My dear Prime Minister,
Since my last letter the Christmas holidays have intervened and, apart from continued public anxiety with regard to the health of the King , there is not very much to report. There were, however, one or two matters which occurred just before the holidays and to which I should like to draw your attention.
The first is a matter which I think you will find distinctly amusing. About a year ago the Poster Sub-Committee of the Empire Marketing Board decided that it was time a poster in the interests of the Irish Free State should be exhibited on the special frames, and accordingly we made enquiries from the Irish authorities as to whether they had any special views on the matter. The reply was to the effect that the Irish authorities had strong views on the point that the artist employed to produce the poster design should be an Irish Free Stater. We accordingly started to search for Irish artists, and after one or two unsuccessful attempts, finally decided on a man who was recommended by Sir William Orpen , who I daresay you know is himself an Irishman. The artist then produced a first design which was quite good, from an artistic point of view, of Irish Dairying, but the figures that he introduced were of the most repulsive character, representing Irish peasants with what appeared to us to be more or less criminal types of faces. We therefore submitted this design to the High Commissioner for the Irish Free State , who warmly approved of it and suggested that the artist should be allowed to go ahead and complete the three posters which make up a full set.
We therefore authorised this and finally got our set of three posters. They were all quite good, and if finally exhibited will have a very telling effect, but in each poster the human figures introduced were calculated to give people a very low idea of the morality, public health and indeed kindliness of the Irish people.
We therefore felt that it was necessary to send the designs over to Dublin, with the idea of their being definitely vetted by those in authority there. The posters were duly sent to Dublin, the Minister of Agriculture  inspected them and stated that the matter was too important for him to decide himself, and he therefore arranged that the posters' designs should be inspected by the Cabinet. The Cabinet, after considering them, approved, and the posters were sent back with quite a warm letter of approval from the Ministry of Agriculture.
We were just on the point of making arrangements for printing when we got an urgent message asking us to send the posters back to Dublin. This request was complied with, and we then learnt that the Permanent Head of the Ministry of Agriculture  had managed to convince his Minister that the matter should be re-opened with the Cabinet. We naturally assumed that the reason was because the Permanent Head considered that the posters would not be a good advertisement for Ireland, but we discovered that his reason was that he thought a pig in the foreground of one of the posters had his ears set on at an angle that was not true to that particular breed! The position now is that the Irish Free State Cabinet is for the second time considering the set of posters and we are awaiting a second expression of the Cabinet's Views! While on the subject of Empire Marketing Board posters, I should like to report that we are just about to exhibit a set produced by an artist in Western Australia, who was commissioned to produce a set of three, illustrating Wheat, Sheep and Forestry in Western Australia, by Huxley  during Mr. Amery's visit. This is the first time that the Empire Marketing Board has taken the risk of commissioning a set of posters from overseas. We normally commission an artist who then submits rough designs which we can criticise. We are, on the whole, very pleased with the Westralian artist's work, and I am sending by next mail a set of these posters to you and I hope that you will glance at them. When it is realised that the Empire Marketing Board posters are now exhibited on 2,000 special frames in all the principal towns of England, and that in addition the smaller reproductions are exhibited in over 20,000 schools in the United Kingdom, apart from a certain number of schools overseas, it will be seen that this form of publicity has reached striking dimensions and can hardly fail to be having a pronounced educational effect upon the people of this country.
SCOTCH HOME RULE
On the Friday before the Christmas holidays I had dinner with and spent a long evening talking to Walter Elliot.  We were discussing a number of things, but he gave me a most interesting account of the growth of the movement towards Scotch Home Rule.
Until the last two or three years Scotch Home Rule has only been a matter of academic political interest, but it has gradually come to assume quite a marked practical importance. The Scotch Labour Party and the Scotch Liberals have both pledged themselves to Scotch Home Rule. At the last election of a Rector of Glasgow University four candidates were nominated-Mr. Baldwin , a Labour man, a Liberal, and Cunninghame Graham  as a Scotch Nationalist candidate. Mr. Baldwin was elected by a very narrow majority, Cunninghame Graham running him a very close second, with the Labour and Liberal candidates nowhere. A vacancy has just occurred at North Midlothian and once again there will be four candidates in the field. The seat was captured by the Tories at the last election, after a long Liberal history. This time there will be a Tory, Liberal, Labour and Scotch Nationalist candidate.
