My dear Prime Minister,

My last letter to you was dated the 25th March and was written
just before I left London for Basle and Sicily.

I had a most useful discussion with Sir Arnold Theiler [1] in
Basle which I hope will result in his deciding to sail for
Australia in the very near future and to devote a year to our
animal health problems in an advisory capacity. After we have had
Theiler for a year, I think we should be well advised to
concentrate on obtaining all the services we can from Dr. Orr [2]
as a consultant and we ought to attempt to get Orr to visit
Australia every two or three years for a few months.

From Basle I went on my holiday straight down to Sicily, where I
found both my children had benefited to a considerable degree from
the sunshine but I am sorry not to be able to report any very
marked improvement in the state of Mrs. McDougall's health. I had
a pleasant ten days there and very greatly enjoyed the sunshine
and the scenery.

The climate of Sicily appears to be remarkably similar to that of
portions of Southern Australia, particularly the Adelaide
districts. I was, therefore, compelled to make a small collection
of fodder plants which I have never seen in Australia and which I
am sending to Dr. Richardson [3], of the Waite Institute, in the
hope that one or some of the varieties that I have forwarded may
prove of some economic value in Australia.

On my return I spent about eight hours in Rome. Mr. R. J. Thompson
[4], the British representative on the Permanent Committee of the
International Institute of Agriculture, was there attending an
International Conference summoned with the idea of drawing up an
International Convention on quarantine measures which are taken by
nations for the protection of their crops. Before I left London, I
had arranged with Thompson to meet him in Rome, if possible, with
the idea of discussing the actual agenda with him there. We both
came to the conclusion that some of the proposals which were being
put forward by countries, such as France, Belgium and Holland,
that are largely interested in the export trade in plant products,
were such as to be quite unacceptable. There was, for instance, a
proposal that where an exporting country felt that she had a
grievance against an importing country owing to the way in which
the importing country enforced its quarantine regulations, the
exporting country might demand arbitration and that, in that
event, arbitration should take place; the arbitrators to be one
appointed by the International Institute of Agriculture, one by
the importing country and one by the exporting country and that
the arbitral award should be regarded as final.

Thompson and I both agreed that it would be impossible to accept
any such limitation of the sovereign rights of countries.

After we had been through the agenda of this Conference, I asked
Thompson to introduce me to the new Secretary-General of the
International Institute of Agriculture. [5] We had a somewhat
difficult conversation because the Secretary-General does not
speak English but I managed to convey to him that, while Australia
was extremely interested in a really efficient International
service in agricultural economics and statistics, we were by no
means satisfied that we were receiving anything of the sort from
the International Institute at the present time.

The Secretary-General told me that he was quite convinced that his
main duty was to concentrate the activities of the Institute in
such a way as to provide just what I had indicated we required.

I then invited the Secretary-General to visit London in the course
of the next few months and to spend two or three days here in
conference with British and Dominion people interested in
agricultural economics and particularly with the Empire Marketing
Board's Committee on Agricultural Economics.

I got back to London on Friday, the 12th April, feeling very fit
and well after my holiday. I found a mass of accumulated work
waiting for me at my office and I also made an arrangement with
Duckham [6] for a long talk on Sunday, the 14th instant.

Unfortunately on Sunday evening I was suddenly attacked by far the
most violent cold that I have ever experienced. Within a few hours
I could hardly hear or see and, although I had a number of
important engagements on the Monday, I was forced to remain in
bed. The cold has now yielded to a large extent to treatment and I
am much better but still not able to use my eyes as much as I
should like. This is really rather a nuisance, because there is so
much to do at the present time.

GOVERNMENT POLICY

Just after I arrived in Sicily, I wrote a memorandum entitled 'The
Unemployment Problem and the British Export Trade'. I sent the
memorandum to my office to be typed, with instructions that a copy
was immediately to be sent to Mr. Tom Jones [7], of the Cabinet
Secretariat. I also wrote to Tom Jones telling him that I thought
this memorandum might be of some use to Mr. Baldwin [8] in
considering his policy speech which I understood was to follow
within a few days of the Budget. Since my return I have been in
touch with Tom Jones and find that he considered the memorandum
well worth Baldwin's attention and that he took it down to
Chequers last weekend and that the Prime Minister read it. Tom
Jones further added that I might anticipate recognising certain
portions of the Prime Minister's policy statement, which will be
made on Thursday. I enclose a copy of this memorandum which you
will perhaps find of interest.

It seemed to me that the Election policies of the two Oppositions-
that is to say Mr. MacDonald [9] and Mr. Lloyd George [10]-Pledge
their Parties to vast expenditure along lines which would, on the
whole, handicap rather than assist British export trade.

I gathered from Duckham that, since his return, he has had half-a-
dozen interviews with Winston Churchill [11] on the subject of
transport facilities in the United Kingdom-Duckham having been the
Chairman of a Government Committee on this subject before he left
for Australia.

Apparently the Government is anxious to find a sound policy for
assisting the railways to cheapen freight rates on goods and thus
to help export.

THE BUDGET

The Budget was by no means an exciting document although
Churchill's speech was remarkably good as a fighting effort. The
one thing which I am dreadfully sorry about is the way in which
they have dealt with the Tea Duties. It is quite probable that the
decision to abolish the Tea duty was a good one but I very much
regret that they have completely destroyed the preference. The
duty was 4d. per lb. on tea, 5/6ths being levied on Empire teas.

