My dear Prime Minister,

It was again very pleasant to receive your letter of the 7th of
March.[1] It makes my work at this end very much more intelligible
if I receive your comments on the letters I send to you. I can
quite appreciate your reasons for considering that my suggestion
of the memorandum on 'British Cooperation in Australian
Developments' was premature. [3] Probably they would not
appreciate the situation yet. I only hope that the country has not
to experience still heavier depression before the vital urgency of
a sustained policy of Empire Development is realised by those who
control affairs.

EMPIRE DEVELOPMENT AND EMPLOYMENT

I feel very weary of the orthodox financial and economic pundits
who for four years have prophesied prosperity and for four years
have been wrong. I have suggested to Walter Elliot [3] the
formation of a small secret committee to examine whether schemes
of Empire development cannot be found which would comparatively
rapidly affect employment conditions in Great Britain. My idea is
that such a committee might formulate a very tentative policy for
Government consideration in the event of the prophesies of
prosperity in 1927 proving wrong for the fifth year in succession,
for then I feel that by next October people even in high places
will be prepared to look towards the Empire with a more genuine
interest.

It is obvious that if a comparatively short view is taken, the
increase in the purchasing power of an Empire country that obtains
from 70% to 45% of its oversea requirements from Great Britain
will affect employment in Great Britain more rapidly and more
directly than an Empire country such as Canada which takes 16%
from Great Britain or than the South American Republics which
average 20%. I do not, however, think that this method of
assessing the desirability of development schemes from the point
of view of the early benefit of Great Britain has ever been
considered here.

THE BUDGET AND WINES

I hope that you will have felt satisfied with the Budget decisions
on sweet wines. The plan to fix the dividing line on Foreign wines
at 25 and on Empire at 27 appears to suit Australia most
admirably. I cabled you to-day as follows:-

Following from McDougall-New wine duties should give Australian
sweet wines effective preference over cheap Spanish and Portuguese
wines, some merchants think Spaniards may try to import at 25
degrees but others regard this limit too low for any type sweet
wine stop British made wine much advantaged by budget comma margin
between these and Australian sweet wines increased from two
shillings to three shillings expect considerable competition from
this source stop Suggest new duties give opportunity to urge on
industry orderly marketing and continuity of supply. New wine
scales represent important additions to preference urged by you
(ends). [4]

There can be no doubt that the Australian Viticultural Council
ought to arrange for more systematic marketing, for improved and
more regular quality and for the retention of such quantities in
Australia as will give some maturity and, perhaps more important
still, some guarantee of continuity of supplies. Presentation,
labelling and advertising are also important. I do hope the
industry will be wise and make the most of their opportunity. I
should like to see a well run Export Control Board for our sweet
wines. I think we shall experience a considerable degree of
competition from the 'British' made wines and I therefore hope
that the Commonwealth Government will not further reduce the
bounty and draw back, at least until a year has shown how the
market here has been affected by the Preference. The failure of
the Chancellor [5] to give us any increase in preference on dry
wines is perhaps not to be wondered at in a year of such financial
difficulty as this has been. His failure to reduce the whisky
duties has infuriated the distillers who had confidently expected
a big reduction. I imagine the Cabinet may have overruled the
Chancellor on that point. The high whisky duty, however, should
mean a continued expansion of a market for Port type wines in
spite of the increased duties on wine.

THE AUSTRALIAN DELEGATION

At to-day's meeting of the Empire Marketing Board, Amery [6] asked
for sanction for a grant of 5,000 to meet the expenses of sending
the Business Delegation to Australia. He explained that this would
create a precedent which could be followed if any other part of
the Empire desired to follow Australia's example. I rather regret
this charge being put upon the Empire Marketing Board vote
because:-

(a) I think the Treasury might have borne the charge with better
grace; and
(b) I am anxious to obtain all I can reasonably obtain for
Australian agriculture and the Geophysical proposal plus the
Business Delegation gives a slight atmosphere of Australia being
specially treated under this vote.

However, it does not really matter and I date say my keenness on
the general work has made me a little unduly nervous of wrong
items being charged to the vote.

E. J. Harding [7] to-day showed me your reply to the list of
names. He is going to sound Mond [8] about a member of the
Imperial Chemical Combine before approaching the others.

