25th August, 1927
PERSONAL & CONFIDENTIAL
My dear Prime Minister,
Under separate cover I have written you a letter marked 'secret' dealing with the attitude of the British Government to the Empire Marketing Board. 
SIR GEORGE PEARCE 
Yesterday I accompanied Sir George Pearce to the East Malling Research Station near Maidstone. Sir George was very much impressed with the work being carried on there.
On our way back, he told me that he very cordially agreed with my view that the visit of a man such as the Director of East Malling to Australia would do a very great deal to assist the Australian people to realise the importance of the application of science to the primary industries and also to the general work of development.
AUSTRALIAN AGRICULTURAL DEVELOPMENT
In my last letter I referred to the work of Stapledon  at Aberystwyth and generally to the importance of grass investigation.
The matter interested me to such an extent that I have had some figures taken out shewing the importance of the commodities that may fairly be regarded as the products of grassland.
In 1925, the last year for which complete British statistics are available, Great Britain imported 329 millions worth of grassland products, the biggest items being in order of importance:
million Wool 76 Butter 53 Bacon 42 Beef 36 Mutton & lamb 22
[Handwritten] Note: 50,000,000 re-exported mainly wool
During the same year British agriculture produced grass products to a value of about 171 millions, so that roughly speaking Great Britain consumes annually somewhere about 500 millions worth of products which are primarily based on the pastures and herbage. Of the total imports today, roughly 50% are derived from the Empire.
I am quoting these figures to you as I think you may find them useful to indicate to the Australian public the immense importance and scope for the further development of these industries. The development of an industry, such as the dried fruit industry, is faced with all sorts of difficulties mainly due to the restricted markets and to something closely approaching general world over production. There can be no question of permanent world over production in the grassland products taken as a whole and in Australia, if we neglect the extension of grazing in new areas, the improvement of the pastures and herbage of existing areas will allow for an immense increase in national wealth.
I am proposing to prepare, principally for Gepp , a memorandum on this subject, of which I will of course send you a copy.
I am enclosing the minutes of the second meeting of the Empire Marketing Board's Committee on Agricultural Economics and would like to draw your attention to pages 6 and 7. You will no doubt agree that the Committee has formulated a very large programme which, if the subjects contained therein can be properly dealt with, should be of very great value to Australia and indeed to many other parts of the Empire.
Working on the basis of these minutes, I have arranged for a qualified agricultural economist from Oxford to prepare a draft report to be submitted to the Committee at its next meeting when I hope we shall be able to agree on a report to the Imperial Agricultural Research Conference in October. I will forward the draft report to you as soon as it is available.
I am forwarding herewith a draft report of the Committee set up by the Empire Marketing Board's Mechanical Transport Committee, the formation of which I reported in my letter of the 20th July. 
This draft report is coming up for discussion tomorrow. As I shall not be in London, having arranged to meet Julius  at Aberdeen, I have written to Tallents , the Secretary of the Empire Marketing Board, a carefully considered letter to be placed before the Main Committee. I think you will find it quite worth your while to read both documents.
I am naturally keeping Gepp fully informed on the whole subject both by letter and by cable but I feel sure that you would like to be kept in touch with what is going on.
In this connection I saw in the 'Times' of yesterday a report of a speech by Butler , the South Australian Premier, to initiate a campaign to increase the wheat areas in South Australia. It seems to me that this question is very closely allied to questions of effective mechanical transport. In many of the South Australian areas, such as the Pinnaroo, wheat growing is limited by the difficulties experienced by farmers who are perhaps more than ten miles from the railway and who cart in their wheat to the railway.
The building of new railway lines to overcome these difficulties is a very expensive process. If, however, the South Australian Railway Commissioners possessed a fleet of six wheel vehicles with which they were able to contract with farmers for the cartage of wheat and the delivery of manures etc., it might be possible to extend the areas very largely and at the same time to make the railways more profitable.
This is merely one illustration of the immense importance to Australia of this work. I shall be glad to have any views that you care to express as to the desirability of joint Empire attack on transport problems.
I enclose a copy of two letters to the 'Times' dealing with the Dried Fruit Export Control. Raynar Smith is a disgruntled broker who has found the element of stability, which the Australian appraisement system has given to the trade, detrimental to his speculative tendencies. 
THE FASCIST STATE
I enclose 3 articles from the 'Times' on the subject of the Fascist state in Italy which seem to be full of interesting information and well put together.  I am therefore forwarding them in case you should care to read them.
I enclose some interesting notes from the 'Times Trade Supplement' on the six months trade of 1927 shewing that, as compared with 1925, the last normal year, there has been a 3.4% increase in the Empire share of British exports.  The note on the purchases from the Southern Dominions is particularly interesting, especially the final point about Australia's share as compared with the world.
In the 'Morning Post' of the 22nd August, Sir George Pearce was attacked by the Hosiery interests. I enclose a copy of their letter and also a copy of the reply, which I drafted for Sir George Pearce. 
I also enclose a further cutting in which the 'Times Trade Supplement' comments on Sir George Pearce's speech and compares his attitude with that recently taken up by the Minister of Trade & Customs. 
Yours sincerely, F. L. MCDOUGALL