My dear Prime Minister,

Since my last letter to you, I have received your note of the 5th
September and your very welcome letter of the 15th September. [1]

Knowing how extremely busy you are, I deeply appreciate your
devoting part of your only too brief holiday in writing so fully
to me.

Referring to your communication of the 15th September, I have
already, in earlier letters, told you what an excellent impression
has been made in London by the success of your negotiations in the
States in reference to finance. [2] The result of the New South
Wales Elections [3], in which your personal intervention probably
[played] an important part, should be to consolidate this work. I
was very delighted to hear from you that you regard the relations
between the Commonwealth and the State Governments as having been
substantially improved and I hope that this will lead to more
fruitful action in the field of development and migration.

With reference to the work of the Empire Marketing Board and the
Imperial Economic Committee, I have no doubt that you will take
the opportunity of Mr. Amery's [4] visit in Australia to discuss
these matters with him pretty fully. I also hope that you will
have found it possible to have given Huxley [5], of the Empire
Marketing Board, an opportunity for a personal talk with you and
that you will have obtained from him a pretty clear picture of the
way in which the Board is trying to solve its publicity problems.

With regard to the Imperial Economic Committee, I feel that,
although, as you say, the adoption of definite standing orders and
a regular programme of sessions has brought the Committee on to a
much more businesslike basis [6], yet it will be very necessary
for Sir David Chadwick [7] and myself to work very hard if we are
to overcome the handicap of Mackinder's [8] Chairmanship. One of
the greatest difficulties of the Imperial Economic Committee is
that the general level of its personnel is not sufficiently high.

The British representation is now fairly good, although Sir
Algernon Firth is past doing really effective work. The other two
M.P.'s who are members of the Committee are, however, pretty good,
especially F. N. Blundell, who represents British Agriculture, and
Sir Thomas Allen, the fourth member, who represents the Co-
operative Movement, is also distinctly useful.

I regret, however, to have to say that, apart from the Indian
representation [9], which is uniformly good, and, on the whole,
the representation of the Crown Colonies [10], the remainder of
the Overseas representation is definitely mediocre. I hope that,
with a more businesslike programme and a larger range of subjects
to deal with, the Governments of the Empire will begin to realise
the desirability of better representation.

If you have had time to look at the progress report of the Empire
Marketing Board, you will probably have gathered the amount of my
time which the Empire Marketing Board's business takes up. Each
week I find myself with two or three Committees during ordinary
working hours and normally two evening Sub-Committees on which
some of the most important work is done. it is also necessary to
keep in touch with the office and with the Ministers who are on
the Board several times during the week. However, the work is
extremely interesting and I feel sure that you would warmly
approve the fact that I am devoting all the time I can possibly
spare to assisting, as far as I am able, to make this work a
success.

I think that it would not be unfair to say that, apart from the
Chairmanship, the three Members who are really giving constructive
work to the Empire Marketing Board are Walter Elliot [11], Ormsby-
Gore [12] and myself.

As in the case of the Imperial Economic Committee, the Dominion
representation on the Empire Marketing Board is not very strong.

The British representation, however, is so strong that, working in
close collaboration with Elliot and Ormsby-Gore, one can get a lot
done. The Empire Marketing Board has also, of course, a pretty
useful staff, quite prepared to take a certain amount of
initiative itself.

I was extremely interested to read your remarks on the subject of
the Tariff and to learn of your decision to appoint a private
Committee to advise you about certain economic aspects. [13] I, of
course, realise clearly the political difficulties; at the same
time I cannot but feel that the report of the Tariff Board, as
summarised in the 'Times' [14] will help substantially on the
political side. Sir George Pearce [15] also told me, when he was
over here, that he thought that even among the politicians there
was a dawning sense that the continuation of indiscriminate
protection could only damage Australia.

With regard to the personnel of your Private Committee, the only
member whom I know is Wickens [16], from whom I am sure you will
get impartial views. If anything I can do at this end can further
assist either you or your Private Committee towards further
elucidation of this extremely complex matter, I should be only too
glad to do anything I possibly can.

I am very pleased that you have found my stream of letters of
interest and occasional use to you. I have made a special note of
the fact that you would like me to keep you particularly well
informed as regards home politics. It is very helpful to know the
type of thing on which you like the fullest information.

I am glad to hear from you that you think the Development &

Migration Commission is really making progress in Australia. One
feels that Gepp [17] has undertaken an enormous task which will
require to be not only zealously but also very skilfully handled
if he is to carry the people with him.

