16th August, 1927
PERSONAL & CONFIDENTIAL
My dear Prime Minister,
Under separate cover I am writing to you on the effect of the Australian tariff on British export trade.  This, however, leaves me to comment here on certain recent happenings.
SIR GEORGE PEARCE 
A rather unfortunate impression was created in many people's minds by an interview which the Minister for Trade & Customs  gave the 'Times' shortly before he left. He stated that the British manufacturer was, in his attitude to Australia, like Oliver Twist always asking for more preference.
In actual point of fact it appears to be clear that there are a good number of items in the tariff in which preferential provisions are today more or less ineffective owing to the lower cost of production in foreign countries such as Germany or Belgium. The duty is levied upon the domestic value in the country of origin and where this domestic value is considerably less than in Great Britain, the result of this method may be to nullify the preference and in fact to place a premium upon a lower standard of living than that which obtains in Great Britain. There is, I know, another side to this question, namely that methods of massed production in America sometimes lead to lower domestic values than in Great Britain and it might be argued that the Australian people should not lose the benefit of the lower costs when these are due to higher methods of efficiency.
It does seem, however, that some British manufacturers have fairly sound grounds for urging that in the case of their particular goods the preferential tariff is somewhat unreal.
When I found how widespread was the unfortunate impression created by the 'Oliver Twist' allusion, I suggested to Sir George Pearce that in his speeches made in Great Britain he might take a somewhat different line and refer pretty definitely to the way in which Great Britain was beginning to wake up as to what the Empire meant and to encourage the further development of a strong Empire sentiment in this country.
Sir George Pearce very warmly agreed with this point of view and I am enclosing a report from today's 'Times' of a speech which he delivered in Newcastle.  I am very glad to say that this speech has received very wide publicity throughout the British press.
I hope that you will agree that, at the present time, Australian Ministers can do a great deal to encourage Britain along the Empire path by encouragement.
MR. ALEXANDER'S  SUGGESTION
I am enclosing a cutting from the 'Times Trade Supplement' in which Mr. Alexander's suggestion made in the House of Commons, to which I drew your attention in my letter of the 28th July , is discussed. The fact that Alexander's speech was made during the last week of the Parliamentary Session has militated against much attention being given to his proposal.
I am enclosing a leading article also from the 'Times Trade Supplement' which was inspired by my memorandum on 'Agriculture and the Empire'. When the Editor  told me that he proposed to write on the subject, I asked him to be very careful not to quote my words or to refer to the memorandum in any way. The leading article is, however, distinctly interesting and worth your consideration.
MR. A. F. BELL , C.M.G.
Mr. Bell left London on Saturday last for Canada and America. His visit has been extremely useful. I am very much impressed with his general ability and zeal. I feel sure that as soon as he reaches Melbourne, you would find it well worth your while to have a long talk with him.
He did not appear, before he left, to have made up his mind as to the best form of re-organization of Export Control Boards but he told me that after discussing the matter with Cooper  and myself, he would very carefully consider the whole situation on board ship and clarify his mind before he reached Melbourne.
MR. J. MYERS
Mr. Myers is, as you know, the Australian Correspondent on the 'Daily Telegraph' and the 'Financial Times'. He called to see me once or twice to get information about the work of the Empire Marketing Board. He told me that he had been criticised in Australia for sending cables to his London papers which were critical of Commonwealth Government actions. He said, however, that he was extremely anxious to be really helpful to the Government while at the same time retaining full liberty of action. He suggested there were many ways in which he could really be of use and that he would be very glad if you would see him in order to discuss how he could best assist.
He left some few weeks ago for Melbourne so perhaps you will give this matter your consideration.
GENEVA NAVAL CONFERENCE
I enclose a cartoon from the 'Star' of August 9th, which is intensely amusing and seems to sum up the position in a very sound way.
I also enclose another Low  cartoon which is a distinctly pungent comment on the existing Irish situation.
In my letter of the 28th July  I wrote to you about the Australian wine trade and gave you certain estimates which a Mr.
