My dear Prime Minister,

IMPERIAL CONFERENCE

Last week Casey [1] sent me confidentially a copy of your cable to
the British Government on the subject of the date of the next
Imperial Conference. I was extremely interested to see your views
so clearly set out and, after reading it carefully, I decided to
draft a memorandum on the subject to send to you and to Amery. [2]
I enclose herewith a copy of this memorandum.

Yesterday I had half-an-hour with Amery. He started by telling me
that I had somewhat underestimated the importance and significance
of the political and defence questions which would have to be
discussed at the next Imperial Conference but he entirely agreed
with the point of view expressed in my memorandum that it would be
undesirable to give wide publicity to these discussions.

Amery went on to say that he most emphatically agreed with you
that the main issue of the next Conference ought to be economic
but he was by no means sure that a separate Imperial Economic
Conference sitting alongside the Imperial Conference was the most
convenient way of arranging matters. He did not, however, give any
very interesting reasons to indicate why he did not think that an
Imperial Economic Conference was suitable.

I reminded him of the immense publicity which the Imperial
Economic Conference of 1923 obtained and he agreed but said that
he thought the same results could be achieved for the economic
side of an Imperial Conference without having a separate Imperial
Economic Conference.

Amery then proceeded to deal with the question of the date of the
Imperial Conference and explained that there were two factors that
made it extremely difficult for any decision to be made at the
present moment. The first was the possible death of the King. [3]
If this unhappy event took place, everything would be upset and he
thought that the probability would be that efforts would be made
to get the Dominion Prime Ministers to attend the Coronation, with
the idea of holding an Imperial Conference immediately afterwards.

The other point was that, although the Government intended to make
the most resolute efforts to have their Election in June, yet the
Government were not sure that they would be able to catch the June
tide. If they failed, it was regarded as impossible to hold the
Election in July, August or September, owing to the interference
with harvest and, under those circumstances, the General Election
would have to take place in October.

Amery said that he quite appreciated my point as regards the
desirability of an Imperial Conference being held before Philip
Snowden [4] had an opportunity of introducing a Budget. He thought
that if the Government came to the conclusion that it could hold
the Imperial Conference in October 1929, it would be necessary to
secure an agreement of the Opposition. I suggested that it was
really to the advantage of the Opposition itself to have the
Imperial Conference before Snowden's Budget. In the event of the
Tories losing the Election, Philip Snowden would undoubtedly be
Chancellor and if he introduced a Budget before the Imperial
Conference, he would be certain to try to decrease the value of
preferences. He would experience very considerable opposition
inside his own Party before he was allowed to formulate such a
policy but supposing he succeeded and supposing within a month or
two of the Budget an Imperial Conference met, the atmosphere which
would be created against his possible anti-preference policy would
be so vigorous as to prove extremely embarrassing to any Labour
Government.

I suggested to Amery that that point of view might well be put
privately to J. H. Thomas [5], William Graham [6] and Tom
Johnston. [7] Amery then talked about some of the subjects which
an Imperial Conference might deal with. He said that as regards
Tariff Preference, a very great deal depended upon the nature of
the pledges which Baldwin [8] gave during the Election Campaign in
regard to food taxes. He was, unfortunately, only too aware that
to raise that issue in Cabinet at the present moment would only
lead the Cabinet to insisting upon much more definite pledges than
he considered necessary. He very much hoped that the pledges would
be of such a nature as to allow, at least, some re-arrangement of
food taxes so that the taxes on, say, tea could be diminished and
taxes to an equivalent amount on some other produce which would
have much more preferential importance could be adopted.

Amery went on to say that he thought that the Imperial Conference
ought to agree to an increase in the powers of the Imperial
Economic Committee and he proceeded to talk about the possibility
of inducing the Dominions to start something equivalent to the
Empire Marketing Board, or, alternatively, to get them to join in
the work of the existing Empire Marketing Board and agree to the
extension of its operations to the advertising of Empire produce
in the Dominions.

I told him that I thought that was a subject which would need very
careful consideration because I was by no means sure that the time
was ripe for such a suggestion. I very strongly urged on Amery
that whatever date might be adopted for the Imperial Conference,
it was eminently desirable that an immediate action should be
taken in regard to the preparation of documentation. I pointed out
that, in the past, the economic side of the Imperial Conference
had suffered very severely from there being no satisfactory
documentation and that the members of the Imperial Conference
received far less information to help them in their economic
discussions than did members of such a body as the Economic
Consultative Committee of the League of Nations.

Amery agreed to go very carefully into this question with the
President of the Board of Trade. [9] He asked me to make a point
of seeing Sir Horace Hamilton, the Permanent Head of the Board of
Trade, in order to try and get his agreement before Amery took up
the matter with Cunliffe-Lister.

After this interview with Amery, I asked Casey to add to a cable
that he was sending to you some information on the points
discussed.

I am proposing from now on to devote as much time as I can
possibly arrange to the preparation of information for the next
Imperial Conference. I have already made a very small start with
some notes on certain items which I am submitting for your
consideration, with the idea of their inclusion in the Agenda.

This first set of notes is included herewith. I hope from time to
time during the next couple of months to send further suggestions
in regard to the Agenda. I very much hope, however, that you will
be good enough to let me know pretty clearly what you have in your
mind and what are the main issues that you desire to stress. The
earlier that I could have the information of this sort, the more
thorough I could make my investigation of the subjects in order
that really solid and useful material may be prepared for your use
when the Conference occurs,
Apart from the sort of material that I am proposing to send to
you, I am starting to have a survey made of the value of Empire
trade to all the more important British industries. I shall do
this in such a form as to allow of the figures being brought up to
date and hope, before the Conference occurs, to have in this
office a pretty complete file shewing the significance of the
Empire as a market and also of Australia as a market to each
important British industry.

I am also obtaining from the principal Chambers of Commerce a list
of the chief industries carried out in their areas so that if, as
I very much hope, you are able to make another tour through the
Provinces, I shall have collected the necessary information about
their industries which is so useful as a basis for speeches.

In recounting the course of my discussion with Amery, I omitted to
mention that Amery had said that he had been giving very serious
consideration to the suggestion in your cable that it might be
necessary for Australia to propose direct negotiations with Great
Britain. He said that he was by no means sure that the time might
not arrive when there would be considerable advantages in a direct
trade treaty between Great Britain and one of the Dominions, but
went on to say that he thought in any Inter-Imperial trade
treaties it would be necessary to have an Imperial Most-Favoured-
Nation Clause so that any concessions given by Great Britain to,
say, Australia were also given to the rest of the Empire.

It seems to me that the idea of an Imperial Most-Favoured-Nation
Clause rather detracts from the desirability of trade negotiations
between Australia and Great Britain, especially as Australia's
policy in regard to Preference has been only to extend a
preference in Australia to other Dominions on the basis of
reciprocal agreements.

Yours sincerely,
F. L. MCDOUGALL
[Handwritten postscript]

I am afraid the English of the Memo on the Imp. Econ. Conf. is
very rough but I have not had an opportunity of correcting the
dictated draft.