39

12th November, 1925

PERSONAL & CONFIDENTIAL

Dear Mr. Bruce,

IMPERIAL ECONOMIC COMMITTEE

Since my last letter, no developments of any importance have occurred. It has been decided that the consideration of the First Report, the Report of the Departmental Committee and of the section of our Minutes which, as I reported in my last letter, had been circulated as a Cabinet Paper, should be deferred until next week's Cabinet Meeting when Lord Balfour [1] will be able to be present.

This week's meetings of the Committee have been fully occupied by the hearing of witnesses and the first meeting of the small Drafting Committee has been summoned for Monday, at which I hope the general outline of the Fruit Report will be discussed.

BROADCASTING

On Monday evening last I had my first experience at broadcasting and delivered a talk on the Australian fruit and wine industry, of which I enclose a copy.

I am glad to be able to inform you that the talk was quite successful and was clearly heard all over the country. The British Broadcasting Co. asked for a personal touch because they desired these talks to be closely related to personal experience in Australia.

'MANCHESTER GUARDIAN' AND EMPIRE TRADE

In to-day's 'Manchester Guardian Commercial' there appears an interesting article on Empire Trade in which the Commonwealth Government's policy of protection and preference and my book 'Sheltered Markets' are singled out for criticism. [2] I think that the article is well worth reading because it puts, in quite reasonable language, the attitude of intelligent free traders on this subject. I have only had time to read it through once but feel that I can probably write a useful answer to the article.

At the bottom of the second column the writer declares that my view 'is inconsistent with the finding of the Balfour Committee'.

[3] I have gone extremely carefully into this and have come to the conclusion that, on this particular point, my view is right and that of the Balfour Committee is wrong. I think that a very useful purpose would be served if it were possible to issue officially a statement modifying paragraph 4 of the Report of the Bureau of Commerce and Industry, as quoted in the first column. [4] This modification might be in harmony with your historic speech at the Sydney Agricultural Show [5] and make it clear that the protection of industries in Australia was to be dependent upon those industries being efficient. I enclose copy of the cutting herewith.

I also enclose copy of a letter signed by Sir Joseph Cook from the 'Manchester Guardian Commercial' of to-day's date. [6]

AUSTRALIAN PRODUCE BOARDS

On Tuesday last, Major King [7], the first representative of the London Agency of the Commonwealth Dairy Produce Board to arrive in England, called to see me. We had a very interesting conversation.

I told Major King that I should be most willing to assist him in any direction in which he thought my advice on matters of general policy could be helpful, and I told him that, in my opinion, it was impossible to exaggerate the importance of quiet and tactful handling of the London business of Export Control Boards. I pointed out to him that the New Zealand Meat Export Control Board had been very successful in London owing to two things. Firstly, that the Board possessed very large powers which it did not find necessary fully to put into operation and, secondly, that its London Representative cultivated the friendliest possible relation with the trade and avoided stressing the fact that large powers were in reserve. I was able further to tell him from personal experience of the working of the Dried Fruit Board that there were many pitfalls and dangers to be avoided.

I was very glad to find that Major King fully agreed with the point of view that I put before him and seemed clearly to realise that an attitude of assertion that control was being brought into play in order to secure better prices for the Australian producer might easily result in bringing the Press and the business world into violent reaction against Commodity Control legislation in general.

I am quite sure that the Dried Fruit Export Control Legislation has very materially assisted the Australian industry this season and that it will continue to give far more satisfactory results than the lack of system which operated last year.

In some ways the Dairy Board will have a very difficult row to hoe and this chiefly because butter is a much more essential article

of diet than dried fruit and because vested interests in butter are much larger than in dried fruits. Provided the London Agency of the Commonwealth Dairy Producers' Board do their work with great tact, I have no doubt that very useful results will be forthcoming. It is, however, obvious that any serious error in policy made by any one Board, whether Australian or New Zealand, would lead to bringing all Export Control Boards in this country into bad odour.

At the present time I maintain pretty dose liaison with the New Zealand Meat Control Board and I think it would be most useful if occasional meetings of a representative of all the Empire Control Boards could be held in London.

In reference to this subject, it will interest you to know that Sir James Cooper's [8] job as Financial Controller of the Wembley Exhibition has now come to an end and, although he has been asked and has consented to act as one of the Liquidators of the Exhibition, I understand from him that the Liquidation work will not involve a very great deal of his time. Sir James Cooper's work at B. A. W. R. A. and his recent experience with the London Agency of the Dried Fruit Board and also his great general knowledge of the City and British business renders him, in my opinion, particularly valuable in connection with the views which I have expressed in the preceding paragraphs.

IMPERIAL COUNCIL OF COMMERCE

The Imperial Council of Commerce is really a Federation of the Empire Chambers of Commerce. This year Sir Edward Davson, one of my colleagues on the Imperial Economic Committee, is Chairman. He asked me to draft a resolution to put before the Imperial Council of Commerce on the subject of the Imperial Economic Committee. I enclose a copy of the resolution which was unanimously adopted by the Imperial Council of Commerce on October 14th.

Yours sincerely, F. L. MCDOUGALL

1 Conservative Prime Minister 1902-05; Lord President of the Council.

2 The writer of 'Sheltered Markets within the Empire' argued that McDougall's case for tariff preference rested on the complementary nature of trade between Britain and Australia, the one producing manufactured goods from raw materials supplied by the other.

Australian tariff changes that had recently been introduced- intended to protect newly established industries threatened the existence of this complementary trade.

3 The Committee on Industry and Trade, established in 1924 with Sir Arthur Balfour as Chairman, published the first of its interim reports in June 1925. McDougall had claimed that Britain's share of world trade was declining, but the Committee reported an increase from 13 per cent in 1913 to 14 per cent in 1923. See F.

L. McDougall, Sheltered Markets, John Murray, London, 1925, P 3, and Committee on Industry and Trade, Survey of 0verseas Markets, HMSO, London, 1927, P. 3.

4 The article quoted the annual report for 1922 of the Director of the Australian Bureau of Commerce and Industry where it was claimed that one aim of Australian customs duties was 'to guarantee stability and permanence to every industry already established and secure prosperity and possibility of development to many projected enterprises, the establishment of which is now certain' (p. 87).

5 See note 2 to Letter 7.

6 The Australian High Commissioner's letter refuted a claim that in Australia American goods were in most cases preferred to British.

7 J. R. King, former London representative of the Coastal Farmers' Co-operative Society of N.S.W. and General Manager in Australia of Weddel & Co., meat importers.

8 Company director; Chairman of the London Agencies of the Commonwealth Dried Fruits and Dairy Produce Control Boards; Deputy Chairman of British Australian Wool Realisation Association Ltd.