Dear Mr. Bruce,

CABLES

On the 13th of March I received the following cable from you:

Reply your telegram, Government never contemplated Britain would
not have representative on Executive Commission. You can tell
Amery [1] that as I indicated in my telegram [2] we are prepared
to accept their proposals as a temporary method of dealing with
position and that the rest of my telegram was merely designed to
set out the position as we saw it-Bruce.

On Monday morning I had an hour with Mr. Amery and after my
interview I sent you the following cable:-

Have seen Amery. He considers proposed Executive Body will not be
departmentalised and as the grant is not to be returnable he feels
there will not be the ordinary Treasury motives for postponement
of expenditure. Amery personally most anxious eventually to secure
assent to making up grant to full average of 1,000,000 annually
but is not sanguine of immediate success. Treasury have published
estimates including 500,000 for Empire marketing. This item has
not yet been noticed by the press. South African Government have
cabled agreement with Amery's plan. No further answers received.

INTERVIEW WITH MR. AMERY

Mr. Amery told me that, although he had not yet answered your
cable of March 6th, he had written you a personal letter about the
Imperial Economic Committee and the Executive Commission. He was
glad to have the information that your cable to me enabled me to
give him. He stated that he had personally taken it for granted
that you did not exclude British representation on the Executive
Commission but the precise information would be useful with his
Cabinet colleagues.

He told me that South Africa had cabled their agreement with H.M.

Government's proposals but did not tell me anything further as to
South African views. I gathered from him that if Canada alone
proves obdurate, he is prepared to go ahead without Canada.

Mr. Amery then asked me to let him have my views as to the methods
of working of the proposed Executive. We discussed several points
and I promised to write to him at once giving him my personal
views. I enclose copy of my letter to him on this subject. I am
taking it for granted that you will wish me to co-operate as fully
as possible with Amery in order to get early and fruitful action
on the Imperial Economic Committee's recommendations.

Mr. Amery also asked for my views on publicity. I told him that I
had given this subject much thought and felt that, while there
were obvious dangers, these could be avoided and the campaign made
most fruitful if certain points were clearly seen. These points
included:

(a) the avoidance of all exaggeration or of appeals based on false
fact or sentiment.

(b) clear realisation of the aims of the campaign
(1) to induce the United Kingdom consumer to transfer his custom
from foreign to Empire goods and not just to increase the total
consumption of fruit or any other articles.

(2) to awaken an Empire consciousness among people in this
country.

I told him that I had gone carefully into the question with some
friends, who were advertising experts, and that they had worked
out a general memorandum, a copy of which I would send to him. He
asked me whether these views coincided with those of Mr. Crawford
[3], the Advertising Expert Member of the Imperial Economic
Committee. I told him that Crawford had only contributed to the
Committee one brief and very vague memorandum, with which the
Committee, as a whole, was in disagreement because Mr. Crawford
based his ideas upon an emotional appeal.

I am enclosing, for your information, a copy of the memorandum on
publicity, which I sent to Mr. Amery. I hope you will find time to
glance at it and to let me know something about the way it strikes
you.

Please understand that I accept no responsibility for the figures
and statements. These were prepared by David Allen Ltd and I have
not checked them.

Mr. Amery asked me if I did not think that the time had come for
Empire Economic Committees to be established in Australia and the
other self-governing Dominions in order to increase the sale of
Empire goods in Dominion markets. He said he would like to see in
Australia a Committee with New Zealand, Canadian and Indian, as
well as United Kingdom, representatives to increase Empire trade.

I told him that I very strongly felt that the essential
preliminary to any such, move must be that Great Britain herself
must 'show willing'. Up to date Great Britain had not given any
really substantial evidence of an intention to prefer Empire
goods. I felt that a move, such as he mentioned, would not be well
received until Great Britain had demonstrated effectively her
intention to assist the Overseas Empire. I think he agreed that my
view was sound.

IMPERIAL ECONOMIC COMMITTEE

There is no news of particular importance about the work of the
Committee this week. Yesterday we had a full dress debate on the
Publicity Section of the Report in which, after several hours, the
proposals of the Drafting Committee were approved, subject to
certain small amendments.

As you will have very clearly realised that Voluntary Preference
is the only method at the present moment available for assisting
Empire products in this market, this Publicity Section becomes of
special importance and I am very glad that the Committee have
decided to state quite clearly that a publicity campaign must
appeal to the reason of the people and not to their emotions.

I am enclosing, for your information, the Minutes of the three
meetings, at the first of which Mr. Amery was present and [at] the
other two Mr. Amery's proposals were discussed by the Committee.

THE LABOUR PARTY AND THE EMPIRE

I am enclosing copy of a report of the Committee of the
Independent Labour Party which has been considering the attitude
of labour to the British Empire. I have marked the pages in which
reference is made to economic relationship but I fancy that you
will be interested to glance through the whole of the report. Mr.

Snell [4], the Chairman of this Committee, is a friend of mine.

