Dear Mr. Bruce,

IMPERIAL ECONOMIC COMMITTEE

Today the Fruit Report [1] was signed unanimously and a draft
cable, for despatch to the Overseas Governments of the Empire, was
discussed and the Chairman [2] authorised to submit the outline of
such a cable on behalf of the Committee to the Secretary of State.

[3] After considering the cable which will probably be sent to
you, I drafted a cable which is now being despatched to you. The
following is the text:-

Imperial Economic Committee signed Fruit Report today proposed
cabled summary being submitted to Secretary of State. Following
are points additional to official summary. Report stresses value
to British industry of Empire development and briefly indicates
importance of markets to products of close settlement. Shows that
British dependence upon foreign fruit supplies is not advantageous
to consumer. Describes fully effect of immense American production
sheltered by tariff upon the Empire fruitgrower. Contrasts wages
in Empire and foreign dried fruit districts. Makes clear that
owing to Anglo-German treaty [4], only available way Great Britain
can help in Empire marketing at present is by voluntary
preference. This is described as organizing the purchasing power
of the country to prefer Empire goods. Normal Tariff methods used
by foreign powers to help their colonies pointed out. Recommended
that general publicity from Annual Grant for apples, dried fruits
and more localized campaigns for canned fruits, oranges etc.

commence immediately British legislation provides identification.

Meanwhile Executive Body when set up can commence general
educational campaign recommended. Hidden profits in fresh fruit
consolidated handling charges condemned. Strongest support given
to organization of producers for marketing. Pointed out that
producers cannot expect best results if not effectively
represented in United Kingdom. Points of special interest to
Australia. Room for increased supplies apples oranges from
Southern Dominions pointed out. Research expenditure on transit
problems of fresh fruit recommended. At average prices this season
Australian sultanas show profit but currants loss. Value tariff
preference sultanas indicated. World overproduction dried fruits.

Growers urged concentrate on production high quality for which
better prices available. Dried fruit draft allowance condemned.

Restrictions of United Kingdom Dried Fruit Trade Associations
adversely criticised. Canned fruit packers urged to be most
scrupulous in regard grading in view entrenched position
California. Above confidential pending publication of report.

Posting final revised report this mail. Presume publicity campaign
will apply meat and other products also.

I sent another cable on the 30th March in the following terms:-

Reference Imperial Economic Committee understand Canadian reply
agrees Amery's proposals but raises constitutional difficulties to
Overseas representatives on Executive body. Further negotiations
proceeding. Anticipate brief parliamentary statement on proposed
executive action March 31st.

Under separate cover I am posting to you a copy of the final draft
of the Main Fruit Report. There are, you will see, a number of
minor corrections and omissions and additions but no further
roneoed copies will be available until the report is printed. I
sent you last mail a copy of the Banana Report but I cannot send
you copies of the other subsidiary reports at the moment because
they had been so hacked about by the Committee before approval
that it would involve you in a very heavy task in reading them and
I think you will prefer to wait until you get the printed copy. I
hope that you will think that the Main Report is a useful
document. In obtaining a unanimous report from 20 men representing
divers interests, it is necessary to compromise and sacrifice
quite a number of points that one would like to have seen given
clear expression to. For instance I had hoped to have made it
abundantly clear that it was to the very great advantage of Great
Britain to take a specially long sighted view so far as markets
for the products of close settlement-fruit, wine, dairy produce,
pig products-were concerned. The Canadian delegates objected and
all that I found possible was to get a sentence or two in Section
2, paragraph 10.

You will find throughout the report that, although tariff
preference is acknowledged to be outside the present scope of the
Imperial Economic Committee, few opportunities have been missed of
bringing the idea of tariff preference to the front. This is
particularly the case in the subsidiary reports.

The most outstanding features of the report are:

(1) the importance of the fruit trade itself This is clearly shewn
in Section 2, paragraphs 7 and 8 and could be made extremely clear
in Australia by the statement that the United Kingdom spends on
imported fruit not less than from a third to a quarter of the
total that Australia spends on all forms of imported goods.

(2) the Committee expresses the definite opinion that the Empire
could supply the bulk of Great Britain's imported fruit, whereas
today the Empire only supplies 20%.

(3) the advantages to Great Britain of obtaining her supplies from
the Empire rather than foreign countries are made very clear in
Section 2 and again in Sections 27 and 28. I would draw your
particular attention to Section 27, which received very close
consideration from the Committee, which I regard as being rather
an interesting Section to have had approved, seeing that we have
at least two strong Free Traders among our members.

