34

8th October, 1925

PERSONAL & CONFIDENTIAL

Dear Mr. Bruce,

I received by this mail two letters from you, one briefly referring to the proposal that Sir Halford Mackinder should visit Australia [1], and the other dealing with a variety of subjects.

[2]

I should like to express my deep appreciation of the very kind way in which you expressed yourself in regard to the work upon which I am engaged. It is, of course, both encouraging and heartening to receive such a letter as yours of August 31st and I want to assure you that I have not been in any way discouraged by lack of response from Australia and that I quite understand that, with the tremendous pressure to which you are subjected, I cannot expect to receive anything like detailed replies to the long epistles which I send you. I hope that, when the stress of the General Election is over [3], you will have a little time in which you could carefully consider the questions of our more important objectives in Empire economic relationship and perhaps let me know your views in the matter. While a man would be of a curiously insensible nature who would not be cheered by receiving such a letter as you have been good enough to write, two things would prevent me from suffering from discouragement, the first being my deep feeling that the job is of real importance to Australia, to Great Britain and to the Empire, and the second that it is really a pleasure to me to be allowed to do work in conjunction with yourself In my last letter I told you that, during the stress of an Election Campaign, I did not propose to worry you with lengthy epistles.

There are one or two rather important points arising at the present time. The first is, however, a small one. The 'Spectator' of September 26th referred to your speech about 'Law and order' and suggested that you were reflecting on conditions in this country. I felt fairly sure that the 'Spectator' was wrong, so I wrote to them a letter, copy of which I enclose. This elicited a small editorial comment. [4] I think that you will agree that this action was desirable.

While on the subject of newspaper articles, I should like to draw your attention to a short review of 'Sheltered Markets' which appeared in the 'New Statesman' and which was written by Mr. G. D.

Cole, the Labour economist. [5] It is interesting and worth your looking at as an indication of a labour point of view.

I am also enclosing another rather long article from the 'New Statesman' which illustrates rather clearly the difference between the attitude of the Labour left wing and Communists. This is also, I think, written by Mr. Cole and is certainly worth reading.

IMPERIAL ECONOMIC COMMITTEE

Since my last letter, I have met a number of the members of the Committee including the Chairman. [6] Mackinder is not at all anxious to start work and I understand it is not proposed to call the Committee together until the 3rd of November. He is lunching with me on Monday next and I am going very strongly to urge him to call the Committee a fortnight earlier. There is quite a large amount of work to do on the Fruit Report if it is to be made a valuable document and there is no conceivable reason, except private engagements of the Chairman, why we should not be at work now.

On Tuesday night seven members of the Committee dined together in order to discuss the Fruit Report and I was surprised to find how very general the attitude of criticism of the Chairman has become.

I have had a short talk with Mr. Amery [7] and hope to be able to arrange for a longer talk in the near future but he is tremendously preoccupied with his Mosul difficulties and can hardly be expected to give careful consideration of other matters.

As I expect you know, he is being most bitterly attacked by the whole of the cheaper press over his Mosul policy. [8] Personally I hope that he knows what he is about and that there is no chance of any rupture with Turkey, because I do not think that this country would stand for war on any pretext at the present time.

I had a long and most interesting talk with Ormsby-Gore [9] on Tuesday last. Two important subjects were discussed. The first was about labour conditions in the Crown Colonies and Protectorates. I explained to the Under-Secretary that the Labour Party were beginning to be really interested in what they called the British Commonwealth of Nations, i.e. the relations of Great Britain with the self-governing Dominions, but that they persisted in thinking that the British record in the Crown Colonies was stained by the maintenance of frightful labour conditions in many parts.

I suggested that in all probability if we could get the information we should find that labour conditions in most British Crown Colonies compare very favourably with those in the territories of other Colonial Powers.

Ormsby-Gore is, as you know, highly intelligent and he immediately saw the point. He got Sir Samuel Wilson, the Permanent Head of the Colonial side of the office, in, and came to a definite decision that a circular confidential despatch should be sent to all the Colonial Governments asking them to provide information as regards labour, wages and conditions and it was further decided that Ormsby-Gore should try to arrange with the Foreign Office for the confidential collection of similar information by British Consuls from the Colonial Possessions of Foreign Powers. When this information is forthcoming in eight or nine months' time, a series of judicious questions in Parliament ought to be able to elicit some very striking answers which would show labour people that our record in the Colonies is not what they imagine it to be.

The second subject I discussed with Ormsby-Gore was planning ahead, so far as Imperial economic policy is concerned. I suggested to him that unless the British Government worked towards some objective, no striking progress was likely to be made and I suggested that the objective should be an Imperial Economic Conference at which results of real practical importance to Great Britain, to the Dominions and to the Colonies could be arrived at.

I drew his attention to your remarks about the proper utilisation of the Imperial Economic Committee. Ormsby-Gore promised to interest himself actively in my points and thought that the best thing would be to try to get Mr. Baldwin [10] to agree to the formation of a Cabinet Committee to consider Imperial economic relationships and to plan ahead so as to attempt to achieve definite results.

I am not without hopes that my interview with Cunliffe-Lister [11], reported in my last letter, and this very satisfactory interview with Ormsby-Gore may not lead to a more active policy by the British Government in relation to Imperial economic affairs.