Elliot feels that there is some prospect of the Scotch Tories adopting Scotch Home Rule, and then a real fear that Scotch Home Rule might become practically an agreed non-political measure which might be carried through Parliament and come into effect in the near future. What the Scotch have in mind is, of course, the Ulster basis-that is to say a Scotch Parliament with a continuation of Scotch representation at Westminister, though on a reduced scale. From Elliot's point of view any such idea is alarming because it would involve a choice between Scotch politics and the Imperial work upon which he has set his heart. He feels that in the event of Scotch Home Rule being brought about, members representing Scotch seats would carry very few guns in the House of Commons, just as in a somewhat similar way the Ulster members fail to count.
I very strongly represented to Elliot that what was good enough for Ulster was by no means good enough for Scotland, and that all my Scotch blood boiled at the idea of Scotland being prepared to give up the substance of a disproportionately large voice in the counsels of the Empire (in comparison with population) for the shadow of local self-government. I also suggested to him that as men of Scotch descent count for so much in the business and political spheres of the Dominions, Scotch Home Rule would tend to decrease the reliance felt in His Majesty's Government in Great Britain, and that the movement on the whole would be a retrograde step unless Scotland was prepared to abandon entirely any idea of representation at Westminster and go in for Dominion status, in which event I felt that the movement towards the establishment of inter-imperial bonds would be greatly strengthened. It is, of course, quite possible that this issue of Scotch Home Rule may not become practical politics in the immediate future, but apparently there is a real chance that it may occur. If you have any views on the subject I shall be particularly glad to know what they are.
PROSPECTS FOR BRITISH INDUSTRY
The commencement of the New Year is naturally seeing the Press devoting a certain amount of attention to the prospects of British Industry in 1929. I am enclosing a very interesting letter from Lord Weir  to the Times on this subject, which I feel sure you would like to read.
I am awaiting with some interest and perhaps even cynical amusement the dicta of the Chairmen of the Big Five Banks.  It will be amusing if once again in 1929 they say, as they said in 1928 and 1927 and 1926 and 1925 and 1924 and in 1923, that the previous year had for various reasons, some stated, not fulfilled expectations, but that having carefully surveyed the whole tendencies of world trade, they are of the opinion that there is justification for a reasoned optimism in regard to the coming year.
ECONOMIC RESEARCH IN AUSTRALIA
I had an interesting letter from Rivett  by the last mail, in which he reacted very favourably to a suggestion that I had made as to the attachment of a couple of post-graduate economic students to my office, with the idea of such men undertaking at one and the same time a certain amount of economic research in this country on industries, in order to provide bases whereby the standards of efficiency of Australian industries could be judged in comparison with those of Europe, and also carrying out certain further training at the London School of Economics. I am awaiting with great interest your reply to the suggestion that I forwarded on the general subject of economic research in Australia. 
The intervention of the Christmas holidays has prevented any further progress on the series of notes with which I am proposing to bombard you on this subject. I propose, however, to start again in the immediate future. One aspect that I felt ought to be considered is the demand that is growing up in this country for the advertisement of British goods in the Dominions on a somewhat analogous basis to the way in which the Empire Marketing Board is educating British public opinion towards Empire produce in this country. I do not think it would be very difficult to find at least some basis for a reasonable discussion on this matter.
I am enclosing a copy of an article which I have recently prepared, in which I bring out the idea that, in order to get really active co-operation from this country in Empire Development, it may be necessary to have some concentration of aim and to select certain portions of the Empire in something equivalent to a priority list. I am not sure whether this article will be published or not, but I think that you will probably find it sufficiently interesting to be worth your while to read.
SOUTH AFRICAN TREATY 
I enclose a further cutting on the South African-German Treaty, from which you will see that the Germans are laying flattering unction to their souls as a result of what-has occurred. You have probably had this information in the Australian cabled news, but Reichert's  speech on the breach made in the British Empire preference system is well, worth noting and quoting. I also enclose a copy of an article from the Times Trade Supplement, dealing with the same matter.
Yours sincerely, F. L. MCDOUGALL