Dear Mr. Bruce,

IMPERIAL ECONOMIC COMMITTEE

As the Economic Committee was sitting morning, afternoon and night
during the whole of last week, I was unable to write you at any
greater length than the two very brief notes which I sent. I am
very glad, however, that I sent you a copy of the first report
because it cannot be printed until tomorrow at the earliest and,
as there will be no mail next week, it will be three weeks after
the signing of the document before a printed copy can be posted to
you.

First Report

The present position as regards the First Report (General) [1] is
that no Government of the Empire has objected to publication but
the Treasury has not yet signified its approval of immediate
publication. This is due to the fact that Mr. Churchill [2] is at
the present moment preoccupied with the Coal crisis [3] and with
the gold standard controversy [4] and, in consequence, has not yet
looked at either the Report or at the views which the Treasury
Officials have expressed on the subject. If Mr. Churchill's
approval of publication is obtained by 20'clock today, the Report
will be issued tomorrow afternoon; if not, there will be some
further delay.

Meat Report

As regards the Meat Report [5], the position is much more
complicated. in order to give you a full idea of the matter, I
must deal with it at some length. You will remember that I
informed you that the British Agricultural interests were very
dissatisfied at not having a representative of British Agriculture
on the Imperial Economic Committee. I also in-formed you that, in
my view, it was a serious mistake on the part of the Home

Government not to have appointed an Agricultural Representative.

When the farmers made a fuss, the Minister of Agriculture [6]
wrote to the President of the Board of Trade [7] and received, in
reply, a definite assurance that the Ministry of Agriculture would
be kept informed of any developments of the Committee that
involved the interests of the home producer.

About the 1st July, the Canadian Delegates [8] presented a
memorandum to the Chairman [9] informing him that they intended to
press the question of the differentiation between the treatment of
Canada and Ireland in the Regulations affecting the importation of
store cattle. [10] The Chairman on receiving this memorandum took
no action and did not notify the Board of Trade or the Ministry of
Agriculture. About the middle of July the question of store cattle
was first raised in the Committee itself and the British
Representatives [11], apart from the Chairman, expressed their
approval of the Canadian attitude and the Chairman made some
slight reference of possible danger of antagonising home
interests.

Sir Mark [12] informs me that, on the Meat Sub-Committee, he made
it clear that, while he recognised the justice of the Canadian
claim, he pointed out the dangers and, on the Main Committee, I
pointed out that, as the Meat Sub-Committee had not taken any
evidence on this subject from the British breeders' standpoint, it
was dangerous to make any definite recommendations. Sir Mark and
I, however, were completely in agreement that if Canada and South
Africa strongly desired to raise this issue and that if Ireland
had no objection to its being raised and, further, that if the
British Representatives approved, it was impossible for Australia
to do anything further than the action which we took.

As a result of discussions between the Canadian and Irish
Delegates [13], an agreed paragraph on this subject was inserted
in the Meat Report and adopted unanimously by the Committee, the
Chairman raising no question on the matter at all.

Immediately after the report was signed, copies were, of course,
sent to the British Ministers concerned and the Minister of
Agriculture strongly protested against this paragraph and I
understand raised the matter at the end of the Cabinet Meeting
which occurred on July 31st, the day after the Report was signed.

[14] Owing to the failure of the Chairman to notify either the
Board of Trade or the Ministry of Agriculture as to the store
cattle question, the Minister of Agriculture was placed in an
unfavourable position. He had given repeated pledges to the
National Farmers Union, the Agricultural Committee of the House of
Commons and to the Agricultural Commission that no interest of the
British producer would be in any way jeopardised by the action of
the Imperial Economic Committee and he felt that he had been very
badly let down.

After the Cabinet Meeting, the Chairman was asked to interview the
Minister of Agriculture and the Minister indicated the amendments
that he would require before he could consent to the publication
of that paragraph in the Meat Report. The Minister's amendments
were of so sweeping a character that they were obviously
unacceptable. Most of the members of the Committee had left London
but luckily the Canadian Representative principally concerned was
not sailing until the next day. Sir Halford Mackinder, however,
after his interview with the Minister for Agriculture left London
for Cowes, instructing the Secretary [15] to try and arrange with
the Canadian Representative for the necessary modification.

The Secretary felt that he had an impossibly difficult task to
perform and asked me if I would help him. I discussed the matter
with Sir Mark, who agreed, and the Secretary and I saw the
Canadian Representative. After a very long discussion, we agreed a
form of words which, while maintaining in substance the sense of
the original paragraph, was calculated to be much more acceptable
to the Ministry of Agriculture. The Canadian Representative sailed
on the 1st August.

