My dear Prime Minister,

On the 31st October I wrote you at very considerable length on the
subject of Australian wine and the British market and, by the
following mail, a report, drawn up by the Commercial Officer [1]
after discussion with me, was forwarded by the Official Secretary
[2] for your confidential information.

Since that date one or two happenings of some significance have
occurred. Buring and Walker [3], two Australian Vignerons who are
being very active at present in London, saw the Agents-General for
New South Wales, South Australia and Western Australia and the
Acting AgentGeneral for Victoria [4] and urged the importance of
the Agents-General inciting their Governments to approach the
Federal Government to induce them to demand better terms for
Australian wines here.

Sir George Fuller asked me to see him and said that he would
particularly like me to meet the four Agents-General. I told Sir
George that I could not possibly meet them formally unless they
wished to suggest that the Empire Marketing Board might assist in
the marketing of Australian wine but that I should be pleased
informally to give them an idea of the way in which the British
Government viewed the situation. It was, therefore, arranged that
I should see them as the Australian member of the Empire Marketing
Board and on this occasion I explained fully the views of the
British people in regard to British and Australian wine.

The Agents-General told me that Buring and Walker had changed
their point of view and were now urging that Australia should
press for a flat rate of duty of 2/-per gallon on all Australian
wine irrespective of strength. I naturally agreed that if anything
of the sort could be achieved, it would be excellent but that such
a move would involve the British Treasury in a loss of not less
than 200 [sic] in revenue and that the Chancellor [5] was likely
to take the line that in two successive years he had amended the
wine duties with the idea of improving the Empire position.

Further he was likely to suggest that at least two years should be
given to enable the trade to adjust itself before any further
alteration was made.

Following this talk with the Agents-General, Buring and Walker
called to see me and we had a long discussion about the position,
as a result of which I arranged to ask Sir Francis Floud, the head
of the Customs, to have lunch with me to meet Messrs. Buring and
Walker. In the meantime I asked them to let me have their views in
the form of a letter. The essential paragraphs of their
communication are as follows:-

In a few words, we would like to set out the position as we see it
after interviewing those in the trade who purchased wines freely
from us up to the beginning of this year, and to whom we are
desirous of again selling our quota of export wine.

Whilst we realise that the Chancellor of the Exchequer was anxious
to help the Empire Wine Industry, and gave us further preference
and also increased the excise on British wines, and fixed a datum
line for Tarragona-Lisbon Wines, the margin between the so-called
British Wines and Empire Sweet Wines was too much in favour of the
former with the result that the increase in production and
consumption of these wines was at the expense of the Empire Sweet
Wines.

This proves that after all there is a large demand for bulk wine
at a moderate price which could be largely fulfilled by Australian
products, and that for this purpose a sound clear wine in good
condition alone is wanted. The British wine is but a few months
old as it comes on the market, whilst Australian, even the
youngest, would not come before the public under 12 months.

We agree that a demand will gradually set in for higher quality
more matured wines as time goes on, but the cost of production,
which includes the extra maturing, will be greater. The quantity
will be proportionately small, the largest consumption will always
be in the lower, not necessarily poor quality wines.

We agree that an age limit should be set on Australian wines of 7
months, or that no shipments of a vintage be allowed before
December 1st of the year of vintage. It does not necessarily
follow that a wine held back for maturing in concrete vessels in
Australia for 18 months, will be better than if the same wine had
been shipped at say 8-9 months, in fact the contrary would take
place, the maturing in Great Britain in small wood would improve
the quality more than the maturing in concrete in Australia.

We agree that the organisation of the export trade would do away
with many disabilities, and place it on a better footing and
restore confidence in the British Merchant.

We are doubtful whether it would actually increase consumption
unless the British Chancellor can make that preference effective
which he intended Empire wines should enjoy. The most simple and
the only really effective way would be to reduce the duties on
Empire sweet wine from 4/- to 2/-, leaving excise and other duties
including the datum line as at present. The Chancellor has created
a precedent for this by the imposition of a flat rate of excise on
so-called British wines of 1/6 per gallon whether dry or sweet. We
ask that Empire wines be granted the flat rate of 2/- per gallon
dry or sweet.

Any step that can be taken to make the British wines British in
more than name such as a heavy duty on the raw products not of
British origin, such as Must, Raisins, Sugar, etc. would be
helpful.

I was having a talk about the subject of Australian wine with
Whiskard [6], of the Dominions Office, and pointing out to him the
extreme injustice of the embargo on the use of the word 'Port'. He
explained to me the very serious difficulties which the British
Government would meet in attempting to make any alteration. He
told me that Portugal would not agree to any form of Commercial
Treaty with Great Britain which did not give them the exclusive
use of the term 'Port' and, further, that on this depended the
export of salt cod from Newfoundland. I then suggested to Whiskard
that Great Britain might take a certain line of action which would
be very useful to South Africa and to Australia and which would
also please the wine producing countries on the Continent,
particularly France, and that would be to agree with the
International Wine Office that no alcoholic beverage should be
allowed to be called wine unless it was the produce of fresh
grapes-that is to say that the so-called British wine, which is a
synthetic combine derived from the fermentation of wine must
and/or raisins together with sugar, fortified with any form of
potable spirit, could not be called simply 'wine' or 'British
wine' but would have to have some such word as 'raisin wine',
'must wine' or some other designation attached.

I should be glad to know whether you think this is an idea which
is worth following up. On the whole wine subject perhaps you would
be good enough to arrange that I should obtain a clear expression
of the Commonwealth Government's point of view on this subject at
an early date. I will let you know what is the result of the
informal talk between Sir Francis Floud, Buring, Walker and
myself, when we meet at lunch.

Yours sincerely,
F. L. MCDOUGALL