2nd August, 1928
PERSONAL & CONFIDENTIAL
My dear Prime Minister,
LEAGUE OF NATIONS ECONOMIC ACTIVITY
It is now many weeks since I have heard from you and I am hoping that, during the next fortnight, I shall get your reactions on my communications in regard to Geneva.
I am somewhat hesitant about going forward with the idea of trying to establish a British Empire point of view in regard to the economic activities of the League of Nations without having received your blessing on my project. At the same time the weeks are slipping by and in another month the Delegations will have left for Geneva. It is, of course, quite possible that no really important issue in regard to the League's economic activities will arise at the Assembly; on the other hand, in view of the Italian notice , I think they will. If I do not receive any communication from you within the next ten days (i.e. the next two mails) I shall probably cable you on this subject.
Many thanks for your cable of the 30th July which I communicated at once to Amery.  We had a Special Meeting of the Empire Marketing Board yesterday at which your cable was read and at which Amery informed us that he was forwarding a copy of the cable to Baldwin. 
Tillyard  and I have been able to make satisfactory arrangements for entomological work at this end through Farnham Royal Institute attached to the Imperial Bureau of Entomology.
There is every reason to anticipate that things will go with a swing as soon as Tillyard gets back to Australia. He is certainly undertaking a series of extremely difficult pieces of work but success in one or two directions, and particularly with Blow-fly, would mean a tremendous amount to Australia.
This week has been one of alarums and excursions in the political world, as a result of which it is now understood that the Prime Minister has brought Joynson-Hicks  and Amery to heel and that there will not be further indiscreet ministerial speeches, at least in the immediate future.
I was dining last night with Sir Robert Horne  and he was quite interesting on the subject. He said that Churchill's  free trade declaration had caused the most intense annoyance among the bulk of the Conservative Members of Parliament and had, in his opinion, once again demonstrated the fact that it would be impossible for Winston Churchill to be Prime Minister in a Conservative Administration.
Horne claimed that he had been acting as a pacificator between the discordant elements in the Party. As there is no doubt that Horne has very considerable influence among the definitely protectionist wing of the Party, I insisted very vigorously on the necessity for keeping the two ideas of domestic protection and Empire development separate. To this he agreed.
My own impression is that Horne is regarded as rather a light- weight in Parliament but at the same time I must acknowledge that no leading public man in this country shows a clearer, or perhaps indeed as Clear, appreciation of the Empire problem as does Robert Horne.
INDUSTRIAL TRANSFERENCE BOARD'S REPORT 
In my last letter I mentioned a dinner given by the Empire Marketing Board to the Business Mission. At the conclusion of that dinner, I spoke to Amery and Elliot  about the desirability of a gentle and dignified reproof being administered by some significant person to the atmosphere of this report in regard to the status of the Dominions. We had a few minutes conversation about who would be a suitable person to do it and I suggested John Buchan.  Elliot, who is a great personal friend of Buchan's, promised to tackle him on the subject. The result was a letter from Buchan in the 'Times', of which I enclose a copy.  It is a very mild, but, at the same time, quite useful reproof and I thought it desirable to see that the Australian press cabled out the gist of the letter. Buchan's letter drew a reply from Sir John Cadman , of which I also enclose a copy.
SAFEGUARDING OF INDUSTRIES
I am enclosing an extremely interesting supplement published by the 'Daily Telegraph' on the Safeguarding of Industry. It consists of a series of articles by leading people expressing their views for or against safeguarding. I have marked those which I think you would find particularly worth looking at.
It is interesting to note that the two men who have strongly emphasised the Empire point of view are Mond  and William Graham.  I would especially ask you to read Graham's short article. I do not know whether you still have your Committee on the Tariff  functioning but in case you have, I am forwarding, under separate cover, three extra copies of this supplement which perhaps your Committee may like to study.
LOW'S  CARTOONS
I am enclosing another cartoon by Low which I am sure you will find intensely amusing. Low's political sense is very acute and his assumption that if Bolshevism came to England, Winston Churchill would manage to become the head of the British Soviet is quite delightful. I think you have met George Lansbury.  Low has got an entirely typical attitude of expression on to his face.
The drawing of Lord Melchett is not unduly unkind.
I am also enclosing a rather interesting leading article from yesterday's 'Evening Standard'. 
I am forwarding a report of the Estimates Committee of the House of Commons, because this contains their report on the finance of the Empire Marketing Board.  The Committee consists of Members of the House of Commons but a member of the Treasury sits with the Committee and practically acts as a member. So far the Empire Marketing Board has not had an opportunity of discussing this report. I shall advise that we accept the recommendation to appoint a Finance Committee but proceed without too much concern with our publicity and research work and with our schemes for film production. The Finance Committee will mean an additional wheel to the coach but it does not seem to me a recommendation that can safely be neglected.
THE TREASURY MIND
I particularly want to draw your attention to the attitude of the Treasury to the Empire. Ever since I have been in England, I have continually found that, on the whole, the Treasury are hostile to Imperial developmental ideas and, as a body, the Treasury Officials are uninterested in the British Empire but much keener on co-operation with Europe and the United States of America than with the Dominions. This statement may not be true in regard to a number of individual members of the Treasury but I do not think it can be contradicted as regards the general attitude of the Treasury.