To-day I understand that the Minister of Agriculture has asked Sir
Halford to get into wireless communication with the Canadian
Representative and ask for his consent to this paragraph being
temporarily deleted from the Meat Report and that the subject of
Store Cattle be brought before the Imperial Economic Committee
when it meets again at the beginning of October. I do not think
there is any likelihood of the Canadian Representative agreeing
and I am informed that even if he does agree, the South African
Representative [16] will not do so. I enclose copy of the amended
paragraph after amendment was accepted by all the members of the
Committee and I think you will agree that, in its present form, it
is one which the British Government could quite cheerfully accept
and say that in reconsidering this legislation they would have to
keep very carefully in mind the interests of the British breeders.

I also enclose a copy of the original paragraph as incorporated in
the Report when signed. In my opinion the original paragraph went
much too far, having regard to the fact that no evidence had been
taken on this subject on the side of the producers. [17]

General

As regards the First General Report of the Imperial Economic
Committee, I am of opinion that it is on the whole an interesting
document and that if put into effect by the British Government it
will represent a final attempt to give the Dominion producer a
position of advantage over the foreigner in the Home market
without the aid of tariffs, import licences or any other form of
restriction or control of imports. I think that where we make
recommendations as regards the allocation of the Million annual
grant, we are somewhat weak. I do not imagine that 65% of the
Million could be usefully spent on educational publicity but we
were advised that unless we made some total allocation it was
improbable that we should be able to get the whole of this year's
Million out of the Treasury. The intention of the Committee was
not to tie the hands of the Executive Commission but to leave the
allotment in such a form as to make it possible for the Imperial
Economic Committee from time to time to make further definite
recommendations as to methods of spending this annual grant.

Sir Mark and I have throughout attached the very greatest
importance to the branding of foreign goods with the word
'foreign' and I hope that you will clearly realise that the
Committee's recommendation of expenditure for publicity is
entirely conditioned upon the acceptance by the British Government
of its recommendations as regards marking.

I should like to comment on several of the paragraphs in the First
General Report.

Paragraph 8, Page 422

Sir Mark and I both attempted to strengthen the first sentence
dealing with tariff preference. I am, however, satisfied that the
sentence, as it stands, indicates no abandonment of any views on
this subject. The third sentence starting from 'we have not yet'
down to 'would suffice' was the result of a number of discussions
and of a compromise. At one stage this sentence definitely
referred to such questions as import licences, stabilization
policy etc. Sir Mark and one or two other members of the Committee
had, however, very pronounced views on this subject and when Mr.

Ramsay MacDonald [18] made a speech in which he advocated bulk
purchases of Empire produce by the British Government, they were
alarmed and desired to cut out all reference to these subjects.

The form of words used was, therefore, a compromise. I felt it
essential that the Committee should indicate that it had not
considered any of the many possible forms of stimulating Empire
trade apart from tariffs, subsidies or voluntary preference.

Paragraph 20, Pages 436-438

I want to draw your attention to the statistics on Page 437. I was
responsible for preparing the whole of the statistics of the
General Report and after I had got them out, I submitted them to
the Board of Trade's Statistical Department to check. The per
capita comparison shewn on this page is I think the most striking
set of figures on this subject that I have yet seen. [19]

Paragraph 30, Page 449

As indicated in my note, I think that this paragraph is, in a way,
the key to the whole Report. I particularly direct your attention
to the last sentence. The Chairman had drafted it to read as
follows:-'In providing for a voluntary discrimination by its
citizens, the Government of the United Kingdom will be achieving
by methods of freedom no more than other countries seek to compass
by their customs tariff'. I strongly disapproved of that form of
words and obtained the alteration which, as it now stands, makes
it clear that if the Government of the United Kingdom adopts our
proposals, they will be attempting and not necessarily succeeding
in achieving on free trade basis what other countries achieve by
preference.

Paragraph 41, Page 462

I presume that some of the industries disappointed of British
preference may regard this paragraph as very weak from their point
of view. The Committee, however, were quite unanimous that any
idea of subsidising industries disappointed of preference out of
the Million grant was impracticable and worse that it would have
involved the splitting up of the money into such small amounts
that it would also have been futile.

The last sentence of this paragraph was inserted by the Committee
with the intention that in so far as the Executive Commission
directly advertised specific Empire products such as Empire dried
fruit, Empire apples and Empire Canned fruits, the disappointed
industries should receive special attention and special
expenditure. I think it reasonable to assume that if our general
scheme is adopted the Australian apple and dried fruit industries
will obtain special publicity during the period their goods are on
the United Kingdom market. If, as is probable, the Australian
dried fruit industry has 30,000 tons to dispose of next year in
Great Britain, this will probably mean that its selling season
will have to extend over the greater part of the year and that it
would become entitled to continuous publicity under this scheme.

