14th December, 1927
PERSONAL & CONFIDENTIAL
My dear Prime Minister,
I think you will be interested in the enclosed cutting from this week's 'Economist' on the Australian tariff changes. You will notice that they refer favorably to the article in the 'Times', of which I sent you a copy last week.  Had Layton  known that it was an effort of mine or had it even been marked 'From an Australian Correspondent', I am quite sure the comments would have been quite different.
On Friday last the High Commissioner  gave the first of what I rather hope will prove to be a series of very small lunches at Australia House. His guests were Mr. Hacking , the new Parliamentary Secretary to the Department of Overseas Trade, Sir Horace Hamilton, the new permanent head of the Board of Trade, and Sir William Clark, the permanent head of the Department of Overseas Trade. Trumble  and myself were also there. Naturally the conversation turned on Anglo-Australian trade and particularly on the tariff. It was very interesting to find that these three men, who are all in a position of very considerable authority so far as trade matters are concerned, were somewhat sceptical as to how far the preferential benefits under the new changes would really assist Great Britain but all convinced that all the items which may be detrimental would have a serious result.
Hacking himself is not a free trader and during the conversation at the lunch I think he became much more convinced of the favourable result of the tariff. At any rate two days later he gave an entirely satisfactory answer to a question in the House of Commons, of which I enclose a copy. 
I feel sure that the little luncheon was very useful and I hope that the High Commissioner will make a regular feature of a small lunch of this sort about once a fortnight, to which leading people from Whitehall or from the business community can be brought into touch with him and with such people as Collins  and I.
During last week there have been two very interesting happenings in the Labour Party. Firstly, the election of the Executive which, as you probably remember, acts as the Opposition Front Bench. You will be interested to notice that Tom Johnston  Comes fourth in the list and that the three members of the Labour Party who are serving on the Empire Marketing Board or on its two Main Committees, namely J. H. Thomas , W. Graham  and Tom Johnston, are all well placed on the Labour Front Bench.
Secondly, an amusing situation has arisen in regard to the Labour Party's Surtax Proposals. The Party Conference at Blackpool insisted that the Surtax was to be used for improving social services and to enable taxation of foodstuffs to be abolished. Mr.
Snowden  for weeks remained silent on the Surtax but finally having been publicly challenged by Maxton  to state his views on the subject, has declared (a) that the estimate of 80,000,000 from the Surtax is grossly exaggerated.
(b) that the whole of the proceeds of the tax must be used for debt redemption.
With these two provisos, he is in favour of the Surtax.  The 'Times' note  on the Labour Party Meeting, of which I enclose a copy, states that Mr. Snowden carried off this attitude quite successfully but other papers report a very stormy meeting.
Whatever actually happened in the meeting there can be no doubt that Snowden and MacDonald  have diametrically opposite views as to how the proceeds of the proposed Surtax should be utilised.
In my last letter I mentioned a speech by a Mr. James Lennox on the subject of the importance of British agriculture cooperating with overseas agriculture. I am now enclosing a copy of his speech with the leading article in the Farming paper in which it was printed.
One of the great difficulties of the Empire Marketing Board is to convince the British farmer that he is getting equal benefit with the overseas farmer from the grants made by the Board. Mr. F. N.
Blundell  M.P., one of my colleagues on the Imperial Economic Committee, asked a question on this subject in the House of Commons and received a very important reply, of which I enclose a copy. The reply is detailed and you may find it useful for reference. 
You may remember that two years ago I wrote the article for the 'Encyclopaedia Britannica' on Empire Trade and Commerce. They have asked me to give them a revised and extended article for their new edition. This has now been completed and I am forwarding a copy to you. I do not suggest for a moment that you should read it, because it is almost necessarily rather dry, but you may find it useful to have by you for reference as it does contain a very considerable amount of information which could not easily be obtained elsewhere.
'FINANCIAL NEWS' ARTICLE
I have already informed you of the very great interest that the Rt. Hon. Sir Edward Hilton Young  is now displaying in Empire trade and I have sent you one or two articles that I have written at his request for the 'Financial News'. I am enclosing a further article which you may find of some interest.
THE INDIAN TARIFF BOARD
At the Society of Arts last week Sir David Chadwick  gave a very interesting talk on the work of the Indian Tariff Board. I am enclosing the 'Financial Times' account of his speech and Chadwick has promised to let me have the full text as soon as it is printed. It is rather interesting in the light of Australian experience to note that the Indian Tariff Board, after recommending a bounty and a tariff on iron and steel, has been able, at the end of three years, to recommend the abolition of the bounty and the reduction of the duty. Of course labour conditions in India must render this comparatively easy but it seems obvious that the industry has applied modern large scale Organisation to its needs with markedly beneficial results.
While Julius  has been over here, he has had a series of interviews with various people on the subject of standardisation and simplification. He has created a very considerable amount of interest with the result that Cunliffe-Lister  is calling a meeting for Monday next at the Board of Trade at which he will himself preside and which Lord Balfour  is expected to attend.
The Board of Trade, the Department of Overseas Trade, the Department of Scientific & Industrial Research, the National Physical Laboratory and two or three of the great employers, such as Lord Weir , will be present. On the Australian side Julius, Professor Madsen  and I will be present.
I very much hope that this conference may do some substantial amount of good and follow up the lead which you gave here a year ago. 
Yours sincerely, F. L. MCDOUGALL