My dear Prime Minister,

IMPERIAL ECONOMIC COMMITTEE

I enclose a copy of the Eighth report of the Imperial Economic
Committee. [1] On the whole I think you will probably agree that
it is a useful and valuable document. The report received a very
considerable amount of publicity and comment in this country and I
enclose copies of the 'Times' summary and leading articles from
the 'Times' [2], the 'Times Trade Supplement' and from the
'Yorkshire Post'. I would particularly like you just to notice the
amusing opening of the leading article in the 'Yorkshire Post'.

Arrangements have been made for a very wide distribution of this
report and as there has been, and probably still is, considerable
confusion in peoples' minds as to the relation of the Imperial
Economic Committee to the Empire Marketing Board, this report
should do a great deal to make the proper distinction.

The Imperial Economic Committee is making considerable progress
with its various enquiries. The examination of witnesses on
Tobacco has now approached a conclusion. The Timber enquiry has
been relegated to a Sub-Committee, of which I am Chairman. I have
quite a strong team consisting of Sir George Courthope [3], Bart.,
the Chairman of the Agricultural Committee in the House of Commons
and a member of the Forestry Commission, together with R. L.

Robinson, the technical Forestry Commissioner, Mr. Harrison
Watson, the Trade Commissioner for Canada, Sir Peter Clutterbuck
[4], representing India, and Sir Gilbert Grindle [5], K.C.M.G.,
representing the Colonial Empire. We have not a very large amount
of work before us but I am determined to do everything that I can
to get through with the work in order that the Timber Report may
be available for presentation before the Empire Forestry
Conference gets to work in Australia. [6]

The influence of Chadwick [7] upon Mackinder [8] has been most
excellent and as I reported to you in a recent letter, Mackinder
is now behaving better in all ways than at any stage during the
three years in which the Committee has been functioning.

The Trade Survey of Agricultural Machinery is presenting
unexpected difficulties, owing to the hopeless difference in the
classification of agricultural machinery among the various
producing and importing countries. We are doing everything
possible to straighten out this tangle and hope to be able to
present a really intelligent survey. Both Chadwick and myself
attach the very greatest importance to making this first trial
preliminary survey really good and, as you were responsible for
the proposal that the Imperial Economic Committee should be
trusted with this series of world trade surveys, I am sure you
will also feel that no effort should be spared to make it a really
good piece of work.

The Sub-Committee dealing with Agricultural Machinery consists of
Mackinder, F. N. Blundell [9] M.P., myself and, of course,
Chadwick.

The other day Mackinder, Chadwick and I had a talk about how we
were finally to frame the reports. Under the new Standing Orders,
reports come to the Main Committee for a third reading debate in a
quite tentative form. Mackinder and Chadwick both feel that it
will be necessary to have something in the way of a Standing
Drafting Committee to get the proper Imperial aspect suitably
expressed in each report. They both also felt that it would be
essential that the Drafting Sub-Committee should, in each case,
consist of the Chairman, Chadwick, the Chairman of the Sub-
Committee presenting the report, and myself. In view of the very
heavy amount of work that I have to undertake, I suggested that
they should very carefully consider whether there was not some
other Dominion representative who could serve on the final
Drafting Committees but they were both most insistent and, after
consideration, I was reluctantly forced to agree that, for this
particular type of work, there was no other overseas
representative who could usefully function. It is rather a sad
comment on the type of man whom the other Dominions have appointed
both to the Imperial Economic Committee and to the Empire
Marketing Board, that experience has shown on both Bodies that,
when the general Dominion point of view needs to be taken into
careful consideration, they have to turn to me. [10]

EMPIRE MARKETING BOARD

At the last meeting of the Empire Marketing Board, Amery [11] made
a clear and unequivocal statement about the attitude to the Empire
Marketing Board's funds. He explained that there was something
like 350,000 unexpended from previous votes and that the Treasury
had, therefore, reasonably suggested that not more than 500,000
should be put on the estimates for the Empire Marketing Board
purposes during the coming financial year, making a total
available sum of 850,000. He said that the estimates would be so
framed as to make it perfectly clear that if the E.M.B. actually
needed more money than this, a supplementary vote would be given
and that, ultimately, the fund would receive the full 1,000,000
that was due to it for the coming financial year.

I told Amery that I thought it was very desirable, when the vote
came up, he should take care to see that the statement was made in
so clear a way that there could be no misunderstanding and that
steps should be taken to see that the representatives of the
overseas press cabled clear messages on the subject to the various
Dominions.

The general work of the Empire Marketing Board is proceeding quite
vigorously but calls for no special comment.

THE BRITISH MOTOR TRADE

I am enclosing two letters, one which I received from Sir William
Clark, the Comptroller of the Department of Overseas Trade, and my
reply to him. I hope that you will read both letters. I am sending
copies to Gepp. [12]

While on this subject of motor cars, I think you will be
interested in the extract which I am enclosing, taken from a
recent issue of the 'Economist'. [13] I regard the figures quoted
as a complete justification of the policy of safeguarding which
this country has adopted since the war.

INTERNATIONAL RATIONALISATION AND GREAT BRITAIN

I have been discussing with Casey [14] the important article from
Seydoux [15], which appeared in the 'Times' of March 15th. I
understand that Casey is forwarding the cuttings on this subject
to you.

It appears to me that the 'Times' in discussing Seydoux' article
missed what is probably the most definite reason why Great Britain
has not been more willing to associate herself with European
International cartels. [16] That reason is, I think, the growing
realisation in this country, which is slowly spreading even to
such remote quarters as the City of London and the Treasury, that
the development of the British Empire and the special position of
Great Britain in Empire markets is of even greater importance to
Great Britain than an active part in the restoration of Europe. A
memorandum is being prepared which I hope to be able to forward to
you by the next mail on the position of Great Britain in relation
to world trade. This will, I hope, show, in a clearer way than
anything that has been published in this country up to date, the
way in which Great Britain has been forced to take second place to
the United States of America in the foreign markets of the world
and also how, in Empire markets, Great Britain has retained her
predominant position.

Yours sincerely,
F. L. MCDOUGALL