BRITISH GOVERNMENT AND THE FIRST REPORT OF THE IMPERIAL ECONOMIC COMMITTEE

As regards the way in which the British Government proposes to handle the report of the Imperial Economic Committee and to constitute the proposed Executive Commission, I understand that an Inter-Depart-mental Committee has been set up to report to the Cabinet as to what action the Government should take.

I have received a good deal of inside information about the way this Committee and the President of the Board of Trade are viewing things and I am not very happy about it because while I think that they are going on rather wrong lines, I cannot at the moment see how to alter the situation. This is chiefly due to the fact that Mackinder seems ready to agree with almost any proposition made by a British Cabinet Minister. I imagine that Mackinder feels that he was badly in the wrong over the Canadian cattle business [12] and is most anxious to put himself right with the Government.

Cunliffe-Lister told me that he wanted to include British agriculture and British manufactures in the advertising scheme proposed by the Imperial Economic Committee. I told him that I did not think there would be any objection taken in Australia to the inclusion of British agricultural products in the general advertising scheme but I thought it

was decidedly dangerous for him to consider advertising British manufactured products out of the 1,000,000 which the Government had earmarked for Empire development and chiefly as a recompense for preferences which they were not able to put into effect. That is one difficulty. Another is that the Treasury appears to be determined to keep the spending of the 1,000,000 under its direct control. You know what a strong position the Treasury occupies in British Governmental affairs and how it requires a man with a considerable character effectively to resist Treasury pressure.

The idea of the Imperial Economic Committee was to constitute an Executive Commission free from Treasury control and also a body which would not be advisory but would carry out the intentions of the Imperial Economic Committee. The present British Government idea seems to be to create a new Inter-Departmental Advisory Body to advise the Government upon the advices tendered by the Imperial Economic Committee and to leave executive action to existing Departments Publicity to the Board of Trade, Research to the Department of Science and Industry and Breeding Stock to the Ministry of Agriculture.

My difficulty in taking action is that while I have every reason to believe that the information given above is sound and correct, I have obtained it from a source that I cannot quote to British Ministers. What I hope to be able to do is to suggest to Cunliffe- Lister that it would be desirable to give the Imperial Economic Committee an opportunity of commenting upon any scheme which the British Government may consider desirable so far as the Executive Commission is concerned and to tell him that the Imperial Economic Committee would, in my opinion, like the opportunity of further considering the allocation of the 65% of the 1,000,000 which they recommended should be used for educational publicity.

RURAL CREDITS

Since dictating the foregoing, a copy of Dr. Earle Page's speech on introducing the Commonwealth Bank Rural Credits Section has come into my hands. [13] I have read it with the very greatest interest, because it seems to me to provide in many ways the keystone to a definite policy of orderly marketing for Australian produce.

I would, however, like to make one suggestion, I think it would be most desirable if I could be kept directly informed of steps taken by the Commonwealth Government in the general direction of orderly marketing and I wonder whether you could arrange for some one in your Department to forward to me direct, at the earliest possible moment, information about anything that has to do with (1) orderly marketing (2) preference and (3) any other economic development.

Yours sincerely, F. L. MCDOUGALL

1 See note 4 to Letter 21.

2 See note 1 to Letter 22.

3 See note 1 to Letter 33.

4 McDougall's letter, signed 'an Australian', argued that Bruce was merely suggesting that some Australian State governments were submitting to pressure from extremist trade union leaders. An editorial comment accepted this interpretation: Spectator, 3 October.

5 New Statesman, 26 September.

6 Sir Halford Mackinder.

7 Leopold Amery, Secretary for the Colonies and for Dominion Affairs.

8 Iraq, including the disputed border area of Mosul, was administered by the United Kingdom as an 'A class' mandate under the terms of a treaty with Iraq drawn up in 1922. Britain and Turkey were required by the Treaty of Lausanne to reach agreement on the border, but when negotiations broke down in 1924, the dispute was referred to the Council of the League of Nations, both parties agreeing to accept its ruling. A commission of three was sent to Mosul early in 1925 and found that Mosul should be included with Iraq, provided Britain would undertake to maintain the mandate.

During a Council meeting on 19 September, at which the question was referred to the International Court of justice to determine the Council's competence in the matter, Amery pledged again that Britain would abide by the Council's ruling. When, however, the Turkish representative refused to give a similar assurance, Amery stated that Britain was therefore entitled to withdraw her pledge.

In December 1925 the Mosul area was awarded to United Kingdom-Iraq on condition that the mandate be maintained for twenty-five years or until Iraq joined the League. A new Treaty between the United Kingdom and Iraq, embodying this provision, was signed in 1926.

Amery's policy was criticised on two grounds: that the administration of Iraq involved heavy and unwarranted expense;

that his uncompromising stand over the inclusion of Mosul had risked war with Turkey.

9 William Ormsby-Gore, Parliamentary Under-Secretary for the Colonies.

10 Stanley Baldwin, Prime Minister.

11 Sir Philip Cunliffe-Lister, President of the Board of Trade.

12 See Letter 27.

13 The Commonwealth Bank (Rural Credits) Bill was introduced in the House of Representatives by the Commonwealth Treasurer, Earle Page, on 20 August. It established a Rural Credits Department of the Bank to finance orderly marketing schemes for rural produce.

For Page's speech see Commonwealth Parliamentary Debates 1925, vol. 111, PP. 1633-40.