If this proves to be the case, it will relieve the Commonwealth
Dried Fruit Board from expenditure on general publicity and leave
them free to devote such funds as they think desirable to direct
propaganda among retailers arranging special window displays etc.

Paragraph 42, Page 463

The first two sentences of this paragraph should make it possible
for the Executive Commission, on the recommendation of the
Imperial Economic Committee, to alter the allocation as shewn in
Paragraph 43, Page 464.

Paragraph 44, Page 466

This paragraph should be read as having been inserted to indicate
that, while most of the Self-governing Dominions are interested in
meat, fruit, dairying and other industries, such industries as
Tea, in which India and Ceylon are alone interested, or certain
portions of the Fish industry, which solely concern Newfoundland,
will be considered by the Imperial Economic Committee and
therefore such countries as India and Newfoundland will find their
interests looked after at a later stage.

Paragraph 45, Page 465 (2)

Please note the significance of the last three lines of (2). [20]

Page 470-Note of the Sub-Committee on Fruit

I hope that you will not be disappointed that we have not been
able to issue a Fruit Report at the present juncture. In a
previous letter I explained some of the reasons [21] and on
carefully considering the Meat Report I am reinforced in my
opinion that the Fruit Sub-Committee acted advisedly. I should
like to have seen the Meat Report make a very much fuller survey
of the meat possibilities of the British Empire and I think that
it is probable that the Fruit Report will do this in regard to
Fruit.

I am anxious that the Imperial Economic Committee should, in every
industry which they investigate, show the potentialities to each
portion of the Empire and make it perfectly dear to the
Government, the legislators and people of this country how in each
instance the provision of markets governs development and
therefore will cause possibilities of migration. [22]

Statistical Appendices

I should like to direct your attention to Table 3, Page 480, which
shows the progressive importance of the Empire markets to British
industry in a clearer way than anything I have yet seen and I
think that you will find the Tables 5 and 6, Pages 482/483
interesting and useful [23] In each case I prepared the figures
but they have all been checked by the British Board of Trade and
you can, therefore, rely upon their accuracy.

I have no doubt that Sir Mark will be giving you full information
as regards the Meat Report.

I have very much appreciated serving on the Committee as a
Colleague of Sir Mark Sheldon, and he has been throughout
extremely kind.

Future of the Imperial Economic Committee

I understand from Sir Philip Cunliffe-Lister and Sir Sydney
Chapman [24] that the British Government intends to suggest to the
Governments of the Empire the next series of foodstuffs which

should be investigated by the Imperial Economic Committee and they
have mentioned dairy produce and tea as being questions which they
are likely to bring forward.

I understand from Sir Thomas Allen, of the Wholesale Co-operative,
that the world tea situation is likely to become acute, owing to
the increased demand for tea in the United States, to the
possibility of Russia coming back on to the market as a large
purchaser and to the fact that there has been no substantial
increase in tea plantings in India or Ceylon.

The arrangement of the work of the Imperial Economic Committee
that would probably find most favour would be for the Full
Committee to sit from March to August of each year and that
perhaps a nucleus Sub-Committee should be in existence throughout
the remainder of the year to act in an advisory capacity to the
proposed Executive Commission and to follow up any special
investigations which the Main Committee might not have completed.

As regards the completion of the reference to Fruit, I understand
from Sir Halford Mackinder that he intends that, in October, this
should be handled by the whole of the Committee that remains
available and not simply by the Fruit Sub-Committee which was
working on it during the last few months.

NATIONAL FARMERS UNION

I enclose the Toast List of a Luncheon given by the National
Farmers Union to the visiting South African Farmers, because I
think you will be interested in the second toast, which I have
marked. [Such] a toast from such a body was only made possible by
your own speech at the National Farmers Union Dinner in October
1923. [25]

'SHELTERED MARKETS'

This book continues to receive the most excellent press which,
unfortunately, is not reflected in commercial sales. I enclose a
leading article from the 'Daily Telegraph', a critique from the
'Times Literary Supplement', a special article in the 'Referee'
and a very pleasant appreciation published in this month's
'English Review'. [26]

My letter has already grown to an inordinate length. Next mail I
shall attempt to give you an appreciation of the extraordinarily
serious industrial position arising in this country.

Yours sincerely,
F. L. MCDOUGALL

[Handwritten]

P.S. I have just heard that the question of the date of
publication of the First Report will be dealt with by the Cabinet
tomorrow. [27]