The I.L.P. is, on the whole, the section of the Labour Party most
affected by international socialism and therefore this report
seems to me of rather particular significance and shows that the
idea of Empire economic relationship has made very considerable
progress in soil much less suited to the growth of our ideas than
among trade unionists.

HOURS OF LABOUR

I enclose cuttings from the 'Times' giving an article by the Rt.

Hon. G. N. Barnes [5] on this subject, a leading article from the
'Times' and the report of the opening meeting of the International
Conference in London. [6] I think that you will be interested in
this.

'TIMES TRADE SUPPLEMENT'

As I believe you are aware, the 'Times Trade Supplement' is going
to publish on April 17th a very important Empire Products Special
Supplement dealing with the British Empire. I believe that this
Supplement will be very good and attract widespread attention both
in this country and in the Dominions.

As a prelude to the publication, the paper is publishing a series
of articles on the economic problems of the Empire and I enclose a
copy of the article that appeared last week. [7]

I am also enclosing a very striking leading article on the Annual
Grant under the title of the 'Gift Horse', a rather curious
coincidence to anyone who has seen your cable of March 6th.

The Leader Writer has taken just the opposite point to yourself
and criticises the British Government for looking the gift horse
in the mouth before making the gift. [8]

I also enclose, from the same paper, a short comment on the new
Merchandise Marks Bill. [9]

PROPAGANDA

I enclose a report of a speech which I made at Bournemouth and a
copy of a leading acticle from the 'Bristol Times & Mirror' about
my article in the 'National Review'.

PARLIAMENTARY QUESTIONS

I enclose several Parliamentary questions and answers of interest
in connection with the Imperial Economic Committee.

BRITISH TRADE

In my letter of February 17th [10] I gave you some figures about
British trade and commented upon the optimistic talk which was
then current. There has been rather less obvious optimism during
the past month but everyone still seems to take an improvement of
trade for granted.

The February trade figures give little encouragement so far as the
British export trade goes. The total value of exports of British
produce and manufacture was 62.8 millions in February as against
60.3 millions in January 1926, but in February 1925 the figure
was 69.3 millions; so, although February showed a small increase
over January, exports were 6.5 millions down on February 1925.

The decline in imports noted in January 1926 continued in
February, the January total being 117.6 millions and for February
96.8 millions. So far as the first two months of 1926 go, the
position is as follows:-

1924 1925 1926
(2 mths) (2 mths) (2 mths)
Imports 197.8 mill. 239.0 mill. 214.5 mill.

Exports 132.2 " 138.3 " 123.1 "

CONSERVATIVE PARTY

A group of the younger Left Wing Conservative Members have asked
me to dine with them on March 22nd and to address them on the
subject of Empire Economics. They intend to work at the subject
and have appointed a sub-group of four members with a Secretary (a
son of Sir Rennell Rodd, late Ambassador at Rome). These members
are very intelligent but tend to be too 'high brow'. I hope,
however, that they really mean to work for I have so often been
disappointed with promises of work from Tories.

Their idea is (1) to get a grasp of the situation (2) to start a
campaign in (a) Parliament (b) the Press in favour of a successful
Imperial Conference on the economic side.

I propose to point out to them methods of clearly apprehending the
present position in the following sequence:

(a) a study of the post war competitive situation in the world's
markets which British industry must face. For this purpose I have
prepared some figures from the most recent foreign statistics
which are striking. I enclose a copy.

With a little knowledge of world trade and a study of these
figures, it becomes clear that, whereas in 1913 Great Britain had
only two serious industrial competitors, today France, Italy,
Belgium, Japan and Czechoslovakia have also to be reckoned with.

I would recommend to your attention the final column of this table
which shows that, in contrasting the export trade of 1923 with
1925, the progress made by Great Britain is almost negligible
whereas every other one of these countries have made substantially
greater progress.

I have also prepared figures on the export of manufactured goods
which, although less complete, are equally striking. I enclose
this table also.

When one considers the depressed state of the British iron and
steel industry, it is extremely significant to note that both
Germany and France have between 1923 and 1925 doubled the quantity
of iron and steel products exported.

(b) A study of the comparative value of markets to Great Britain
illustrated by the facts that I have so frequently utilized.

(c) From (a) and (b) a clear idea can be obtained of the Economic
importance of the Empire to Great Britain.

(d) How to speed up Empire development.

(1) I shall urge them to satisfy themselves as to the present
practicability of Tariff Preference, Import Licences, etc.

(2) Urge that they study the possibilities of Voluntary
Preference.

(3) Realise the many and grave limitations of Voluntary
Preference.

(4) Work for a reconsideration within the Unionist Party of the
whole question of Empire Economic Development.

FUTURE OF THE IMPERIAL ECONOMIC COMMITTEE

I am not forwarding any further ideas on this point. Just at
present I am working until about 11 p.m. every night and have not
the opportunity of giving this important subject the attention it
requires. As soon as the Fruit Report is signed (I hope next
week), the extreme pressure will be relaxed and I shall be able to
collect my ideas.

Yours sincerely,
F. L. MCDOUGALL