137

8th December, 1927

PERSONAL & CONFIDENTIAL

My dear Prime Minister,

AUSTRALIAN TARIFF CHANGES

In my last letter I told you that I was arranging with the 'Times' to explain the effect of the most recent Australian tariff changes on British trade. I enclose a copy of a brief article which I wrote for the 'Times Trade Supplement' and which appeared last Friday as a foreword to the publication in that journal of the detailed proposed tariff schedule.

On Wednesday the 'Times' published my long article [1], of which I enclose 2 copies. I hope that you will have time to read this. I have attempted to put the case as clearly and as impartially as possible and I was very glad that the 'Times' found themselves able to print the article 'From a Correspondent' without adding the qualifying words 'From an Australian Correspondent'. I think from this it can be assumed that the Times regarded the article as being sufficiently impartial to be a just estimate of the probable effects of the tariff.

THE TARIFF AND BRITISH IRON & STEEL INDUSTRIES

Sir William Larke, Director of the British Iron & Steel Federation, wrote asking for an appointment in order to discuss some of the implications of the new tariff changes. Having received this notification, I carefully examined the position and found it so interesting that I prepared a memorandum shewing the trend of British exports of iron and steel products to Australia in comparison with exports to the whole of the rest of the world.

I am enclosing the memorandum which I prepared and which I am sure will interest you quite considerably.

Armed with this document, I was able to convince Sir William Larke of the very great assistance which the preferential clauses of the Australian tariff had been in recent years to his industry. I may say that he was frankly surprised at the results. I am sending copies of this memorandum to a number of people here and hope that it will have a sound educational effect.

EMPIRE AGRICULTURE

Walter Elliot [2] sent me the other day a very interesting report of a speech by a man called Lennox [3], one of the recognised leaders of the Scottish Farming community. The article was so much in the direction in which I have been thinking that I wrote to Lennox to tell him how much I appreciated his speech and to suggest the possibility of a meeting. I have received a reply from him which I feel sure will interest you because he attributes his own conversion to the realisation and the importance of Overseas and Home agriculture working together to your speech at the Farmers' Union Dinner in London in 1923. I hope to follow up this suggestion coming from British agriculture, because I feel perfectly certain that it is essential that we should find means whereby the case for the development of Empire agriculture as a whole may be put to industrial Britain. It is sickening to think that the Conservative Government has not the brains or the initiative to do it themselves but I have reached a stage of almost despair so far as the present Government is concerned.

ENTOMOLOGY

At yesterday's full meeting of the Empire Marketing Board, Ormsby- Gore [4] being in the Chair during Amery's [5] absence, Walter Elliot brought forward the proposal of the E. M. B. to cooperate with the Commonwealth Government in establishing large scale entomological research in Australia. [6]

Ormsby-Gore very warmly supported the proposal and I explained to the Board the very large way in which Australia was developing her scientific research organisations and how in that development the material and technical support of the British Government and of British science would be of the very greatest possible value.

There was some discussion but it was decided that, although no definite action would be taken by the Board until the formal application was received from the Commonwealth Council for Scientific & Industrial Research, yet there was no obstacle to the Board approving a grant of 25,000 in capital and 10,000 per annum. It was, however, to be understood that the 10,000 per annum maintenance grant should only be for a period of five years with the definite understanding that at the end of that time the Board's contribution should be reviewed and probably substantially decreased, if not discontinued.

I am cabling Rivett [7] to this effect today and asking him to see that you are notified.

AUSTRALIA AND GREAT BRITAIN

In view of the immense importance to Australia and also to Great Britain that there should be a solid basis of cooperation between Great Britain and Australia in Australian development, it seems to me that it is urgently necessary to take every possible step that may be calculated to make the British people understand what Australia means and how the development of Australia would help them. One of our greatest difficulties is that, whenever there are tariff changes or indeed whenever the Australian tariff is mentioned, the industries that feel that they are damaged by the tariff invariably become vocal while those industries who receive benefits do not say anything. As a result there can be no possible doubt in spite of all the work that has been done, that the average citizen in so far as he has any thoughts on the subject at all still feels that British industry is, on the whole, detrimentally affected by the Australian tariff.

You and I of course know that this is not the case and that in fact on balance the Australian tariff is a help and not a hindrance to British trade. To make this clear to Great Britain is, however, a work which must be continuously undertaken and the most careful thought is required on how best to present the case.

It has occurred to me recently that a good deal of advantage might accrue if a very brief book on British-Australian cooperation in Australia's development could be written and published at a price of say not more than 2/6d. My idea of the book would be that it should give a brief description of Australia and her possibilities for development with chief emphasis on agricultural development but also dealing, to a certain extent, with coal, iron and steel and such secondary industries as woollens. It should then show the importance of Australia as a market particularly by comparison with other countries and point out the way in which Australian development both of the primary and also of selected secondary industries would encourage and expand British trade to Australia.

It should also discuss pretty fully the effect of Australia's economic policy on British trade, quite frankly shewing the way in which Australian industries have limited the export of certain types of British goods but showing how, on the general volume of trade, the tariff has been a source of real help to Great Britain.

If such a book was to be prepared, it would seem to me necessary that the Commonwealth Government should be prepared to purchase a considerable number of copies for distribution in this country in order that the book might be issued at a sufficiently cheap price to make it possible to secure a wide circulation. I am only mentioning this in today's letter in order to put it in your mind but I shall hope, in the course of the next two or three weeks, to get out the headings for such a book and to send it to you for your consideration with the idea that, if you approve, I might try to find time somehow or other to tackle it. [8]

Later

With reference to Entomology, I have not cabled Rivett as suggested in the earlier part of this letter. I have just sent a confidential cable to you with a request that you would kindly inform Rivett of the substance of its contents. As you had cabled to the British Government on the subject, it appeared to me, on second thoughts, more appropriate to send the cable to you than to Dr. Rivett. [9]

Yours sincerely, F. L. MCDOUGALL

1 'Australian Tariff Changes. Effects on British Trade', Times, 7 December.

2 Parliamentary Under-Secretary for Scotland; Chairman of the Research Grants Committee of the Empire Marketing Board.

3 James Lennox of Methven, Perthshire. A copy of his letter is on file AA:M111, 1927 4 William Ormsby-Gore, Parliamentary Under-Secretary for the Colonies; Chairman of the Publicity Committee of the Empire Marketing Board.

5 Leopold Amery, Secretary for the Colonies and for Dominion Affairs, was touring the Dominions.

6 See note 9 to Letter 135.

7 David Rivett, Deputy Chairman and Chief Executive Officer of the Commonwealth Council for Scientific and Industrial Research.

8 In a letter dated 16 january 1928, Bruce commented that the idea of the book was admirable but he feared that McDougall would be 'overloading' himself and suggested McDougall arrange to have the book written under his general direction. The letter is on file AA:M, 1928.

9 A copy of the cable is on file AA:A458, AJ 1/19.