23rd June, 1927
PERSONAL & CONFIDENTIAL
My dear Prime Minister,
I have now in preparation two statements which I hope to be able to forward to you in the course of the next fortnight. As neither are ready at present, my letter will be shorter than usual.
MR. G. A. JULIUS 
Mr. Julius arrived in London late on Tuesday evening. I spent the greater part of Wednesday morning with him and last night he dined with me and we had a long discussion which lasted until 11.30.
It was most pleasant to meet a man of Mr. Julius's outlook and not only on scientific questions but also on the broad lines of Australian economic policy we found that we were in very substantial agreement. So much was this the case that I hope to be able to forward to you shortly a further reinforcement of the views which I expressed in my memorandum on Australian Tariff Policy as a result of gathering from Mr. Julius his own standpoint in this matter.
Tonight Julius, Professor Watt  and myself are dining with Walter Elliot  and Ormsby-Gore  to discuss cooperation between the Commonwealth Council for Scientific and Industrial Research and the Empire Marketing Board in scientific research.
Mr. Julius appears to have arrived in London with the definite idea that the form of liaison temporarily set up whereby I am acting for the C.C.S.I.R. is one which is sound. I have, however, particularly asked him to keep an entirely open mind on the subject until he has had a couple of months in which to turn round and to learn the whole of the complexities of Research Organisations in Great Britain.
AUSTRALIAN DRIED FRUITS
Yesterday the London Agency of the Commonwealth Dried Fruit Board gave a trade luncheon at Australia House at which we were fortunate enough to secure, as the chief guests, Lord Birkenhead  and the Rt. Hon. J. H. Thomas  M.P. There were no other speakers and Birkenhead and Thomas amply filled the bill, making interesting statements of very considerable benefit to the industry.
The guests numbered just under 200, of whom over 120 were members of the trade. These gentry were highly delighted to be asked to meet Lord Birkenhead and I feel certain that the whole of the traders present went away with a warmer feeling towards the Australian dried fruit industry as a consequence of this function.
Mr. Pratten  was one of our guests and he was seated next to Lord Birkenhead, so that I hope he enjoyed it.
EMPIRE MARKETING BOARD
You are probably aware that a Cabinet Economy Committee has been sitting for some time. I understand that the Treasury, headed by Sir Warren Fisher , has commenced an attack before the Cabinet Economy Committee on the 1,000,000 Annual Grant to the Empire Marketing Board. I think that the Treasury's idea is to put forward a proposal to reduce the value of the Grant and also to insist on strict Treasury control and the surrender of unexpended balances.
I do not anticipate that My Lords of the Treasury will have it their own way but it is extremely significant of the state of mind of the Treasury and the Bank of England that they should even put forward suggestions for a reduction in the Annual Grant at the present moment.
I shall watch the position with keenest interest and keep you informed & should any untoward development seem in the least likely, shall immediately cable.
I had a letter from Gepp  asking me to look into the possibility of an improved market for Brandy in the United Kingdom, pointing out that an extension of the market would entirely be dependent upon increased preference.
It so happened that, at the same time, I found that some of the Parliamentary Members of the Empire Industries Association were anxious to press for increased preference on Brandy in the debate on the Finance Bill. I have, therefore, provided them with a good deal of information and today discussed the matter with Sir Horace Hamilton, the head of the Customs. He tells me that at the moment there is an insuperable objection to any increase in the preference on Brandy, namely that no such increase could well be given without some concession being given to the Whisky Distillers in the United Kingdom. Financial conditions have made it impossible to give the concession to the Whisky people that was anticipated and under those circumstances he feels that, although the Chancellor  was quite well disposed towards an improved preference on Brandy yet it would be quite impossible for him to accept the amendment.
I conclude from this that should it be possible at the next budget for the Chancellor to give any substantial concession to the Distillers in Great Britain it would be practical politics to press at the same time for an increase in the preferential rate upon Empire Brandy.
In my letter of the 1st June , I drew attention to a possible concession to British Merchants holding Tarragona and Lisbon wines in bond. I now find that an amendment has been formed to the Finance Bill in order to allow the duty of 8/- per gallon on foreign wines over 25 strength to be reduced to 5/- so far as the quantity held in bonded store before the budget came into operation is concerned. The total amount of wine involved is something in the neighbourhood of 1,000,000 gallons-in other words about 2 1/2 months supply.
I am inclined to think that the Chancellor will probably accept this amendment provided that the debate shows that there is no strong objection to it in the House. I had Hamilton to lunch with me today and he said that he was by no means sure what action the Chancellor would take but he thought it was a reasonable thing to give the unfortunate holders of Tarragona wines an opportunity to get quit of this stock without having to accept entirely ruinous prices. So far as I am able to gather, this concession, being of a purely temporary nature, cannot have any important effect on the trade in Australian wines.
Yours sincerely, F. L. MCDOUGALL