Empire teas represented from 70% to 80% of the entire imports and
it would have seemed to me very simple to have maintained a duty
of .66 of a penny on foreign teas, allowing Empire teas free
entry. This would have maintained the preference. It is, of
course, probable that the country is benefiting from the
preference on tea but it does not give any reciprocity to Great
Britain. If this was the reason for the abolition of the
preference, it would have been infinitely better to have said so
instead of saying that the preference was being abolished because
the foreign teas would be cheapest and therefore affect the
cheapest class of trade.

DUCKHAM

I found my talk with Duckham on Sunday last very pleasant. It was
so refreshing to find how fully he had visualised Australia's
problems and with what enthusiasm for Australia and things
Australian he had returned. I was both pleased and amused to find
that Duckhamworking on his own-had come to the conclusion that
some plan whereby the British Government would purchase Australian
butter, dried fruits, etc. on a long term contract at a reasonable
price would stabilise agricultural prices. This is very close to
what you and I were discussing and which you tentatively suggested
at the Imperial Economic Conference of 1923.

Duckham gave me definitely to understand that he and his
colleagues are most anxious to do everything they can to assist
towards a really effective Imperial Conference but that they
cannot individually do much donkey work. This one can fully
appreciate.

At a meeting of the Empire Marketing Board, which is occurring
this afternoon, I am going to suggest that the Board should make
available a man to act as part-time Secretary to the Economic
Mission and to keep them in touch with Empire economic questions
between the present time and the Imperial Conference. I have also
arranged with Walter Elliot [12] that he should propose a meeting
between the E.M.B. and the Business Mission for the purpose of
discussing questions in connection with the economic side of the
Imperial Conference. I thought this suggestion would come better
from Elliot than from the representative of Australia so far as
the Board was concerned.

During the last fortnight I have received two long letters from
Simpson [13], to which I shall be replying direct. I am of course
very glad to hear from him, although I hope that the fact that he
has commenced to correspond with me partly on your behalf will not
mean that you will miss such opportunities as may occasionally
arise for dealing personally with some of the matters about which
I write to you.

Simpson seems a little worried about the way in which I have used
percentage figures in some of my memoranda and he suggests that
the total trade figures would be more satisfactory. The difficulty
of course about using total trade figures has been the very large
changes in price levels, which render any comparison between pre-
war and post-war totals quite illusory unless the prices have been
reduced to a common basis. There is also this further view. Busy
Ministers are not prepared to look carefully through a whole mass
of statistics. I therefore feel that in preparing matter, which I
strongly hope will be carefully read, it is desirable to simplify
statistics in such a way as to bring out their immediate
significance. In doing this one imposes on oneself the obligation
not to simplify in such a way as to distort the truth. It is more
than likely that at some stage or another, I have unconsciously
used statistics in such a way as to give undue emphasis to certain
aspects of problems. This is probably inevitable but I do most
definitely feel that one of the major responsibilities of a man
who is continually dealing with statistical matter is to simplify
that matter in such a way as to present, so far as he is able to
see it himself, the major aspects of the truth.

IMPERIAL CONFERENCE

While in Sicily I was delighted to receive your cable of the 27th
March, in which you were good enough to indicate your general
concurrence with the way in which I have started the work in
preparation for the next Imperial Conference. [14] The various
points mentioned in your cable will be gone into with the utmost
care and I will forward to you from time to time such information
as I am able to collect.

The question of the assessment of the actual value of Australian
preference to the various British industries is by no means an
easy matter nor is the assessment of the actual cost of the
preference to the Australian consumer. I intend to go into this
matter closely in the near future.

I am glad that you thought well of my suggestion that you should
appoint an Advisory Committee on Imperial Economic Conference
problems. [15] I hope that I shall hear a good deal of the
activities of this Committee and should be delighted if I can be
of any use to them.

19th April, 1929

At the conclusion of the meeting of the Empire Marketing Board
yesterday I had a few words with Amery [16] about the Budget and
particularly about the way in which the Government had eliminated
the preference on tea. Amery stated that he absolutely agreed with
everything I said but simply held up his hands and remarked that
he had been quite unable to secure any consideration from Cabinet
on that point of view.

I thought it was really quite pathetic to see the little man so
obviously unhappy about his complete lack of influence with his
colleagues. If the Tories get back, as a result of the General
Election, I do hope that there will be a change at the Dominions
Office and that Amery will be given some other position where he
can be more effective than he is there.

Last night in Parliament there occurred an extremely important
discussion on Philip Snowden's [17] rather reckless attack on the
Allied debt arrangements. I was dining in the House-the party
including Major Elliot, Ormsby-Gore [18] and Bob Boothby [19]-and
they were all of the opinion that the sudden turn of events due to
Snowden's rash speech would prove very helpful to the Government
in the Election.

I am enclosing a copy of the Hansard as you may like to read
through the major portion of the Debate.

BRITISH MISSION

I was sorry to have missed the High Commissioner's [20] dinner to
the Big Four-or rather Three because Duckham was not able to be
present owing to a chill-but I understand it was quite a distinct
success.

Yours sincerely,
F. L. MCDOUGALL