(4) the very strongest emphasis is laid upon the importance of the
organization of producers. In our First Report and in our Meat
Report I did not find it possible to get the Committee
wholeheartedly to endorse the principles of the organization of
the overseas producer for the purpose of supervising the marketing
of his goods in the United Kingdom. Nothing has been more striking
than the way in which the work of the Committee has educated the
members in this direction. Today the only members who have any
hesitation on the subject of the organization of the producer are
the Chairman and Sir Thomas Allen, representing the Wholesale Co-
operative. They both approve of organization but continually
desire to insert paragraphs pointing out the possible ultimate
dangers to the United Kingdom consumer if organization is carried
to a high degree of efficiency. This question did not become acute
on the subject of fruit but if, as I anticipate, the Committee
tackles dairy produce as its next subject, the question of export
control legislation will certainly be well in the forefront.

The idea of the organization of the producer runs through the
entire report but I would draw your special attention to Section
11 and to the continual references to the necessity of effective
representation of the overseas producer on the United Kingdom
market.

(5) I am not very satisfied with the Sections on Finance and would
have liked to have seen rather stronger recommendations made but
it is I think quite implicit that finance lies at the bottom of
all schemes for effective organization of the producer.

(6) the sections dealing with the methods of selling fruit, both
wholesale and retail, in the United Kingdom will be sure to arouse
a considerable amount of criticism from those having vested
interests in the trade but I think you will agree that remarks on
this subject have been carefully expressed and they have been very
closely scrutinized by the Committee. The Chairman has continually
insisted that, as an Imperial Body, we must, as far as possible,
avoid interfering in domestic affairs. Having regard to our terms
of reference, I am not at all sure whether he has not over
stressed this point of view. One result of his attitude is that
the report may be considered weak in definite recommendations.

(7) on the Publicity Section No. 28, I should particularly like to
receive from you an expression of your views. Mr. Crawford, the
Publicity Expert whom the British Government placed on the
Committee, produced a report which contained nothing but the
vaguest of generalities and in effect recommended a great
sentimental appeal based on ties of blood and the development of a
fruit consciousness. I strongly took the line that what we had to
do was to develop not a fruit but an Empire consciousness in the
people of Great Britian and that the appeal must be directed to
the reason and not to the emotions. It would be very helpful to me
to know how the paragraphs in Section 28 strike you.

This report for the first time shows quite clearly that, owing to
election pledges on the one hand and to the Anglo-German Treaty on
the other, there is no road open whereby Great Britain can assist
the marketing of Empire products except the road we have
indicated, namely, voluntary preference. It was, of course,
impossible even to suggest that in this report we should indicate
what most of us felt would be the result of a really well
conceived educational publicity campaign. I have the gravest
doubts as to whether educational publicity will be in any
considerable degree a substitute for tariff preference or definite
schemes based on import licences but I feel that, in two years
time, such a campaign ought to have an immense effect upon the
electorate and perhaps result in making it possible, after the
next general election, to carry into effect policies which are at
the present moment regarded as being politically impossible.

With regard to expenditure out of the Annual Grant, you will see
from the Banana Report and also from the Main Report that certain
definite expenditure is proposed in order to assist the
establishment of this industry in the West Indies and West Africa
and that further small grants are to be devoted towards organizing
producers in the Crown Colonies. As there is no mention of any
definite sums of money in connection with the Dominions, there may
be some criticism in Australia that Dominion interests have been
neglected while those of the Crown Colonies have been pushed.

Actually nothing could be farther from being the case because, as
far as the Committee is able to see, the only Crown Colony fruit
product which is in sufficient supply to be advertised is bananas
and it is unthinkable that we should advertise bananas while they
remain a monopoly of an American Corporation; thus, out of the
total expenditure which may be incurred, probably only about
30,000 or 40,000 will be spent on behalf of the Crown Colonies,
Protectorates and, for the matter of that, India, while the
remainder will be used to benefit the Dominions and British
agriculture.

SUBSIDIARY REPORTS

With the exception of the Banana Report, almost all the matters of
general interest have been extracted from the various Subsidiary
Reports and placed in the Main Report. The Subsidiary Reports,
however, contain a mass of very interesting statistical
information on the various fruit trades.

From the point of view of the fruit growers of the Empire, these
Subsidiary Reports attached to the Main Report ought to make the
whole document of really great value to the Dominion Producers.

They will be able to see what they are up against and how large a
market remains to be conquered in the United Kingdom. The Apple
Report is considerably the longest, whereas the reports on jam and
Nuts are only brief summaries of the position. I am quite sure the
general form and in fact the usefulness of the separate reports
would have been much increased if they had received more attention
from the Committee. The Banana Report, as you know, was prepared
by a separate Banana Committee, the Apple Report and, to a lesser
extent, the Citrus Report received a fair amount of attention. I
naturally saw that the Dried Fruit Report contained a considerable
amount of matter but so far as the others are concerned, when you
realise that even this morning when we were taking the final
reading of the Canned and Bottled Fruit Report, the Chairman was
alone among the members of the Committee I think in reading it for
the first time, you will realise the sort of difficulty that one
has been up against.

