My dear Prime Minister,

Under separate cover I am writing to you on the effect of the
Australian tariff on British export trade. [1] This, however,
leaves me to comment here on certain recent happenings.

SIR GEORGE PEARCE [2]

A rather unfortunate impression was created in many people's minds
by an interview which the Minister for Trade & Customs [3] gave
the 'Times' shortly before he left. He stated that the British
manufacturer was, in his attitude to Australia, like Oliver Twist
always asking for more preference.

In actual point of fact it appears to be clear that there are a
good number of items in the tariff in which preferential
provisions are today more or less ineffective owing to the lower
cost of production in foreign countries such as Germany or
Belgium. The duty is levied upon the domestic value in the country
of origin and where this domestic value is considerably less than
in Great Britain, the result of this method may be to nullify the
preference and in fact to place a premium upon a lower standard of
living than that which obtains in Great Britain. There is, I know,
another side to this question, namely that methods of massed
production in America sometimes lead to lower domestic values than
in Great Britain and it might be argued that the Australian people
should not lose the benefit of the lower costs when these are due
to higher methods of efficiency.

It does seem, however, that some British manufacturers have fairly
sound grounds for urging that in the case of their particular
goods the preferential tariff is somewhat unreal.

When I found how widespread was the unfortunate impression created
by the 'Oliver Twist' allusion, I suggested to Sir George Pearce
that in his speeches made in Great Britain he might take a
somewhat different line and refer pretty definitely to the way in
which Great Britain was beginning to wake up as to what the Empire
meant and to encourage the further development of a strong Empire
sentiment in this country.

Sir George Pearce very warmly agreed with this point of view and I
am enclosing a report from today's 'Times' of a speech which he
delivered in Newcastle. [4] I am very glad to say that this speech
has received very wide publicity throughout the British press.

I hope that you will agree that, at the present time, Australian
Ministers can do a great deal to encourage Britain along the
Empire path by encouragement.

MR. ALEXANDER'S [5] SUGGESTION

I am enclosing a cutting from the 'Times Trade Supplement' in
which Mr. Alexander's suggestion made in the House of Commons, to
which I drew your attention in my letter of the 28th July [6], is
discussed. The fact that Alexander's speech was made during the
last week of the Parliamentary Session has militated against much
attention being given to his proposal.

EMPIREE AGRICULTURE

I am enclosing a leading article also from the 'Times Trade
Supplement' which was inspired by my memorandum on 'Agriculture
and the Empire'. When the Editor [7] told me that he proposed to
write on the subject, I asked him to be very careful not to quote
my words or to refer to the memorandum in any way. The leading
article is, however, distinctly interesting and worth your
consideration.

17.8.27

MR. A. F. BELL [8], C.M.G.

Mr. Bell left London on Saturday last for Canada and America. His
visit has been extremely useful. I am very much impressed with his
general ability and zeal. I feel sure that as soon as he reaches
Melbourne, you would find it well worth your while to have a long
talk with him.

He did not appear, before he left, to have made up his mind as to
the best form of re-organization of Export Control Boards but he
told me that after discussing the matter with Cooper [9] and
myself, he would very carefully consider the whole situation on
board ship and clarify his mind before he reached Melbourne.

MR. J. MYERS

Mr. Myers is, as you know, the Australian Correspondent on the
'Daily Telegraph' and the 'Financial Times'. He called to see me
once or twice to get information about the work of the Empire
Marketing Board. He told me that he had been criticised in
Australia for sending cables to his London papers which were
critical of Commonwealth Government actions. He said, however,
that he was extremely anxious to be really helpful to the
Government while at the same time retaining full liberty of
action. He suggested there were many ways in which he could really
be of use and that he would be very glad if you would see him in
order to discuss how he could best assist.

He left some few weeks ago for Melbourne so perhaps you will give
this matter your consideration.

GENEVA NAVAL CONFERENCE

I enclose a cartoon from the 'Star' of August 9th, which is
intensely amusing and seems to sum up the position in a very sound
way.

I also enclose another Low [10] cartoon which is a distinctly
pungent comment on the existing Irish situation.

AUSTRALIAN WINE

In my letter of the 28th July [11] I wrote to you about the
Australian wine trade and gave you certain estimates which a Mr.

