17th April, 1929
PERSONAL AND CONFIDENTIAL
My dear Prime Minister,
My last letter to you was dated the 25th March and was written just before I left London for Basle and Sicily.
I had a most useful discussion with Sir Arnold Theiler  in Basle which I hope will result in his deciding to sail for Australia in the very near future and to devote a year to our animal health problems in an advisory capacity. After we have had Theiler for a year, I think we should be well advised to concentrate on obtaining all the services we can from Dr. Orr  as a consultant and we ought to attempt to get Orr to visit Australia every two or three years for a few months.
From Basle I went on my holiday straight down to Sicily, where I found both my children had benefited to a considerable degree from the sunshine but I am sorry not to be able to report any very marked improvement in the state of Mrs. McDougall's health. I had a pleasant ten days there and very greatly enjoyed the sunshine and the scenery.
The climate of Sicily appears to be remarkably similar to that of portions of Southern Australia, particularly the Adelaide districts. I was, therefore, compelled to make a small collection of fodder plants which I have never seen in Australia and which I am sending to Dr. Richardson , of the Waite Institute, in the hope that one or some of the varieties that I have forwarded may prove of some economic value in Australia.
On my return I spent about eight hours in Rome. Mr. R. J. Thompson , the British representative on the Permanent Committee of the International Institute of Agriculture, was there attending an International Conference summoned with the idea of drawing up an International Convention on quarantine measures which are taken by nations for the protection of their crops. Before I left London, I had arranged with Thompson to meet him in Rome, if possible, with the idea of discussing the actual agenda with him there. We both came to the conclusion that some of the proposals which were being put forward by countries, such as France, Belgium and Holland, that are largely interested in the export trade in plant products, were such as to be quite unacceptable. There was, for instance, a proposal that where an exporting country felt that she had a grievance against an importing country owing to the way in which the importing country enforced its quarantine regulations, the exporting country might demand arbitration and that, in that event, arbitration should take place; the arbitrators to be one appointed by the International Institute of Agriculture, one by the importing country and one by the exporting country and that the arbitral award should be regarded as final.
Thompson and I both agreed that it would be impossible to accept any such limitation of the sovereign rights of countries.
After we had been through the agenda of this Conference, I asked Thompson to introduce me to the new Secretary-General of the International Institute of Agriculture.  We had a somewhat difficult conversation because the Secretary-General does not speak English but I managed to convey to him that, while Australia was extremely interested in a really efficient International service in agricultural economics and statistics, we were by no means satisfied that we were receiving anything of the sort from the International Institute at the present time.
The Secretary-General told me that he was quite convinced that his main duty was to concentrate the activities of the Institute in such a way as to provide just what I had indicated we required.
I then invited the Secretary-General to visit London in the course of the next few months and to spend two or three days here in conference with British and Dominion people interested in agricultural economics and particularly with the Empire Marketing Board's Committee on Agricultural Economics.
I got back to London on Friday, the 12th April, feeling very fit and well after my holiday. I found a mass of accumulated work waiting for me at my office and I also made an arrangement with Duckham  for a long talk on Sunday, the 14th instant.
Unfortunately on Sunday evening I was suddenly attacked by far the most violent cold that I have ever experienced. Within a few hours I could hardly hear or see and, although I had a number of important engagements on the Monday, I was forced to remain in bed. The cold has now yielded to a large extent to treatment and I am much better but still not able to use my eyes as much as I should like. This is really rather a nuisance, because there is so much to do at the present time.
Just after I arrived in Sicily, I wrote a memorandum entitled 'The Unemployment Problem and the British Export Trade'. I sent the memorandum to my office to be typed, with instructions that a copy was immediately to be sent to Mr. Tom Jones , of the Cabinet Secretariat. I also wrote to Tom Jones telling him that I thought this memorandum might be of some use to Mr. Baldwin  in considering his policy speech which I understood was to follow within a few days of the Budget. Since my return I have been in touch with Tom Jones and find that he considered the memorandum well worth Baldwin's attention and that he took it down to Chequers last weekend and that the Prime Minister read it. Tom Jones further added that I might anticipate recognising certain portions of the Prime Minister's policy statement, which will be made on Thursday. I enclose a copy of this memorandum which you will perhaps find of interest.
It seemed to me that the Election policies of the two Oppositions- that is to say Mr. MacDonald  and Mr. Lloyd George -Pledge their Parties to vast expenditure along lines which would, on the whole, handicap rather than assist British export trade.
I gathered from Duckham that, since his return, he has had half-a- dozen interviews with Winston Churchill  on the subject of transport facilities in the United Kingdom-Duckham having been the Chairman of a Government Committee on this subject before he left for Australia.
Apparently the Government is anxious to find a sound policy for assisting the railways to cheapen freight rates on goods and thus to help export.
