197

5th December, 1928

PERSONAL AND CONFIDENTIAL

My dear Prime Minister,

SHEFFIELD CHAMBER OF COMMERCE

On Monday last I was the guest of the Sheffield Chamber of Commerce at their quarterly luncheon at which there were about 200 members present. I took the opportunity of making the suggestion that the Chambers of Commerce ought immediately to start to consider the economic side of the next Imperial Conference and that, through the Association of British Chambers of Commerce, the views both of the Association and of such important individual Chambers as those of Manchester, Sheffield, Leeds and Glasgow, should be brought to the attention first of H.M.G. in Great Britain and then to the H.M. other Governments through the medium of the Imperial Conference.

I enclose two or three newspaper reports of my address.

IMPERIAL CONFERENCE

By a curious coincidence on my return to London on Tuesday morning, I found a letter from Casey [1] enclosing a copy of your cable to the Secretary of State [2] on the subject of the date of the next Imperial Conference. Needless to say I am very heartily in agreement with the desirability of having the next meeting of the Imperial Conference as early as possible. I cannot see any real reason why the British Government should object to the Conference being held in the Autumn of 1929. It is true that the General Election will take place in June of 1929 but the preparatory work for the Conference is a question chiefly for the Civil Servant, and Ministers give so little attention to the problems that they can hardly make the Elections an excuse for a postponement to 1930, except on the basis of a possible change of Government. [3]

Supposing such a change took place, it might be a matter of really vital importance to have an Imperial Conference before a Liberal- Labour Coalition brought in their first Budget. I shall try and arrange to see Amery in the near future and have a talk with him.

After reading your cable, I was more than ever convinced of the desirability of making the next Conference one in which we should go back to the 1923 precedent and have a separate Imperial Economic Conference sitting alongside the Imperial Conference.

Such an arrangement would, I think, facilitate an early meeting and, just as in 1923 the whole of the public attention was rivetted on the economic issues, so in 1929 or 1930 the same thing would undoubtedly happen. This would tend to check any desire which might manifest itself towards digging up the roots of the 1926 political decisions to see how they are growing.

In one portion of your cable you refer to the possibility of Australia being forced to negotiate Trade Treaties with Foreign Powers, which might involve some loss of preferential advantage to Great Britain. I can, of course, see the possibility of what you suggest happening but I am not at all clear as to how Australia could gain any very substantial practical advantages through such arrangements, unless certain foreign countries were induced, by the offer of specially favorable terms, considerably to alter their economic policy. I should have thought that there was much more chance of getting Great Britain to give more favorable treatment to sugar and wine than to obtain a position in which the United States of America would reduce its tariff on wool imports or that European countries would give more advantageous conditions for our meat, dairy produce or other agricultural commodities.

The operation of the 'Most-favored-Nation' clause, which I suppose would have to take effect in the event of Trade Treaties with Foreign Countries, so decreases the value of any special concessions that we might make as to render Trade Treaties with Foreign Countries of far less significance than preferential arrangements between Empire Countries. [4] I do most emphatically agree with the view expressed in your cable that the action of South Africa in their Trade Treaty with Germany creates a situation which demands the immediate attention of an Imperial Conference.

WOOLLEN & WORSTED RESEARCH

I took the opportunity of my presence in Yorkshire on Monday to visit the Woollen & Worsted Research Institute at Leeds and I spent the evening at the Institute discussing research projects with the Director [5], a most capable and energetic man who is making this Institution one of the really firstclass research shows in Great Britain.

Apart from a number of interesting questions as regards wool, the details of which I will not worry you with, the most interesting feature there was the evolution of new machinery. As a result of the examination of existing spinning and carding machinery by Physicists who employ the cinematograph and other devices actually to ascertain what each part of existing machinery actually does, the Institute has been able to devise new types. The most important type is a new spinning machine for woollen yarns. This new machine will do 2 1/2 times as much work per spindle employed as existing machinery. it will produce a better yarn and it is estimated that, with the new machine, one girl will be able to produce about twice as much yarn as machinery at present attended by one man and one youth. Similar though not quite so dramatic improvements in carding machinery are being evolved.

I particularly mentioned this advance in spinning machinery for two reasons: firstly, because there can be no doubt that it is an overwhelming example of the value of the application of science to industry and, secondly, because of the great economic significance of the invention. The invention has been patented by the Research Institute, who have licensed Messrs. Platt Brothers, the world famous manufacturers of textile machinery, to manufacture. The machine will be on the market next February and wherever it is generally installed, it should reduce the cost of the production of woollen yarns by some very striking figure. I suggest that an example of this sort emphasizes the need for economic research, which you are proposing to establish in Australia, being very closely linked with scientific research and reinforces my view that, as a part of the new economic research in Australia, comparative studies of industries in Great Britain and, where necessary, on the Continent, should be undertaken by my office on the basis of collaboration between the Economics Graduate [6] and my Scientific Assistant. [7]

In this case it seems clear that the installation of this new machinery will so reduce the cost of producing woollen yarns as seriously to affect the question of the amount of protection required by the Australian industry. I certainly feel that information as to the evolution of labour saving devices will be necessary for the Body which makes the Tariff recommendations to the Commonwealth Parliament.

Yours sincerely, F. L. MCDOUGALL

1 R. G. Casey, Commonwealth Government's Liaison Officer in London.

2 Leopold Amery, Secretary of State for the Colonies and for Dominion Affairs.

3 In a letter dated 10 February 1929 (file AA:M111, 1929), Bruce wrote that he had 'acquiesced in the position' that an Imperial Conference would not be held until 1930.

4 Bruce, however, was coming to the view that an Anglo-Australian trade treaty would be at least as useful to Australia as British preference policy. See the letter cited in note 3.

5 S. G. Barker, Director of Research, British Research Association for the Woollen and Worsted Industries.

6 See Letters 168 and 193.

7 A. S. Fitzpatrick.