68

29th April, 1926

PERSONAL & CONFIDENTIAL

Dear Mr. Bruce,

In my last letter to you I described a talk with Mr. T. Johnston [1], M. P. The thing that struck me as being the most significant was the impression which his Indian visit made upon Johnston. He is a puritanical fellow, of the stuff the Scottish covenanters were made of and certain things in India horrified him: the blatant avowedness of prostitution under British rule:

the failure to make primary education more general. On balance, however, as a Britisher, even if of the left wing of labour, he felt that he had more to be proud of than ashamed over British rule in India.

He described the Swaraj party as being utterly incompetent and reactionary and said that the idea of India-a nation was absurd at the present time.

I feel sure that this information (which is for you personally) will interest you.

SAFEGUARDING ENQUIRIES

I enclose copy of a letter which I sent to the 'Times' on this subject and also a schedule of the figures upon which I based my letter.

I did not sign the letter as I felt it was trenching upon the question of domestic protection. I think it may be of some use in spreading the idea of the value of Empire Markets. [2]

ECONOMIC PROBLEMS OF THE EMPIRE

I enclose the VII article from the 'Times Trade Supplement' on this subject. [3]

LAYTON'S ARTICLES FROM 'MANCHESTER GUARDIAN'

Mr. W. T. Layton, the Editor of the 'Economist', has published two articles in the 'Manchester Guardian' which I enclose. I also enclose a copy of a signed letter which I have just sent to the 'Manchester Guardian' answering Layton which, I hope, the 'Manchester Guardian' will publish. As my letter is a fairly useful statement of the opposite side of the case, it is more than possible that the 'Manchester Guardian' will suppress it, although this paper is far fairer to its fiscal opponents than the other Liberal Free Trade papers. I would suggest that you read Layton's articles carefully. He will be one of the British representatives on the International Economic Conference at Geneva. He is a recognised force on the Free Trade side and I should imagine represents pretty well the British Treasury point of View. [4]

PARLIAMENTARY QUESTIONS

I enclose some interesting Parliamentary questions and answers.

AUSTRALIAN APPLES

So far, the Australian apple season illustrates most of the points to which the Imperial Economic Committee draw attention in the Fruit Report.

The fruit is arriving in very large quantities with no attempt being made to regulate the quantitites placed on each market. I understand that this week four steamers are discharging Australian apples at Hull alone! It is no one's business to place a portion in cold storage and, as a result, prices have collapsed in a most unfortunate way. This is illustrating the truth of the saying that without 'orderly marketing' a bounteous crop is a curse to the producer.

The Imperial Economic Committee says, in effect, 'you producers cannot expect satisfactory results unless you are prepared to (a) organize (b) have effective representation in the United Kingdom to control the distribution of your fruit'. The present average price of Australian apples is, I suppose, 9/- per case: with proper regulation and attention to quality, it would be anything from 12/- to 14/- per case-the difference between profit and loss.

Unfortunately all is not well with the quality of the fruit. I received a letter yesterday from Sir Algernon Firth, a copy of which I enclose, and to which I would direct your special attention. Firth was for five years the Chairman of the Associated Chambers of Commerce. He is a most zealous Imperialist, and, as you know, is the Senior Member of the British representation on the Imperial Economic Committee.

It is most essential that the producer and the Government inspectors in Australia should realise that all the money spent on publicity will be wasted, every attempt to establish Voluntary Preference will be in vain, unless the goods sent here are of good quality, well packed and carefully graded. I cannot exaggerate the importance of continual insistence upon this point. Firth's letter is so clear that you may find it useful in pressing this point home.

MR. AMERY [5]

I had half an hour with Mr. Amery this morning. My main purpose was to put before him Tom Johnston's ideas as to the value of Labour Members of Parliament visiting parts of the Empire in the next twelve months. Mr. Amery was very interested and proposes to review the Colonies to which delegations could usefully be sent. I found that Mr. Amery considered the Fruit Report of the Imperial Economic Committee as a great advance on the previous reports. He told me that the Empire Marketing Board is held up owing to the Civil Servant, whom he has selected to act as Secretary, being temporarily engaged in the Coal negotiations. Amery hopes to hold a first meeting about May 12th.

THE BUDGET

From our point of view the Budget is not of very special interest.

The only point that Amery was able to secure was the stabilization of preference for a period of ten years. This is, of course, a move in the right direction but cannot be of any substantial advantage to Australia except perhaps in fixing the 4/- per gallon preference on sweet wine. It will be invaluable to the Empire tobacco grower for the preference on tobacco is greater than the intrinsic value of the raw tobacco itself. I wonder whether there is any chance of a substantial development of the tobacco industry in Australia.

In the discussions on the budget, Commander Hilton Young [6] made two excellent Imperial points. One was that Trade facilities should be confined to Empire Development and the other was a summing up of the situation in a thoroughly satisfactory manner so far as I am concerned. If you do not read the speech in the Hansard, please read the four marked sentences in the extract which I enclose.

DAIRY BOARD

I enclose a copy of an interview with Sir James Cooper [7] published the 'Imperial Food Journal'.

Yours sincerely, F. L. MCDOUGALL

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

2 The letter, signed 'Dominion', was published in the Times on 28 April. McDougall argued that, in considering an industry's need for protection, the Safeguarding Committees should take account of the destination of exports. Goods sent to all countries would be unlikely to need protection from foreign competition, whereas the hosiery and knitwear industries, then under consideration, relied largely on sheltered markets within the Empire.

3 'Economic Problems of the Empire. VII-Fuel and Raw Material Supplies', Times Imperial and Foreign Trade and Engineering Supplement, 24 April.

4 Layton's articles, 'Europe and the Tariff Problem' and 'World Trade or Empire Trade?', were published on 17 and 26 April. He suggested that Britain's future markets might lie in Europe rather than in the Empire and that 'our great aim must be low tariffs everywhere'. Though trade with the Empire had increased, the rate of increase was less than might have been expected, and Dominion protective tariffs had risen. McDougall's reply, published on 30 April, argued that the extent of Imperial preference had also increased, that European competitors were rapidly expanding their markets at the expense of Britain and that 'the surest path towards a return to prosperity in British industry is the road of Empire development'.

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

6 E. Hilton Young, Independent M.P.; Editor of the Financial News;

Financial Secretary to the Treasury 1921-22; British representative at The Hague Conference on International Finance 1922. in his speech Young examined some problems of the British economy and export trade and suggested: 'We want a cure and not palliatives. We require fresh and willing buyers and new sheltered markets to replace those lost. We have lost the sheltered markets which we gained by getting a start in production. We must find fresh sheltered markets in the Empire'. See House of Commons, Parliamentary Debates, fifth series, vol. 194, Cols 1918-26.

7 Company director; Chairman of the London Agencies of the Commonwealth Dried Fruits and Dairy Produce Control Boards.