T. C. Angove, of South Australia, had made. A couple of days ago I
received a cable from Oakley [12] asking for my opinion on the
situation and I therefore made some enquiries which resulted in
confirming Angove's figures. I found that firms handling
Australian wines are at the present time decidedly depressed about
the situation. They feel that it is essential that if Australian
wine is to make a great success here, it must be offered to the
public at prices from 3/- to 3/6d a bottle. This really allows no
margin for increase in price at the Australian end above 3/3d per
gallon f.o.b.

I feel very strongly that if Australia is to make real progress,
the Commonwealth Government should give an assurance that the
present 3/- per gallon export bounty should remain unchanged for a
period of say 2 years but should require to be completely
satisfied that the marketing arrangements of the industry are put
on a sound basis.

The whole situation here seems to be governed by the success or
failure of the Lisbon and Tarragona interests in putting a blended
wine on the market at a price which could compete with the
Australian. There seems little doubt that they will succeed in
doing this at least to some degree. Whether the trade and the
public will like the blended wine is a matter which still remains
to be decided but any substantial increase in the Australian price
would give a tremendous impetus to the trade to turn to the
blended Spanish and Portuguese wines. It would be little less than
a tragedy if a failure at the Australian end to realise the
situation and prolonged lack of stability, owing to delay on the
part of the Government in deciding on definite action in regard to
the bounty, should result in Australia losing the opportunity
which was created by the British Budget.

18.8.27

SCIENCE AND AGRICULTURE

Last Thursday I went to Aberystwyth where I met Julius [13] and we
jointly inspected the Welsh Plant Breeding Station. Stapledon
[14], the Director, has done a great deal of very valuable work on
the improvement of grasses and clovers. He has visited Australia
and was thus able to visualise our problems and to make valuable
suggestions about our needs. He suggests that by means of the
careful selection of strains of native or introduced grasses and
clovers, we shall gradually be able to evolve pasture which will
be able to withstand drought. Just as our wheat breeding and the
technique of wheat farming has during the last 30 years pushed the
wheat belt back into drier and drier country, so Stapledon
declares we can bring herbage along with the advance of wheat and
thus establish that sound economic unit the mixed wheat and sheep
farm through the Mallee and in the new wheat lands of Western
Australia. [15] I am convinced that the visits of really first
class British scientists to Australia is a policy which should be
encouraged in every possible way. In some cases the Empire
Marketing Board will be prepared to foot the bill, in others the
Commonwealth Council for Scientific & Industrial Research ought to
act. I find Julius in hearty agreement with this conception. Here
I should like to let you know that the rather unfortunate
appointment of Dr. Franklin Kidd [16] on Storage and Transport
problems was made without my being in any way consulted. I feel
that in selecting a man to advise in Australia, we must consider
(a) his standing (b) his personality and character. Nothing will
do more to convince the Australian people of the value of your
Government's great decisions to place the development and the
application of science to industry upon a sound basis than a
succession of visits of really first class men to Australia who
not only by their standing but also by their personality and
character will impress the primary producers, the press and the
public with the vast possibilities for development along certain
definite lines of work.

So far I have been able to arrange, through the Empire Marketing
Board, for a visit this year to Australia by Dr. Hill [17], the
Director of Kew Gardens. Hill is a charming individual, a man of
definitely high standing but I should think not a very forcible
character. His visit will be of greater help to systematic botany
than to the more direct economic objectives.

As a result of discussions between Ormsby-Gore [18], Walter Elliot
[19], Julius and myself, Julius now hopes to be able to arrange
for Sir Arnold Theiler [20], who is probably the most
distinguished man in the British Empire on Veterinary work, to
visit Australia early next year.

I am extremely anxious that we should arrange for Dr. J. B. Orr,
the head of the Rowett Institute near Aberdeen, to visit Australia
next year and to advise on problems connected with animal
nutrition and particularly in regard to the establishment of the
proposed Northern Australia Tropical Agricultural Research
Station.

Valuable as the proposed Business Delegation to Australia may
undoubtedly be, I think that Australia will, in the long run, reap
even greater advantage by the visits of really first class
scientists provided they are men who can clearly visualise the
economic objective and keep it definitely before them.

There can be little doubt that south of the line from Sydney
across to Perth, we can, in time, treble the carrying capacity of
our existing settled areas. Whether this takes ten years or fifty
years depends upon the way in which the problems are tackled. It
seems to me that the series of advisory visits is one of the best
methods of stimulating the interest of the Australian scientific
worker and the Australian farmer upon which the whole rate of
progress must obviously depend.

Yours sincerely,
F. L. MCDOUGALL