your reply to the list of names. He is going to sound Mond  about a member of the Imperial Chemical Combine before approaching the others.
HIGHWAYS OF EMPIRE MAP
By this mail I have forwarded to you a copy of the reproduction of the Highways of Empire map, of which the large scale poster has, I believe, been exhibited by Mr. Clapp  in Melbourne. The reproduction in the smaller size is, I think you will agree, extremely decorative and effective-so much so that I have little doubt that a number of people will frame it and hang it in entrance halls and places of that sort. It has, however, occurred to me that you might like to have a second copy with the idea of presenting the reproduction to the Frankston State School. The reproduction is specially intended for use in schools and applications from over 5,200 schools have been received in the ten days that have elapsed since an advertisement was inserted in the educational press stating that the Empire Marketing Board was prepared to issue the map to schools making individual application to the Empire Marketing Board.
At the last meeting of the Board, it was agreed, on my suggestion, that copies of this map, and later of other suitable poster reproductions, should be sent to the Directors of Education in the various parts of the Empire, with an indication that schools individually applying to the Empire Marketing Board would receive copies. I therefore think that as the use of the Empire Marketing Board's posters in schools may become a feature throughout the Empire, you might care to set the example in Australia by the presentation of a copy to Frankston, which I believe is in your Constituency. 
SIR LENNON RAWS 
I have seen something of Sir Lennon Raws during the last week, and am very interested to find that there is considerable probability of his becoming the Australian representative of the Imperial Chemical Company. He appears to me to have become a little broader in his outlook since 1924 and to be a less Anti-Tariff man than he was, although hotly opposed to the extremer forms of Protection.
I am glad that you think the 'London Weekly' has up-to-date been on a high standard, and I am enclosing a copy of the number for the week ending 9th April. I am afraid that Haden Guest  and Apsley  are finding it rather difficult to carry on the paper.
They started, I think, with much too little in the way of capital resources, and they were rather disappointed by people who had given tentative indications of support which failed to materialise. I hope that means will be found whereby the paper can be carried on, but I am a little doubtful.
'THAT PINT POT'
You may remember my talking to you when you were in London about the views of a man called Hecht.  Hecht is an extremely originally minded engineer who has become an economist and has written several very stimulating books which, unfortunately, are almost unreadable, owing to Hecht's lack of ability to express himself. His earlier works run into 500 or 600 pages and have been extremely solid going. He has, however, just written a short booklet called 'That Pint Pot', the idea of the title being that the practical economist views the world from the basis that 'you cannot get more than a pint out of a pint pot'. Hecht's whole idea is that any such attitude towards economic life is incredibly absurd when the effect of the human spirit, as expressed by invention, makes it possible to get gallons out of the pint pot, provided that you organise your industry and your distribution in such a way as to take the fullest advantage of the inventive spirit of man. Although this small booklet suffers from the same disadvantages as Hecht's large works, i.e., it is written in a confused way, yet I feel sure that you would find it well worth reading carefully. I am therefore enclosing a copy.
EMPIRE MARKETING BOARD
A meeting of the full Board was held this week, at which a considerable number of important decisions were taken, of which I will send you a summary by next mail. I also think that the time has arrived when it would be useful for you and Mr. Paterson  if I prepared a statement on the publicity work of the Empire Marketing Board. I shall do this at the earliest opportunity and hope to forward it to you within the next fortnight.
One remark made by Mr. Amery has caused me some concern. He said that it was possible that the terms of the vote by the Empire Marketing Board might be altered in order to allow a certain degree of expenditure for advertising Empire products on the Continent of Europe. I have not had an opportunity of discussing that point with Amery privately, and I did not feel inclined to raise the issue before the full Board, but I personally connect this in my own mind with the Government's intention to disband the Department of Overseas Trade. You are probably aware that the Department of Overseas Trade has an exhibition side, and it may be that the Government thinks that that exhibition side might be placed under the Empire Marketing Board. If anything of the sort happens, it would involve the Empire Marketing Board becoming responsible for the exhibition of British manufactured goods on the Continent of Europe, and would, I think, rather seriously affect the intentions for which the Board was formed. I am proposing to write to Mr. Amery immediately after Easter, telling him of my misgivings and suggesting that I should have an opportunity of discussing the matter with him. I should, however, very much appreciate an expression of your view on this quite tentative hypothesis.
I am enclosing a copy of the Budget statement, together with the discussion on the day following. I am also enclosing a report from the 'Times' on the effect of the new duties on Dominion wines. This, in part, was inspired.
Yours sincerely, F. L. MCDOUGALL