I imagine the Press and the Politician will be looking for
immediate results, while Gepp may tend towards problems which
cannot mature until a number of years have elapsed and the main
difficulty may be to adjust these two points of view.

I am extremely grateful to you for your assurance that you will
stir up the D. & M. Commission and Markets & Migration in order
that I may receive fuller information as to happenings in
Australia. Up to the present time I cannot say that I have been
receiving very much that is definitely useful.

So far as the Commonwealth Council for Scientific & Industrial
Research is concerned, I already feel that I have arrived at a
very satisfactory position not only with Julius [18] and
Richardson [19] who are here, but also with Rivett. [20] Rivett
was good enough to write a very delightful letter a few weeks ago
telling me that he had regarded, with very considerable
misgivings, arrangements whereby I was to undertake liaison work
for the Commonwealth Council. The result, he was good enough to
say, of six months' experience had been entirely to alter his
point of view. A fairly satisfactory system of interchange of
information has already grown up between Rivett and myself and,
with the return of Julius and Richardson to Australia, I hope to
see the London liaison able to do really satisfactory work for
Australia. It is probably difficult to exaggerate the importance
of this work, because both through the Empire Marketing Board and
also through the Agricultural Research Institutions in Great
Britain, Australia has an immense amount to gain.

IMPERIAL AGRICULTURAL RESEARCH CONFERENCE

Nothing very important has occurred since I last wrote to you so
far as this Conference is concerned. We all went to Cambridge on
Friday and continued the meetings of the Specialised Committees at
Cambridge, enlivened by visits to the Agricultural Research
Institutes there. The two Special Committees on which I was
representing Australia finished their work at Cambridge and I am
enclosing a copy of the report of the Committee of Agricultural
Economics, which will be presented to the Plenary Sessions when
they are resumed in London next week. This, I think, is quite a
good report and will, I hope, lead to appropriate action.

On Monday last, both Julius and I left the Conference and went to
Leeds, where we had a full dress discussion with the Research folk
of Leeds University and with the British Woollen and Worsted
Research Association on cooperation between them and the
Commonwealth Council for Scientific & Industrial Research on
problems connected with wool production and woollen manufacture.

The Vice-Chancellor of Leeds University presided at the discussion
and I think we reached a satisfactory basis upon which definite
plans for cooperation can now be evolved.

20th October

EMPIRE MARKETING BOARD

I have just received a confidential statement as to the
commitments incurred by the Empire Marketing Board from the date
of its inception in May 1926 to September 30th 1927 and also a
statement of the actual disbursements to date.

The figures are distinctly interesting. On Research-The total
expenditure approved by the Secretary of State is 453,935, of
which only 63,238 has actually been disbursed.

The total Research commitments have been matched by contributions
of about 300,000 from other sources mostly upon the 50/50 basis.

On Publicity, the expenditure approved amounts to 488,300 but
this sum is intended to last until March 31st 1928. Of this amount
174,636 has actually been expended.

The Staff expenditure over the fifteen months has reached a total
of 25,648. The total expenditure which has, therefore, been
authorized up to date is 969,883 [21], of which 263,522 has
already been spent.

You will remember that the Empire Marketing Board only received
500,000 for the financial year 1926-27 and, although a nominal
1,000,000 was voted for 1927-28, 1 informed you in a private
letter that the Treasury had arranged to short pay by 600,000,
promising, however, to make this sum available later. The
financial statement shows that the Board's activities will not be
impaired by this Treasury action.

There is another way of looking at the statement that has been
issued, namely to add together the total amount of grants which
have been definitely authorised by the Board, but some of which
have not yet reached the stage at which authority for expenditure
has been necessary. On this basis I find that the total amount of
grants approved by the Board is 820,000. Of this total a sum of
307,000 may be regarded as being grants to Scientific
Institutions in the United Kingdom, in order to enable them to
develop their activities for Imperial purposes. This includes
grants for research into cold storage, to horticultural problems
and, in many other directions. What I would describe as grants for
purely Imperial purposes represent 37.5% of the research
expenditure so far approved in principle by the Board. I would,
however, point out that in almost all research work, with the
possible exception of the work on Refrigeration and Entomology,
the country in which the research is undertaken ought to be in a
position to derive the greatest amount of benefit from the work.

Therefore, although I think it fair to regard these grants as
being strictly for Imperial purposes, yet British agriculture
ought to derive perhaps a greater benefit than overseas
agriculture.

Having dealt with grants which are purely for Imperial purposes,
British agriculture has received the next largest benefit with a
total of 217,000, representing 26.7%. The very large grant of
40,000 a year for 5 years made to the British Ministry of
Agriculture for marketing research in aid of home grown produce
accounts for this large figure.

