My dear Prime Minister,

The last letter I received from you was dated the 27th August. I
of course recognise that since that date you have been faced with
a General Election campaign, with all the troubles and worries of
Cabinet reconstruction and by some awkward political crises.

Therefore, although I have looked forward to receiving letters
from you, I have not done so with any confident expectation until
the last two or three weeks. [1] I am sure that you are aware that
I shall not misinterpret the reasons which preclude you from
writing and that you also realise how useful it is to me to
receive from time to time your personal reactions on some of the
points which I write about.

I have been wondering whether you would think that a useful
purpose would be served if I was to prepare a report on the work
of the Imperial Economic Committee and on the Empire Marketing
Board, either jointly or separately. The idea that occurs to me is
that such report or reports written for Australian consumption
might be quite useful and that you might think it worth while to
consider the issue as a Parliamentary paper. I should be glad to
know whether you would think such action desirable. [2]

BRITISH ECONOMIC MISSION

On Monday night I dined with the Malcolms [3] and was most
delighted to find how enthusiastically they had reacted to their
Australian visit. Although Malcolm appeared to be somewhat
horrified at certain of our economic experiments, his whole
attitude to Australia and to things Australian was so
extraordinarily pleasant and cordial.

I told him that my only serious criticism of the report [4] was
that the Mission had not indicated, in two or three paragraphs,
the inherent possibilities of the intensive development which they
so strongly advocated in contra-distinction to extensive
development.

Malcolm agreed that it would have improved the report had
something of this sort been done but when he told me of the
pressure under which the report was written, I can quite
understand this omission.

I have been asked by the 'Times Trade Supplement' to write an
unsigned comment on the report and I enclose a copy of what I have
written herewith. I would particularly draw your attention to the
last three pages. I hope that you will agree that it is distinctly
useful to draw the attention of financial and commercial people to
the enormous scope for intensive development in Australia.

COMMERCIAL TREATIES AND AUSTRALIAN TRADE

In one of my letters of the 14th February I wrote to you on this
subject [5] and I enclosed one copy of a statement prepared for me
by the Commercial Relations Branch of the Board of Trade. I am now
enclosing a second copy, which you may feel disposed to send to
the Minister for Trade & Customs. [6] I have sent two copies to
Casey [7], one of which he will be forwarding to Henderson. [8]

EMPIRE MARKETING BOARD

Tomorrow it has been arranged that I should address the Imperial
Affairs Committee of the Conservative Party on the way in which
the Dominions have reacted to the establishment of the Empire
Marketing Board. These addresses in the House of Commons are
sometimes useful and sometimes pretty futile. It all depends on
whether the subject matter under discussion in the Chamber itself
is of interest or not. If the House is dull, one may get an
audience of 50 or 60 but if interesting affairs are afoot in the
Chamber, one's audience may be as small as 10. I feel, however,
that it would be a very good thing to create an opportunity
whereby Members of Parliament, before going to the Country at the
General Election, should realise the importance of the Empire
Marketing Board to the economic relations between Great Britain
and the Dominions and I, therefore, arranged with the Empire
Marketing Board to prepare a summary of extracts of Overseas
opinions on the Board's work. I will forward a copy of this to you
by the next mail.

I shall try and arrange to address the Labour Commonwealth Group
on the same subject and thus, through the medium of these two
Groups, to arrange with the Secretary of each Group to circulate
the paper among most of the Members of the two Groups which
include some 300 Members of Parliament. [9]

In my letter of the 21st February I referred to the proposal of
the International Institute of Agriculture at Rome to establish an
Agricultural Economics Committee and I informed you that I should
be discussing this matter with Mr. R. J. Thompson [10], the
British representative on the Permanent Committee of the
Institute.

This talk occurred at lunchtime today and I found that Thompson's
views are very closely similar to those which I expressed in my
last letter to you. He believes that, as it was decided at the
General Assembly of the Institute to concentrate the work of the
Institute upon economic and statistical questions, a really useful
purpose would be served by maintaining an Agricultural Economics
Committee for a couple of years at least.

ROME AND GENEVA

The next meeting of the Economic Consultative Committee of the
League of Nations will be held on the 6th May. The Consultative
Committee is meeting only once a year but, as its function is to
review the whole of the work of the Economic Organization of the
League, it must be regarded as being of very substantial
importance.

So far as agricultural and International economics are concerned,
there are two opposed schools of thought which manifest themselves
at Geneva and at Rome. The tendency of the Scandinavian and
Central European States, including Germany, is towards making Rome
the agricultural organ of the League of Nations, provided Rome is
prepared to be truly International, and, failing the reform of
Rome, to transfer the major activities of the International
Institute at Rome to Geneva. The other school which includes
France, Spain, of course Italy and particularly Argentina, are for
increasing the status of Rome. France and Italy are by no means
opposed to Rome being recognised as the Agricultural Organ of the
League of Nations provided the effective autonomy of Rome is not
impaired. Argentine, being somewhat hostile to the League of
Nations, is opposed to any direct association between Rome and
Geneva. Belgium I think is pro-Geneva. The position of the United
States of America is peculiar in that it states that it is
prepared to support Rome and does not desire to see Rome and
Geneva more closely associated but in point of fact has, however,
practically withdrawn its financial support owing to its
irritation at the marked pro-Italian policy of the International
Institute of Agriculture at Rome. The attitude of the British
Government is not markedly pro-Rome or pro-Geneva, although with a
tendency towards supporting the Geneva point of view.

