130

19th October, 1927

PERSONAL & CONFIDENTIAL

My dear Prime Minister,

Since my last letter to you, I have received your note of the 5th September and your very welcome letter of the 15th September. [1]

Knowing how extremely busy you are, I deeply appreciate your devoting part of your only too brief holiday in writing so fully to me.

Referring to your communication of the 15th September, I have already, in earlier letters, told you what an excellent impression has been made in London by the success of your negotiations in the States in reference to finance. [2] The result of the New South Wales Elections [3], in which your personal intervention probably [played] an important part, should be to consolidate this work. I was very delighted to hear from you that you regard the relations between the Commonwealth and the State Governments as having been substantially improved and I hope that this will lead to more fruitful action in the field of development and migration.

With reference to the work of the Empire Marketing Board and the Imperial Economic Committee, I have no doubt that you will take the opportunity of Mr. Amery's [4] visit in Australia to discuss these matters with him pretty fully. I also hope that you will have found it possible to have given Huxley [5], of the Empire Marketing Board, an opportunity for a personal talk with you and that you will have obtained from him a pretty clear picture of the way in which the Board is trying to solve its publicity problems.

With regard to the Imperial Economic Committee, I feel that, although, as you say, the adoption of definite standing orders and a regular programme of sessions has brought the Committee on to a much more businesslike basis [6], yet it will be very necessary for Sir David Chadwick [7] and myself to work very hard if we are to overcome the handicap of Mackinder's [8] Chairmanship. One of the greatest difficulties of the Imperial Economic Committee is that the general level of its personnel is not sufficiently high.

The British representation is now fairly good, although Sir Algernon Firth is past doing really effective work. The other two M.P.'s who are members of the Committee are, however, pretty good, especially F. N. Blundell, who represents British Agriculture, and Sir Thomas Allen, the fourth member, who represents the Co- operative Movement, is also distinctly useful.

I regret, however, to have to say that, apart from the Indian representation [9], which is uniformly good, and, on the whole, the representation of the Crown Colonies [10], the remainder of the Overseas representation is definitely mediocre. I hope that, with a more businesslike programme and a larger range of subjects to deal with, the Governments of the Empire will begin to realise the desirability of better representation.

If you have had time to look at the progress report of the Empire Marketing Board, you will probably have gathered the amount of my time which the Empire Marketing Board's business takes up. Each week I find myself with two or three Committees during ordinary working hours and normally two evening Sub-Committees on which some of the most important work is done. it is also necessary to keep in touch with the office and with the Ministers who are on the Board several times during the week. However, the work is extremely interesting and I feel sure that you would warmly approve the fact that I am devoting all the time I can possibly spare to assisting, as far as I am able, to make this work a success.

I think that it would not be unfair to say that, apart from the Chairmanship, the three Members who are really giving constructive work to the Empire Marketing Board are Walter Elliot [11], Ormsby- Gore [12] and myself.

As in the case of the Imperial Economic Committee, the Dominion representation on the Empire Marketing Board is not very strong.

The British representation, however, is so strong that, working in close collaboration with Elliot and Ormsby-Gore, one can get a lot done. The Empire Marketing Board has also, of course, a pretty useful staff, quite prepared to take a certain amount of initiative itself.

I was extremely interested to read your remarks on the subject of the Tariff and to learn of your decision to appoint a private Committee to advise you about certain economic aspects. [13] I, of course, realise clearly the political difficulties; at the same time I cannot but feel that the report of the Tariff Board, as summarised in the 'Times' [14] will help substantially on the political side. Sir George Pearce [15] also told me, when he was over here, that he thought that even among the politicians there was a dawning sense that the continuation of indiscriminate protection could only damage Australia.

With regard to the personnel of your Private Committee, the only member whom I know is Wickens [16], from whom I am sure you will get impartial views. If anything I can do at this end can further assist either you or your Private Committee towards further elucidation of this extremely complex matter, I should be only too glad to do anything I possibly can.

I am very pleased that you have found my stream of letters of interest and occasional use to you. I have made a special note of the fact that you would like me to keep you particularly well informed as regards home politics. It is very helpful to know the type of thing on which you like the fullest information.

I am glad to hear from you that you think the Development &

Migration Commission is really making progress in Australia. One feels that Gepp [17] has undertaken an enormous task which will require to be not only zealously but also very skilfully handled if he is to carry the people with him.

