My dear Prime Minister,

YOUR LETTER OF 21ST MAY [1]

It was very pleasant to receive your long letter of the 21st May,
in which you commented upon the points raised in my letters. I
very much appreciate receiving your comments especially as I
realise how heavy are the calls upon your time.

I noted your remark that I should exercise a close scrutiny of the
enclosures which I forward to you in order to avoid a waste of
your time. I can only say that I have been surprised that you have
received my huge budgets with so much patience and I will
certainly see that anything I forward shall be, in my opinion, of
sufficient value for you to read.

AUSTRALIAN FINANCE

I should like to send you my warmest Congratulations upon the
successful outcome of the financial arrangements [2] At this side
of the world you appear to have first courageously carried your
legislation in the teeth of a determined opposition and then to
have tempered justice with mercy and to have won over the States
in a way which should do much towards the further unity of
Australia. I should imagine that the result must have greatly
increased your personal hold upon the country.

BRITISH POLITICS

Frankly I sigh for a little such statesmanship here. The
Government has wobbled horribly over the House of Lords reform [3]
and, although this event may do little seriously to affect its
position, yet in the other fields of policy they seem to be
incapable of any valuable constructive effort. Collectively the
Cabinet have done few stupid things save this House of Lords
fiasco but they appear unable to evolve any policy to meet the
real need of the country, the restoration of industry and of
agriculture.

I enclose a copy of yesterday's Hansard with the debate on the
Reform of the House of Lords in it. John Buchan [4] made a most
remarkable maiden speech which, according to the 'Times' report,
was received with general cheers from all sides of the House.

Probably this speech will be distinctly interesting to you as you
know Buchan.

EMPIRE MARKETING BOARD

With reference to the comment in your letter on the suggestion
made by Amery [5] that the Empire Marketing Board might incur a
certain degree of expenditure for advertising Empire products on
the Continent, I think that you will feel assured that the very
strong and definite opposition which I immediately made to this
suggestion at the full meeting of the Board has had its effect and
that there is no tendency at the present moment to re-open that
question. All the other Overseas Representatives of the Board
strongly supported my attitude on that occasion.

I have already on several occasions put Julius [6] into touch with
Walter Elliot [7] and with other members of the Board and tonight
Julius and I are dining with Walter Elliot for a business
discussion on cooperation between the Empire Marketing Board and
the Commonwealth Council for Scientific & Industrial Research.

I have noted your remark that you would like to be kept informed
from time to time about any really important lines of
developmental research. I hope before long to send you a note on
the general subject of Mechanical Transport which is about to be
considered by a Special Committee set up by the Empire Marketing
Board at the request of the Colonial Office Conference.

I am glad to be able to report that the special poster campaign
which the Empire Marketing Board is developing is arousing
continual increasing interest and in this connection I enclose a
leading article from the 'Manchester Guardian' [8] which is worth
your looking at. From such a source the praise of the Board's work
is remarkable. Actually, however, the appearance of this leading
article is due to a rather bad mistake made by the Board's
officers. The Board's first public report is ready for issue but
concurrently with it a White Paper was to have been issued.

Unfortunately, owing to some hitch, the Stationery Office
published the White Paper before the report and the publicity that
should have been obtained for the report itself is thus
endangered.

I am extremely annoyed that this should have happened because
elaborate arrangements had been made for publicity of the main
report, special articles having been prepared for the 'Times' and
other important papers and the premature issue of the White Paper
may render publicity of this sort very difficult to obtain.

IMPERIAL ECONOMIC COMMITTEE

There is nothing of fresh interest to report in connection with
the Committee, except that now we have reached the drafting stage
of the Fish Report and the incompetence of Mackinder [9] has again
become strikingly evident; so much has this been the case that
Chadwick [10] is finding his work extremely difficult.

If you can see your way to discuss with Amery the need for a
better Chairman, it might be all to the good. In view, however, of
the unsatisfactory way in which Amery received the comments you
made at the Imperial Conference on this suggestion, I am doubtful
whether you would care to approach the matter again.

MEMORANDUM ON AGRICULTURE

I am enclosing herewith a first draft of a memorandum upon the
importance of the Agricultural producer to the industry of the
Empire and particularly to Industrial Britain. A good deal of it
will not be fresh to you but I have used the Geneva Conference
[11] as the peg to hang the ideas upon and I am not aware that
anyone has yet stressed that aspect of the International Economic
Conference.

My purpose in preparing this draft is to commence to spread the
idea of a new conception of the prosperity of Empire agriculture
being completely essential to the prosperity of Great Britain.

As I see it, the Empire idea should be continuously stressed but
those of us who enthusiastically support that idea need to find
fresh angles to present to the public mind. I am also impressed
with the view that many worthy people here react rather
unfavourably to the word 'Empire'. They cannot rid their minds of
the Chamberlain [12], Dr. Jameson [13]-Kipling [14] complex-the
Union Jack and exploitative capitalism. I feel that these folk may
see the light more readily if expressed in terms of agriculture.

I am also most anxious to further the idea which you have done
more than anyone else to create, namely, that the solution of the
main problems of British and of Dominion agriculture are to be
found along the same road.

I should be very much obliged if you could let me know whether you
see any virtue in such a form of presentation and I should
appreciate any criticisms you might care to make on the
memorandum. Please observe that it is a first attempt to grapple
with a very large subject!

EXPORT OF PEDIGREE STOCK

I am not at all clear to whom I ought to write in Australia on
this subject. I am, therefore, writing officially to the Secretary
of the Prime Minister's Department and enclose a copy of my
communication herewith. [15]

WINE

With reference to the amendment to the Finance Bill to relieve
British merchants holding stocks of Tarragona and Lisbon wines, I
cabled on the 30th June to inform you of the position.

So far as the development of the Australian wine business is
concerned, I have found it rather difficult to get impartial
views. I am inclined, however, to think that Australia would make
a very great mistake if she used the present opportunity to press
for the uttermost farthing in the price to be obtained from
British merchants for her port type wines.

As I indicated to you in my letter of 28th April [16], the Spanish
and Portuguese interests have had a very heavy knock as a result
of the budget. They are trying to get over this knock by exporting
wines under 25 strength, that is at the low rate of duty, for
blending in London with wines of a very high alcoholic content. I
believe that the better class merchants are still sceptical as to
whether a sound wine can be produced by these methods. Provided
they can get Australian wine at a reasonable price and they will
be prepared to make forward contracts in very considerable volume,
I feel very definitely that Australia really has the ball at her
feet but that considerable restraint and discretion is needed to
obtain the maximum permanent advantage from the existing
situation.

Yours sincerely,
F. L. MCDOUGALL