As the report will be before you at the same time as this letter,
I will not go into further details about it but I should like to
repeat this remark that if, after reading it, you could find time
to let me have a fairly full expression of your views about it, it
would be of very great assistance in consideration of further
subjects. I am unfeignedly glad that this report is finished
because owing largely to the circumstances referred to above, I
have had to devote a good deal of time, and a good deal of it
wasted time, to getting the report completed.

THE ECONOMIC SIDE OF THE IMPERIAL CONFERENCE

I am enclosing a draft of a proposal for exploring the ground
before the Imperial Conference, which I hope you will be able to
look through. The draft is, I think, self-explanatory but so far I
have only given a copy to Sir Sydney Henn [5] but I propose to
discuss it with Lord Burnham [6], with whom I am lunching on April
the 12th. The work that I am suggesting this little unofficial
Committee should do for the Government is work that really ought
to be within the province of the Imperial Economic Committee but,
of course, as you know it is not the case at the present moment.

I hope that a small and effective Committee can be set up to work
quite in private and really to do three things. First of all to
consider the ground and tender advice to the Prime Minister [7]
and the Secretary of State for the Dominions; secondly to educate
the House of Commons and thirdly, to inaugurate a Press Campaign
to educate the country. I quite deliberately consider that a
Committee of this sort would be much better at the present time if
it was on a purely party basis. I think practically everybody
agrees that, unless some catastrophe occurs, the Conservative
Party will be in office for the next eight years and as they will
have the executive power, it is necessary to devote special
attention to them.

LABOUR PARTY

I had a long talk last night in the House of Commons with Mr. Tom
Johnston [8] on the subject of progress of Empire ideas in the
Labour Party and he agrees with me that slow but definite progress
is being made. He yesterday asked an interesting supplementary
question of Amery, after Amery had made the statement about the
Executive Body for the Imperial Economic Committee, to which I
would draw your attention when you are considering the line to
take in public speeches when you are over here in the Autumn. I
hope that you will bear in mind the importance of associating
Empire development with good standards of labour conditions. I am
sure that it would have a very good effect, both on the Labour
Party and also on the younger Conservatives.

THE VALUE OF THE EMPIRE TO BRITISH INDUSTRIES

I have started to prepare schedules showing the value of the
Empire as a market to certain industrial districts in Great
Britain and I enclose the statements for Birmingham and Leicester.

I have selected all the industries of a given district in which
Empire markets absorb about 50% or over of the total exports from
Great Britain. You will see what an excellent story can thus be
made. I am sending copies of the figures to members for the
districts when I know the member personally and feel that he will
make good use of the figures. I am asking these members to confine
their use of the schedules to material for speeches and not to
publish it. In the case of Birmingham, I have sent the figures to
Messrs. Amery and Neville Chamberlain [9] and to Sir Evelyn Cecil.

[10]

TIMES TRADE SUPPLEMENT

I enclose two further articles from the above paper on the
Economic Problems of the Empire. [11]

NEXT ENQUIRY OF IMPERIAL ECONOMIC COMMITTEE

I learn that on March 30th Amery cabled the Governments of the
Empire stating that the Imperial Economic Committee proposed to
investigate Dairy produce during the forthcoming months.

I assume that there will be general agreement, though perhaps
India may suggest the addition of a further subject of interest to
the tropical parts of the Empire. If Dairy produce is approved, I
feel sure that the critical question will be the Export Control
Legislation of New Zealand and Australia.

The present personnel on the Committee will take a sympathetic
attitude to this legislation with the possible exception of the
Chairman and Sir Thomas Allen, the representative of the Co-
operative Wholesale Society. I feel that it is very desirable that
any additional representatives of Australia should be in sympathy
with the policy of the Government on this question of Export
Control. If this letter reaches you in time to be of any value
from this point of view, perhaps you will consider this point.

EMPIRE PARLIAMENTARY ASSOCIATION

During the last two or three weeks, every time I have seen Sir
Howard d'Egville [12], he has been trying to get me to cable you
an expression of my own opinion that it was desirable to postpone
the Empire Parliamentary Association's visit to Australia till
next year. He very strongly takes the view that it is absurd to
have a Parliamentary visit to Australia while the Imperial
Conference is on.

I told him that I did not feel inclined to cable any expression of
my own views because I felt sure that you were in a position fully
to appreciate the situation and that, in addition, I thought that
the visit of a Parliamentary Party to Australia during the coming
Autumn was more important from an educational point of view than
any possible value of conferences arranged by the Empire
Parliamentary Association might have. He has told me that Lord
Burnham cabled asking for an expression of your view and that you
replied leaving a decision in the hands of the British
Association, but expressing your own view that the visit should
proceed this year.

Casey [13] tells me that d'Egville has also suggested to him that
he should cable an expression of his views that the trip should be
postponed but Casey, I gather, took the same view as I did.

Incidentally I was amused to find the last time I met Casey, that
he had, by the last mail, sent you a copy of the 'Secret of High
Wages'. [14]

Yours sincerely,
F. L. MCDOUGALL