1st February, 1928
PERSONAL & CONFIDENTIAL
My dear Prime Minister,
In my last letter I referred to the report of the Manchester Chamber of Commerce and to the effective answer which it was possible to issue. I am now enclosing a cutting from the London Notes of the 'Evening Standard' which I think are probably the most widely read journalistic notes, at least among people of education. This was a little piece of excellent additional publicity. I have written to the Manchester Chamber of Commerce offering to go down and discuss with them the way in which British trade is affected by the Australian tariff.
LOW  CARTOON
I am enclosing a copy of Low's cartoon from the 'Evening Standard' of 26.1.28. I really think it is one of the most brilliant pieces of cartoon work that I have ever seen. It appeals to me with very great force because, as you know, I have been so profoundly impressed by the reverent adoration with which the journalistic and commercial world of this country have each year received the ex cathedra statements of the Chairmen of the Big Five Banks.  The fact that year after year they have been hopelessly wrong in forecasting a definite trade improvement has not in any way decreased the awe and regard with which their annual speeches are received. 
The head of Montagu Norman  as the Sphinx is extremely telling and I feel sure that you will be highly amused, especially as I remember your association with McKenna. 
THE EMPIRE MARKETING BOARD
I have made an analysis of the purposes for which the main grants for scientific and marketing research have been approved by the Empire Marketing Board up to the 31st December 1928. I have sent you these figures before, shewing the countries benefiting by the grants. This time I have worked out the figures according to the subjects which are receiving help. I think you may find this of some use.
At the last meeting of the Research Grants Committee of the Board, the Australian Entomological proposals  came forward and the Committee decided that, while they could not at this stage definitely recommend to the Board a capital grant of 25,000 because they had not sufficient detail about the expenditure, yet in view of the importance of the subject they were prepared to recommend to the Board that a substantial capital grant should be made which should not exceed 25,000, so far as the Board was concerned, but that further details from Australia should be awaited before a final decision as to the actual amount is arrived at.
So far as the annual maintenance grant is concerned, I had discovered that members of the Board felt that a request for 10,000 a year for five years was very formidable. The Board has been looking for some time for an opportunity of introducing a declining scale of annual grants.
I felt it probable that, if there was a general discussion on the 10,000 a year grant for Australian Entomology, one of two things would occur-either that the Committee would rather unwillingly agree chiefly because the Commonwealth Government had asked for this sum, or, alternatively, that a proposal would be made that a sum of 5,000 a year should be allotted. I, therefore, took the initiative in proposing grants on the following basis: 10,000 a year for 2 years, 7,500 a year for the third and fourth years and 5,000 for the fifth year.
I had carefully discussed the principle of a declining maintenance grant with Julius  and he had strongly expressed the view that it was both desirable that the Empire Marketing Board should adopt that method and also that the Australian Entomological application was quite a suitable occasion for its being brought into play.
The Research Grants Committee decided to recommend the suggested scale of annual grants to the Board and I hope that, at the Board meeting on February 15th, the whole matter will go through without any hitch.
I have written to Rivett  carefully to explain how necessary it is that the Board should receive fairly definite details about schemes and have told him that as the Board has to deal with applications from all parts of the Empire and not only from the great self-governing Dominions, it is necessary for the Board to have fairly full and detailed statements in order to avoid scandalous waste of public money. Of course, when the Board is dealing with a highly competent scientific authority, such as the Commonwealth Scientific Council, such questions need not perhaps arise but, on the other hand, as I told Rivett, we had an application the other day from the Kenya Government for grants amounting in total to 60,000. After demanding detailed statements, we found that most of the proposals were quite unsuitable for E.M.B. grants, with the result that Kenya obtained a grant amounting in total value to about 2,000.
From this example you will readily see that, unless the Board is to give consideration to the difference in status between a great Dominion and a Colony, such as Southern Rhodesia, or a Dominion of the type of Newfoundland, it would be necessary to ask the Dominions themselves to submit comparatively detailed schemes when financial assistance is being sought.
IMPERIAL ECONOMIC COMMITTEE
The Imperial Economic Committee has now commenced its Tobacco enquiry and Sir James Cooper  has taken his seat. I think it is going to prove a useful and interesting piece of work.
Yours sincerely, F. L. MCDOUGALL