Dear Mr. Bruce,

I have, in a separate note, replied to the more personal parts of
your letter of July 6th. [1]

While I fully appreciate the fact that I cannot expect you to
reply to the bulk of my letters and communications, your letter
was especially welcome.

I shall be very glad of the opportunity of meeting Mr. Gepp [2] at
Port Said, and I shall be glad to commence a correspondence with
Mr. Paterson. [3]

As it seems to me, the more permanent Australian representative on
the Imperial Economic Committee, and on the Empire Marketing
Board, ought to be in liaison with both the Minister for Markets,
and also with the Development and Migration Commission.

The purpose of the first liaison is too obvious to require
comment. As I have visualised the work of the Commission, it will
have three main spheres-
(a) Migration
(b) Development of Transport and of Primary Industries
(c) Development of power schemes and of Secondary Industries.

I am not clear whether I am right in assuming that the Commission
will be concerned with secondary industries, but my impression is
that such a body charged with national stocktaking, and with
development, cannot but have considerable concern with
manufacturing policy. If it is desirable for me to be in touch
with the Minister on marketing, it seems equally clear that I
should be in touch with the Commission in reference to the
production side of Primary development. The Research side of the
Empire Marketing Board is even now bringing me into contact with
aspects of scientific research which must be of intense interest
to Australia.

I have a strong feeling that occasional reports on the progress of
research, written by a fairly intelligent layman with some general
knowledge of agriculture to a lay body such as the Development
Commission, may prove very useful, no matter what form of
interchange of scientific information may be arranged between the
specialist in Great Britain and the specialist in Australia. It is
recognised that, owing to a lack of method of making the results
of research available in a form intelligible to producers, much
valuable work is lost in the dry records of proceedings of
scientific societies, and work of immense importance -such as the
Mendelian principles-may, like them, be lost to the productive
side of agriculture for many years. It also not infrequently
happens that the scientist fails to convince the laymen of the
importance of certain advances; this is specially the case when
the scientist is highly specialised and cannot himself see more
than his own problem.

This matter, however, involves the whole question of the Research
side of the Empire Marketing Board, and I will not weary you with
the written word when the matter can soon more easily be
discussed.

EMPIRE MARKETING BOARD

Although all the Ministers, and most of the other members of the
Board, are away from London, a nucleus sub-committee on Publicity
is carrying on, and on the Research side I am keeping in touch
with the Board's secretariat. As Parliament is meeting on August
30th and 31st, there will be official meetings of the Research and
Publicity Committees about that date.

Considering the short life of the Empire Marketing Board, I am
fairly well satisfied with the progress we are making.

Publicity

At present we are in difficulties with the Advertising Agents over
the question of commission. The Treasury objects to paying 10% on
so large a sum as we may eventually expend. I hope, however, that
this week we shall either obtain an accommodation from the Agents,
or be in a position to inform the Treasury that they must settle
the question one way or the other for us. I very much dislike our
being in the position of being expected to fight a battle on
behalf of the Treasury.

So far as the poster campaign goes, we are making good progress on
the preparatory arrangements, and shall, I hope, be able to show
the Conference the type of work which we contemplate using. If all
goes well, we shall have some first posters on the hoardings
during the Conference, and shall be able to start the special
frames not very long after its dose.

The other sub-committee on Publicity in the schools, and through
the cinema, has not yet made any progress.

Research

Up to the present time the Research Committee have made only a
limited number of final decisions involving expenditure. These
include a substantial preliminary grant of �25,000 to the Low
Temperature Research Station at Cambridge, to carry out the work
recommended by the Imperial Economic Committee on the freezing and
chilling of meat, and of the transport of fruit in cold storage.

They have also endorsed the scheme of Economic Research and
Economic Education to be conducted by the Board of Agriculture,
mainly in the interests of the British farmer, this involving a
total expenditure of �40,000, and as I have reported to you
before, commitments have been made for about �20,000 in respect of
the Imperial College of Tropical Agriculture at Trinidad. Definite
expenditure has been approved, to the extent of �10,000, for work
on the Mineral Deficiencies of Pastures.

In addition to these definite commitments, a considerable amount
of exploratory work is being done prior to the definite
consideration of schemes by the Research Committee, which
exploration includes such widely different problems as-
(1) Survey of the Entomological Services of the Empire being
provided by the Imperial Bureau of Entomology,-and
(2) An examination of the question of grubs in Australian Dried
Fruits.

Considerable progress is being made in establishing connection
with Research Institutions in the Dominions. Owing to my discovery
that Dr. Richardson [4], the head of the Peter Waite Institute
(Adelaide University), was in London, we have been able to
conclude tentative arrangements whereby the work on the mineral
deficiencies of pastures will be commenced in Australia. The
arrangements are purely tentative, but Richardson has cabled
Adelaide, who have agreed in principle.