The Budget was by no means an exciting document although Churchill's speech was remarkably good as a fighting effort. The one thing which I am dreadfully sorry about is the way in which they have dealt with the Tea Duties. It is quite probable that the decision to abolish the Tea duty was a good one but I very much regret that they have completely destroyed the preference. The duty was 4d. per lb. on tea, 5/6ths being levied on Empire teas.
Empire teas represented from 70% to 80% of the entire imports and it would have seemed to me very simple to have maintained a duty of .66 of a penny on foreign teas, allowing Empire teas free entry. This would have maintained the preference. It is, of course, probable that the country is benefiting from the preference on tea but it does not give any reciprocity to Great Britain. If this was the reason for the abolition of the preference, it would have been infinitely better to have said so instead of saying that the preference was being abolished because the foreign teas would be cheapest and therefore affect the cheapest class of trade.
I found my talk with Duckham on Sunday last very pleasant. It was so refreshing to find how fully he had visualised Australia's problems and with what enthusiasm for Australia and things Australian he had returned. I was both pleased and amused to find that Duckhamworking on his own-had come to the conclusion that some plan whereby the British Government would purchase Australian butter, dried fruits, etc. on a long term contract at a reasonable price would stabilise agricultural prices. This is very close to what you and I were discussing and which you tentatively suggested at the Imperial Economic Conference of 1923.
Duckham gave me definitely to understand that he and his colleagues are most anxious to do everything they can to assist towards a really effective Imperial Conference but that they cannot individually do much donkey work. This one can fully appreciate.
At a meeting of the Empire Marketing Board, which is occurring this afternoon, I am going to suggest that the Board should make available a man to act as part-time Secretary to the Economic Mission and to keep them in touch with Empire economic questions between the present time and the Imperial Conference. I have also arranged with Walter Elliot  that he should propose a meeting between the E.M.B. and the Business Mission for the purpose of discussing questions in connection with the economic side of the Imperial Conference. I thought this suggestion would come better from Elliot than from the representative of Australia so far as the Board was concerned.
During the last fortnight I have received two long letters from Simpson , to which I shall be replying direct. I am of course very glad to hear from him, although I hope that the fact that he has commenced to correspond with me partly on your behalf will not mean that you will miss such opportunities as may occasionally arise for dealing personally with some of the matters about which I write to you.
Simpson seems a little worried about the way in which I have used percentage figures in some of my memoranda and he suggests that the total trade figures would be more satisfactory. The difficulty of course about using total trade figures has been the very large changes in price levels, which render any comparison between pre- war and post-war totals quite illusory unless the prices have been reduced to a common basis. There is also this further view. Busy Ministers are not prepared to look carefully through a whole mass of statistics. I therefore feel that in preparing matter, which I strongly hope will be carefully read, it is desirable to simplify statistics in such a way as to bring out their immediate significance. In doing this one imposes on oneself the obligation not to simplify in such a way as to distort the truth. It is more than likely that at some stage or another, I have unconsciously used statistics in such a way as to give undue emphasis to certain aspects of problems. This is probably inevitable but I do most definitely feel that one of the major responsibilities of a man who is continually dealing with statistical matter is to simplify that matter in such a way as to present, so far as he is able to see it himself, the major aspects of the truth.
While in Sicily I was delighted to receive your cable of the 27th March, in which you were good enough to indicate your general concurrence with the way in which I have started the work in preparation for the next Imperial Conference.  The various points mentioned in your cable will be gone into with the utmost care and I will forward to you from time to time such information as I am able to collect.
The question of the assessment of the actual value of Australian preference to the various British industries is by no means an easy matter nor is the assessment of the actual cost of the preference to the Australian consumer. I intend to go into this matter closely in the near future.
I am glad that you thought well of my suggestion that you should appoint an Advisory Committee on Imperial Economic Conference problems.  I hope that I shall hear a good deal of the activities of this Committee and should be delighted if I can be of any use to them.
19th April, 1929
At the conclusion of the meeting of the Empire Marketing Board yesterday I had a few words with Amery  about the Budget and particularly about the way in which the Government had eliminated the preference on tea. Amery stated that he absolutely agreed with everything I said but simply held up his hands and remarked that he had been quite unable to secure any consideration from Cabinet on that point of view.
I thought it was really quite pathetic to see the little man so obviously unhappy about his complete lack of influence with his colleagues. If the Tories get back, as a result of the General Election, I do hope that there will be a change at the Dominions Office and that Amery will be given some other position where he can be more effective than he is there.
Last night in Parliament there occurred an extremely important discussion on Philip Snowden's  rather reckless attack on the Allied debt arrangements. I was dining in the House-the party including Major Elliot, Ormsby-Gore  and Bob Boothby -and they were all of the opinion that the sudden turn of events due to Snowden's rash speech would prove very helpful to the Government in the Election.
I am enclosing a copy of the Hansard as you may like to read through the major portion of the Debate.
I was sorry to have missed the High Commissioner's  dinner to the Big Four-or rather Three because Duckham was not able to be present owing to a chill-but I understand it was quite a distinct success.
Yours sincerely, F. L. MCDOUGALL