In this country, as you are no doubt well aware, all Senior Civil Service promotions are made on the recommendation of the Treasury.
This results in the Department having an enormous influence with the whole of the Civil Service and, through the Civil Service, upon Ministers. Since the Empire Marketing Board was founded, there have been several definite and direct attacks by the Treasury upon the Board, to some of which I have referred in previous letters.
I am told on very good authority that Sir Warren Fisher  has definitely stated that he will do everything in his power to secure the abandonment of the publicity activities of the Empire Marketing Board. In the same way Sir Warren Fisher was the chief protagonist in the attack on the research grants power of the Board. There can also be no doubt that Winston Churchill, while under the influence of the Treasury as Chancellor of the Exchequer, has been, on the whole, hostile to Empire development ideas. This is, of course, partly due to his personal dislike of Amery.
Some years ago Lord Milner  told me that the Treasury were the great stumbling block to Empire development ideas and, although a great deal of progress has been made in the last two or three years, I still have no doubt that the Treasury attitude is the most difficult thing we have to contend with in England.
I am told that the original draft of the report of the Industrial Transference Board was a dreadful document, lecturing the Dominions in a most unpleasant way and that the Dominions Office had to fight very vigorously in order to secure the necessary amendments which finally made the report assume its published form.
MINISTERIAL ATTITUDE To EMPIRE DEVELOPMENT
Probably very largely due to the influence of the Treasury but also to the pre-occupation with immediate political affairs and to the very difficult economic position in which Great Britain finds herself, the attitude of Ministers on the whole to Empire development has not been very helpful during the past two years.
Baldwin himself is, of course, quite sympathetic to Empire development but does not give it any attention. Winston Churchill on the whole has been rather hostile. Birkenhead  does not appear to be interested. (This is a great pity which ought to be remedied but I have not found the right method of approach.) Neville Chamberlain  is very keen but absorbed with the very large tasks of his own Department. Amery is, most unfortunately-as I reported in my last letter-using every public opportunity of dragging in the safeguarding issue and creating the danger that the masses would associate local protection with Empire development.
During recent debates on the economic position of Great Britain, it has been most striking to find that the most vigorous pronouncements in favor of Empire development as a policy for securing Great Britain's economic position have come from members of the Labour Party. I am sure that you will agree that this general position is unsatisfactory. Owing to this apathy of Ministers, the Treasury attitude to the Empire Marketing Board is perhaps a real danger. I therefore want to make a suggestion which I hope you will seriously consider. I should like to suggest that you should send a personal letter to Baldwin stressing the following points:-
(a) that you should remind him of the keen personal interest that you take in the economic development of the British Empire;
(b) that, as evidenced by your speeches in England in 1923 and 1926, you have regarded the economic position of Great Britain as being perhaps the most urgent problem in Empire economics;
(c) that you are convinced and you feel sure that Baldwin shares your conviction that the development of the resources of the British, Empire is the soundest way to place the economic position of Great Britain on a far sounder basis than it is today. You could remind Baldwin that, as a general statement, it is true today to state that whereas foreign countries obtain 10% of their import requirements from Great Britain, the overseas Empire as a whole obtains 40% of its imports from Great Britain and a considerably higher proportion of those imports in which Britain is in a position to compete;
(d) It would be useful to express as your opinion the view that the gradual development of secondary industries in the Dominions, while naturally slowly changing the nature of British exports to the Dominions, will not decrease the value and volume of the total trade but is much more likely to increase it.
(e) that you feel sure that all that is necessary for the British people resolutely to set their mind towards a policy of Empire development on a bold scale is that they should be enabled to visualise what the Empire means;
(f) that you should let Baldwin know that you had kept very closely in touch with the work of the Empire Marketing Board and that you had been very much impressed with two things: the way in which it was beginning to succeed in making the British people have an Empire sense and, what perhaps was even more urgently important from a British point of view, making the Dominions realise that Great Britain did really desire to assist them in their developmental problems. You could illustrate this last statement by referring to the splendid psychological effect in the Dominions of the comparatively small sums of money which had been allocated by the Board to co-operation with such 'bodies as the C.S.I.R. in Australia and the D.S.I.R. in New Zealand.
(g) You could state your view that you regarded the continuance and perhaps the intensification of the work of the Empire Marketing Board as being of the greatest Imperial significance because it is likely to lead, in the course of two or three years, to all parts of the Empire beginning to visualise the Empire as an economic unit and thus to prepare the way for much greater schemes of interimperial co-operation which, when carried out, cannot fail immensely to improve the economic position and strength of all parts of the British Empire and particularly that of Great Britain.
I do suggest that a letter somewhat along these lines reaching the Prime Minister just after he returns from his much needed holiday and before the work of the new session in November engages his attention would be most beneficial. I do not know whether you ever do write personal letters to other Prime Ministers within the British Empire. If no such idea has yet been established, surely it is desirable that it should be. I should be most interested to know what you think about it and hope that you will see your way to agree. 24
Yours sincerely, F. L. MCDOUGALL