Dear Mr. Bruce,

I was very pleased to receive a letter from you dated 1st May. [1]
I quite understand that it is impossible for you to reply to my
many long communications. It is, however, encouraging to hear
occasionally from you and to know that you find time to read all
the matter which I forward.

IMPERIAL ECONOMIC COMMITTEE

In my last letter of the 4th June, I discussed at considerable
length the work of the Imperial Economic Committee and tried to
give you a forecast of the points which I thought it probable
would be incorporated in the first report. Since my letter, we
have had another full meeting of the Committee and a further
general discussion. Once again attention was concentrated upon
identification.

It may be a little difficult for me to realise with what patience
it is necessary to pursue any objective on a Committee such as the
Imperial Economic Committee. After looking at the cable you sent
to Sir Mark Sheldon [2] at the commencement of our work, I rather
feel that you may be disappointed if the forecast which I gave in
my last letter represents the major portion of any recommendations
which the Committee is able to make in its first report. If this
should prove to be the case, I would suggest that the attitude to
take will be that the Imperial Economic Committee faced with its
huge problem realised that there were four broad ways of solving
the problem.

1. Tariffs.

2. Subsidies.

3. Methods other than tariffs for regulating imports.

4. Mobilizing the British consumer to prefer Empire goods by (a)
identification (b) organization (c) advertisement.

The Committee was debarred from Tariffs [3], rightly regarded
Subsidies as a last resort, has not yet examined (3) but decided
that whatever further methods might ultimately be availed of, the
three points enumerated under (4), namely Identification,
Organization and advertisement, were essential first measures if
any other plan was to be fully successful; it therefore very
properly concentrated initially upon (4).

BOOK

With reference to my book, as you know Lord Milner [4] had agreed
to write a Preface. Just before he was taken ill, he wrote to me
to say that, under medical orders, he had to refrain from any
work. I therefore got Sir Robert Horne [5] to write a Preface and
he did it very well but, unfortunately, kept me waiting for nearly
a month before I got his copy. Every-thing is now complete,
including the Index, and I hope that Murray's will publish the
book within the next three weeks.

Sir Robert Horne was good enough to express himself as being very
pleased indeed with the book which, he said, he thought should be
of the greatest value to people interested in Empire Trade.

DRIED FRUIT BROCHURE

I am enclosing copy of a small illustrated brochure which I
prepared to shew people in Great Britain that in contra-
distinction to Smyrna we produce clean and wholesome dried fruits.

Copies are going to the whole of the British Press and we have had
100,000 copies printed for circulation at Wemble [6] and to
Retailers.

LABOUR PARTY DEVELOPMENTS

This week very interesting developments have occurred in the
Labour Party. The party holds 145 seats in the House of Commons.

91 Members have now joined the Labour Commonwealth Group, a group
formed 13 months ago and the initial meeting of which enrolled 15
members. The Members of the group are, of course, not pledged to
uphold preference or any other tenet but simply to a study of
Empire problems. The influence of the Group upon the whole
parliamentary Labour Party can be gauged from what has happened in
the last two days. The party set up a Committee to consider action
in regard to the Budget. Philip Snowden [7] was Chairman. Quite
apart from this Committee, certain Labour Members in the name of
the party put down two amendments to the Finance Bill referring to
the preferential clauses. The first was to alter the date of
application of preference from July 1st, 1925 to January 31st,
1926, and the second was to omit the preferential clauses from the
Finance Bill. On Tuesday the Budget Committee considered these
amendments and after prolonged debate decided to recommend the
Labour Party to cancel these amendments and to offer no opposition
to the preferences except to the 10 year stabilization of the
Sugar preference. The Free Traders in the Party, however, took
fright. On Wednesday a full Party Meeting was summoned. Snowden,
Lord Arnold [8], Lees-Smith [9] and others battled for attacking
preference; Ramsay MacDonald [10] threw his weight into the
attack. Then Haden Guest [11], Tom Johnston and other keen Empire
men spoke in favour of the preferences. J. H. Thomas [12] for the
first time declared in favour of preference, and a vote was taken.

It was decided by 6 votes to retain the amendments but it was
decided on the plea of Arthur Henderson [13] that the Labour Party
should not officially support these amendments. I understand that
the Labour Whips will be off for the Preference Debate. The full
significance of the development as shown at the Party will not
become apparent immediately but the rapidity with which Empire
ideas are infiltrating the Labour Party exceeds even my
expectations. Whatever else may happen, I think that you and I may
claim that in this direction we have helped the British Empire in
no small measure. The meeting had a tragic aspect. Poor old
Wignall [14], after speaking vehemently in favour of preference,
collapsed and died within a few hours.

The Labour Commonwealth Group preferentialists are divided into
two classes:

(A) The Clydesiders led by Wheatley [15], Johnston, and Maxton
[16] who are (for tactical purposes) developing preference purely
on Labour lines, i.e. advocating preference to goods produced in
Empire countries where high standards of working conditions
prevail.

(B) Haden Guest, and now Dalton [17] and J. H. Thomas, who develop
the broader issue.

Since I wrote the above, I see that to-day's 'Times' and 'Daily
News' devote a column to the meeting which was supposed to be
secret. I enclose cutting.

I have to-day cabled you in reference to this matter as fellows:-

At Labour Party Meeting yesterday Commonwealth Group secured free
vote of labour party on present preference resolutions and lost
resolution to withdraw all labour amendments thereto by six votes.

J. H. Thomas declared for preference for first time. [18]

DR. HADEN GUEST'S ARTICLES

I am enclosing cutting from the 'Daily Mail' which shews that
Haden Guest's articles have been taken seriously in Turkey.

AUSTRALIAN SWEET WINE

I am enclosing copy of letter which I received to-day from Mr.

Etchell, of the Vine Products Co. Ltd. I have had indications from
other quarters that there is now a considerable amount of interest
arising in Australian Sweet Wines. Mr. Etchell's firm is
particularly interested and he told me the other day that if he
could get the quantities, he would be prepared to back his opinion
by buying 250,000 gallons of Australian Sweet Wines. I think you
may find the information in this letter of some value if you are
discussing the wine question with the Viticultural Council.

With reference to Wine, from the enquiries I have had, I am quite
sure that if the Viticultural Council would arrange for a small
supply of their choicest wines, especially white dry wines such as
the De Pury vintages, Quelltaler Hock etc. to be available in
London, I could easily arrange with such places as the Restaurant
of the House of Commons, the Carlton Club, Brooks' Club and a few
other places of that sort to stock some of the very best
Australian wines. This would have the most excellent effect on
public ideas of Australian wines because once it became known that
exclusive people used Australian wine at lunch or dinner, the
greater part of the British people would be open to our bread and
butter lines.

I discussed this with Davy Masterton [19] before I left Melbourne
and he promised some action but I have heard nothing from him
since.

You will probably have seen that Sir Edward Grigg has been
appointed Governor of Kenya. In a way I am very sorry. Grigg had
become a very convinced preferentialist and, as a Liberal Member
of Parliament and a whole hearted supporter of preference, he
would have been very valuable to the cause. I should think that he
would be a success in Kenya but I feel that we could ill afford to
lose men of his type from active politics here.

Yours sincerely,
F. L. MCDOUGALL