156

29th March, 1928

PERSONAL & CONFIDENTIAL

My dear Prime Minister,

IMPERIAL ECONOMIC COMMITTEE

I enclose a copy of the Eighth report of the Imperial Economic Committee. [1] On the whole I think you will probably agree that it is a useful and valuable document. The report received a very considerable amount of publicity and comment in this country and I enclose copies of the 'Times' summary and leading articles from the 'Times' [2], the 'Times Trade Supplement' and from the 'Yorkshire Post'. I would particularly like you just to notice the amusing opening of the leading article in the 'Yorkshire Post'.

Arrangements have been made for a very wide distribution of this report and as there has been, and probably still is, considerable confusion in peoples' minds as to the relation of the Imperial Economic Committee to the Empire Marketing Board, this report should do a great deal to make the proper distinction.

The Imperial Economic Committee is making considerable progress with its various enquiries. The examination of witnesses on Tobacco has now approached a conclusion. The Timber enquiry has been relegated to a Sub-Committee, of which I am Chairman. I have quite a strong team consisting of Sir George Courthope [3], Bart., the Chairman of the Agricultural Committee in the House of Commons and a member of the Forestry Commission, together with R. L.

Robinson, the technical Forestry Commissioner, Mr. Harrison Watson, the Trade Commissioner for Canada, Sir Peter Clutterbuck [4], representing India, and Sir Gilbert Grindle [5], K.C.M.G., representing the Colonial Empire. We have not a very large amount of work before us but I am determined to do everything that I can to get through with the work in order that the Timber Report may be available for presentation before the Empire Forestry Conference gets to work in Australia. [6]

The influence of Chadwick [7] upon Mackinder [8] has been most excellent and as I reported to you in a recent letter, Mackinder is now behaving better in all ways than at any stage during the three years in which the Committee has been functioning.

The Trade Survey of Agricultural Machinery is presenting unexpected difficulties, owing to the hopeless difference in the classification of agricultural machinery among the various producing and importing countries. We are doing everything possible to straighten out this tangle and hope to be able to present a really intelligent survey. Both Chadwick and myself attach the very greatest importance to making this first trial preliminary survey really good and, as you were responsible for the proposal that the Imperial Economic Committee should be trusted with this series of world trade surveys, I am sure you will also feel that no effort should be spared to make it a really good piece of work.

The Sub-Committee dealing with Agricultural Machinery consists of Mackinder, F. N. Blundell [9] M.P., myself and, of course, Chadwick.

The other day Mackinder, Chadwick and I had a talk about how we were finally to frame the reports. Under the new Standing Orders, reports come to the Main Committee for a third reading debate in a quite tentative form. Mackinder and Chadwick both feel that it will be necessary to have something in the way of a Standing Drafting Committee to get the proper Imperial aspect suitably expressed in each report. They both also felt that it would be essential that the Drafting Sub-Committee should, in each case, consist of the Chairman, Chadwick, the Chairman of the Sub- Committee presenting the report, and myself. In view of the very heavy amount of work that I have to undertake, I suggested that they should very carefully consider whether there was not some other Dominion representative who could serve on the final Drafting Committees but they were both most insistent and, after consideration, I was reluctantly forced to agree that, for this particular type of work, there was no other overseas representative who could usefully function. It is rather a sad comment on the type of man whom the other Dominions have appointed both to the Imperial Economic Committee and to the Empire Marketing Board, that experience has shown on both Bodies that, when the general Dominion point of view needs to be taken into careful consideration, they have to turn to me. [10]

EMPIRE MARKETING BOARD

At the last meeting of the Empire Marketing Board, Amery [11] made a clear and unequivocal statement about the attitude to the Empire Marketing Board's funds. He explained that there was something like 350,000 unexpended from previous votes and that the Treasury had, therefore, reasonably suggested that not more than 500,000 should be put on the estimates for the Empire Marketing Board purposes during the coming financial year, making a total available sum of 850,000. He said that the estimates would be so framed as to make it perfectly clear that if the E.M.B. actually needed more money than this, a supplementary vote would be given and that, ultimately, the fund would receive the full 1,000,000 that was due to it for the coming financial year.

