9

22nd January, 1925

PERSONAL AND CONFIDENTIAL

Dear Mr. Bruce,

Since my arrival I have been so extremely busy that I have had to postpone writing for the mail until the very last moment and therefore cannot write nearly as fully as I should like to do.

I sent, through Sir Joseph Cook [1], a cable to you on the 16th instant, which read as follows:-

Have seen Amery [2] Cunliffe-Lister. [3] They state Government will carry preferences not involving increase of taxation but feels unable to introduce preferences involving increase of duties this budget. Amery hopeful of development later. I raised question of further reduction on light wine. Amery states Government anxious to give Dominions full value for postponed preferences through schemes developed by Economic Committee. He sees serious obstacles to direct subsidies and is anxious for practicable schemes. He discussed grants to publicity. I expressed your view that export control boards could co-operate in Imperial schemes and tentatively suggested that British Government might guarantee against loss long term contracts with Dominion Control Boards [4] at payable prices. Amery welcomed suggestion and asked me to develop idea. I strongly urged need of effective recognition by British Government of preferential advantages given by Dominions.

I gather from all sources that, so far as this coming Budget is concerned, the Government does not feel itself able to bring forward the Economic Conference Preference Proposals that involve any increase of duties.

Amery states that the bitter memories of 1923 [5] are too close but that he anticipates that, if we continue effective propaganda, it should be possible to re-open the matter with success possibly for the next Budget.

With both Cunliffe-Lister and Amery I have emphasized, as strongly as it is possible to do, the urgent need of the British Government doing sufficiently definite things to make it obvious in the Dominions that they intend really to build up an effective policy of Empire development and Empire trade.

I also sounded them both on the possibilities of further reductions of duty on Light Wine and I am preparing, at Amery's request, a memorandum for the Chancellor of the Exchequer [6] on Wine and on Canned Fruit. I will forward a copy of this memorandum by the next mail. You will remember that, as Canned Fruit is taxed on its sugar content, there might be some method whereby a more substantial preference could be given without any fresh taxation.

Cunliffe-Lister seems to be under the impression that a large proportion of the 1,000,000, which is to be put at the disposal of the Economic Committee to make up for the preferences which the British Government does not feel able to bring before Parliament, should be used for subsidising publicity for Empire goods. I found Amery much more doubtful as to whether grants to publicity was the proper method. In my opinion there are certain rather grave dangers in using any large proportion of this money for advertising purposes. It seems to me that it would lay the British Government open to the charge that they were sweetening the press under the guise of Imperial development. At the moment it seems to me that it would be very much better for this money to be used in more direct methods of assistance to Dominion marketing and that the Dominions should be prepared to find their own publicity funds.

I am starting to investigate certain new methods of trade indemnity assurance with the idea that a portion of this money be used as some form of premium to guarantee a long term contract made by some special body in Britain with the Dominion Control Board against loss.

I should be very glad to have an indication of your views as to the wisdom of grants to publicity being used to any important extent, so far as the 1,000,000 are concerned.

I am very sorry to have to inform you that Mr. Hassan, the representative of the Australian Meat Council in London, has made the position in regard to Meat and an Import Licence System [7] very difficult by what appears to have been an extremely injudicious statement about the British Government's intention to prohibit the importation of foreign meat until all Dominion supplies had been taken up.

Mr. Ben Morgan, of the British Empire Producers, and Mr. Forsyth, of the New Zealand Meat Board, have informed me that as a result of this indiscretion, Mr. Hassan has temporarily become 'persona non grata' with the British Government.

I have written you under separate cover on the subject of the visit to Australia of Mr. E. D. Simon. [8] You will probably remember that I told you about his interests in Dominion trade. I very much hope that you will be able to see him.

I have found people here very surprised at the latest development for the proposed 75% Preference Regulation. Last week the High Commissioner was advised that, so far as goods not produced in Australia are concerned, the old 25% basis will be reverted to, but that, so far as goods manufactured in Australia are concerned, the new regulations will be put into force. Even so good a friend of Australia and of Imperial Preference as the Editor of the Times Trade Supplement [9] told me that he was astonished at this development. It appeared to him that the original intention to prevent Anglo-Continental goods from obtaining British Preference was being abandoned and that the primary purpose of the regulation would now be to obtain a greater measure of protection for Australian manufactures against British goods. [10]

I, of course, contradicted that point of view but, as the Regulation stands at the present moment, it is certainly difficult to explain here. I most sincerely hope that the primary purpose in regard to Anglo-Continental goods will be adhered to and that the regulation in its final form will not be given a strongly protectionist basis.

[Handwritten]

I hope to write much more fully next mail. I am in daily touch with the British people and with Sir Joseph.

Yours sincerely, F. L. MCDOUGALL

1 Australian High Commissioner.

2 Leopold Amery, Colonial Secretary.

3 Sir Philip Cunliffe-Lister (formerly Sir Philip Lloyd-Greame), President of the Board of Trade.

4 Government-assisted producers' bodies, formed to promote orderly marketing of primary produce.

5 The Conservatives fought an election campaign on a protectionist platform in 1923 and, while surviving as the largest party at Westminster, lost government.

6 Winston Churchill.

7 At the 1923 Imperial Economic Conference, Bruce suggested import licensing as one of several possible methods of increasing sales of Empire products.

8 Manchester businessman and city councillor; former Liberal M.P.

9 T. S. Sheldrake.

10 Under new Australian Customs regulations, imports from Britain qualified for tariff preference only if representing 75 per cent of British labour or material. Products of a kind not manufactured in Australia needed only 25 per cent British labour or material component.