14th May, 1925
PERSONAL & CONFIDENTIAL
Dear Mr. Bruce,
IMPERIAL ECONOMIC COMMITTEE
The meetings of the General Purposes, Meat and Fruit Panels have continued this week. Sir Halford Mackinder  returned on Monday and presided at the Fruit Panel on Tuesday and the General Purposes Panel yesterday.
At the General Purposes Committee Sir Halford made a statement that he thought that it was now time for the Committee to commence to formulate ideas. Up to the present he had thought it desirable to rather avoid any attempt at the consideration of schemes. He said that the Committee was faced with two possibilities (1) making a series of small practicable suggestions which, although of value, could not possibly stir the imagination of the democracies of Great Britain and the Dominions, or (2) to attempt the very much more difficult task of preparing a really comprehensive scheme for placing Empire trade on a better basis.
He himself had no doubt that the second and more difficult task was the most necessary one and that small practicable schemes might become a fitting adjunct to some larger ideas. In view of this statement of the Chairman, I hope that, in the next few weeks, I may be able to give you some rather more interesting matter on the subject of the Imperial Economic Committee.
So far the British Government has arrived at no decision in regard to the alteration in the date on which the new preference is to come into operation. Last Friday I had an interview with Amery  on the subject and found that he had been told by the Customs Authorities that, although large quantities of South African and Australian dried fruits were imported during May, June and July, the chief sales took place after August and that, therefore, no hardship would attach if the date of July 1st was adhered to.
At his request, I submitted a letter to him on this subject, a copy of which is enclosed. Mr. Amery forwarded this letter to the Chancellor of the Exchequer. 
In conversation with Mr. Amery, I drew his attention to the fact that Australian sugar interests were also jeopardized if the date of July 1st was adhered to for the date of the application of the sugar preference.
CONDITIONS IN THE LEVANT
In my letter of May 7th I referred to Dr. Haden Guest's  articles in the 'Daily Mail' on the hygienic and labour conditions in Smyrna and Greece and I sent you copies of his first two articles. I enclose a copy of the further articles that have been published and also a copy of a report which I asked Dr. Haden Guest to furnish me with. I am proposing to send copies of this report to the Chairman of the Dried Fruit Export Control Board  but I think that it is desirable that the report should be regarded as CONFIDENTIAL at the present time.  My reasons for this are that the British dried fruit traders, especially those sections particularly interested in Smyrna and Greece, are in a
state of badly suppressed fury. They know that the conditions, as described by Dr. Haden Guest, exist and would find it extremely difficult to controvert them. They have asserted that these articles are the result of Australian propaganda and have
privately threatened reprisals with the idea of drawing attention to the way in which Australian fruit is liable to become infested with grubs. I believe that this idea will not be proceeded with because the wiser heads in the trade have pointed out what evil consequences would occur if different sections of the industry started to attack the quality of one another's fruit with the probable result of destroying the public confidence in dried fruit as a whole.
The Australian representatives on the London Dried Fruit Association have been able to assure the Association that Australian interests had nothing to do with the initiative of Dr.
Haden Guest's visit to Smyrna, nor of the 'Daily Mail' articles and under these circumstances I think that it is much better to let Dr. Haden Guest's articles do their own work and that, anyhow for the present, we should make no attempt to reinforce the effect that they are having.
We commenced selling operations of the new season's fruit on Monday and up to the present have sold somewhere about 120 tons at prices from 15 to 20 a ton better than Australian old season's fruit was fetching in April. This is, so far, very satisfactory and if we can get the preference conditions brought into operation at an early date it will lead to very much stronger buying. I am hoping that we shall be able to avoid a falling market which has been the result of such disaster to Australian dried fruit interests during the last two years.
REPORT OF THE ROYAL COMMISSION ON FOOD PRICES 
The first report of the Royal Commission on Food Prices was issued on May 8th and has received a very cool reception from the press and from the Members of Parliament that I have met since its publication. At the same time it is a mine of information and a number of very important points are made by the Commissioners, perhaps the most important being that the high prices of wheat experienced by this country during the last six months have been directly due to the low average returns obtained by the producers in Britain, the Dominions and foreign countries during the last three or four years because low prices have caused a decrease in production.
So far as meat is concerned, the Commission draw attention to the unremunerative prices obtained for beef since the war and anticipate a considerable period of rising prices for beef and again state that these rising prices are due to the unremunerative returns to producers in the past.
The attitude of the Commission, as shewn in this report, to the Export Control Boards in the Dominions is interesting. I was informed about six weeks ago that the Commission was likely to take a rather hostile attitude to the Export Control Board system.
I therefore made an opportunity of discussing this question fully with Sir Halford Mackinder (who was then acting as Chairman of the Commission in the absence of Sir Auckland Geddes) and the attitude of the Commission in their report is one to which I can see no possible objection.
Discussing in particular the New Zealand Export Control Board, the Commission states that 'the existing statutory powers of the Board are so great that it is considered essential that the operations of the Board should be the subject of continuous and sympathetic observation by a body representing all interests in this country, such as the Food Council which we are recommending your Majesty's Government to set up'.
The Commission goes on to suggest that a body such as the Food Council would be in a position to cooperate with the New Zealand Meat Board and to intervene with friendly counsel if the Board appeared to be likely to take any action which might be construed as detrimental to British interests. This, I think, is the type of attitude we should like taken up by the British Government.
I have ascertained that a copy of the Royal Commission's report is being forwarded to you from Australia House by this mail and I would draw your attention in the first instance to Sections 182, 273, 274, 275, 294, 295, 304, 305, 306, 307, 308, 309-314 and 333.
STABILIZATION OF PRICES
On May 11th I had a very interesting interview with the Rt. Hon.
E. F. L. Wood, M.P., the Minister of Agriculture, on this subject.
Mr. Wood explained that he personally considered a policy of stabilization of prices, if feasible, the most important thing that could be undertaken in the interests of British agriculture, of Empire development and in the interests of the British consumer. He told me that he had discussed the matter with Sir Philip Cunliffe-Lister  who still regarded any such ideas with grave misgivings. Mr. Wood was, however, anxious fully to explore the possibilities of stabilization plans and therefore intended to ask the small Departmental Committee, to which I made reference in my last letter, to continue their research on this subject.
He asked me what would be the attitude of Australia. I told him that there could be no doubt but that we should be extremely interested in any plans that could be evolved upon an Imperial basis for getting more stable payable prices for agricultural produce.
Mr. Wood asked me whether I would give any assistance I could to his Committee. This I undertook to do and I further undertook to informally and privately discuss with certain Conservative Members representing agricultural constituencies, the possibilities of Imperial plans aiming at the avoidance of extreme fluctuations.
Yours sincerely, F. L. MCDOUGALL