149

16th February, 1928

PERSONAL & CONFIDENTIAL

My dear Prime Minister,

By this mail I received from you two letters-one dated the 9th of January and the other the 10th of January. [1]

I very much appreciated your kindness in sending me the letter of the 9th of January which included extracts from the letter received from Mr. Gepp [2] and from Dr. Rivett [3] about liaison between their Organisations and myself. By the last mail I received almost an overwhelming amount of correspondence from the Development & Migration Commission. So far as the Commonwealth Council is concerned, from the very commencement they have maintained a regular flow of information and liaison in that direction is very satisfactory.

It has been a matter of very great satisfaction to me to find that Julius [4], Rivett and Richardson [5] have all felt able to express, in the strongest way, their sense of the value of this liaison.

Your letter of the 10th of January was chiefly comments on recent communications from me.

THE CITY AND AUSTRALIA

I have no doubt that you are only too vividly aware of the present attitude of the City of London towards Australia. Nevertheless I think I ought to express to you how very widespread and, therefore, serious, is the distrust of Australian economic policy in very large sections of influential opinion in this country. It is by no means confined to financial circles but affects the attitude of many men who are essentially friendly to us.

There is no doubt that the Parliamentary Party [6] that visited Australia last year returned with a feeling that Australia's economic policy had created a very difficult position and that it was likely that things would have to get worse in Australia before they became better. The publication of the Tariff Board's report [7] has added to this feeling and wherever I go I come across people whose attitude of mind in things Australian is profoundly affected by the idea of the vicious circle, the increasing tariff, the increasing wages, rising costs of living and, therefore, of production.

While I find little difficulty in conclusively demonstrating that the Australian tariff has, up to the present moment, been markedly beneficial to British trade on the whole, and in pointing out the extraordinary importance of Australia as a market to Great Britain, and while I am able to convince many people of the immense possibilities of Australian primary production, yet it is impossible to inspire very much confidence in the immediate future among those who have made any considerable study of recent happenings.

You, of course, must be anxiously considering this position. I feel, however, that what is essential, if confidence in the immediate future of Australia is to be restored, is that a definite Governmental declaration should be made that steps are going to be taken to break the circle which is causing rising costs. The political difficulties of the Commonwealth Government taking such action are always present in my mind. I am, therefore, hopeful that you will find the suggestions in my long letter of the 19th of January [8] on Empire Rationalisation as being a contribution which might assist in this direction.

I was dining in the House of Commons the other night with Sir Sydney Henn. [9] He told me that he was the Chairman of an Insurance Company which holds comparatively large quantities of Australian securities. He said that his Co-Directors were continually urging the desirability of realising Australian securities because of their doubts as to Australia's immediate economic future. I cannot resist the feeling that this sort of thing is very widespread and must seriously affect Australia's position.

AMERY'S [10] RETURN

Amery's return has not created any very wide interest in the press. This fact is due, I think, to lack of interest in Amery's personality which is his most serious handicap in British politics. He presided yesterday at a meeting of the Empire Marketing Board and appeared to be in very good form and immensely pleased with his trip.

Huxley [11] is most enthusiastic and has returned bubbling over with enthusiasm and zeal, which I am sure we shall be able to turn to extremely good account in the work of the Empire Marketing Board.

Huxley is of the opinion that Amery was extremely successful particularly in South Africa and Canada but felt that in Australia and in New Zealand there was less for Amery to do and that he, therefore, did not shine to the same extent in the two predominantly British Dominions.

The 'Evening Standard' published a wonderful cartoon of Amery's return and I am enclosing a copy. [12] Casey [13] told me yesterday that he was sending you a copy but I am sure that you can pass on this additional copy to someone else.

LABOUR AND THE EMPIRE

I am enclosing a rather interesting cutting from an obscure Labour paper called the 'Finsbury Star' giving a report of a meeting of the Finsbury Borough Council. I think there is very considerable significance in this small episode.

POLITICAL

The result of the Lancaster By-Election has given the Liberals some rather definite encouragement, although I am inclined to think that the autocratic intervention of Lord Ashton [14] in favour of the Conservative Candidate probably put the backs of a great number of people in the Constituency up and thus swelled the Liberal vote.

From the results of the other pending By-elections, one ought to be able to make a fair estimate of the present position of the Government in the country but, as things stand, I am inclined to think that the estimate I gave you in my last letter will not prove very inaccurate.

Sir Archibald Sinclair [15], the Liberal member who has been appointed to the Empire Marketing Board, attended his first meeting yesterday. I had no opportunity of speaking to him and I do not know him. I shall, however, try to make an early opportunity of cultivating his acquaintance.

Yours sincerely, F. L. MCDOUGALL

1 The letters are on file AA:M111, 1928.

2 H. W. Gepp, Chairman of the Commonwealth Development and Migration Commission.

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

4 George Julius, Chairman of the Commonwealth Council for Scientific and Industrial Research.

5 A. E. V. Richardson, Professor of Agriculture and Director of the Waite Agricultural Research Institute, University of Adelaide;

member of the Executive of the Commonwealth Council for Scientific and Industrial Research.

6 Members of the Empire Parliamentary Association toured Australia from October to December 1926.

7 See Letters 128 and 129.

8 Not found.

9 Conservative M.P.

10 Leopold Amery, Secretary for the Colonies and for Dominion Affairs, had been on an extensive tour of the Dominions.

11 Gervas Huxley, Secretary to the Publicity Committee of the Empire Marketing Board, accompanied Amery on the tour.

12 Evening Standard, 14 February. 'Tales of the Dominions', by David Low, a New Zealander who had worked for the Sydney Bulletin, was based on 'The Boyhood of Raleigh', by Millais.

13 R. G. Casey, Commonwealth Government's Liaison Officer in London.

14 Manufacturer; M.P. 1886-95; Constable of Lancaster Castle.

15 Secretary of State for Scotland 1931-32; Secretary of State for Air 1940-45; Leader of the Liberal

Parliamentary Party 1935-45.