22

4th June, 1925

PERSONAL & CONFIDENTIAL

Dear Mr. Bruce,

On looking through my letters to you, two things strike me. The first is that I have written each mail at some length since the 22nd January and have received no replies from you. [1] However, I presume that you desire me to keep you as fully informed as possible on all matters connected with the Imperial Economic Committee and of the economic side of Australia's political interest in this country.

The second point that strikes me is that, in giving you a running comment on both the above subjects, I must occasionally express opinions which subsequent events profoundly modify. I am taking it for granted that it is unnecessary for me to explain this sort of thing and that you will quite understand the position.

IMPERIAL ECONOMIC COMMITTEE

At yesterday's meeting of the full Committee an informal discussion on the Chairman's [2] Speech, of which I sent you a copy last mail, took place. At the suggestion of the Chairman, a reversed order of precedence of comment was adopted in order, he said, that the representatives of Crown Colonies, India, etc.

should have a full opportunity of expressing their views before the senior Dominions and British Representatives spoke.

With the exception of a very qualified approval by India and the Crown Colonies, each of the other Dominion Representatives and the British Representatives condemn the main ideas incorporated in Sir Halford Mackinder's speech on two grounds:

1. that it involved the creation of three new Committees.

2. that the idea of a Home Trade Agency and an Imperial Trade Agency in Great Britain would lead to an intensification of the differences between the home producer and the Empire producer.

3. that the idea of an Imperial Trade Agency to press the sale of British goods in the Dominions was quite impracticable at the present stage.

Sir Mark Sheldon [3] and Sir James Allen [4] laid particular emphasis upon the British Government giving the necessary legislation to enable the consumer to identify goods as home produce, Empire or foreign, but Sir James Allen also insisted upon the actual country of origin being shewn.

I supported Sir Mark Sheldon's attitude and stated that any question of an Imperial Trade Agency to push British goods in the Dominions should be left in complete abeyance until Great Britain had definitely adopted some effective method of giving some form of preference to Dominion goods and I urged that there was no necessity to regard Dominion agriculture as competitive with British but, on the other hand, the Dominion supplies should very probably be regarded as complementary to the home grown supplies and that we should both regard the foreigner as our joint competitor.

The Committee was particularly impressed by an excellent speech of Sir Thomas Allen, who represents the Wholesale Co-operative interests and has presumably been placed on the Committee as the most practicable representative of the British consumer.

He urged that the Imperial Economic Committee should continue to function and that the existence of the Committee made the imperial Trade Agency, the Home Trade Agency and the Empire Development Commission unnecessary.

He acknowledged the need for some small Executive Body, subsidiary to the Imperial Economic Committee, for the purpose of the actual putting into operation [of] the schemes for the expenditure of the Million Pounds and to undertake other executive action.

The Chairman, in reply to the debate, stated that his speech had barely been put forward as an excitant of discussion. He unreservedly withdrew the suggestion for an Imperial Trade Agency in the Dominions and Colonies and he answered a few other points raised during the discussion. It was decided that the matter should be further discussed next week.

I particularly desire to mention that the way in which the Chairman withdrew from what had become an untenable position created a favourable impression and went a long way to undo the unfortunate effect of his speech last week. [5]

Both the Canadian Representatives [6] were absent from yesterday's meeting.

One most marked feature of the discussion was that South Africa, Australia and Sir Thomas Allen all expressed the view that it was a very great pity that the Million Pounds annual grant had been introduced at all. The view was expressed that it would have been far better if Mr. Baldwin [7] had stated that the British Government was prepared to consider any proposals which the Imperial Economic Committee might make which involved certain financial grants by the Home Government.

The Committee, having practically disposed of Mackinder's tentative suggestions, have now got to restart on constructive proposals. Where these are to come from, apart from the Australian Representatives, I do not know.

Sir Mark intends to concentrate upon the legislative methods for making it possible to make the British consumer identify Empire goods. I agree with him that this is fundamental and must be the first step but I am quite sure that the Committee will go a good deal further. Practically speaking, there are four methods by which Empire foodstuffs can be encouraged in Great Britain. The first is tariff methods which the Committee are debarred from. [8] The second method is subsidies which the Committee feels should be regarded as a last resource. The third would be by methods for regulating imports other than tariff methods. This is a subject which the Committee has not yet even touched on but it would include variations of import licences and stabilization plans. The fourth method is by organization coupled with advertisement.

I think that the Committee, in its preliminary report, will concentrate on this fourth method but I very much hope that, having made a first report, attention will then be directed towards the third method. It seems to me that if we are to make a report before the end of July, which I am quite sure is desirable from many points of view, that the points we should be able to deal with will be:

1. Identification by recommending the Home Government to pass the necessary legislation to require all retailers of food products to make all food offered for sale as 'Home grown', 'of Empire origin' or 'foreign'.

