My dear Prime Minister,

By this mail I received a short letter from you dated the 27th
July, in which you referred to the very strenuous tour of the
various States that you were in the middle of making and also to
the work of the Imperial Economic Committee. [1]

I was rather amused to find that the only communication sent to
you by last mail was a three line memorandum covering a copy of
the Fish Report of the Imperial Economic Committee. [2] I believe
this is the first time during the whole period since I returned in
1924 that any mail has left with so brief a communication
addressed to yourself from me. It seems to indicate two things;

firstly your patience in reading the stuff I send out and,
secondly, to the fact that I am not addicted to many holidays.

VISIT TO SCOTCH RESEARCH STATIONS

Last week I was away in Scotland, having arranged with Julius [3]
that we should jointly visit the Rowett Research Institute at
Aberdeen, of which Dr. J. B. Orr is the Director.

Orr is a very remarkable man of about 45 years of age. Before he
became Director of an Agricultural Research Station, he had
achieved very considerable reputation on human nutrition. So much
was this the case that during the last year of the War, he was
brought back from France, where he was serving as M.O. to a
Battalion, to investigate, on behalf of the War Office, the
comparative nutritional needs of the civilian and military
populations. Orr's war record was also remarkable as, simply
serving as a Medical Officer, he received both the D.S.O. and the
M.C. and this, as far as I am aware, without having any influence
of any sort.

Julius, who naturally knows little about agriculture, was
immensely impressed by the work being carried out at Aberdeen and
this visit confirmed him in the idea of the importance that would
attach to a visit by Orr to Australia.

I remained at Aberdeen for a further day with Dr. Orr after Julius
had left and curiously enough Lord Lovat [4] arrived to see the
work of the Institute. I was able to have a long talk with Lord
Lovat about various points, to one of which I will refer in a
later stage of this letter.

After visiting Aberdeen, I went to Edinburgh and inspected the
Animal Breeding Research Station. I was fortunate in meeting Major
Walter Elliot [5] at Edinburgh and we spent an entire afternoon
discussing the research work of the Empire Marketing Board and
also some rather interesting political questions.

MAJOR ELLIOT AND GOVERNMENT POLICY

Major Elliot has been up to the present time a Conservative Free
Trader and when I was having this long talk with him, we were
joined by R. G. Boothby [6] M.P., another Scotch Conservative Free
Trader. The conversation turned upon the present Government's lack
of any constructive industrial policy. Both Elliot and Boothby
strongly agreed with my general contention that while the
Government had been guilty of very few sins of commission, their
sins of omission were grievous and, had there been any really
effective opposition, the credit of the Government in the country
could have been greatly damaged in debate.

I was extremely interested to find that both Elliot and Boothby
were beginning to realise that a purely free trade policy would
not meet the requirements of the present time. We discussed the
importance of Empire agriculture to industrial Britain and they
both agreed that a definite policy for the encouragement of
agriculture both at home, in the Dominions and in the Colonies,
was one which would, in the long run, probably benefit the
secondary industries of Great Britain to a greater extent than any
other single policy that could be adopted. They also felt that
this was a policy which the Conservative Party ought to adopt.

I promised Elliot to draw up a private memorandum on the
discussion which occurred on that occasion and I shall, of course,
send you a copy.

I commented on the apparent constructive sterility of Mr. Baldwin.

[7] Elliot's comment on this remark was very interesting. He said
that there was no possible doubt that Baldwin was an unrepentant
protectionist, quite convinced that the real solution of Great
Britain's industrial problems was along the line of safeguarding
of industry and the development of Empire trade by means of
tariffs and preference. As a result of the great disaster of 1923
[8], Baldwin felt that he was unable to advocate his own solutions
until the party had come more into line with his own way of
thinking. Under these circumstances he simply adopted certain
catch words, such as 'peace in industry' and other phrases, in
order to hold the fort while events themselves forced the
realisation of the necessity of his way of thinking upon the
remainder of the party.

I am inclined to think that this conversation in Edinburgh will
have some influence on affairs when Parliament reassembles in
November.

I need not bother you with any reference to the discussion between
Elliot and myself on Empire Marketing Board problems but I am
enclosing a special article from the 'Times' on the 'Chemistry of
Grass' which was contributed by Walter Elliot. [9]

SIR GEORGE PEARCE'S [10] NEWCASTLE SPEECH

In my letter of the 16th August I commented on Sir George Pearce's
speech at Newcastle and the very excellent reception that he had
in the British press. On the 26th August the 'Times' published a
leading article entitled 'Empire Consciousness' using Sir George
Pearce's speech as their motive. [11] I am enclosing a copy of
this article herewith.

On the 29th August Sir Harold Bowden, the Chairman of the Raleigh
Cycle Co. Ltd., in commenting on this leader attacked the
Australian tariff and I wrote a reply. I enclose copies of both
Bowden's letter and my reply. [12]

There can be no doubt that no utterances on Empire economic
questions have received so much publicity as Sir George Pearce's
Newcastle speech since you left England last December.