I imagine the Press and the Politician will be looking for immediate results, while Gepp may tend towards problems which cannot mature until a number of years have elapsed and the main difficulty may be to adjust these two points of view.

I am extremely grateful to you for your assurance that you will stir up the D. & M. Commission and Markets & Migration in order that I may receive fuller information as to happenings in Australia. Up to the present time I cannot say that I have been receiving very much that is definitely useful.

So far as the Commonwealth Council for Scientific & Industrial Research is concerned, I already feel that I have arrived at a very satisfactory position not only with Julius [18] and Richardson [19] who are here, but also with Rivett. [20] Rivett was good enough to write a very delightful letter a few weeks ago telling me that he had regarded, with very considerable misgivings, arrangements whereby I was to undertake liaison work for the Commonwealth Council. The result, he was good enough to say, of six months' experience had been entirely to alter his point of view. A fairly satisfactory system of interchange of information has already grown up between Rivett and myself and, with the return of Julius and Richardson to Australia, I hope to see the London liaison able to do really satisfactory work for Australia. It is probably difficult to exaggerate the importance of this work, because both through the Empire Marketing Board and also through the Agricultural Research Institutions in Great Britain, Australia has an immense amount to gain.

IMPERIAL AGRICULTURAL RESEARCH CONFERENCE

Nothing very important has occurred since I last wrote to you so far as this Conference is concerned. We all went to Cambridge on Friday and continued the meetings of the Specialised Committees at Cambridge, enlivened by visits to the Agricultural Research Institutes there. The two Special Committees on which I was representing Australia finished their work at Cambridge and I am enclosing a copy of the report of the Committee of Agricultural Economics, which will be presented to the Plenary Sessions when they are resumed in London next week. This, I think, is quite a good report and will, I hope, lead to appropriate action.

On Monday last, both Julius and I left the Conference and went to Leeds, where we had a full dress discussion with the Research folk of Leeds University and with the British Woollen and Worsted Research Association on cooperation between them and the Commonwealth Council for Scientific & Industrial Research on problems connected with wool production and woollen manufacture.

The Vice-Chancellor of Leeds University presided at the discussion and I think we reached a satisfactory basis upon which definite plans for cooperation can now be evolved.

20th October

EMPIRE MARKETING BOARD

I have just received a confidential statement as to the commitments incurred by the Empire Marketing Board from the date of its inception in May 1926 to September 30th 1927 and also a statement of the actual disbursements to date.

The figures are distinctly interesting. On Research-The total expenditure approved by the Secretary of State is 453,935, of which only 63,238 has actually been disbursed.

The total Research commitments have been matched by contributions of about 300,000 from other sources mostly upon the 50/50 basis.

On Publicity, the expenditure approved amounts to 488,300 but this sum is intended to last until March 31st 1928. Of this amount 174,636 has actually been expended.

The Staff expenditure over the fifteen months has reached a total of 25,648. The total expenditure which has, therefore, been authorized up to date is 969,883 [21], of which 263,522 has already been spent.

You will remember that the Empire Marketing Board only received 500,000 for the financial year 1926-27 and, although a nominal 1,000,000 was voted for 1927-28, 1 informed you in a private letter that the Treasury had arranged to short pay by 600,000, promising, however, to make this sum available later. The financial statement shows that the Board's activities will not be impaired by this Treasury action.

There is another way of looking at the statement that has been issued, namely to add together the total amount of grants which have been definitely authorised by the Board, but some of which have not yet reached the stage at which authority for expenditure has been necessary. On this basis I find that the total amount of grants approved by the Board is 820,000. Of this total a sum of 307,000 may be regarded as being grants to Scientific Institutions in the United Kingdom, in order to enable them to develop their activities for Imperial purposes. This includes grants for research into cold storage, to horticultural problems and, in many other directions. What I would describe as grants for purely Imperial purposes represent 37.5% of the research expenditure so far approved in principle by the Board. I would, however, point out that in almost all research work, with the possible exception of the work on Refrigeration and Entomology, the country in which the research is undertaken ought to be in a position to derive the greatest amount of benefit from the work.

Therefore, although I think it fair to regard these grants as being strictly for Imperial purposes, yet British agriculture ought to derive perhaps a greater benefit than overseas agriculture.

Having dealt with grants which are purely for Imperial purposes, British agriculture has received the next largest benefit with a total of 217,000, representing 26.7%. The very large grant of 40,000 a year for 5 years made to the British Ministry of Agriculture for marketing research in aid of home grown produce accounts for this large figure.

