My dear Prime Minister,

AUSTRALIAN TARIFF CHANGES

In my last letter I told you that I was arranging with the 'Times'
to explain the effect of the most recent Australian tariff changes
on British trade. I enclose a copy of a brief article which I
wrote for the 'Times Trade Supplement' and which appeared last
Friday as a foreword to the publication in that journal of the
detailed proposed tariff schedule.

On Wednesday the 'Times' published my long article [1], of which I
enclose 2 copies. I hope that you will have time to read this. I
have attempted to put the case as clearly and as impartially as
possible and I was very glad that the 'Times' found themselves
able to print the article 'From a Correspondent' without adding
the qualifying words 'From an Australian Correspondent'. I think
from this it can be assumed that the Times regarded the article as
being sufficiently impartial to be a just estimate of the probable
effects of the tariff.

THE TARIFF AND BRITISH IRON & STEEL INDUSTRIES

Sir William Larke, Director of the British Iron & Steel
Federation, wrote asking for an appointment in order to discuss
some of the implications of the new tariff changes. Having
received this notification, I carefully examined the position and
found it so interesting that I prepared a memorandum shewing the
trend of British exports of iron and steel products to Australia
in comparison with exports to the whole of the rest of the world.

I am enclosing the memorandum which I prepared and which I am sure
will interest you quite considerably.

Armed with this document, I was able to convince Sir William Larke
of the very great assistance which the preferential clauses of the
Australian tariff had been in recent years to his industry. I may
say that he was frankly surprised at the results. I am sending
copies of this memorandum to a number of people here and hope that
it will have a sound educational effect.

EMPIRE AGRICULTURE

Walter Elliot [2] sent me the other day a very interesting report
of a speech by a man called Lennox [3], one of the recognised
leaders of the Scottish Farming community. The article was so much
in the direction in which I have been thinking that I wrote to
Lennox to tell him how much I appreciated his speech and to
suggest the possibility of a meeting. I have received a reply from
him which I feel sure will interest you because he attributes his
own conversion to the realisation and the importance of Overseas
and Home agriculture working together to your speech at the
Farmers' Union Dinner in London in 1923. I hope to follow up this
suggestion coming from British agriculture, because I feel
perfectly certain that it is essential that we should find means
whereby the case for the development of Empire agriculture as a
whole may be put to industrial Britain. It is sickening to think
that the Conservative Government has not the brains or the
initiative to do it themselves but I have reached a stage of
almost despair so far as the present Government is concerned.

ENTOMOLOGY

At yesterday's full meeting of the Empire Marketing Board, Ormsby-
Gore [4] being in the Chair during Amery's [5] absence, Walter
Elliot brought forward the proposal of the E. M. B. to cooperate
with the Commonwealth Government in establishing large scale
entomological research in Australia. [6]

Ormsby-Gore very warmly supported the proposal and I explained to
the Board the very large way in which Australia was developing her
scientific research organisations and how in that development the
material and technical support of the British Government and of
British science would be of the very greatest possible value.

There was some discussion but it was decided that, although no
definite action would be taken by the Board until the formal
application was received from the Commonwealth Council for
Scientific & Industrial Research, yet there was no obstacle to the
Board approving a grant of 25,000 in capital and 10,000 per
annum. It was, however, to be understood that the 10,000 per
annum maintenance grant should only be for a period of five years
with the definite understanding that at the end of that time the
Board's contribution should be reviewed and probably substantially
decreased, if not discontinued.

I am cabling Rivett [7] to this effect today and asking him to see
that you are notified.

AUSTRALIA AND GREAT BRITAIN

In view of the immense importance to Australia and also to Great
Britain that there should be a solid basis of cooperation between
Great Britain and Australia in Australian development, it seems to
me that it is urgently necessary to take every possible step that
may be calculated to make the British people understand what
Australia means and how the development of Australia would help
them. One of our greatest difficulties is that, whenever there are
tariff changes or indeed whenever the Australian tariff is
mentioned, the industries that feel that they are damaged by the
tariff invariably become vocal while those industries who receive
benefits do not say anything. As a result there can be no possible
doubt in spite of all the work that has been done, that the
average citizen in so far as he has any thoughts on the subject at
all still feels that British industry is, on the whole,
detrimentally affected by the Australian tariff.

You and I of course know that this is not the case and that in
fact on balance the Australian tariff is a help and not a
hindrance to British trade. To make this clear to Great Britain
is, however, a work which must be continuously undertaken and the
most careful thought is required on how best to present the case.

It has occurred to me recently that a good deal of advantage might
accrue if a very brief book on British-Australian cooperation in
Australia's development could be written and published at a price
of say not more than 2/6d. My idea of the book would be that it
should give a brief description of Australia and her possibilities
for development with chief emphasis on agricultural development
but also dealing, to a certain extent, with coal, iron and steel
and such secondary industries as woollens. It should then show the
importance of Australia as a market particularly by comparison
with other countries and point out the way in which Australian
development both of the primary and also of selected secondary
industries would encourage and expand British trade to Australia.

It should also discuss pretty fully the effect of Australia's
economic policy on British trade, quite frankly shewing the way in
which Australian industries have limited the export of certain
types of British goods but showing how, on the general volume of
trade, the tariff has been a source of real help to Great Britain.

If such a book was to be prepared, it would seem to me necessary
that the Commonwealth Government should be prepared to purchase a
considerable number of copies for distribution in this country in
order that the book might be issued at a sufficiently cheap price
to make it possible to secure a wide circulation. I am only
mentioning this in today's letter in order to put it in your mind
but I shall hope, in the course of the next two or three weeks, to
get out the headings for such a book and to send it to you for
your consideration with the idea that, if you approve, I might try
to find time somehow or other to tackle it. [8]

Later

With reference to Entomology, I have not cabled Rivett as
suggested in the earlier part of this letter. I have just sent a
confidential cable to you with a request that you would kindly
inform Rivett of the substance of its contents. As you had cabled
to the British Government on the subject, it appeared to me, on
second thoughts, more appropriate to send the cable to you than to
Dr. Rivett. [9]

Yours sincerely,
F. L. MCDOUGALL