After Great Britain comes the Dependent Colonial Empire with
proposed grants amounting to 179,250, or 22%. Here again a large
grant of 22,000 a year for 5 years which has been made to assist
in the establishment of a Colonial Agricultural Research Service
largely accounts for this figure.

Among the Dominions, Australia comes easily first with grants
which total 83,875, or 10.3% of the total. The proposed grant to
the Tropical Research Station accounts for 50,000 of this amount.

After Australia comes Northern Ireland with 19,500, or 2.4%. Next
comes New Zealand with 15,333, or 1.9%.

Up to the present time no applications have been received from
South Africa or from India and only very small proposals from the
Irish Free State and Canada. It is, however, understood that, as a
result of the Imperial Agricultural Research Conference, Canada
certainly, and probably India, will submit applications. I
understand from the South African Delegates that it is probable
that they will make suggestions in the near future.

POLITICAL

The political situation here remains quiet, as Parliament is not
meeting until November.

Today's 'Times' announces that Baldwin [22] has appointed Ronald
McNeill [23] to the Cabinet with the office of Chancellor of the
Duchy of Lancaster in place of Robert Cecil.

The 'Times' has a rather trenchant leading article criticising the
Government for neglect of youth. I enclose a copy. There is a very
strong feeling that Baldwin is making a great mistake in sticking
to the whole of his Cabinet. I find in many quarters the strongest
discontent-for instance over the ministerial personnel associated
with the Board of Trade-Cunliffe-Lister [24] is certainly
unpopular in the House and is regarded as a serious disappointment
in business quarters. Of his two junior Ministers Arthur Michael
Samuel [25] has considerable ability largely spoilt, however, by
immense conceit, while Sir Burton Chadwick, the Parliamentary
Secretary of the Board of Trade, is everywhere regarded as a joke.

Among the younger Conservatives, there was a great desire that
Baldwin should have re-constructed his Cabinet by sending
CunliffeLister to the House of Lords and by bringing some of the
younger men into the Ministry. There are 4 Under-Secretaries who
the younger members of the Party feel ought to receive promotion.

I think in about the following order: Walter Elliot, Ormsby-Gore,
Major King [26] from the War Office and Sir Kingsley Wood from the
Ministry of Health.

Recent speeches made by Baldwin and Winston Churchill [27] show no
indication of the Government having decided to take any really
active line to deal with [the] trade depression. They have both
declared during the last month that British trade is looking up. A
careful examination of trade statistics generally fails to justify
this point of view for, although the figures for 1927 are
naturally somewhat better than 1926-when the whole trade of the
country was seriously affected by the coal stoppage yet they are
substantially worse than 1925 which was very far from being a good
year.

While there is nothing to excite one's admiration or any special
hopes, so far as the Tories are concerned, the position in the
Labour Party is, I understand, worse. I am told that MacDonald
[28] is almost desperate over the internecine feuds which rend the
Party. The recent Conference at Blackpool seems to have tried to
formulate a moderate policy which would be useful at the elections
but it is pretty generally felt that the proposal for a general
surtax of all unearned incomes of over 500 a year is likely to
damage the Party considerably with the electorate. Most people
agree that Great Britain is seriously over-taxed. The Labour
Party's proposal would increase the revenue from taxation by 85
millions a year.

It is difficult to form any opinion as to the prospects of the
Liberals but I think the general current view among well informed
people is that so long as Lloyd George [29] is the recognised
leader of the Liberal Party they cannot hope for very much
assistance from the constituencies. Six months ago I think it was
generally anticipated that, if an election took place this Autumn,
the result would have been to have returned no Party to Parliament
with a working majority. Opinion is now, however, tending towards
the idea that if the Government does nothing specially foolish
within the next 2 years, it may be able to scrape back with a
small working majority.

As you know better than anybody it is quite impossible to forecast
electoral chances 2 years ahead but possibly you will be
interested in the current trends of political opinion.

BRITISH AND AUSTRALIAN WAGES

In my last letter I sent you a statement on the gap between real
wages in Great Britain and in Australia. Today's 'Times' publishes
an interesting summary of a report by the Ministry of Labour on
wages in Great Britain. [30] I am enclosing the cutting which you
may feel inclined to pass on to Wickens.

Yours sincerely,
F. L. MCDOUGALL
P.S. I enclose a very interesting leading article from the
'Financial News' dealing with the report of my Committee upon
Agricultural Economics. I have marked the parts most worthy of
your attention.