13th March, 1929
PERSONAL AND CONFIDENTIAL
My dear Prime Minister,
LABOUR AND THE EMPIRE
By the last mail I wrote to you about a discussion with Mr. Harry Snell M.P., the Secretary of the Labour Commonwealth Group.  This week Tom Johnston  M.P. lunched with me and I had a short talk with J. H. Thomas  M.P. The latter is very confident of Labour success and was emphatic that Labour would prove an excellent friend to Empire Development. He is, however, a very facile person and, though most adroit, is not the person to go to for long views. With Johnston I had a most interesting talk. He thinks Labour has a fifty-fifty chance of forming a Government but a much slighter one of obtaining a,clear majority. He said that if a Labour Government was formed, it would last, at a maximum, eighteen months.
We discussed possible members of a Labour Cabinet. He thought that such new recruits to the party as Sir Oswald Mosley  and Capt.
Wedgwood Benn  might be offered office as both had become close friends of MacDonald's. Johnston seemed to think he would probably be offered a post, but perhaps not of Cabinet rank.  He expressed doubts about acceptance if such an offer was made but one does not attach too much importance to such doubts.
I emphasized to Johnston the difference between the Tory and the Labour Party in regard to the Empire. I said that the Tories were publicly regarded as keenly pro-Empire so that, even when they did little to justify such a belief, they still received the credit of an Imperial attitude but that Labour was, in public estimation, still suspect on Empire questions. It would, therefore, be of the very greatest importance to a Labour Government to obtain, by deeds, a good record on Empire matters. Johnston agreed with this summing up of the position.
I then drew attention to the possibility of Labour being in office for the next Imperial Conference and suggested that a typically Snowdenian  budget might be the most unfortunate prelude to an imperial Conference.
Johnston said that he recognised this danger but felt that all depended upon who MacDonald put with his Cabinet. 'It would be necessary for a couple of Ministers to be prepared to resign', Johnston declared rather than allow a Labour Government to face an Imperial Conference with preferences substantially reduced and without any effective alternatives.
I shall arrange to see Thomas again shortly and talk about Empire Marketing Board matters with him and also raise the Budget- Imperial Conference issue.
I think there is no doubt that Labour will, if it achieves office, maintain the Empire Marketing Board and indeed may take more interest in its work than the present Government.
THE BALFOUR COMMITTEE REPORT 
I am forwarding to you a copy of the final report of the Balfour Committee. I have marked some of the salient passages about Empire trade but have not yet had time to read much of it. I have referred to these passages in another letter forwarded to you by this mail. I certainly think that this report marks a definite stage in the Empire Development campaign. The remarks about reciprocity from Great Britain are colourless enough but the essential fact is the vital importance of the sheltered markets of the Empire and the necessity to maintain the sheltering condition is fully recognised.
TORIES AND THE EMPIRE MARKETING BOARD
In a public speech the other day Lord Hailsham, the Lord Chancellor, after praising the work of the Empire Marketing Board and claiming the fullest credit for the Government in having established the Board, made the extraordinary statement that the Labour Party had definitely declared that, if they were returned to power, they would abolish the Board. Steps have, of course, been taken to put Lord Hailsham right but I feel I must draw your attention to this extraordinarily stupid remark. At least four or five of the leading members of the Labour Party have definitely declared, not once but several times, that the policy of the Labour Party would be to support the Empire Marketing Board and to endeavour to increase its functions in the interest of the orderly and systematic marketing of Empire products.
MELCHETT-TURNER CONFERENCE 
I am enclosing a copy of the preliminary report of the Melchett- Turner Conference, which has just reached me. The paragraphs about Migration are perhaps important, although they are not very novel.
Yours sincerely, F. L. MCDOUGALL