My dear Prime Minister,

SHEFFIELD CHAMBER OF COMMERCE

On Monday last I was the guest of the Sheffield Chamber of
Commerce at their quarterly luncheon at which there were about 200
members present. I took the opportunity of making the suggestion
that the Chambers of Commerce ought immediately to start to
consider the economic side of the next Imperial Conference and
that, through the Association of British Chambers of Commerce, the
views both of the Association and of such important individual
Chambers as those of Manchester, Sheffield, Leeds and Glasgow,
should be brought to the attention first of H.M.G. in Great
Britain and then to the H.M. other Governments through the medium
of the Imperial Conference.

I enclose two or three newspaper reports of my address.

IMPERIAL CONFERENCE

By a curious coincidence on my return to London on Tuesday
morning, I found a letter from Casey [1] enclosing a copy of your
cable to the Secretary of State [2] on the subject of the date of
the next Imperial Conference. Needless to say I am very heartily
in agreement with the desirability of having the next meeting of
the Imperial Conference as early as possible. I cannot see any
real reason why the British Government should object to the
Conference being held in the Autumn of 1929. It is true that the
General Election will take place in June of 1929 but the
preparatory work for the Conference is a question chiefly for the
Civil Servant, and Ministers give so little attention to the
problems that they can hardly make the Elections an excuse for a
postponement to 1930, except on the basis of a possible change of
Government. [3]

Supposing such a change took place, it might be a matter of really
vital importance to have an Imperial Conference before a Liberal-
Labour Coalition brought in their first Budget. I shall try and
arrange to see Amery in the near future and have a talk with him.

After reading your cable, I was more than ever convinced of the
desirability of making the next Conference one in which we should
go back to the 1923 precedent and have a separate Imperial
Economic Conference sitting alongside the Imperial Conference.

Such an arrangement would, I think, facilitate an early meeting
and, just as in 1923 the whole of the public attention was
rivetted on the economic issues, so in 1929 or 1930 the same thing
would undoubtedly happen. This would tend to check any desire
which might manifest itself towards digging up the roots of the
1926 political decisions to see how they are growing.

In one portion of your cable you refer to the possibility of
Australia being forced to negotiate Trade Treaties with Foreign
Powers, which might involve some loss of preferential advantage to
Great Britain. I can, of course, see the possibility of what you
suggest happening but I am not at all clear as to how Australia
could gain any very substantial practical advantages through such
arrangements, unless certain foreign countries were induced, by
the offer of specially favorable terms, considerably to alter
their economic policy. I should have thought that there was much
more chance of getting Great Britain to give more favorable
treatment to sugar and wine than to obtain a position in which the
United States of America would reduce its tariff on wool imports
or that European countries would give more advantageous conditions
for our meat, dairy produce or other agricultural commodities.

The operation of the 'Most-favored-Nation' clause, which I suppose
would have to take effect in the event of Trade Treaties with
Foreign Countries, so decreases the value of any special
concessions that we might make as to render Trade Treaties with
Foreign Countries of far less significance than preferential
arrangements between Empire Countries. [4] I do most emphatically
agree with the view expressed in your cable that the action of
South Africa in their Trade Treaty with Germany creates a
situation which demands the immediate attention of an Imperial
Conference.

WOOLLEN & WORSTED RESEARCH

I took the opportunity of my presence in Yorkshire on Monday to
visit the Woollen & Worsted Research Institute at Leeds and I
spent the evening at the Institute discussing research projects
with the Director [5], a most capable and energetic man who is
making this Institution one of the really firstclass research
shows in Great Britain.

Apart from a number of interesting questions as regards wool, the
details of which I will not worry you with, the most interesting
feature there was the evolution of new machinery. As a result of
the examination of existing spinning and carding machinery by
Physicists who employ the cinematograph and other devices actually
to ascertain what each part of existing machinery actually does,
the Institute has been able to devise new types. The most
important type is a new spinning machine for woollen yarns. This
new machine will do 2 1/2 times as much work per spindle employed
as existing machinery. it will produce a better yarn and it is
estimated that, with the new machine, one girl will be able to
produce about twice as much yarn as machinery at present attended
by one man and one youth. Similar though not quite so dramatic
improvements in carding machinery are being evolved.

I particularly mentioned this advance in spinning machinery for
two reasons: firstly, because there can be no doubt that it is an
overwhelming example of the value of the application of science to
industry and, secondly, because of the great economic significance
of the invention. The invention has been patented by the Research
Institute, who have licensed Messrs. Platt Brothers, the world
famous manufacturers of textile machinery, to manufacture. The
machine will be on the market next February and wherever it is
generally installed, it should reduce the cost of the production
of woollen yarns by some very striking figure. I suggest that an
example of this sort emphasizes the need for economic research,
which you are proposing to establish in Australia, being very
closely linked with scientific research and reinforces my view
that, as a part of the new economic research in Australia,
comparative studies of industries in Great Britain and, where
necessary, on the Continent, should be undertaken by my office on
the basis of collaboration between the Economics Graduate [6] and
my Scientific Assistant. [7]

In this case it seems clear that the installation of this new
machinery will so reduce the cost of producing woollen yarns as
seriously to affect the question of the amount of protection
required by the Australian industry. I certainly feel that
information as to the evolution of labour saving devices will be
necessary for the Body which makes the Tariff recommendations to
the Commonwealth Parliament.

Yours sincerely,
F. L. MCDOUGALL