116

7th July, 1927

PERSONAL & CONFIDENTIAL

My dear Prime Minister,

YOUR LETTER OF 21ST MAY [1]

It was very pleasant to receive your long letter of the 21st May, in which you commented upon the points raised in my letters. I very much appreciate receiving your comments especially as I realise how heavy are the calls upon your time.

I noted your remark that I should exercise a close scrutiny of the enclosures which I forward to you in order to avoid a waste of your time. I can only say that I have been surprised that you have received my huge budgets with so much patience and I will certainly see that anything I forward shall be, in my opinion, of sufficient value for you to read.

AUSTRALIAN FINANCE

I should like to send you my warmest Congratulations upon the successful outcome of the financial arrangements [2] At this side of the world you appear to have first courageously carried your legislation in the teeth of a determined opposition and then to have tempered justice with mercy and to have won over the States in a way which should do much towards the further unity of Australia. I should imagine that the result must have greatly increased your personal hold upon the country.

BRITISH POLITICS

Frankly I sigh for a little such statesmanship here. The Government has wobbled horribly over the House of Lords reform [3] and, although this event may do little seriously to affect its position, yet in the other fields of policy they seem to be incapable of any valuable constructive effort. Collectively the Cabinet have done few stupid things save this House of Lords fiasco but they appear unable to evolve any policy to meet the real need of the country, the restoration of industry and of agriculture.

I enclose a copy of yesterday's Hansard with the debate on the Reform of the House of Lords in it. John Buchan [4] made a most remarkable maiden speech which, according to the 'Times' report, was received with general cheers from all sides of the House.

Probably this speech will be distinctly interesting to you as you know Buchan.

EMPIRE MARKETING BOARD

With reference to the comment in your letter on the suggestion made by Amery [5] that the Empire Marketing Board might incur a certain degree of expenditure for advertising Empire products on the Continent, I think that you will feel assured that the very strong and definite opposition which I immediately made to this suggestion at the full meeting of the Board has had its effect and that there is no tendency at the present moment to re-open that question. All the other Overseas Representatives of the Board strongly supported my attitude on that occasion.

I have already on several occasions put Julius [6] into touch with Walter Elliot [7] and with other members of the Board and tonight Julius and I are dining with Walter Elliot for a business discussion on cooperation between the Empire Marketing Board and the Commonwealth Council for Scientific & Industrial Research.

I have noted your remark that you would like to be kept informed from time to time about any really important lines of developmental research. I hope before long to send you a note on the general subject of Mechanical Transport which is about to be considered by a Special Committee set up by the Empire Marketing Board at the request of the Colonial Office Conference.

I am glad to be able to report that the special poster campaign which the Empire Marketing Board is developing is arousing continual increasing interest and in this connection I enclose a leading article from the 'Manchester Guardian' [8] which is worth your looking at. From such a source the praise of the Board's work is remarkable. Actually, however, the appearance of this leading article is due to a rather bad mistake made by the Board's officers. The Board's first public report is ready for issue but concurrently with it a White Paper was to have been issued.

Unfortunately, owing to some hitch, the Stationery Office published the White Paper before the report and the publicity that should have been obtained for the report itself is thus endangered.

I am extremely annoyed that this should have happened because elaborate arrangements had been made for publicity of the main report, special articles having been prepared for the 'Times' and other important papers and the premature issue of the White Paper may render publicity of this sort very difficult to obtain.

IMPERIAL ECONOMIC COMMITTEE

There is nothing of fresh interest to report in connection with the Committee, except that now we have reached the drafting stage of the Fish Report and the incompetence of Mackinder [9] has again become strikingly evident; so much has this been the case that Chadwick [10] is finding his work extremely difficult.

If you can see your way to discuss with Amery the need for a better Chairman, it might be all to the good. In view, however, of the unsatisfactory way in which Amery received the comments you made at the Imperial Conference on this suggestion, I am doubtful whether you would care to approach the matter again.

MEMORANDUM ON AGRICULTURE

I am enclosing herewith a first draft of a memorandum upon the importance of the Agricultural producer to the industry of the Empire and particularly to Industrial Britain. A good deal of it will not be fresh to you but I have used the Geneva Conference [11] as the peg to hang the ideas upon and I am not aware that anyone has yet stressed that aspect of the International Economic Conference.