After Great Britain comes the Dependent Colonial Empire with proposed grants amounting to 179,250, or 22%. Here again a large grant of 22,000 a year for 5 years which has been made to assist in the establishment of a Colonial Agricultural Research Service largely accounts for this figure.

Among the Dominions, Australia comes easily first with grants which total 83,875, or 10.3% of the total. The proposed grant to the Tropical Research Station accounts for 50,000 of this amount.

After Australia comes Northern Ireland with 19,500, or 2.4%. Next comes New Zealand with 15,333, or 1.9%.

Up to the present time no applications have been received from South Africa or from India and only very small proposals from the Irish Free State and Canada. It is, however, understood that, as a result of the Imperial Agricultural Research Conference, Canada certainly, and probably India, will submit applications. I understand from the South African Delegates that it is probable that they will make suggestions in the near future.

POLITICAL

The political situation here remains quiet, as Parliament is not meeting until November.

Today's 'Times' announces that Baldwin [22] has appointed Ronald McNeill [23] to the Cabinet with the office of Chancellor of the Duchy of Lancaster in place of Robert Cecil.

The 'Times' has a rather trenchant leading article criticising the Government for neglect of youth. I enclose a copy. There is a very strong feeling that Baldwin is making a great mistake in sticking to the whole of his Cabinet. I find in many quarters the strongest discontent-for instance over the ministerial personnel associated with the Board of Trade-Cunliffe-Lister [24] is certainly unpopular in the House and is regarded as a serious disappointment in business quarters. Of his two junior Ministers Arthur Michael Samuel [25] has considerable ability largely spoilt, however, by immense conceit, while Sir Burton Chadwick, the Parliamentary Secretary of the Board of Trade, is everywhere regarded as a joke.

Among the younger Conservatives, there was a great desire that Baldwin should have re-constructed his Cabinet by sending CunliffeLister to the House of Lords and by bringing some of the younger men into the Ministry. There are 4 Under-Secretaries who the younger members of the Party feel ought to receive promotion.

I think in about the following order: Walter Elliot, Ormsby-Gore, Major King [26] from the War Office and Sir Kingsley Wood from the Ministry of Health.

Recent speeches made by Baldwin and Winston Churchill [27] show no indication of the Government having decided to take any really active line to deal with [the] trade depression. They have both declared during the last month that British trade is looking up. A careful examination of trade statistics generally fails to justify this point of view for, although the figures for 1927 are naturally somewhat better than 1926-when the whole trade of the country was seriously affected by the coal stoppage yet they are substantially worse than 1925 which was very far from being a good year.

While there is nothing to excite one's admiration or any special hopes, so far as the Tories are concerned, the position in the Labour Party is, I understand, worse. I am told that MacDonald [28] is almost desperate over the internecine feuds which rend the Party. The recent Conference at Blackpool seems to have tried to formulate a moderate policy which would be useful at the elections but it is pretty generally felt that the proposal for a general surtax of all unearned incomes of over 500 a year is likely to damage the Party considerably with the electorate. Most people agree that Great Britain is seriously over-taxed. The Labour Party's proposal would increase the revenue from taxation by 85 millions a year.

It is difficult to form any opinion as to the prospects of the Liberals but I think the general current view among well informed people is that so long as Lloyd George [29] is the recognised leader of the Liberal Party they cannot hope for very much assistance from the constituencies. Six months ago I think it was generally anticipated that, if an election took place this Autumn, the result would have been to have returned no Party to Parliament with a working majority. Opinion is now, however, tending towards the idea that if the Government does nothing specially foolish within the next 2 years, it may be able to scrape back with a small working majority.

As you know better than anybody it is quite impossible to forecast electoral chances 2 years ahead but possibly you will be interested in the current trends of political opinion.

BRITISH AND AUSTRALIAN WAGES

In my last letter I sent you a statement on the gap between real wages in Great Britain and in Australia. Today's 'Times' publishes an interesting summary of a report by the Ministry of Labour on wages in Great Britain. [30] I am enclosing the cutting which you may feel inclined to pass on to Wickens.

Yours sincerely, F. L. MCDOUGALL P.S. I enclose a very interesting leading article from the 'Financial News' dealing with the report of my Committee upon Agricultural Economics. I have marked the parts most worthy of your attention.