There is no doubt that the British authorities are distinctly
sympathetic to the American attitude of dissatisfaction with the
way in which affairs have been managed in Rome but there is a
decided feeling that the Americans have not played their cards at
all skilfully if they really desired to bring about reform.

I should be particularly glad if you would give me some indication
of the attitude which the Commonwealth Government would desire me
to take in regard to these matters. I believe I have already made
it clear that, in my judgment, it would be as well to throw what
influence we possess into the scale of attempting to induce Rome
to become a more efficient organization and that, provided there
were definite signs of such an improvement, to agree to the closer
association of Rome and Geneva.

I am clearly aware of the misgivings which you entertain in regard
to the economic activities of the League and I shall, of course,
do everything I can to assist to steer the Economic Organization
of the League into useful rather than dangerous channels. I do not
think that it would be possible for Australia to bring about a
drastic curtailment of the League's economic activities and I
therefore feel that we should display a sufficient interest so
that we can exert a useful influence and prevent the League being
captured by the economic doctrinaire and thus become a platform
for the British free traders. If the League is to perform useful
functions in regard to statistics and intelligent information, for
which its central position peculiarly fits it, it seems most
desirable that it should be concerned not only with commerce and
with industry but also with agriculture. This I feel strongly
about, because an Economic Organization, exerting considerable
influence in the world, which is entirely divorced from the
consideration of agricultural problems, will certainly take a lop-
sided view and, from the point of view of a country such as
Australia, would have its utility seriously curtailed. In spite,
however, of this definite feeling that Geneva ought to be
interested in agriculture, I should doubt the wisdom, at the
present stage, of increasing the size and therefore the status of
the Economic staff at Geneva and would prefer to see Rome reformed
and acting as the Agricultural Organ of the League with its work
subject to review by the Economic Consultative Committee rather
than to scrap Rome and to build up a new wing to the Geneva
Organization.

These questions may, or may not, come up for discussion at the
meetings of the Economic Consultative Committee but whether they
come up publicly or not, there is certain to be a great deal of
discussion in the lobbies on the subject and I should particularly
like to receive from you some indication of the way in which your
mind tends in these matters. If it were possible for you to let me
have a reply on this subject by the mail following the receipt of
this letter, I should receive it just before I go to Geneva.

Should this not prove possible, perhaps you would be good enough
to send me a cable before the end of April indicating your
reactions. [11]

THEILER [12] AND PASTORAL RESEARCH

As you will, of course, know, it had been impossible to obtain
from Theiler any definite reply to the proposal of the
Commonwealth Council for Scientific and Industrial Research that
he should become the head of the Animal Health Division of the
Council's Organization. Theiler made it quite clear to me, both
verbally and by letter from Basle, that he was not prepared to
come to any final decision until he had had an opportunity of a
discussion with Orr. [13] I therefore arranged, after cabling
Rivett [14], to take Orr to Basle in order that we might have the
consultation which Theiler's health had precluded when he was in
London. This occurred on the 16th and 17th of February. We found
that Theiler had really made up his mind not to accept the
Council's offer but, as a result of our joint discussions, he
promised me that he would give the most favorable consideration to
an invitation to go to Australia for a year to act as adviser to
the Council on the establishment of direct attack on problems of
animal health. I, of course, cabled this information to Rivett and
have received from the Council a confirmation of the idea and
instructions to try to finalise arrangements with Theiler. [15]

The thing that I think will particularly interest you in these
discussions was the way in which, when Theiler and Orr got
together, they immediately agreed that what was really required in
Australia, so far as the pastoral and dairying industries were
concerned, was not, at least at this stage, the establishment of
great central laboratories at Canberra but the direct attack on
outstanding problems of economic importance through the
establishment of two field stations, one in Queensland and one in
some district of Southern Australia in which marked deficiency
diseases existed. It was indeed on the assumption that the Council
would agree to such a programme that Theiler expressed his
willingness to consider acting as adviser in order to get such a
scheme started.

On my return from Basle, I saw Walter Elliot [16] and suggested to
him that if the Commonwealth Council approved of the idea, the
Empire Marketing Board ought to be prepared to agree to the
diversion of the grant, which had been promised to Australia for
the establishment of a Tropical Agricultural Research Station in
Queensland, to the purposes of this direct attack on animal health
problems. Elliot readily agreed to this idea and I informed Rivett
that, in considering the Thieler and Orr proposal, he could take
into consideration the probability of the Empire Marketing Board
being prepared to come in on a 50-50 basis in lieu of the
Queensland grant. [17] There does not seem, at the present time,
any prospect of the establishment of a Tropical Research Station
in Northern Queensland and it would be much better to use this
money for more immediate objectives.

RUSSIAN COMPETITION IN DRIED FRUITS

I am enclosing copy of a letter which I am sending by this mail to
Mr. W. C. F. Thomas, C.B.E., the Chairman of the Commonwealth
Dried Fruits Board. I should be particularly glad if you would
read this, as it gives an extremely interesting instance of the
way in which Russia is prepared to trade. [18] I shall make a
point of seeing that Tom Johnston [19] and some of the other
Labour men who are keen on Empire Development know the facts about
this transaction.

Yours sincerely,
F. L. MCDOUGALL