The suggested basis is that on an estimate, furnished by
Richardson for this particular research, of a capital cost of
�6,000, and an annual expenditure of �3,750, the Research
Committee will recommend to the Board that 50% of both capital and
annual cost be met by the Board, the annual for a term of five
years,-the Waite Institute to find the remaining 50%. This
particular research into mineral deficiencies in pastures affords
an interesting example of the way the Research Committee is
visualising its job. The problem involves all parts of the Empire,
being of special interest in Scotland, Australia, South Africa,
Kenya, the Falkland Isles, and Palestine.

The Rowett Institute at Aberdeen has commenced the fundamental
scientific work, and field workers have been, or are about to be,
sent to Kenya. South Africa is carrying on parallel work in the
Transvaal. The Waite Institute in Adelaide has been interested,
and the Jewish authorities in Palestine are prepared to come in on
a 50-50 basis for research work in Palestine.

The general idea is-
(a) To make the Rowett Institute basic for this particular job of
work.

(b) For the Board to contribute the whole cost of the basic work,
at present estimated at �10,000.

(c) For the basic institute to be a clearing house of information
for all work on this subject within the Empire.

(d) For the Board to be prepared to assist further research in
other parts of the Empire on this particular general Empire
problem, by contributions on a 50-50 basis, each Imperial research
station undertaking work to be free to follow its own lines of
developing the problem, but to be required to report regularly to
the basic Institute the scope and nature of work undertaken.

In this way we hope, without any cumbrous machinery, to encourage
original work; to solve the problem more rapidly than if the whole
research was centralised; without impairing the freedom of each
unit, to avoid unnecessary duplication of donkey work by the
prompt circulation of results obtained to all engaged in the
research. Finally, we hope to evolve a suitable method whereby the
Board can circulate authenticated results to the farmers of the
Empire in language they can appreciate, probably through the
medium of the various Agricultural departments throughout the
Empire.

I have described this piece of work at some length because I hope
to discuss the Research side of the Empire Marketing Board with
you, and I therefore would like to put this into your mind
beforehand.

Last Tuesday I visited the Fruit Research station at East Malling,
and feel convinced that there work is being done which will prove
of the utmost value to the Fruit Industry of Australia, and which
I hope will lead to the establishment of parallel research work in
Australia.

IMPERIAL ECONOMIC COMMITTEE

The Dairy Produce report will not be published until September
2nd, as the Stationery Office are working with a nucleus staff
during August.

I am forwarding to you an uncorrected page proof which you will, I
hope, find readable. The text has been slightly modified in places
to eliminate repetition, but this copy is substantially accurate.

I hope you will have time to read the reports, but I have marked
the portions which I think will be of the greatest interest.

On the cover the phrase 'Marketing and preparing for Market of
Foodstuffs produced in Overseas Parts of the Empire' has, in
consequence of the decision to include British Agriculture, been
altered to 'Produced within the Empire'.

Generally speaking, the really important sections of the Report
are V from our point of view, VIII, and XIII, XVIII, XIX, XXI,
XXII, XXVI, XXIX, XXX. I feel that you will find the section
dealing with Wholesale and Retail prices, and with the Export
Control Board, the two most interesting portions of the report.

The margarine report does not very vitally concern Australia-I
have, however, marked the portions that you would certainly desire
to see. On the other hand, the whole of the margarine report is of
very considerable Imperial interest, as it concerns India, and
East and West Africa, to a considerable degree, and I therefore
hope that you will have time to look through it.

If you read the report carefully, you will probably come to the
conclusion that having regard to the very small share that Canada
holds in the Dairy Produce trade of the Empire, the amount of
space given to Canada, and the amount of, shall I say, gratuitous
advertisement given to the Canadian Department of Agriculture, is
the weakest feature of the report. So far, in every one of our
reports we have had some form of difficulty with the Canadian
representatives. Canada has been represented by Officials who have
been immensely sensitive to any possible reaction from either
their producers, or more probably the heads of their departments,
and it is only with the utmost difficulty that any suggestion that
everything in Canada is not super-perfect can be brought into the
text.

Should it so happen that this kind of treatment has made Canada
feel the Imperial Economic Body is a very useful body, a good
purpose will have been served. Had the Chairman [5], however, done
any real work on the subject, and become fully seized of all the
points, he would have been able to have dealt much more properly
with this sort of thing.

THE POSITION OF BRITISH INDUSTRY

I have prepared several memoranda dealing with the position of
British Industry which I am enclosing with this letter.

