224

1st May, 1929

PERSONAL AND CONFIDENTIAL

My dear Prime Minister,

ECONOMIC CONSULTATIVE COMMITTEE

During last weekend I made a very careful draft of what I felt it would be expedient to say at the Plenary Session of the Consultative Economic Committee. I then cabled, giving you an indication of the line which I proposed to take, and also asking for certain information as to the views of the Commonwealth Government in regard to the International Institute of Business Management and also as to whether the Commonwealth Government intended to sign the International Conventions on import and export prohibitions and also on hides and skins, etc. I feel that this cable should probably have been sent a few days earlier as it has not given you very much time in which to answer.

With regard to the line which I propose to take at Geneva, I am enclosing a copy of my suggested speech. Yesterday I saw Sir Sydney Chapman [1], who is, as you are of course aware, the British representative on the Economic Committee of the League and who also attends the Economic Consultative Committee. I asked him to look through the draft of my suggestions and when he had done so, he told me that he thought that the line of country indicated was very well worth while taking and he strongly supported my doing so. I have also shewn the draft to Sir David Chadwick [2] and to J. R. Collins [3], both of whom definitely approve.

I feel fairly confident that you will regard the text of my suggested speech as being in close harmony with the Commonwealth Government policy for, although I do not attend the Economic Consultative Committee as a representative of the Commonwealth Government, yet at the same time it is obviously desirable for me only to express views which are sound from a Government policy point of view. If, after you have received my report on the work at Geneva, you definitely approve the line which I am adopting, I think it would be a very good thing if you were to decide that Australia should take a lead at the General Assembly in September to try to get the Assembly's general approval. I feel fairly sure that we could get a pretty solid British Empire attitude along these lines. At this meeting at Geneva I shall have the opportunity of consultations with Sir Atul Chatterjee [4] (of India), with the Canadian representative [5], whoever he may be, and of course with the British Delegation. [6] I shall also be able to ascertain how far Sir Arthur Salter [7] and the Secretariat would support this point of view. As far as the British are concerned, my line of country will probably irritate W. T. Layton but no one else.

OVERSEAS MECHANICAL TRANSPORT

I have received from the High Commissioner [8] copies of two cables referring to the Overseas Mechanical Transport Committee.

These cables direct that I should represent Australia at the Conference which is to be held to determine the allocation of funds and to discuss the programme. The cables further instruct me to consult Collins, presumably on the question of reasonable allocation, and the second cable states that I am authorised to promise an Australian contribution not to exceed 1200 spread over 5 years. I feel sure that there must be some error as regards this sum. I have been in correspondence with Gepp [9] about this subject for months and have received from him a personal indication that Australia would be prepared to contribute a sum in the neighbourhood of 10,000 spread over 5 years.

On the 26th July 1928 [10] I wrote to you expressing the view that Australia would probably have to contribute somewhere about a sixth of the 60,000. I therefore feel that the figure 1,200 in the cable should probably read 12,000. I am arranging for a cable to be sent to discover whether this is the case. 1,200 would only represent about 2% and having regard to the very great extent to which the whole subject interests Australia, I feel sure that the Commonwealth Government is not proposing such a meagre contribution.

LOW'S [11] CARTOONS

I enclose a recent cartoon by Low from the 'Evening Standard' which seemed so much to the point that I felt sure you would like to see it.

SIR ARNOLD THEILER [12]

On Monday morning I received rather a severe shock. As you know I had been negotiating with Theiler on behalf of the C.S.I.R. for the last three months. Theiler has raised a good number of difficulties about going to Australia but he assured me that, provided his health was right and the difficulties were overcome, he would willingly undertake the trip. Some months ago I induced Dr. Orr [13] to go to Basle with me for a consultation with Sir Arnold and both Orr and I felt at the end of the discussions that it was quite clear that Theiler was going to undertake the work.

Certain other small difficulties arose just before Easter so I took the opportunity of again visiting Sir Arnold at Basle and once again left feeling that all the troubles had been cleared up.

