194

21st November, 1928

PERSONAL AND CONFIDENTIAL

My dear Prime Minister,

On the 31st October I wrote you at very considerable length on the subject of Australian wine and the British market and, by the following mail, a report, drawn up by the Commercial Officer [1] after discussion with me, was forwarded by the Official Secretary [2] for your confidential information.

Since that date one or two happenings of some significance have occurred. Buring and Walker [3], two Australian Vignerons who are being very active at present in London, saw the Agents-General for New South Wales, South Australia and Western Australia and the Acting AgentGeneral for Victoria [4] and urged the importance of the Agents-General inciting their Governments to approach the Federal Government to induce them to demand better terms for Australian wines here.

Sir George Fuller asked me to see him and said that he would particularly like me to meet the four Agents-General. I told Sir George that I could not possibly meet them formally unless they wished to suggest that the Empire Marketing Board might assist in the marketing of Australian wine but that I should be pleased informally to give them an idea of the way in which the British Government viewed the situation. It was, therefore, arranged that I should see them as the Australian member of the Empire Marketing Board and on this occasion I explained fully the views of the British people in regard to British and Australian wine.

The Agents-General told me that Buring and Walker had changed their point of view and were now urging that Australia should press for a flat rate of duty of 2/-per gallon on all Australian wine irrespective of strength. I naturally agreed that if anything of the sort could be achieved, it would be excellent but that such a move would involve the British Treasury in a loss of not less than 200 [sic] in revenue and that the Chancellor [5] was likely to take the line that in two successive years he had amended the wine duties with the idea of improving the Empire position.

Further he was likely to suggest that at least two years should be given to enable the trade to adjust itself before any further alteration was made.

Following this talk with the Agents-General, Buring and Walker called to see me and we had a long discussion about the position, as a result of which I arranged to ask Sir Francis Floud, the head of the Customs, to have lunch with me to meet Messrs. Buring and Walker. In the meantime I asked them to let me have their views in the form of a letter. The essential paragraphs of their communication are as follows:-

In a few words, we would like to set out the position as we see it after interviewing those in the trade who purchased wines freely from us up to the beginning of this year, and to whom we are desirous of again selling our quota of export wine.

Whilst we realise that the Chancellor of the Exchequer was anxious to help the Empire Wine Industry, and gave us further preference and also increased the excise on British wines, and fixed a datum line for Tarragona-Lisbon Wines, the margin between the so-called British Wines and Empire Sweet Wines was too much in favour of the former with the result that the increase in production and consumption of these wines was at the expense of the Empire Sweet Wines.

This proves that after all there is a large demand for bulk wine at a moderate price which could be largely fulfilled by Australian products, and that for this purpose a sound clear wine in good condition alone is wanted. The British wine is but a few months old as it comes on the market, whilst Australian, even the youngest, would not come before the public under 12 months.

We agree that a demand will gradually set in for higher quality more matured wines as time goes on, but the cost of production, which includes the extra maturing, will be greater. The quantity will be proportionately small, the largest consumption will always be in the lower, not necessarily poor quality wines.

We agree that an age limit should be set on Australian wines of 7 months, or that no shipments of a vintage be allowed before December 1st of the year of vintage. It does not necessarily follow that a wine held back for maturing in concrete vessels in Australia for 18 months, will be better than if the same wine had been shipped at say 8-9 months, in fact the contrary would take place, the maturing in Great Britain in small wood would improve the quality more than the maturing in concrete in Australia.

We agree that the organisation of the export trade would do away with many disabilities, and place it on a better footing and restore confidence in the British Merchant.

We are doubtful whether it would actually increase consumption unless the British Chancellor can make that preference effective which he intended Empire wines should enjoy. The most simple and the only really effective way would be to reduce the duties on Empire sweet wine from 4/- to 2/-, leaving excise and other duties including the datum line as at present. The Chancellor has created a precedent for this by the imposition of a flat rate of excise on so-called British wines of 1/6 per gallon whether dry or sweet. We ask that Empire wines be granted the flat rate of 2/- per gallon dry or sweet.

Any step that can be taken to make the British wines British in more than name such as a heavy duty on the raw products not of British origin, such as Must, Raisins, Sugar, etc. would be helpful.

I was having a talk about the subject of Australian wine with Whiskard [6], of the Dominions Office, and pointing out to him the extreme injustice of the embargo on the use of the word 'Port'. He explained to me the very serious difficulties which the British Government would meet in attempting to make any alteration. He told me that Portugal would not agree to any form of Commercial Treaty with Great Britain which did not give them the exclusive use of the term 'Port' and, further, that on this depended the export of salt cod from Newfoundland. I then suggested to Whiskard that Great Britain might take a certain line of action which would be very useful to South Africa and to Australia and which would also please the wine producing countries on the Continent, particularly France, and that would be to agree with the International Wine Office that no alcoholic beverage should be allowed to be called wine unless it was the produce of fresh grapes-that is to say that the so-called British wine, which is a synthetic combine derived from the fermentation of wine must and/or raisins together with sugar, fortified with any form of potable spirit, could not be called simply 'wine' or 'British wine' but would have to have some such word as 'raisin wine', 'must wine' or some other designation attached.

I should be glad to know whether you think this is an idea which is worth following up. On the whole wine subject perhaps you would be good enough to arrange that I should obtain a clear expression of the Commonwealth Government's point of view on this subject at an early date. I will let you know what is the result of the informal talk between Sir Francis Floud, Buring, Walker and myself, when we meet at lunch.

Yours sincerely, F. L. MCDOUGALL

1 F. C. Faraker, Commercial Officer at the Australian High Commission. See Letter 190.

2 Thomas Trumble, Official Secretary to the High Commissioner.

3 H. P. L. Boring and R. C. Walker.

4 Sir George Fuller, Sir Henry Barwell, W. C. Angwin and A. H.

Wright.

5 Winston Churchill, Chancellor of the Exchequer.

6 G. G. Whiskard, Assistant Secretary at the Dominions Office.