58

11th March, 1926

PERSONAL & CONFIDENTIAL

Dear Mr. Bruce,

CABLES

In my last letter I described the visit of Mr. Amery [1] to the Imperial Economic Committee and the preliminary discussion held by the Committee on Mr. Amery's statement. On March 3rd I sent you the following cable:

Amery yesterday gave Economic Committee detailed account British Government's intention to implement First Report. His statement followed lines of cable sent Empire Governments but he also stated that he hoped Economic Committee would nominate members of Committee to serve on Spending Body. This question discussed by Committee today, Canadian delegates [2] difficult. Suggest that you cable British Government stating that while preferring original proposal of Executive Commission you accept their proposal as temporary expedient until whole question can be discussed in October at Imperial Conference. [3] I propose working for Amery's plan in Committee as a purely temporary basis-Cook.

[4]

After a second discussion in the Committee held on Friday, March 5th, I sent you a further cable as follows:-

My cable March 3rd following further from McDougall-Amery requested Imperial Economic Committee to express views on all points raised in his communication. Two meetings held. Canadian and South African [5] representatives fear unfavourable replies from their Governments. Imperial Economic Committee advising Amery that pending the replies of Oversea Governments Committee cannot give detailed advice. Memorandum from Imperial Economic Committee being sent to Amery on three points. Firstly that while welcoming representation of British agriculture on Committee itself, presence of British agricultural interests as such on Executive Body is a departure from original scheme outlined in First Report.

Secondly that Committee hopes that the initiation of all general schemes will remain in hands of Imperial Economic Committee.

Thirdly that in order to avoid misunderstanding, participation of British agriculture in annual grant should be limited to schemes benefiting Overseas Producers as well as home producers-Cook.

On Tuesday, March 9th, Mr. Shepherd [6] informed me of the receipt of a cable from you asking the High Commissioner to secure copies of your cables of February 20th and of March 6th [7] to the

British Government, so that I might be informed of your Government's policy. I have now read both these cables and the High Commissioner has arranged that I shall be given copies of all cables from you or to you on subjects concerning the Imperial

Economic Committee. Normally several days elapse before copies of cables sent by yourself to H. M. Government reach Australia House.

IMPERIAL ECONOMIC COMMITTEE

At a special meeting held on Friday, March 5th, a remodelled draft of what Mackinder [8] thought we ought to say to Mr. Amery was discussed. The Committee, however, came to the conclusion that at the moment it was undesirable to submit a memorandum going into a number of points in detail and better to send a more precise statement of the attitude which the Imperial Economic Committee felt that it could adopt prior to the representatives learning the views of their respective Governments.

I enclose a copy of the memorandum which was finally decided upon and of the covering letter which Mackinder appended in forwarding the views of the Committee to the Secretary of State.

On Monday last there was a meeting of the Drafting Committee, at which Mackinder stated that he proposed on Tuesday, March 9th, to propose to the Committee that they should advise the Secretary of State that the Committee felt that, during the coming year, not more than half a million could usefully be expended and thus give H. M. Government an opportunity of making the proposed reduction for 1926-7 from one million to half a million rather more acceptable in the overseas parts of the Empire.

On Tuesday morning, after I had had an opportunity of seeing your cable of March 6th to the British Government, I informed Mackinder that I should be unable to support his proposed move and he therefore decided to withdraw it and not bring it before the Committee.

On Tuesday, apart from further consideration of the Fruit Report, the draft Merchandise Marks Bill was discussed by the Committee and it was decided to submit a memorandum to the Secretary of State for the Dominions on the subject of the Bill. I am enclosing a copy of the memorandum decided upon.

So far as paragraphs 2, 3 and 4 of this draft are concerned, every member of the Committee arrived at the meeting unanimous in their view that there should be no option given to the retailer and that the use of the words 'Empire' or 'Foreign' should be made obligatory. Unfortunately, during the course of the discussion, the South African representative received a copy of a cable from his Government to the British Government expressing a preference for marking with the name of the country of origin instead of the words 'Empire' and 'Foreign'. However this view did not get expressed in the memorandum.

So far as paragraphs 6, 7 and 8 are concerned, these were points raised by me which met with the full approval of the Committee.

With regard to your request to me to keep you well posted, there is not much news available. I am, however, sending you today the following cable in reference to your proposal for an Executive Commission consisting of representatives of the oversea parts of the Empire. I presume your idea would include British agricultural representatives. My cable reads as follows:

Following from McDougall-Imperial Economic Committee and British Government proposals. Have now seen your cable to His Majesty's Government of March 6th. Consider your proposal of Executive Commission consisting of representatives of overseas Empire may be misunderstood as you do not mention any British representative thereon. Fear your proposal in present form may be thought unreasonable. On constitutional grounds Chairman of Imperial Economic Committee has always urged on Committee an impartial Executive Commission appointed by H.M. Government and consists of British members only. If your proposal considered practicable it would be very effective especially if Executive Commission was in effect a sub-committee of Imperial Economic Committee. I do not consider that either Canada or South Africa would at present agree with your proposal. Understand Indian Government has cabled that it does not object to H.M. Government's scheme. Have not yet heard of any further replies from Oversea Governments. Expect to see Amery Monday. Will cable immediately I obtain further information.

I do not imagine that you meant to exclude all British representation (apart from presumed agricultural representation) from the Executive Commission but your cable as it reads looks like this.

I think your proposal would be regarded here as involving considerable departure from established financial practice as I understand that Parliament cannot, on established financial practice, pledge money in advance of the year's necessities but the way out might be for the vote of a sum of say 5,000,000 with perhaps a clause requiring the Treasury to pay 1,000,000 annually out of the vote to the Executive Commission.

