My dear Prime Minister,

I was extremely pleased to receive your letter of the 10th
February [1] in which you have been good enough to go into a
number of points raised by me. You deal with one or two points
about the economic side of the Imperial Conference but you also
say that you propose to write fully on the matter at a future date
and deal with the whole question exhaustively. I imagine that I am
to take it that the receipt of this letter of the 10th February,
together with your promise to write exhaustively, is the answer to
my cable of March 11th. [2] The fact that in this letter, which
was written after you had received a good number of my
communications about the Imperial Conference, you do not
definitely disapprove of any of my lines of activity, is to be
regarded by me as encouragement to go ahead along these lines
pending the receipt of a full communication from you on the
subject.

In your note on my letter of the 29th November [3] you say that
you were decidedly interested in the points that I raised about
publicity for Australia. The Committee that was formed as a result
of the lunch has not functioned very well for certain personal
reasons, which I need not worry you about. Suffice it to say that
I came to the conclusion that we were not likely to see any very
interesting report emanate from that Committee. About a fortnight
ago, therefore, I got T. Tallents, the Secretary of the Orient
Co., and Huxley [4], of the Empire Marketing Board, together for
lunch and discussed with them the preparation of a memorandum on
the subject of publicity for Australia. Subsequent to the lunch I
put together the memorandum and sent it to Tallents and Huxley for
their comments and then remodelled it on the line of those
comments. I then sent it to Mr. Frank Pick [5], the Managing
Director of the Underground Combine, who, as I have already told
you, I regard as being the best man on such subjects in London,
and also to Mr. Dougal Malcolm. [6] They both generally concurred
in the memorandum but both made certain comments. I enclose copies
of their letters so that you can see the type of comments they
made. I also enclose a copy of the memorandum.

After Easter I am going to get Pick, Malcolm, T. Tallents and
Huxley together to discuss the matter further and, if possible, to
put up some more concrete and definite proposals to Gepp. [7]

'SHELTERED MARKETS OF THE EMPIRE'

In my last letter I sent you a copy of a series of small notes for
speakers which I had prepared entitled 'Sheltered Markets of the
Empire'. This I sent to some 100 Members of Parliament and to
perhaps another 50 people in influential positions. They were
mostly sent out in the middle of last week and I have already
received some 50 personal acknowledgments, chiefly stating that
information in this condensed form was extremely welcome. It is, I
think, impossible to exaggerate the value of this type of
propaganda conducted by means of personal letters.

ECONOMIC RESEARCH

I was most interested to read your comments on economic research
and quite understand the reasons which have induced you to decide
in favor of a separate economic research staff. [8] I can also
understand why you think the question of attaching any individuals
over here would have to be left for the time being. I wonder,
however, whether it would not be possible to apply the Research
Studentship idea to economic research. There is no doubt that,
under the Research studentship scheme, extremely useful results
are being obtained by C. S. I. R. and I venture to suggest that,
in economic research, something of the same sort would prove
particularly valuable. If Australia is really to appreciate the
economic position of her principal agricultural and secondary
industries, it seems of the utmost importance that study should be
made of comparable industries in other countries; in fact in
general the comparative method should be used as far as
practicable. Supposing a research studentship was given to a
promising young man who had taken a degree in economics in one of
the Australian Universities and the studentship was made tenable
in London on the understanding that the appointee was to be kept
closely in touch with my work, I imagine that very useful
comparative studies could be made with great advantage to the
Bureau of Economic Research. [9]

BRITISH POLITICS

Your letter reminds me that I was fool-hardy enough to make a
forecast of the election results as early as last November. In my
last letter I alluded to the results of two By-elections and,
since I wrote, three more have occurred, in one of which a
Scottish Conservative seat was captured by a young woman Labour
candidate by an enormous majority and, in the other, an English
agricultural constituency was captured by the Liberals. I am not
at all sure that the Scottish seat can be regarded as typical,
because the young woman candidate was not only a good political
speaker but was also extremely attractive. I am much more
concerned about the Liberal success in Lincolnshire. The idea of
80 to 100 Liberals in the next Parliament is far from attractive
but one is beginning to think it may have to be faced.

ADVERTISING EMPIRE GOODS

I have referred to the way in which a movement to force the
Government to participate in the advertising of Empire goods is
growing and I am enclosing a cutting from the 'Manchester Daily
Despatch' on this subject. This particular paper is always rather
hostile to Empire trade but it may be worth your while to look at
the article.

I am leaving London by tonight's boat for Sicily and am thus
taking a holiday on both sides of Easter. My wife and children
have been in Sicily for some months, where they have been lent a
small villa on the edge of the sea between Taormina and Catania,
i.e. right under Etna. My wife unfortunately has been very far
from well for the last couple of years and it is necessary that I
should discuss with her plans for herself and the children for the
near future. I must be back in London by about April 11th, because
I have a great deal to do and have arranged to address the Labour
Commonwealth Group in the House of Commons on April 15th.

I have arranged to go via Basle and spend one night there in order
to have a further discussion with Sir Arnold Theiler [10] about
his plans for his one year in Australia.

Yours sincerely,
F. L. MCDOUGALL