IMPORTATION OF ALSATIANS

While in Scotland Julius and I were discussing the possible effect
in Australia of the importation of Alsatian wolfhounds. In this
country there are constant series of unpleasant episodes connected
with this particular breed of dog, sheep worrying being one of the
sins most commonly attributed to the breed. We both felt that if a
considerable number of alsatians were imported into Australia,
there is strong probability that a number of these dogs may take
to the bush, join the dingos and the result of the introduction of
alsatian blood into the Australian dingo is one which anyone who
has the interests of Australia at heart must contemplate with
horror.

Julius and I both feel that consideration should be given to an
order prohibiting the importation of alsatians and, although this
is a matter on which I feel I should not worry you, I am not at
all sure to whom such a suggestion should be addressed. If you
think the matter of sufficient importance, perhaps you would
discuss it with the appropriate Minister.

7th September

LORD LOVAT AND THE BUSINESS DELEGATION

While at Aberdeen I had an opportunity of discussing with Lord
Lovat the Business Delegation. He assured me that immediately he
returned to London in October and when the holiday season was
over, he was going to throw the whole of his weight to try and
secure a really effective team for Australia. He by no means
despaired of getting Lord Weir [13] to head the delegation and he
thought that if Weir and Beckett [14] could be induced to go, the
team would be sufficiently strong to be of real utility.

I have already told you that, in my opinion, Lovat will be able to
exercise a stronger influence on the right type of man than even
Mr. Amery. [15]

MR. J. M. KEYNES [16] AND THE LANCASHIRE COTTON TRADE

I enclose from today's 'Manchester Guardian' a report of J. M.

Keynes' speech to the Lancashire cotton trade. It is distinctly
interesting in itself but it seems to me that the depression in
Lancashire, which is so obviously borne out in his address, is a
factor which Australia should take into more serious consideration
before using her tariff for the establishment of cotton spinning.

It is unnecessary for me to labour this point but I think you may
find the Keynes address rather useful in any discussion that may
come up on this subject.

EMPIRE MARKETING BOARD AND ENTOMOLOGY

I am enclosing an interesting article from the 'Times Trade
Supplement' on the 'Insect pests of the Empire' which is an
account of the 'Parasite Zoo' which the Imperial Bureau of
Entomology has established by means of a grant from the Empire
Marketing Board. I think this is well worth your attention as you
may find it useful as an indication of the way in which the
application of science can help agricultural industries.

BRITISH TRADE

Last night I had to speak in the City at what is known as the
'1912 Club'. I enclose the 'Times' report of the meeting. [17] In
order to satisfy myself as regards the present position of British
trade, I made a survey of the way in which British industrial
rivals have been increasing their exports. This is really bringing
the point made by you in your speech to the Imperial Conference in
1926 up to date. You then used the comparison between 1923 and
1925, I took out the figures of the increase in total exports of
1926 over 1923 and also for the first three months of 1927 over
the first three months of 1923. The results were extremely
interesting. I set them out below:

Netherlands

%
Increase of 1926 over 1923 (whole year) 29.6
" " 1927 " 1923 (first 3 mths) 43.6

Belgium

%
Increase of 1926 over 1923 (whole year) 14.4
" " 1927 " 1924 (first 3 mths) 11.2

France

1926 showed a reduction of 3% under 1923, doubtless due to the
revaluation of the franc but the 3 months of 1927 showed an
increase of 27.3% for the same period in 1923, indicating that the
temporary dislocation of French industry, which was evident in
1926, had been overcome.

Czecho-Slovakia

%
Increase of 1926 over 1923 (whole year) 35.8
" " 1927 " 1923 (first 3 mths) 67.5

U.S.A.

Increase of 1926 over 1923 (whole year) 8.6
" " 1927 " 1923 (first 3 mths) 17.2

Japan

Increase of 1926 over 1923 (whole year) 27.9
Latest figures not available.

Germany

Comparison with 1923 is impossible but the comparison with 1924
gives the following interesting results:

%
Increase of 1926 over 1924 (whole year) +35.0
" " 1927 " 1924 (first 3 mths) 57.0

All the above figures have been worked out on a sterling basis.

Comparing the British position with the above figures, one finds
that 1926 showed a 9.4% decrease from 1923 and that the first 3
months of 1927 showed an 8% decrease for the same period in 1923.

I also examined the latest available figures to see the British
share in the imports of a number of countries, in this case
omitting all reference to 1926 owing to the fact of the coal
strike, and I am enclosing a table with the results. The 50%
reduction in the British share in the trade of Italy and Japan is
particularly striking. If you will examine this table you will, I
think, observe how difficult it was for you thoroughly to impress
the commercial world of Great Britain in 1923 because, in that
year, the disorganization of Germany was giving Great Britain a
much larger share of certain European markets than she had in
1913. You will, however, notice that the position in 1927 has, in
most cases, resulted in Britain holding a lower share than in
1913.

8th September

THE IMPORTANCE OF ANIMAL INDUSTRIES

I have prepared for the Development & Migration Commission a
memorandum on the Economic Importance of Animal Industries. It
seemed to me that you would find this of considerable interest and
perhaps of use when you are speaking in country districts. I am,
therefore, enclosing a copy herewith.

Yours sincerely,
F. L. MCDOUGALL