Mackinder has so perpetually drilled into the Imperial Economic Committee the constitutional impossibility of overseas representatives spending British Government money, that your proposal would be regarded as somewhat revolutionary. There is no doubt, however, that if anything like your proposal can be accepted at the Imperial Conference, it would provide a most effective method of getting on with the work of Empire Development. I would, however, suggest for your consideration one important point. Suppose there was an Executive Commission consisting of different overseas representatives to those representing the Governments of the Empire on the Imperial Economic Committee, would there not be a probability of some divergence, and possibly of rivalry between the two bodies? For this reason I would prefer to see a Sub-Committee of the Imperial Economic Committee acting as the Executive Commission, with power to co-opt other persons on to special Sub-Committees to deal with specific problems.

I do not see that there would be any serious objection to making the Secretary of State for the Dominions the Minister generally responsible to Parliament for the expenditure, and of including, say, Ormsby-Gore [9] as Under-Secretary of State as a member of your proposed Executive Commission.

FUTURE OF IMPERIAL ECONOMIC COMMITTEE

After reading your cables to H. M. Government of February 20th and March 6th, I have obtained a clearer idea of your views as to the future of the Imperial Economic Committee.

I am extremely glad that you are determined to see the idea of the Committee become something of real importance in the Empire. I propose to write to you several times during the next few months on the subject of the Imperial Economic Committee. Today I can only indicate, in the briefest outline, my ideas as to how the Imperial Economic Committee can be made more effective.

Firstly I'm afraid it is essential that there should be a change of Chairman. I have looked through my recent letters to you and have been reminded of the old Roman who added to every one of his speeches the words 'Delenda est Carthago'. My letters appear to have expressed the idea of the necessity for an alteration in the Chair with much the same persistence. I will write to you more fully on this point, however.

Secondly I think we ought to make up our minds as to what we think the Imperial Economic Committee ought to be and to do and then to decide to go forward with the Imperial Economic Committee as a Committee appointed from one Imperial Conference to the next. If Canada or South Africa prove obdurate, then we should persuade the other Governments to go ahead, on the basis that Canada can either (a) fill her seats at any time (b) appoint representatives on any ad hoc enquiry that interested her. I fancy that if this view were adopted, Canada would protest and refuse to appoint representatives to the Standing Committee but in fact would probably always see that she had ad hoc representatives for all enquiries.

Thirdly the British Government must be made to realise that they must be adequately represented on the Committee.

Up to the present the British delegates have proved weaker than those of any other part of the Empire except Newfoundland. The Crown Colonies, India & New Zealand have all been well represented; Canada well in parts, South Africa only fairly, Ireland very well. As a whole, however, the crying need is for a strong British delegation, including men with names that count.

These are just first preliminary ideas on the subject.

FRUIT REPORT

There has been a little more progress made and the Chairman hopes to complete the report for signature next week. Printing will, however, be a matter taking some time as there are several large reports coming out in the immediate future and the Stationery Office is congested with work. I fear publication cannot take place before the very end of this month or else just after Easter.

CONSERVATIVE PARTY

Mr. Amery asked me to let him have a dozen copies of the summary of my address to the Imperial Affairs Committee for circulation to members of the Cabinet.

POLITICAL ECONOMY CLUB

You may remember that in my last letter I mentioned that Philip Snowden [10] had stated that the share of British exports taken by the Empire had not materially increased during the last forty or fifty years. I gave you some preliminary figures and I now enclose a schedule showing exactly what the position has been. I sent a copy of this to Mr. Snowden and received rather an amusing reply to the effect that he meant to have said that the Australian share had not increased and not that the Empire share had not increased!!

ADDRESS

Yesterday I addressed the Hants & Dorset Branch of the Royal Colonial Institute at Bournemouth and I enclose a copy of the summary of my address and a copy of the report in the 'Times' of today.

PARLIAMENTARY QUESTIONS

I enclose copies of further Parliamentary Questions and also the 'Times' report of a motion by Lord Strachie in the House of Lords on the position of British agriculture in respect to the Annual Grant. [11]

ARTIFICIAL SILK

The 'Times' on March 9th published a most interesting supplement on Artificial Silk but nowhere mentioned the importance of Empire markets. I therefore wrote to the 'Times' about this point and I enclose a copy of my letter. [12]

Yours sincerely, F. L. MCDOUGALL

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

2 J. Forsyth Smith and W. A. Wilson.

3 Bruce's response to Amery's cable of 1 March (as outlined in Letter 57) was sent on 6 March. It closely followed McDougall's wording regarding the Executive Commission proposal. The cable is on file AA:CP78/22, 224/1926.

4 Sir Joseph Cook, Australian High Commissioner.

5 J. H. Dimond.

6 Malcolm Shepherd, Official Secretary to the Australian High Commissioner.

7 See note 3 to Letter 57 and note 3 above.

8 Sir Halford Mackinder, Chairman of the Imperial Economic Committee.

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

10 Labour M.P.; free trader; Chancellor of the Exchequer 1924.

11 Times, 11 March. Strachie, a Liberal peer and former Parliamentary Secretary of the Board of Agriculture, had claimed that assistance to Dominion producers was detrimental to the interests of British agriculture and had noted that the proposal had been condemned by the National Farmers' Union.

12 The twenty-four-page supplement had featured many European manufacturers. In his letter, published on 11 March, McDougall pointed to this increasing competition for British industry and to the importance of Empire markets, which in 1924 had accounted for 61.5 per cent of all British artificial silk exports.