About a fortnight ago, Theiler wrote to the effect that he would have to make the provision of a thoroughly trained Biochemist as his personal assistant a definite condition of his accepting the responsibility. I at once communicated with Orr who, in a most self-sacrificing way, immediately promised Theiler to make any member of the Biochemist staff at the Rowett Institute, who would suit Theiler, available for the purpose. Theiler then informed me by wire that he was satisfied and asked me to book the passage. I received this wire last Thursday and then, on Monday, Theiler wrote to say that he had had a final consultation with his Doctors, who forbade him to go on the ground of his general health.

I cannot avoid feeling that Theiler has been very reluctant and has not treated us quite fairly in this matter. I am afraid that Julius and Rivett [14] will be horribly disappointed.

So far as I can see what we must now do is to make some arrangement whereby Orr can be appointed as consultant to C.S.I.R.

on Animal Husbandry questions and arrange for him to visit Australia a couple of times during the next 5 years. If we could arrange to get Orr to Australia next year for six months, I feel sure that he could initiate a large portion of the work for which we were relying upon Theiler.

THE BUSINESS MISSION

On Monday night the Empire Marketing Board entertained Duckham [15] , Hugo Hirst [16] and Malcolm [17] together with the two Secretaries-Archer and Henderson [18]-to dinner. The purpose of the dinner was to have a business discussion with the members of the Mission. Amery [19] was in the Chair, Ormsby-Gore [20], Elliot [21] and Lord Stradbroke [22] were also present and most of the members of the Board, with the unfortunate exception of Jimmie Thomas. [23]

At the conclusion of the dinner, Duckham and Hirst both spoke briefly and quite well but Malcolm made rather too long a speech.

We then adjourned to another room for the business discussion, and Duckham opened up with the subject of Marketing with a suggestion that arrangements should be made, whereby a combination of large firms in Great Britain should be encouraged by the Government to make long term contracts with Dominion producers of butter, dried fruit and other commodities. Duckham said that the Mission had not jointly discussed this proposal but he was just putting it forward as a basis of discussion. Unfortunately it immediately became clear that Duckham had really not given the matter any careful thought because, as soon as various people started to ask him questions, he said first that it might well be worth the Government's while to give a combination of firms a guarantee against loss and then contradicted this by saying that under no circumstances should a subsidy by given.

Amery, who was in the Chair, did not take any firm hold on the meeting but simply delivered a lecture on the immense superiority of the tariff preference method of dealing with food over any other. The discussion then became very desultory and everybody felt it to be quite unsatisfactory.

It was a great pity that Duckham had not discussed the matter with the other members of the Mission or at least prepared his own mind much more thoroughly before he advanced the idea.

2.5.29

COLONIAL DEVELOPMENT

In my last letter I mentioned that I had been asked to write about Baldwin's [24] proposals to assist Colonial Development through the British Exchequer bearing the interest charges on developmental loans. I am enclosing a copy of the article. If you have time to read it, you will see that, after pointing out the advantages to Great Britain of such a policy, I asked why the proposal should be limited to the Colonies. I pointed out that if Baldwin's main intention was to help the British export trade, the extension of the scheme to some of the Dominions, and especially to Australia and New Zealand, would secure more marked results than in the case of any group of Colonies save possibly the West African group.

Amery used my Nigeria v. Roumania argument in the House of Commons yesterday. [25]

LABOUR AND THE EMPIRE

Since I last wrote, I have had a very interesting talk with Tom Johnston [26] about the forthcoming Election and the attitude of the Labour Party on Empire questions. Johnston told me that he regarded the most outstanding political change that has occurred during the last five years as being the attitude of the Labour Party towards the British Empire. He told me that he had recently issued a statement on the success of Nationalisation in which practically the whole of the examples were taken from Empire sources.

I asked Johnston to send me some copies of his pamphlet, a copy of which I am enclosing, as I think it may amuse you. I do not imagine that you would like this pamphlet circulated in Australia for quite a number of reasons, including the fact that he has described you as the 'Australian Tory Premier'-incidentally getting your initials wrong. Johnston told me that his main purpose in writing this pamphlet was because he felt sure that the result would be that Labour candidates throughout the country would find the information in it very useful and would thus be forced to talk and think about the Dominions.