2. Grading The Committee to recommend the Governments of the Empire to encourage effective organization of producers to achieve standardization in uniform grading and packing.

3. Continuity of supplies of Empire produce A similar recommendation to above.

4. Advertising The mobilisation of the British consumer to prefer Empire goods.

Dependent upon (a) shewing him the advantage to himself and to his own country of giving such preference and (b) informing him of the fact that Empire goods are available.

5. Improvement of production and of quality of meat and fruit Under this head recommendation that the Home Government should pay freight to enable pedigree bulls and boars to be carried free;

also possibly certain recommendations for Empire work on plant breeding.

6. Improvement in refrigeration methods Recommendation that the British Government grant funds to the Food Investigation Committee to extend the scope of work at the Cambridge Low Temperature Research Station on frozen and chiller beef and to provide, at a later stage, facilities for large scale commercial experiments, such as could only be carried out on a refrigerated vessel in actual transit. Further recommendations to the Governments of the Empire to establish research studentships at Cambridge so that a supply of highly trained scientists capable of overseeing refrigeration methods might be available in the Dominions and Crown Colonies.

7. Preference in public contracts 8. Executive The Committee will do everything it can to avoid creation of any elaborate machinery but it is realised that some executive is needed so as to avoid expenditure being subjected to Treasury oversight and Parliamentary debate. My idea is the creation of an Empire Trade Board to consist of say three British Representatives of whom one might well be the Chairman of the Imperial Economic Committee assisted by paid (part time) technical advisers and by a small staff Provided the Imperial Economic Committee continues to function, it would be unnecessary to create any advisory body to guide this executive.

The question of the future of the Imperial Economic Committee obviously arises at this point. At present the Committee has ad hoc references and the presumption seems to be that, provided it shows itself a useful body, it will continue to receive ad hoc references, I imagine that the full Committee might sit for four or five months a year but it seems very desirable that a Sub- Committee of the Imperial Economic Committee should be in continual existence and act in an advisory capacity to the proposed Empire Trade Board which would thus become the executive counterpart of the Imperial Economic Committee. The Sub-Committee could also undertake any elaborate investigations that the main Committee desired. If the principle were adopted of one more or less permanent and one replaceable member of each Delegation, the permanent members would form the Sub-Committee which would be in continuous existence and the main Committee would function as and when desired with new blood from the Dominions and Colonies for each Session.

PARLIAMENTARY

Parliament is having a ten days Whitsuntide Recess and there is, therefore, nothing immediate to report.

I understand that you receive House of Commons Hansards regularly.

I want to draw your attention to the debate on Employment, which appeared in Hansards Vol. 184 No. 78, and to the speeches of Commander Burney [9], Columns 1630, 1631, 1632, 1633, 1635, 1636, 1637, 1638 and 1639, and also to the even more interesting speech of Mr. Boothby [10], a young and extremely bright Unionist Member, Columns 1666-1674. It was very remarkable that, after two Unionist Members had made such Imperial speeches, the Government Speaker [11] in reply should have stated that 'until Europe is in a position to take our goods and consume what we produce, I believe that we are in for a very difficult and serious time in the industry of this country'. (Column 1679.) [12]

If you have not time to do more than glance at this Hansard, I think you should read Mr. Boothby's speech and particularly the latter part of it.

Yours sincerely, F. L. MCDOUGALL

1 Bruce had written on 1 May acknowledging the letters. His letter is on file AA : M111, 1925.

2 Sir Halford Mackinder.

3 Senior Australian representative on the Imperial Economic Committee.

4 New Zealand High Commissioner in London; New Zealand representative on the Imperial Economic Committee.

5 See Letter 21.

6 L. C. McOuat and J. Forsyth Smith.

7 Stanley Baldwin, Prime Minister.

8 As a result of reservations expressed at the 1923 Imperial Economic Conference, particularly by George P. Graham, the Canadian Minister of Railways and Canals, the Committee's terms of reference were framed to exclude consideration of tariffs.

9 C. D. Burney, Conservative M.P., argued that Britain and the Dominions would benefit if Britain expanded her markets within the Empire.

10 R. J. G. Boothby urged Imperial self-sufficiency, with the Empire meeting Britain's raw material and agricultural needs and Britain producing manufactured goods.

11 H. B. Betterton, Parliamentary Secretary to the Minister of Labour, Sir Arthur Steel-Maitland.

12 Burney's speech is recorded in columns 1630-5, Boothby's in columns 1662-70. Betterton's statement in reply is in columns 1670-5