My dear Prime Minister,

LEAGUE OF NATIONS

On Friday last Trumble [1] sent up a copy of a cable from you
announcing my appointment as a Substitute Delegate to the Tenth
Assembly to deal with economic matters. My feelings were rather
mixed on reading the message, for I was by no means personally
anxious to go to Geneva. I think, however, that it is probably
wise and that it will provide an excellent opportunity for liaison
with members of the Government and especially with Graham [2], the
President of the Board of Trade.

Graham, I understand, is going for the first ten days and this
will probably make it expedient for me to be in Geneva at the
commencement of the Assembly. If you have any criticism of the
point of view which I expressed at the meetings of the Economic
Consultative Committee [3], I very much hope that you will have
time to let me know what they are before the commencement of the
discussions.

There is one point about which I should like your guidance. If the
Economic Organization is to concentrate upon a more effective
economic information service, some slight increase of expenditure
may be involved. Sir Arthur Salter [4] suggested that a sum of
about 5,000 per annum might be needed.

I believe that the Commonwealth Government has tended to criticise
League expenditure. I quite agree that there is ample ground for
criticism on the International Labour Office portion of the Budget
but I doubt whether, in the Economic Section, there is room for
economies save by a reduction in the sums spent upon Conferences.

I should like to feel able (a) to pursue with Salter, and perhaps
in the Committee of the Assembly, the possibilities of savings in
certain directions which could be used to finance an improved
economic service; (b) in the event of no such savings being
possible, to feel that approval of a slight addition of, say,
5,000, which, of course, might not affect the general budget of
the League, would not be disapproved of by the Commonwealth
Government.

LORD PASSFIELD [5]

I had a long talk with the Secretary of State on Friday at most of
which Lunn [6], the Under-Secretary of State for the Colonies, was
also present.

We first discussed Snowden's [7] remarks about Food Taxes.

Passfield made it very clear that he was anxious that Snowden's
words should not be taken too seriously.

I asked whether Passfield realised what harm these words had
already done, pointing out how difficult they had made your task.

I then urged that the Government should consider whether an
undertaking could not be given not to repeal Preferences of vital
moment to Dominion industries before Imperial Economic questions
had been discussed.

Passfield said he would take the suggestion into consideration and
discuss it with his colleagues.

We then discussed the Imperial Economic Conference and Passfield
expressed anxiety lest Australia should press for new preferences
which his Government simply could not give. This led us naturally
to a discussion on ways in which Great Britain could help without
raising the fiscal issue. We talked about bulk purchase on a non-
State trading basis. He expressed a desire to have such methods
thoroughly examined. I agreed but said that I considered an
essential preliminary to such examination would be an assurance
from the Treasury that the Department would not adopt a non-
possumus attitude if, as was probable, some form of Government
guarantee were needed to safeguard a Trade amalgamation against
contingent loss on a long term bulk purchase contract.

We also discussed the recommendation of the Duckham Mission [8]
for the amendment of the 34,000,000 Agreement so as to allow of
British financial cooperation in large schemes for demonstrating
how the results of scientific research could be applied to
Australian Agriculture. I gave him a rough idea of your, proposals
to place the Dairying industry on a sounder basis. [9]

I came away with the impression that Passfield, like Graham, was
really anxious to find means for cooperation.

MR. PONSONBY [10]

On Tuesday morning I had an interview with Ponsonby, the Under-
Secretary of State for the Dominions, and Chairman of the Overseas
Settlement Committee. The discussion was chiefly on methods
whereby Great Britain could cooperate with Australia in assisting
in the intensive development of pastoral and agricultural
industries. I found that Ponsonby was quite prepared to take an
intelligent interest in the subject and I suggested that he should
raise with the Overseas Settlement Committee the paragraphs in the
Economic Mission Report [11] dealing with that aspect.

He asked me whether this was not a case in which all the necessary
initiative could easily come from Australia.