I asked Johnston whether, in the event of Labour forming a Government after the Election, he anticipated being offered a post in the Government. He said that, as he was a member of the Labour Front Bench and had, at each Party Election to the Executive come fourth or fifth on the list, he thought that MacDonald [27] would certainly offer him a post. He went on to say that if he had any choice in the matter, he would try to get one of the offices connected either with the Dominions or the Colonies. There is no doubt that it would be an interesting experience to have Johnston as a Minister but he would need to exercise a great deal of restraint in order to prove a success. [28] However, all electoral matters will be settled by the time this letter reaches you.

Later

I have just received a correction of the cablegram from the Prime Minister's Department in regard to Australia's financial contribution to the Mechanical Transport Investigations. This correction shows that I was right in assuming that 12,000 was intended and not 1,200. I am sorry that I incurred the expense of sending a brief cable as I might have relied upon a repeat clearing up the situation.

Yours sincerely, F. L. MCDOUGALL

1 Economic Adviser to the British Government.

2 Secretary to the Imperial Economic Committee.

3 Financial Adviser to the Australian High Commissioner.

4 High Commissioner for India in London; a Vice-President of the Economic Consultative Committee.

5 Adam Shorn, Canadian political scientist; Chairman of the Board of Historical Publications, Ottawa.

6 Sir Arthur Balfour, Chairman of the Committee on Industry and Trade; Lord Barnby, wool merchant, company director and a past President of the Federation of British Industries; W. T. Layton, Editor of the Economist; Arthur Pugh, Vice-President of the General Council of the Trades Union Congress and General Secretary of the Iron and Steel Trades Confederation. G. A. Mitchell, President of the Associated Chambers of Commerce, replaced Balfour at the second session.

7 Director of the Economic and Financial Section of the League of Nations.

8 Sir Granville Ryrie.

9 H. W. Gepp, Chairman of the Commonwealth Development and Migration Commission.

10 See Letter 179.

11 David Low, a New Zealander who had worked for the Sydney Bulletin.

12 Director of Veterinary Education and Research in South Africa until his retirement in 1927.

13 J. B. Orr, Director of the Rowett Institute for Research in Animal Nutrition, Aberdeen.

14 George Julius, Chairman of the Commonwealth Council for Scientific and Industrial Research, and David Rivett, the Council's Deputy Chairman and Chief Executive Officer. More detailed records of the negotiations with Theiler, including a copy of his letter of withdrawal, are on file CSIRO:30, [1]. In a letter dated 1 May, on the same file, McDougall suggested to Rivett that Orr be appointed consultant in animal husbandry in Theiler's place.

15 Sir Arthur Duckham, chemical engineer prominent in the coal industry; leader of the British Economic Mission to Australia 1928.

16 Chairman and Managing Director of General Electric Co. Ltd;

member of the British Economic Mission.

17 D. O. Malcolm, a director of British South Africa Co., Rhodesian Railway Trust and other companies; member of the British Economic Mission.

18 N. E. Archer of the Dominions Office and J. G. Henderson, Private Secretary to the President of the Board of Trade, Sir Philip Cuniliffe-Lister.

19 Leopold Amery, Secretary for the Colonies and for Dominion Affairs; Chairman of the Empire Marketing Board.

20 William Ormsby-Gore, Parliamentary Under-Secretary for the Colonies; Chairman of the Publicity Committee of the Empire Marketing Board.

21 Walter Elliot, Parliamentary Under-Secretary for Scotland;

Chairman of the Research Grants Committee of the Empire Marketing Board.

22 Parliamentary Secretary, Ministry of Agriculture and Fisheries;

member of the Empire Marketing Board.

23 J. H. Thomas, Labour M.P.; Colonial Secretary 1924;

representative of the Labour Party on the Empire Marketing Board.

24 Stanley Baldwin, Prime Minister.

25 Amery emphasised the value of exports to the colonial Empire by comparing Nigeria's purchase of 60-70 per cent of her total imports from Britain with Roumania's purchase of only 6-7 per cent. A loan to Nigeria would therefore create ten times the purchasing power of a similar loan to Roumania. See House of Commons, Parliamentary Debates, fifth series, vol 227, col. 1410.

26 Scottish Labour M.P.; Editor of Forward, a Glasgow labour paper.

27 Ramsay MacDonald, Leader of the Labour Opposition.

28 Johnston was appointed Parliamentary Under-Secretary for Scotland in 1929 and Lord Privy Seal in 1931. He was Secretary for Scotland (1941-45) in the wartime coalition government.