126

22nd September, 1927

PERSONAL AND CONFIDENTIAL

My dear Prime Minister,

AGRICULTURAL POLICY

In my letter of the 6th of September [1] I told you of a long talk which I had with Major Elliot [2] and Boothby [3] on British Government Policy, and I said that I was preparing a confidential note for Elliot on this discussion. I have completed the note and I enclose a copy, which I think you will find of interest.

EMPIRE SCIENTIFIC CO-OPERATION

Julius [4] has returned from his long tour through England and Scotland, during which he has been in touch with all the important research stations in the country. He has come back more convinced than ever of the immense importance of the closest possible co- operation between Great Britain and Australia in order that the development of Australia on sound scientific lines may be pushed on with as fast as possible. I of course entirely agree with him, not only for purely developmental reasons, but also because I believe that Empire scientific co-operation can assist towards closer understanding both in political and economic spheres.

The history of Empire relationships from the political point of view is a record of loosening ties and increasing independence of action, which has on the whole had salutary results. On the economic side closer co-operation is the essential need of the moment, but you, more than perhaps anyone else, know the difficulties. I feel extremely strongly that scientific co- operation would pave the way for closer economic action, and there is little doubt that such co-operation would not only have repercussions beneficial to the idea of inter-Empire economic development, but also would react most favourably on the Empire political situation.

One of the results of Julius' strong feeling has been that he regards it as most desirable that Sir George Pearce [5] should have the fullest opportunity of completely grasping the significance of Imperial scientific development before he returns.

Sir George is of course in Geneva, and is not returning to London before sailing for Australia. Major Elliot is also in Geneva, and Julius is extremely anxious to arrange for a heart to heart talk between Elliot and Sir George. Julius, however, feels that if this is to be arranged in such a way as to secure the maximum degree of understanding between these two men, it will be necessary for both Julius and myself to be present, and he has therefore wired to Sir George Pearce telling him that he intends to go to Geneva this week-end for a general discussion on those subjects with Elliot. A meeting has been arranged for Monday, and I hope to be able to see Elliot on Sunday and to arrange with him to put the general case to Sir George Pearce in the most effective way.

Julius feels that if Sir George Pearce returns to Australia fully realising the immense assistance that it will be to the C.C.S.I.R.

if the fullest possible British co-operation is secured in the problems of the Council, that this will immensely strengthen not only the Council, but also the hands of the Government, in dealing with scientific problems. I think there can be little doubt that he is right, and I hope that the meeting on which he is so keen, will have fruitful results, and that you will regard it as financially worth while.

EMPIRE MARKETING BOARD AND AUSTRALIA

Yesterday there was a meeting of the Empire Marketing Board, at which I was able to make a statement which proved extremely interesting to the Board. You will remember that the first Overseas grant made by the Board was to the Waite Institute in Adelaide, to establish research into the mineral deficiencies of Australian pastures. The grant from the Board was for 3,000 capital, plus 1,900 a year for five years towards annual running expenses. The grant was on a fifty-fifty basis, and the Commonwealth Council decided to make available the other 50 per cent of the money. With this grant as a basis, and with the very great assistance of the 'kudos' which naturally comes from British co-operation, Dr. Richardson [6], the Director of the Waite Institute, was able to obtain an additional 10,000 from Melrose [7] in South Australia, and has lively hopes of obtaining from 5,000 to 7,500 a year from the South Australian Government, in order that the work of the Waite may be extended to cover the whole problem of pasture research, so far as it affects Southern Australia. I am particularly mentioning this to you because it seems to me probable that on the basis of comparatively small grants from the Empire Marketing Board and the Commonwealth Council, the interest of wealthy individuals and of the State Governments may be aroused, and large scale schemes brought into operation to the immense advantage of Australia.

DRIED FRUIT

You will be glad to have heard of the very considerable improvement that has come over the Dried Fruit position in the last two or three weeks. A month ago it was only possible to regard the position as being rather sinister. For the last two years Australia has had about 12,000 tons of sultanas to sell in Great Britain. This year she has 28,000 tons, and has had to face a 50% increase in the crops in Smyrna and Greece, and also intensified Californian competition. The Fates, however, have been somewhat kind, and extreme heat in Smyrna, followed by rain, while not substantially decreasing the quantity of the crop, has lowered its quality to such an extent that the bulk of the Smyrna fruit will not be able to compete with any of the Australian better grade fruit. As soon as the market really realised this position, active buying of Australian fruit commenced, with the result that last week 3,000 tons of fruit were sold-an easy record.

We are by no means out of the wood yet, but there now seems a very considerable probability that we shall be able to realise the bulk of the sultana crop before the new Australian fruit comes in next year, at prices which, while substantially lower than last year, will still not be entirely unremunerative to the grower.

I mention this to you because it seems clear to me that the situation as it has developed, has proved once again the value of the export control legislation, provided that it is wisely administered. The Board in early August was being pressed to sell, irrespective of price. Had they done so, a weak market situation would have been created, and I doubt whether any larger volume of fruit would actually have been sold. The London Agency wisely refused, and simply maintained a strong selling policy at prices in harmony with the general world parity of the moment. They were therefore able to take advantage of the situation created by the position in Smyrna, and to sell large quantities on a comparatively strong market in September.

GENERAL

There is nothing of striking interest occurring in the political world at the present time. The Conservative Party Conference is to be held in ten days' time, when it appears likely that the Prime Minister [8] will be heavily pressed to effect drastic economics, which of course means really, cutting down social services. The Irish situation as a result of the General Election is quite obscure, and one can only regret that Cosgrave [9] has not secured the majority which he no doubt deserved.

Yours sincerely, F. L. MCDOUGALL

1 Letter 124.

2 Walter Elliot, Parliamentary Under-Secretary for Scotland;

Chairman of the Research Grants Committee of the Empire Marketing Board.

3 R. J. G. Boothby, Parliamentary Private Secretary to the Chancellor of the Exchequer, Winston Churchill.

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

5 Senator and Vice-President of the Executive Council; leader of the Australian delegation to the League of Nations Assembly 1927.

6 A. E. V. Richardson.

7 John Melrose, South Australian pastoralist.

8 Stanley Baldwin.

9 W. T. Cosgrave, President of the Irish Free State Government.

Cosgrave's Fine Gael was returned to power at a General Election on 15 September. His narrow majority over the opposition, dominated by the republican Fianna Fail, depended on the uncertain support of twelve Independents.