My dear Prime Minister,

AUSTRALIAN TARIFF

I think you will be interested in the enclosed cutting from this
week's 'Economist' on the Australian tariff changes. You will
notice that they refer favorably to the article in the 'Times', of
which I sent you a copy last week. [1] Had Layton [2] known that
it was an effort of mine or had it even been marked 'From an
Australian Correspondent', I am quite sure the comments would have
been quite different.

On Friday last the High Commissioner [3] gave the first of what I
rather hope will prove to be a series of very small lunches at
Australia House. His guests were Mr. Hacking [4], the new
Parliamentary Secretary to the Department of Overseas Trade, Sir
Horace Hamilton, the new permanent head of the Board of Trade, and
Sir William Clark, the permanent head of the Department of
Overseas Trade. Trumble [5] and myself were also there. Naturally
the conversation turned on Anglo-Australian trade and particularly
on the tariff. It was very interesting to find that these three
men, who are all in a position of very considerable authority so
far as trade matters are concerned, were somewhat sceptical as to
how far the preferential benefits under the new changes would
really assist Great Britain but all convinced that all the items
which may be detrimental would have a serious result.

Hacking himself is not a free trader and during the conversation
at the lunch I think he became much more convinced of the
favourable result of the tariff. At any rate two days later he
gave an entirely satisfactory answer to a question in the House of
Commons, of which I enclose a copy. [6]

I feel sure that the little luncheon was very useful and I hope
that the High Commissioner will make a regular feature of a small
lunch of this sort about once a fortnight, to which leading people
from Whitehall or from the business community can be brought into
touch with him and with such people as Collins [7] and I.

LABOUR PARTY

During last week there have been two very interesting happenings
in the Labour Party. Firstly, the election of the Executive which,
as you probably remember, acts as the Opposition Front Bench. You
will be interested to notice that Tom Johnston [8] Comes fourth in
the list and that the three members of the Labour Party who are
serving on the Empire Marketing Board or on its two Main
Committees, namely J. H. Thomas [9], W. Graham [10] and Tom
Johnston, are all well placed on the Labour Front Bench.

Secondly, an amusing situation has arisen in regard to the Labour
Party's Surtax Proposals. The Party Conference at Blackpool
insisted that the Surtax was to be used for improving social
services and to enable taxation of foodstuffs to be abolished. Mr.

Snowden [11] for weeks remained silent on the Surtax but finally
having been publicly challenged by Maxton [12] to state his views
on the subject, has declared
(a) that the estimate of 80,000,000 from the Surtax is grossly
exaggerated.

(b) that the whole of the proceeds of the tax must be used for
debt redemption.

With these two provisos, he is in favour of the Surtax. [13] The
'Times' note [14] on the Labour Party Meeting, of which I enclose
a copy, states that Mr. Snowden carried off this attitude quite
successfully but other papers report a very stormy meeting.

Whatever actually happened in the meeting there can be no doubt
that Snowden and MacDonald [15] have diametrically opposite views
as to how the proceeds of the proposed Surtax should be utilised.

BRITISH AGRICULTURE

In my last letter I mentioned a speech by a Mr. James Lennox on
the subject of the importance of British agriculture cooperating
with overseas agriculture. I am now enclosing a copy of his speech
with the leading article in the Farming paper in which it was
printed.

One of the great difficulties of the Empire Marketing Board is to
convince the British farmer that he is getting equal benefit with
the overseas farmer from the grants made by the Board. Mr. F. N.

Blundell [16] M.P., one of my colleagues on the Imperial Economic
Committee, asked a question on this subject in the House of
Commons and received a very important reply, of which I enclose a
copy. The reply is detailed and you may find it useful for
reference. [17]

'ENCYCLOPAEDIA BRITANNICA'

You may remember that two years ago I wrote the article for the
'Encyclopaedia Britannica' on Empire Trade and Commerce. They have
asked me to give them a revised and extended article for their new
edition. This has now been completed and I am forwarding a copy to
you. I do not suggest for a moment that you should read it,
because it is almost necessarily rather dry, but you may find it
useful to have by you for reference as it does contain a very
considerable amount of information which could not easily be
obtained elsewhere.

'FINANCIAL NEWS' ARTICLE

I have already informed you of the very great interest that the
Rt. Hon. Sir Edward Hilton Young [18] is now displaying in Empire
trade and I have sent you one or two articles that I have written
at his request for the 'Financial News'. I am enclosing a further
article which you may find of some interest.

THE INDIAN TARIFF BOARD

At the Society of Arts last week Sir David Chadwick [19] gave a
very interesting talk on the work of the Indian Tariff Board. I am
enclosing the 'Financial Times' account of his speech and Chadwick
has promised to let me have the full text as soon as it is
printed. It is rather interesting in the light of Australian
experience to note that the Indian Tariff Board, after
recommending a bounty and a tariff on iron and steel, has been
able, at the end of three years, to recommend the abolition of the
bounty and the reduction of the duty. Of course labour conditions
in India must render this comparatively easy but it seems obvious
that the industry has applied modern large scale Organisation to
its needs with markedly beneficial results.

SIMPLIFIED PRACTICE

While Julius [20] has been over here, he has had a series of
interviews with various people on the subject of standardisation
and simplification. He has created a very considerable amount of
interest with the result that Cunliffe-Lister [21] is calling a
meeting for Monday next at the Board of Trade at which he will
himself preside and which Lord Balfour [22] is expected to attend.

The Board of Trade, the Department of Overseas Trade, the
Department of Scientific & Industrial Research, the National
Physical Laboratory and two or three of the great employers, such
as Lord Weir [23], will be present. On the Australian side Julius,
Professor Madsen [24] and I will be present.

I very much hope that this conference may do some substantial
amount of good and follow up the lead which you gave here a year
ago. [25]

Yours sincerely,
F. L. MCDOUGALL