They consist of the following papers:-

I. The Growth of American competition-(A copy of this was
forwarded to you in Australia).

II. The Growth of European competition.

III. Far Eastern Markets.

IV. A note on South American Markets.

V. A note on Empire Markets.

VI. British Position in World Markets.

I have gone to considerable length on these matters, because I
feel convinced that it is of the utmost importance to show the
Conference that, although in 1923 it was possible to believe that
the restoration of Europe would bring back prosperity to Great
Britain, the position in 1926 is such that any such hope is almost
obviously illusory. Throughout I have worked up to the 31st March,
1926, so as to avoid any unfair use of the Coal Strike effects. I
hope you will have time to look through these papers.

In this connection I am enclosing some cuttings from this week's
'Statist'. They are interesting as typifying the immense inertia
of the British Free Trade point of view. If you will read the one
on the state of the Lancashire Cotton industry, you will observe a
spirit of unreasoning optimism which is unfortunately only too
typical.

I am tempted to remind you of the attitude of the Catholic Church
to a Protestant of saintly life. The Church declares in such a
case that he may achieve heaven because of God's grace in
recognising his state of 'invincible ignorance'. I am not sure
that such an attitude is not equally applicable to the keen and
patriotic individual of the Manchester school, who is so bemused
by an outworn Theory, that he is impervious to the steady
accumulation of economic facts which disprove his Thesis.

Incidentally, I am not at all sure that 'invincible ignorance'
could not also be applied to some exponents of extreme protection
in Australia.

THE AUSTRALIAN TARIFF

The recent change in the Tariff on Iron and Steel products seemed
to be sufficiently interesting to draw attention to some of its
implications in the Press. I enclose an article thereon which I
sent to the Times Trade Supplement. [6]

AGRICULTURAL POLICY

I enclose a marked copy of the report of a committee of the Labour
Party on Agricultural Policy. The portion on marketing may prove
of interest to you. Your phrase of 1923 about fluctuation of
prices is once again quoted. [7]

THE ECONOMIC SIDE OF THE IMPERIAL CONFERENCE

I have, through Casey [8], had an opportunity of looking through
the papers on the Economic side, prepared by H.M. Government for
the Imperial Conference. Apart from two interesting papers upon
Migration, they seem the dreariest lot of stuff that could have
been put out. I hope that the responsible Departments will brief
their Ministers better before the actual Conference.

The main Theme that I have in mind at present is 'The Orderly
Development of Empire Resources'.

In your opening speech at the Imperial Economic Conference, 1923,
(Cmd 2009 page 64)-you commented upon the growth of Dominion trade
from 1880-1921, and you referred to the statesmen of 1880, and
finished the paragraph with 'while we made no really serious
effort to develop the Empire at all The Empire has merely
developed of its own initiative.' You went on to say 'Up to date
there has been no concerted plan, and I venture to suggest, no
real and genuine effort'. This was a perfectly fair comment. It is
true to say that Great Britain has been content with a policy of
laissez faire in regard to the Empire. Development has been left
to private enterprise without any General Staff work. Latterly
there has been some attempt at organized development in West and
East Africa, with excellent results which show themselves in the
increased export trade which Great Britain is able to carry on
with these Colonies. Generally speaking, however, the Imperial
Economic Committee and the Empire Marketing Board are the first
real moves towards an orderly conception of Empire Development.

These bodies only represent a hesitating start, though they appear
to contain all the elements necessary for developing into an
Empire Development Commission such as that recommended by the
Empire Royal Commission in 1917.

Real progress, however, cannot be made simply by the setting up of
bodies in London. It is also necessary that there should be bodies
charged with national stocktaking and development in each of the
Dominions, and perhaps in groups of Colonies such as East and West
Africa and the West Indies, etc. Australia has, in the immediate
past, set up such a body in the new Development Commission, and if
this example could be followed in other parts of the Empire, and
direct liaison established between Imperial bodies in London and
the Development Commissions overseas, it might be Claimed that a
real start towards an orderly system of development for the whole
Empire would have been commenced.

The foregoing merely suggests machinery. Of course, much more is
required. On the financial side it is necessary to direct the
investment of capital into channels that will not only bring
profit to the individual, but also yield the best return to the
Nation and the Empire.

In the past Empire Development, particularly in the Crown
Colonies, has been starved through the cheese-paring financial
policy of the Treasury. If progress is to be made, all that must
be remedied, but the remedy will not be forthcoming unless the
people of the United Kingdom realise how greatly their own future
prosperity depends upon development of their Empire inheritance.

Then science must be harnessed to the service of the Empire.

