Dear Mr. Bruce,

LORD PARMOOR [1]

In my last communication I referred to a letter that appeared in
the Yorkshire Press purporting to be signed by Lord Parmoor. This
gave rise to considerable temporary excitement in political
circles and Mr. Baldwin [2] secured time for a debate on the
subject in the House. Unfortunately Mr. Baldwin entrusted the
matter to Sir Philip Lloyd-Greame [3] who made an extraordinarily
ineffective party speech instead of leaving party a little in the
background and making a weighty protest against the reflection on
the preference policy of the Dominions and on the idea of debasing
the Wembley Exhibition to a fiscal controversy. [4]

Sir Philip Lloyd-Greame's speech was of such a nature as to give
to the Prime Minister [5] a golden opportunity of making an
effective rejoinder which Mr. MacDonald was not slow to take. Mr.

MacDonald said that Lord Parmoor had neither seen nor signed the
letter, but Mr. Yenkin [6], who is closely associated with Lord
Parmoor, told me privately that the old gentleman did not know
whether he had or had not signed the letter and that the views
expressed in it closely represented Lord Parmoor's own point of
view.

The way in which this matter was handled by the Unionists made me
regret having had anything to do with it at all and confirmed my
feeling that the Unionists have a fearful and wonderful lack of
brains and ability.

THE LABOUR PARTY AND EMPIRE

There has, as yet, been no definite move towards the formation of
an Empire Parliamentary Group inside the Labour Party but I am
continuing to meet individual Labour Members and you will be very
interested to know that among some of the Trade Unionist Members
there is a quite clear realisation of the fact that if Labour
conditions are to be maintained in this country, some form of
protection will be essential.

I have found among Trade Unionists a very sympathetic attitude on
the subject of the preferences that Australia and New Zealand are
giving to Great Britain and on the Preference Proposals of the
late Government. They all state that the main trouble is the
foolish attitude that so many present Ministers allowed themselves
to adopt in their election speeches. If it had not been for that,
the Labour Party would have been able to have accepted the bulk of
the Preference Proposals without much difficulty.

Some of these Trade Unionist Members have expressed the view that
a re-orientation of the Labour Party's attitude to the
Safeguarding Industries Act [7] and other protective measures may
take place in the near future. They point out, for instance, that
at the present moment men employed in what are known as the
sheltered trades, i.e. the trades that have no export and
therefore do not compete in the world's market, are paying higher
wages to unskilled men than the wages that are paid to skilled
engineers in industries that have to compete overseas and that
this is an intolerable position for a skilled operative.

For instance, in London, the tram driver is, I am told, receiving
about 17/- a week more than a fitter employed on engineering work.

I am finding that the statistical information that I am able to
place before Trade Union Members about the value of the Australian
and New Zealand Market and the effect on British trade and the
Australian and New Zealand Preferences is very marked indeed and I
am becoming convinced that if we can arrange to continue this
propaganda in Labour quarters, we shall be able to get the
majority of the Labour Party to realise that it is essential in
the interests of British trade to adopt a policy which will induce
the Dominions to continue giving substantial preferential
advantages to Britain.

THE ECONOMIC PREFERENCE PROPOSALS

Sir Howard d'Egville [8] told me yesterday that he had had lunch
with Mr. Clynes [9] and that Mr. Clynes had stated that the
Government intended to incorporate some of the preference
proposals in the Budget and that those which were not incorporated
in the Budget would not come before the House of Commons until
after the Budget had been introduced. I am going to suggest to Sir
Joseph Cook [10] that he should cable you to this effect.

THE IMPERIAL ECONOMIC COMMITTEE

I have discussed the Imperial Economic Committee with several
Liberal Members and I think that they are tending to see that it
would be an advantage from their point of view to have an Ad Hoc
Body which could investigate all methods of fostering Empire trade
apart from methods involving tariffs.

LORD ISLINGTON

I had a couple of hours with Lord Islington who, although a
Liberal Peer, intends to take a very definite attitude in the
House of Lords in favour of the whole of the preferences. He was
delighted to find what an extraordinarily strong case could be
made out and, at his request, I am preparing the matter for his
speech.

ENCLOSURES

I enclose a copy of a letter to the Financial Times on the effect
of the Australian Preference to British Trade. [11]

TRADE STATISTICS

Under separate cover I am forwarding by this mail a diagram
showing British trade with countries from 1870-1922. I think this
is an original research and the result is very interesting and
should prove the basis for excellent propaganda.

Yours sincerely,
F. L. MCDOUGALL