187

3rd October, 1928

PERSONAL AND CONFIDENTIAL

My dear Prime Minister,

RE WINE

As this letter will reach Australia some little time before the General Election actually takes place and as there is a possibility (a) that you may have time to read it (b) that you may, in one or two constituencies, find some difficulty in the matter of the Commonwealth Government's attitude to the wine bounty, I think you may find it useful if I very briefly make a comment on this subject. I am having the whole situation of Australian wine in London most carefully surveyed and am in touch with Sir Francis Floud, the Chairman of the Board of Customs and Excise, in regard thereto. I hope, as soon as I return from Rome, to be able to forward you a very full statement covering the whole position.

For the purpose of this letter, however, I can set out my views very tersely. The consumption of Australian wine in London has remained more or less constant for a number of months with, however, a slight tendency towards a reduction in consumption. The result of this is that there has been no diminution in the enormous stocks of wine at present in bond here. The stocks I believe amount to something in the neighbourhood of 3,000,000 gallons. The chaotic system, or rather lack of system, whereby Australian wines are offered for sale has had a definitely damaging effect. The general attitude towards Australian wine is less encouraging than it was a year ago. Under all these circumstances I cannot help thinking that in one or two districts there may be a good deal of discontent over the Commonwealth Government's attitude. Should this be the case, I am wondering whether it might not be wise for you to state that you were convinced that one of the major troubles of the Australian wine industry was the lack of any proper organization for the marketing of Australian wines in Great Britain; that your Government had stressed this point for the last two or three years but had met with little response from the wine trade. You were, however, prepared to state that the Government was willing to reconsider the whole position with one proviso, namely that the industry was willing to put up an organization of such a nature as to convince the Government that some really effective method of controlled sale would be brought into effect.

It seems to me quite probable that, given an effective organization, it might be wise for the Commonwealth Government to give some form of financial assistance or guarantee to enable a quantity of wine, about equivalent to the surplus stocks in London, to be held in Australia for one or two years in order to ease the whole marketing situation. It is also possible that, if we cannot obtain any improvement in the preference terms from Great Britain, the Commonwealth Government would be well advised to consider whether an additional 3d. or 6d. per gallon might not be added to the bounty for a limited period for (say) three years as the price for completely effective and satisfactory organization.

Yours sincerely, F. L. MCDOUGALL