My purpose in preparing this draft is to commence to spread the idea of a new conception of the prosperity of Empire agriculture being completely essential to the prosperity of Great Britain.

As I see it, the Empire idea should be continuously stressed but those of us who enthusiastically support that idea need to find fresh angles to present to the public mind. I am also impressed with the view that many worthy people here react rather unfavourably to the word 'Empire'. They cannot rid their minds of the Chamberlain [12], Dr. Jameson [13]-Kipling [14] complex-the Union Jack and exploitative capitalism. I feel that these folk may see the light more readily if expressed in terms of agriculture.

I am also most anxious to further the idea which you have done more than anyone else to create, namely, that the solution of the main problems of British and of Dominion agriculture are to be found along the same road.

I should be very much obliged if you could let me know whether you see any virtue in such a form of presentation and I should appreciate any criticisms you might care to make on the memorandum. Please observe that it is a first attempt to grapple with a very large subject!

EXPORT OF PEDIGREE STOCK

I am not at all clear to whom I ought to write in Australia on this subject. I am, therefore, writing officially to the Secretary of the Prime Minister's Department and enclose a copy of my communication herewith. [15]

WINE

With reference to the amendment to the Finance Bill to relieve British merchants holding stocks of Tarragona and Lisbon wines, I cabled on the 30th June to inform you of the position.

So far as the development of the Australian wine business is concerned, I have found it rather difficult to get impartial views. I am inclined, however, to think that Australia would make a very great mistake if she used the present opportunity to press for the uttermost farthing in the price to be obtained from British merchants for her port type wines.

As I indicated to you in my letter of 28th April [16], the Spanish and Portuguese interests have had a very heavy knock as a result of the budget. They are trying to get over this knock by exporting wines under 25 strength, that is at the low rate of duty, for blending in London with wines of a very high alcoholic content. I believe that the better class merchants are still sceptical as to whether a sound wine can be produced by these methods. Provided they can get Australian wine at a reasonable price and they will be prepared to make forward contracts in very considerable volume, I feel very definitely that Australia really has the ball at her feet but that considerable restraint and discretion is needed to obtain the maximum permanent advantage from the existing situation.

Yours sincerely, F. L. MCDOUGALL

1 This letter is on file AA:M111, 1927.

2 The agreement between Commonwealth and State Governments to establish the Australian Loan Council, whereby all government borrowing would be consolidated, had been announced on 20 June.

3 Proposals included limitation of the size of the House of Lords, with elected representatives of all peers sitting for a fixed term; more equitable representation of all political parties in the House of Lords; the right of the Lords to participate in the designation of money bills. The debate is in House of Commons, Parliamentary Debates, fifth series, vol. 208, cols 1279-1404 4 Author; Conservative M.P. for Scottish Universities. Buchan deplored the proposals, as did speakers from all parties. See the Times, 7 July.

5 Leopold Amery, Secretary for the Colonies and for Dominion Affairs; Chairman of the Empire Marketing Board.

6 George Julius, Chairman of the Commonwealth Council for Scientific and Industrial Research.

7 Parliamentary Under-Secretary for Scotland; Chairman of the Research Grants Committee of the Empire Marketing Board.

8 'An Active Board', Manchester Guardian, 6 July. The article praised both the publicity and research work of the Board as the 'least objectionable form' of subsidy for Empire products.

9 Sir Halford Mackinder, Chairman of the Imperial Economic Committee.

10 Sir David Chadwick, Secretary to the Imperial Economic Committee.

11 The International Economic Conference, 4-23 May 1927.

12 Joseph Chamberlain, Colonial Secretary 1895-1903, advocated a policy of uniting and consolidating the British Empire by protective and preferential tariffs.

13 Sir Leander Starr Jameson, a former administrator of the territory which became Rhodesia, and Prime Minister of South Africa 1904-08, had previously worked for the British South Africa Company, gaining mining concessions from local chiefs, and had been leader of the 'Jameson Raid', an abortive effort to overthrow the Boer Government in the Transvaal in 1895.

14 Rudyard Kipling, poet and novelist, whose works about India celebrated both imperialism and the concept of 'the white man's burden'.

15 See note 11 to Letter 115. A copy of the letter is on the file cited in that note.

16 Letter 105. See also Letters 111 and 114.