HIGHWAYS OF EMPIRE MAP

By this mail I have forwarded to you a copy of the reproduction of
the Highways of Empire map, of which the large scale poster has, I
believe, been exhibited by Mr. Clapp [9] in Melbourne. The
reproduction in the smaller size is, I think you will agree,
extremely decorative and effective-so much so that I have little
doubt that a number of people will frame it and hang it in
entrance halls and places of that sort. It has, however, occurred
to me that you might like to have a second copy with the idea of
presenting the reproduction to the Frankston State School. The
reproduction is specially intended for use in schools and
applications from over 5,200 schools have been received in the ten
days that have elapsed since an advertisement was inserted in the
educational press stating that the Empire Marketing Board was
prepared to issue the map to schools making individual application
to the Empire Marketing Board.

At the last meeting of the Board, it was agreed, on my suggestion,
that copies of this map, and later of other suitable poster
reproductions, should be sent to the Directors of Education in the
various parts of the Empire, with an indication that schools
individually applying to the Empire Marketing Board would receive
copies. I therefore think that as the use of the Empire Marketing
Board's posters in schools may become a feature throughout the
Empire, you might care to set the example in Australia by the
presentation of a copy to Frankston, which I believe is in your
Constituency. [10]

SIR LENNON RAWS [11]

I have seen something of Sir Lennon Raws during the last week, and
am very interested to find that there is considerable probability
of his becoming the Australian representative of the Imperial
Chemical Company. He appears to me to have become a little broader
in his outlook since 1924 and to be a less Anti-Tariff man than he
was, although hotly opposed to the extremer forms of Protection.

'LONDON WEEKLY'

I am glad that you think the 'London Weekly' has up-to-date been
on a high standard, and I am enclosing a copy of the number for
the week ending 9th April. I am afraid that Haden Guest [12] and
Apsley [13] are finding it rather difficult to carry on the paper.

They started, I think, with much too little in the way of capital
resources, and they were rather disappointed by people who had
given tentative indications of support which failed to
materialise. I hope that means will be found whereby the paper can
be carried on, but I am a little doubtful.

'THAT PINT POT'

You may remember my talking to you when you were in London about
the views of a man called Hecht. [14] Hecht is an extremely
originally minded engineer who has become an economist and has
written several very stimulating books which, unfortunately, are
almost unreadable, owing to Hecht's lack of ability to express
himself. His earlier works run into 500 or 600 pages and have been
extremely solid going. He has, however, just written a short
booklet called 'That Pint Pot', the idea of the title being that
the practical economist views the world from the basis that 'you
cannot get more than a pint out of a pint pot'. Hecht's whole idea
is that any such attitude towards economic life is incredibly
absurd when the effect of the human spirit, as expressed by
invention, makes it possible to get gallons out of the pint pot,
provided that you organise your industry and your distribution in
such a way as to take the fullest advantage of the inventive
spirit of man. Although this small booklet suffers from the same
disadvantages as Hecht's large works, i.e., it is written in a
confused way, yet I feel sure that you would find it well worth
reading carefully. I am therefore enclosing a copy.

EMPIRE MARKETING BOARD

A meeting of the full Board was held this week, at which a
considerable number of important decisions were taken, of which I
will send you a summary by next mail. I also think that the time
has arrived when it would be useful for you and Mr. Paterson [15]
if I prepared a statement on the publicity work of the Empire
Marketing Board. I shall do this at the earliest opportunity and
hope to forward it to you within the next fortnight.

One remark made by Mr. Amery has caused me some concern. He said
that it was possible that the terms of the vote by the Empire
Marketing Board might be altered in order to allow a certain
degree of expenditure for advertising Empire products on the
Continent of Europe. I have not had an opportunity of discussing
that point with Amery privately, and I did not feel inclined to
raise the issue before the full Board, but I personally connect
this in my own mind with the Government's intention to disband the
Department of Overseas Trade. You are probably aware that the
Department of Overseas Trade has an exhibition side, and it may be
that the Government thinks that that exhibition side might be
placed under the Empire Marketing Board. If anything of the sort
happens, it would involve the Empire Marketing Board becoming
responsible for the exhibition of British manufactured goods on
the Continent of Europe, and would, I think, rather seriously
affect the intentions for which the Board was formed. I am
proposing to write to Mr. Amery immediately after Easter, telling
him of my misgivings and suggesting that I should have an
opportunity of discussing the matter with him. I should, however,
very much appreciate an expression of your view on this quite
tentative hypothesis.

PARLIAMENTARY DEBATES

I am enclosing a copy of the Budget statement, together with the
discussion on the day following. I am also enclosing a report from
the 'Times' on the effect of the new duties on Dominion wines.[16]
This, in part, was inspired.

Yours sincerely,
F. L. MCDOUGALL