16th November, 1927
PERSONAL & CONFIDENTIAL
My dear Prime Minister,
Since the last mail I have received two letters from you both dated the 26th September.  One of them deals with general questions and I was extremely interested to read your expression of agreement with the idea of sending really firstclass scientific people to assist the Commonwealth Council for Scientific &
Industrial Research in dealing with scientific developmental problems. It was particularly interesting to get this comment from you two or three days before the receipt of a final cable from Sir George Pearce  to Julius  authorising the invitation of Sir Arnold Theiler  and Dr. Orr.  Sir Arnold Theiler is to be in Australia for six months but Orr will only have two months at his disposal.
I would particularly urge that you should set aside some hours, and perhaps an evening, to having a really good talk with Orr. I know of nobody in the scientific world who has so clear a grasp of the economic objectives as Orr. I am sure you will like him personally. He had a magnificent war record and today combines the command of a Territorial Battalion with his work as Director of a Research Institute-I suggest a most unusual combination and one rather pleasing to contemplate.
Your letter also deals with the subject of minimising the loss of national wealth consequent upon droughts. I was extremely interested to hear of your announcement at the Melbourne Show of the appointment of a special Committee of Pastoralists to advise the Commonwealth Government on this question  and, in view of the further activities that you have in mind for them, I venture to suggest one man who I feel sure would be extremely useful, namely W. S. Kelly, of South Australia. Gepp , I am sure, will confirm my view that Kelly is an extremely able and practical man with large scale ideas. 
It so happens that my Scientific Assistant Fitzpatrick  and myself have just completed a memorandum on the subject of Fodder Conservation in Australia. Our object was twofold: firstly to clear our own minds on the matter and, secondly, to forward a thought out memorandum both to the Commonwealth Council for Scientific & Industrial Research and the Development & Migration Commission, inviting their comments on our memorandum in order that we might obtain a true perspective of the way in which Australia is regarding the general question. It seems possible that this memorandum, although having only a limited intention, may prove useful to your Committee and I am, therefore, enclosing a copy which you may feel inclined to glance through yourself before handing it over.
I shall do everything I can to induce the Empire Marketing Board to follow up the question of the conservation of young grass and shall, of course, keep both the C.C.S.I.R. and the D. & M.
Commission fully advised on the subject. If you desire any special information for your Committee from British sources, please let me know and I will see that, if available, it is obtained.
Your second letter dealt with Tariff matters and was intensely interesting to me.  In the interest of Australian development, I do most sincerely hope that some means will be found within the course of the next year or so whereby we may put secondary production on a much sounder basis. I shall, of course, continue to forward any information that I think may be useful to you on this subject.
WORLD MOTOR TRANSPORT CONFERENCE
For the last three days the World Motor Transport Conference has been sitting in London and I have attended several of its sessions. A good number of quite useful contributions were made but these International Conferences leave me very cold. It is difficult to get down to really useful discussions. The paper prepared by the D. & M. Commission, which I introduced on the first day of the Conference, was a distinctly interesting document. Good papers were also submitted by South Africa and India.
Each day there was a luncheon, at the first of which the Home Secretary Sir William Joynson-Hicks spoke, the second Sir Granville Ryrie  and the third Col. Wilfrid Ashley, the Minister for Transport. I was only able to attend the one addressed by the High Commissioner and was rather depressed as a result.
While on the subject of Mechanical Transport, I regret to have to report that the proposal to establish an Empire Mechanical Transport Committee in touch with the Empire Marketing Board is, at the present moment, hanging fire. Difficulties have arisen with the Crown Agents for the Colonies  and the Colonial Office which will take some smoothing out. Nevertheless I hope to see some definite progress made in the near future.
In an enclosure to my letter of the 26th of October , I sent you a copy of a memorandum which I had prepared on the Australian Tariff and British Trade. You may perhaps be interested to know how I used this. A copy was sent to the Empire Marketing Board, which has distributed the paper among its special lecturers. I then had the document duplicated and sent out about 100 copies to such Ministers as I knew and to my acquaintances in the House of Commons and also to several business men. I have received not less than 70 replies, a number of them being quite interesting, including several requests that I should allow the memorandum to be published. These I refused but Sir Edward Hilton Young  was very anxious to have something on the same lines and therefore I am preparing, at his request, a special article for the 'Financial News' on the general subject of the effect of Dominion Tariffs on British Trade.
In the House of Commons on Monday last Sir Sydney Henn , who has just resigned from the Imperial Economic Committee, raised the question as to the propriety of the British Government contributing towards the Geophysical Prospecting from the Empire Marketing Board Vote. The Prime Minister  answered the question in a very satisfactory way and I enclose a copy of the Question and Answer from 'Hansard'.  The final supplementary question asked by Mr. E. Brown, the Liberal Member for Leith, is rather a typical Liberal contribution to Empire questions. 
Henn, who is a friend of mine, has a bee in his bonnet on the subject of the Empire Marketing Board. I think really his concern [is] lest the E.M.B. should entirely overshadow, in the public estimation, the Imperial Economic Committee. This is a real danger but one which, in my opinion, cannot be solved by limiting the activities of the Empire Marketing Board but by making the Imperial Economic Committee really effective.
IRRITATING EFFECT OF AUSTRALIAN TARIFF
I have received by this morning's post from the Secretary of the Publicity Committee of the Empire Marketing Board  a letter, of which the enclosed is a copy.  I should particularly like to direct your attention to the vicious effect of the Australian tariff on presents and would point out once again that Canada has remedied this difficulty by admitting, under certain safeguards, free of duty presents of a value less than 1.
This morning's 'Times' contains a considerable amount of really interesting political matter .  Two important discussions occurred in Parliament yesterday.
In the House of Lords Robert Cecil  made his 'apologia' for his resignation. It was dealt with firmly and successfully by his cousin Lord Balfour  and rather heavily set upon in addition by Lord Haldane. 
The Government I think emerged very successfully from this particular challenge, especially as Bridgeman  in the House of Commons had announced the Government's intention to restrict the laying down of cruisers during the financial year to one vessel.
Whether this is sound naval policy or not, I am in no way capable of judging but the necessary action in the House of Commons was a very effective political comment on Cecil's attitude in the House of Lords.
In the House of Commons MacDonald moved a Vote of Censure on the Government on their handling of the Coal situation.  The Government put up Cunliffe-Lister  to reply but the Labour Party refused to give him a hearing, with the result that the House was adjourned by the Speaker and there was no discussion.
Once again it seems probable that Labour, by a short sighted policy, has lost an excellent opportunity for it appears to me that had the discussion on the Vote of Censure taken place, it would have been extremely difficult, if not impossible, for the Government to have made out a good case for their laissez-faire attitude to coal.
The existing situation in the coalfields has fully justified the warnings of the Samuel Royal Commission  and distress in the coalfields is really serious. It is, of course, possible that Labour's intention is to concentrate on discrediting Baldwin in the eyes of the country but it seems obvious that their policy would be more effectively carried out by a debate in which it is pretty certain that the Government would have been heavily criticised not only by Labour but also by Liberals and a number of back-bench Tories than by a hostile demonstration confined to shouting by the Labour Back-Benchers.
It is extremely difficult to gauge the present position of the Government in the country. There are two By-elections pending both in what would normally be regarded as safe Tory seats, namely Southend and Canterbury. One's feeling is that the Government is really seriously discredited chiefly by its sins of omission. On the other hand the ineffectiveness of the Labour Party and the fact that the Liberals have the undoubted handicap of the leadership of Mr. Lloyd George , makes it extremely difficult to give a sound judgment on the political situation.
Yours sincerely, F. L. MCDOUGALL