T. C. Angove, of South Australia, had made. A couple of days ago I received a cable from Oakley  asking for my opinion on the situation and I therefore made some enquiries which resulted in confirming Angove's figures. I found that firms handling Australian wines are at the present time decidedly depressed about the situation. They feel that it is essential that if Australian wine is to make a great success here, it must be offered to the public at prices from 3/- to 3/6d a bottle. This really allows no margin for increase in price at the Australian end above 3/3d per gallon f.o.b.
I feel very strongly that if Australia is to make real progress, the Commonwealth Government should give an assurance that the present 3/- per gallon export bounty should remain unchanged for a period of say 2 years but should require to be completely satisfied that the marketing arrangements of the industry are put on a sound basis.
The whole situation here seems to be governed by the success or failure of the Lisbon and Tarragona interests in putting a blended wine on the market at a price which could compete with the Australian. There seems little doubt that they will succeed in doing this at least to some degree. Whether the trade and the public will like the blended wine is a matter which still remains to be decided but any substantial increase in the Australian price would give a tremendous impetus to the trade to turn to the blended Spanish and Portuguese wines. It would be little less than a tragedy if a failure at the Australian end to realise the situation and prolonged lack of stability, owing to delay on the part of the Government in deciding on definite action in regard to the bounty, should result in Australia losing the opportunity which was created by the British Budget.
SCIENCE AND AGRICULTURE
Last Thursday I went to Aberystwyth where I met Julius  and we jointly inspected the Welsh Plant Breeding Station. Stapledon , the Director, has done a great deal of very valuable work on the improvement of grasses and clovers. He has visited Australia and was thus able to visualise our problems and to make valuable suggestions about our needs. He suggests that by means of the careful selection of strains of native or introduced grasses and clovers, we shall gradually be able to evolve pasture which will be able to withstand drought. Just as our wheat breeding and the technique of wheat farming has during the last 30 years pushed the wheat belt back into drier and drier country, so Stapledon declares we can bring herbage along with the advance of wheat and thus establish that sound economic unit the mixed wheat and sheep farm through the Mallee and in the new wheat lands of Western Australia.  I am convinced that the visits of really first class British scientists to Australia is a policy which should be encouraged in every possible way. In some cases the Empire Marketing Board will be prepared to foot the bill, in others the Commonwealth Council for Scientific & Industrial Research ought to act. I find Julius in hearty agreement with this conception. Here I should like to let you know that the rather unfortunate appointment of Dr. Franklin Kidd  on Storage and Transport problems was made without my being in any way consulted. I feel that in selecting a man to advise in Australia, we must consider (a) his standing (b) his personality and character. Nothing will do more to convince the Australian people of the value of your Government's great decisions to place the development and the application of science to industry upon a sound basis than a succession of visits of really first class men to Australia who not only by their standing but also by their personality and character will impress the primary producers, the press and the public with the vast possibilities for development along certain definite lines of work.
So far I have been able to arrange, through the Empire Marketing Board, for a visit this year to Australia by Dr. Hill , the Director of Kew Gardens. Hill is a charming individual, a man of definitely high standing but I should think not a very forcible character. His visit will be of greater help to systematic botany than to the more direct economic objectives.
As a result of discussions between Ormsby-Gore , Walter Elliot , Julius and myself, Julius now hopes to be able to arrange for Sir Arnold Theiler , who is probably the most distinguished man in the British Empire on Veterinary work, to visit Australia early next year.
I am extremely anxious that we should arrange for Dr. J. B. Orr, the head of the Rowett Institute near Aberdeen, to visit Australia next year and to advise on problems connected with animal nutrition and particularly in regard to the establishment of the proposed Northern Australia Tropical Agricultural Research Station.
Valuable as the proposed Business Delegation to Australia may undoubtedly be, I think that Australia will, in the long run, reap even greater advantage by the visits of really first class scientists provided they are men who can clearly visualise the economic objective and keep it definitely before them.
There can be little doubt that south of the line from Sydney across to Perth, we can, in time, treble the carrying capacity of our existing settled areas. Whether this takes ten years or fifty years depends upon the way in which the problems are tackled. It seems to me that the series of advisory visits is one of the best methods of stimulating the interest of the Australian scientific worker and the Australian farmer upon which the whole rate of progress must obviously depend.
Yours sincerely, F. L. MCDOUGALL