Scientific research cannot only immensely improve the productive
capacity of agriculture throughout the Dominions and Colonies, it
can also immensely affect the available manpower, particularly in
the Colonies, where there is little doubt that the standard of
physical well-being can be greatly improved, and the death-rate
substantially lowered by the application of scientific facts
already well established. Thirdly, there is the whole subject of
Markets, and the whole mass of Economic Research that requires to
be done. In this field the Empire lags far behind the United
States of America.

It would be very easy to show, in the clearest possible way, what
this suggested orderly development might mean to Great Britain. So
far as the Dominions are concerned, the story is already well
known, but if the Empire Economic Committee could devise means for
improving the standard of living, and the purchasing power of the
Indian agriculturalist, immense reserves of prosperity would be
made available to the whole Empire, but particularly to industrial
Great Britain. In India it is estimated that there are two hundred
million people engaged in agricultural pursuits. If their
purchasing power could be increased by only one shilling per head
per year, it would mean a total increase of imports into India of
ten million pounds, of which, at the present time, Great Britain
would obtain five millions. In the same way, the nineteen million
people in Nigeria-who already purchase more per head from Great
Britain than do the citizens of the United States-could be made a
more important market to Great Britain than many of the populous
Continental nations.

EXTENSIVE VERSUS INTENSIVE AGRICULTURAL PRODUCTION

I have from time to time mentioned to you the idea of putting
before the British people the contrast between extensive and
intensive agricultural production, and of it being suggested that
while Great Britain may not feel that it is practicable to
consider any method of guaranteeing her markets for wheat and meat
to Empire production, yet that after all wheat and meat are both
chiefly produced extensively. Extensive methods do not involve any
large degree of close settlement; on the other hand, there are a
number of agricultural industries which are predominantly
intensive, and therefore particularly suitable for migration
settlement. Such industries are fruit and wine production,
dairying, and pig-raising. If Great Britain could assure to the
agriculturalist of the Empire-whether farming at Home, in the
Dominions, or in the Colonies-the markets for these intensive
forms of production, very great progress would be made.

I have tried to bring this theme into both the Fruit Report and
the Dairy Produce Report of the Imperial Economic Committee. In
both cases I encountered some Canadian opposition, and have had to
be content with much less than I should have liked to have seen on
the subject. I am mentioning it now because I feel that you may
care to consider to what extent this idea might form part of your
general point of view on economic matters, as expressed during
your visit to England.

This letter has already grown to inordinate length, and as I hope
to see you within ten days of your receiving it, you may feel that
such a length is rather unnecessary. I have, however, felt that it
was desirable to put a certain number of ideas on paper, so as to
facilitate discussion.

I do not propose to comment here upon the future of the imperial
Economic Committee, the future of the Empire Marketing Board, nor
upon the relation of these two bodies. That is a subject which
needs careful and close discussion.

I have arranged to see both Major Walter Elliot [9], M.P., and
Captain Ormsby-Gore [10], M.P., on the night of Monday, 30th
August, in the House of Commons, to have a talk with them about
these particular subjects. Unfortunately I shall not be able to
see Mr. Amery [11] before coming to meet you, for he has departed
to Switzerland for six weeks for a complete holiday.

AUSTRALIAN MARKETING ARRANGEMENTS IN LONDON

I am very glad to see, from your letter, that you are proposing to
go closely into this question white you are over here. I do not,
however, think that any particularly useful purpose will be served
by my commenting on this point at the moment. Here again is a
subject requiring careful discussion and study.

26th August, 1926

THE IMPERIAL ECONOMIC BODIES

With regard to the future of the Imperial Economic Committee, and
of the Empire Marketing Board, I have already said that I am
discussing these questions during the coming fortnight. I propose
to prepare on paper, the rough outline of two or three alternative
schemes dealing with methods whereby these bodies may become of
much greater assistance to the Empire. I shall bring these notes
with me to Port Said with the idea of their affording a basis for
discussion.

I feel very definitely that the Imperial Economic Committee must
receive an enhanced status, and enlarged terms of reference. Up to
date I feel that the Committee has achieved fairly useful work. If
that is the case, it is due to the zeal and determination of two
or three members of the Committee, and rather in spite of the
Chairman. A continuation on the lines already adopted would, I
fear, tend to become somewhat futile.

I must sincerely apologise for the amount of written matter which
I am inflicting upon you by this mail. I can only hope that you
will find it of use, and in some sort of harmony with your own
point of view.

Yours sincerely,
F. L. MCDOUGALL

Bruce attended the Imperial Conference held in London in October
and November of 1926. While there, he agreed that McDougall should
act for the Commonwealth Development and Migration Commission and
for the Council for Scientific and Industrial Research, both of
which would join the Department of Markets and Migration in
providing his salary. Bruce also decided that McDougall should
have two assistants (A. S. Fitzpatrick and A. W. Stuart Smith).