My dear Prime Minister,

Under separate cover I have written you a letter marked 'secret'
dealing with the attitude of the British Government to the Empire
Marketing Board. [1]

SIR GEORGE PEARCE [2]

Yesterday I accompanied Sir George Pearce to the East Malling
Research Station near Maidstone. Sir George was very much
impressed with the work being carried on there.

On our way back, he told me that he very cordially agreed with my
view that the visit of a man such as the Director of East Malling
to Australia would do a very great deal to assist the Australian
people to realise the importance of the application of science to
the primary industries and also to the general work of
development.

AUSTRALIAN AGRICULTURAL DEVELOPMENT

In my last letter I referred to the work of Stapledon [3] at
Aberystwyth and generally to the importance of grass
investigation.

The matter interested me to such an extent that I have had some
figures taken out shewing the importance of the commodities that
may fairly be regarded as the products of grassland.

In 1925, the last year for which complete British statistics are
available, Great Britain imported 329 millions worth of grassland
products, the biggest items being in order of importance:

million
Wool 76
Butter 53
Bacon 42
Beef 36
Mutton & lamb 22

[Handwritten] Note: 50,000,000 re-exported mainly wool

During the same year British agriculture produced grass products
to a value of about 171 millions, so that roughly speaking Great
Britain consumes annually somewhere about 500 millions worth of
products which are primarily based on the pastures and herbage. Of
the total imports today, roughly 50% are derived from the Empire.

I am quoting these figures to you as I think you may find them
useful to indicate to the Australian public the immense importance
and scope for the further development of these industries. The
development of an industry, such as the dried fruit industry, is
faced with all sorts of difficulties mainly due to the restricted
markets and to something closely approaching general world over
production. There can be no question of permanent world over
production in the grassland products taken as a whole and in
Australia, if we neglect the extension of grazing in new areas,
the improvement of the pastures and herbage of existing areas will
allow for an immense increase in national wealth.

I am proposing to prepare, principally for Gepp [4], a memorandum
on this subject, of which I will of course send you a copy.

AGRICULTURAL ECONOMICS

I am enclosing the minutes of the second meeting of the Empire
Marketing Board's Committee on Agricultural Economics and would
like to draw your attention to pages 6 and 7. You will no doubt
agree that the Committee has formulated a very large programme
which, if the subjects contained therein can be properly dealt
with, should be of very great value to Australia and indeed to
many other parts of the Empire.

Working on the basis of these minutes, I have arranged for a
qualified agricultural economist from Oxford to prepare a draft
report to be submitted to the Committee at its next meeting when I
hope we shall be able to agree on a report to the Imperial
Agricultural Research Conference in October. I will forward the
draft report to you as soon as it is available.

MECHANICAL TRANSPORT

I am forwarding herewith a draft report of the Committee set up by
the Empire Marketing Board's Mechanical Transport Committee, the
formation of which I reported in my letter of the 20th July. [5]

This draft report is coming up for discussion tomorrow. As I shall
not be in London, having arranged to meet Julius [6] at Aberdeen,
I have written to Tallents [7], the Secretary of the Empire
Marketing Board, a carefully considered letter to be placed before
the Main Committee. I think you will find it quite worth your
while to read both documents.

I am naturally keeping Gepp fully informed on the whole subject
both by letter and by cable but I feel sure that you would like to
be kept in touch with what is going on.

In this connection I saw in the 'Times' of yesterday a report of a
speech by Butler [8], the South Australian Premier, to initiate a
campaign to increase the wheat areas in South Australia. It seems
to me that this question is very closely allied to questions of
effective mechanical transport. In many of the South Australian
areas, such as the Pinnaroo, wheat growing is limited by the
difficulties experienced by farmers who are perhaps more than ten
miles from the railway and who cart in their wheat to the railway.

The building of new railway lines to overcome these difficulties
is a very expensive process. If, however, the South Australian
Railway Commissioners possessed a fleet of six wheel vehicles with
which they were able to contract with farmers for the cartage of
wheat and the delivery of manures etc., it might be possible to
extend the areas very largely and at the same time to make the
railways more profitable.

This is merely one illustration of the immense importance to
Australia of this work. I shall be glad to have any views that you
care to express as to the desirability of joint Empire attack on
transport problems.

EXPORT CONTROL

I enclose a copy of two letters to the 'Times' dealing with the
Dried Fruit Export Control. Raynar Smith is a disgruntled broker
who has found the element of stability, which the Australian
appraisement system has given to the trade, detrimental to his
speculative tendencies. [9]

THE FASCIST STATE

I enclose 3 articles from the 'Times' on the subject of the
Fascist state in Italy which seem to be full of interesting
information and well put together. [10] I am therefore forwarding
them in case you should care to read them.

EMPIRE TRADE

I enclose some interesting notes from the 'Times Trade Supplement'
on the six months trade of 1927 shewing that, as compared with
1925, the last normal year, there has been a 3.4% increase in the
Empire share of British exports. [11] The note on the purchases
from the Southern Dominions is particularly interesting,
especially the final point about Australia's share as compared
with the world.

In the 'Morning Post' of the 22nd August, Sir George Pearce was
attacked by the Hosiery interests. I enclose a copy of their
letter and also a copy of the reply, which I drafted for Sir
George Pearce. [12]

I also enclose a further cutting in which the 'Times Trade
Supplement' comments on Sir George Pearce's speech and compares
his attitude with that recently taken up by the Minister of Trade
& Customs. [13]

Yours sincerely,
F. L. MCDOUGALL