I told Amery that I thought it was very desirable, when the vote came up, he should take care to see that the statement was made in so clear a way that there could be no misunderstanding and that steps should be taken to see that the representatives of the overseas press cabled clear messages on the subject to the various Dominions.

The general work of the Empire Marketing Board is proceeding quite vigorously but calls for no special comment.

THE BRITISH MOTOR TRADE

I am enclosing two letters, one which I received from Sir William Clark, the Comptroller of the Department of Overseas Trade, and my reply to him. I hope that you will read both letters. I am sending copies to Gepp. [12]

While on this subject of motor cars, I think you will be interested in the extract which I am enclosing, taken from a recent issue of the 'Economist'. [13] I regard the figures quoted as a complete justification of the policy of safeguarding which this country has adopted since the war.

INTERNATIONAL RATIONALISATION AND GREAT BRITAIN

I have been discussing with Casey [14] the important article from Seydoux [15], which appeared in the 'Times' of March 15th. I understand that Casey is forwarding the cuttings on this subject to you.

It appears to me that the 'Times' in discussing Seydoux' article missed what is probably the most definite reason why Great Britain has not been more willing to associate herself with European International cartels. [16] That reason is, I think, the growing realisation in this country, which is slowly spreading even to such remote quarters as the City of London and the Treasury, that the development of the British Empire and the special position of Great Britain in Empire markets is of even greater importance to Great Britain than an active part in the restoration of Europe. A memorandum is being prepared which I hope to be able to forward to you by the next mail on the position of Great Britain in relation to world trade. This will, I hope, show, in a clearer way than anything that has been published in this country up to date, the way in which Great Britain has been forced to take second place to the United States of America in the foreign markets of the world and also how, in Empire markets, Great Britain has retained her predominant position.

Yours sincerely, F. L. MCDOUGALL

1 Reports of the Imperial Economic Committee. Eighth Report.

Functions and Work of the Imperial Economic Committee, Cmd. 3018, January 1928.

2 Published on 16 March.

3 Conservative M.P.

4 Inspector-General of Forests to the Government of India 1921-26;

Chairman of the Empire Forestry Association 1927; Timber Adviser to the High Commissioner for India 1927-29. 5 Deputy to the Permanent Under-Secretary at the Colonial Office.

6 The Third British Empire Forestry Conference opened in Canberra on 26 September 1928.

7 Sir David Chadwick, Secretary to the Imperial Economic Committee.

8 Sir Halford Mackinder, Chairman of the Imperial Economic Committee.

9 Conservative M.P.; President of the Central and Associated Chambers of Agriculture 1926.

10 In a letter dated 14 May (file AA:M111, 1928) Bruce agreed that the failure to appoint 'a better type of man...is bad from the point of view of the future of the Committee'.

11 Leopold Amery, Secretary for the Colonies and for Dominion Affairs; Chairman of the Empire Marketing Board.

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

13 Figures given in the Economist, 24 March, P 587, showed that the number of cars produced in Great Britain had quadrupled since 1922.

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

15 Jacques Seydoux, former Assistant Director of Political and Commercial Affairs in the French Foreign Office. He drew attention to the 'industrial understanding' developing between France and Germany, notably in the steel and chemical industries, and reinforced by a trade agreement signed in 1926. He hinted that closer political ties might follow and regretted that Britain, by neglecting to restore French finances, had missed the opportunity to maintain financial and industrial leadership in Europe.

16 A leading article on 15 March acknowledged the importance of Seydoux's observations but questioned his argument that British preoccupation with the doctrine of 'balance of power' prevented the economic rebuilding of Europe under the joint leadership of Britain and France.