I said that, while that was undoubtedly the case, there were
certain serious objections to leaving it to Australia to take all
the initiative. I pointed out that the Treasury attitude was not
very friendly and that, under those circumstances, a series of
requests from Australia for British cooperation along these lines
would probably create some hostility at the Treasury. I therefore
made the suggestion that the British Government might very
properly send a despatch pointing out how interested they were in
the suggestions made by the Economic Mission under this head and
asking whether the Commonwealth Government would like to make some
concrete suggestions for British-Australian cooperation in the
solution of how best to secure the more intensive development of
the land.

Ponsonby promised to take this up with the Overseas Settlement
Committee.

IMPERIAL CONFERENCE AND IMPERIAL ECONOMIC CONFERENCE

I received, through Casey [12], information that you had asked
Casey to arrange for the Dominions Office to send me copies of the
various cables which are being exchanged between Governments on
this subject. I have, this morning, received another message from
Casey to the effect that the Dominions Office are very sticky
about this and have intimated that the only way in which they can
do so [is] by the High Commissioner [13] making a request for two
copies of all such cables to be sent to him and leaving it to the
High Commissioner to send a copy to me. This, I feel, would be
quite an unsatisfactory method and I expect I had better rely on
keeping in touch with Casey and seeing, through him, such cables
that affect the situation.

I have seen the British Government's circular cables Nos. 31, 32
and 33. I take it that you will agree to the proposal that the
Imperial Economic Conference and the Imperial Conference should be
held in conjunction and that, as you have already indicated in
your cable to Casey, you will insist on both Conferences being
held in London. I cannot too strongly emphasize the important
effect that an Imperial Economic Conference would have in London
under present circumstances. [14]

On the general subject of Imperial economic cooperation, I had a
most important talk with Neville Chamberlain [15] yesterday, about
which I am writing to you under separate cover.

EMPIRE MARKETING BOARD

I enclose the Third Report of the Empire Marketing Board [16]
which I hope you will find of some interest. Personally I feel
that the form of the Report could have been considerably improved
but it is a Report prepared by the Secretariat and of which the
members of the Board merely take collective responsibility. but
play no part in its preparation.

IMPERIAL ECONOMIC COMMITTEE

During the last ten days we have held six meetings of the Drafting
Committee on the Report of Pig Products, sitting on two occasions
until late at night. We have finally revised the draft which will
come before the Main Committee on the 13th August and will then, I
presume, be formally accepted, summaries telegraphed to the
Dominions and permission for publication requested. The report
should be printed and available about the middle of September.

I hope to be able to forward my report on the work of the Imperial
Economic Committee and the Empire Marketing Board by the next
mail.

EMPIRE MARKETS AND BRITISH TRADE

You will remember that in my letter of the 29th May [17] I
forwarded to you a new memorandum in which I had rather
exhaustively gone into this question. In consequence of some
criticisms received from Chadwick [18] and also the more general
criticisms that I received from Simpson [19] and Gepp [20] as a
result of my early paper on the same subject being read in
Australia, I have considerably amended the form of this document,
reducing the use of percentage figures and incorporating in each
instance the figures showing the changes in the total trade. As it
now stands, it is, I think, a pretty solid piece of work which
ought to serve a useful purpose in inducing people to think. I
hope that you will have time to read this revised edition but, as
Parliament will be sitting, I expect that you will be terribly
busy.

DR. ADDISON [21]

Dr. Addison has been appointed Parliamentary Secretary to the
Ministry of Agriculture in the new Government. He was present at a
meeting of the Research Grants Committee of the Empire Marketing
Board yesterday and he came and asked me to meet him in the near
future to have a talk about the cooperation between British and
Dominion agriculture.

I was very interested to get this sign of intelligence from him
and I am meeting him for an hour's discussion on Monday prior to a
full meeting of the Empire Marketing Board.

I am enclosing a further article in the Empire Free Trade Campaign
by Sir Harry McGowan. [22]

Yours sincerely,
F. L. MCDOUGALL