199

12th December, 1928

PERSONAL AND CONFIDENTIAL

My dear Prime Minister,

IMPERIAL CONFERENCE

Last week Casey [1] sent me confidentially a copy of your cable to the British Government on the subject of the date of the next Imperial Conference. I was extremely interested to see your views so clearly set out and, after reading it carefully, I decided to draft a memorandum on the subject to send to you and to Amery. [2] I enclose herewith a copy of this memorandum.

Yesterday I had half-an-hour with Amery. He started by telling me that I had somewhat underestimated the importance and significance of the political and defence questions which would have to be discussed at the next Imperial Conference but he entirely agreed with the point of view expressed in my memorandum that it would be undesirable to give wide publicity to these discussions.

Amery went on to say that he most emphatically agreed with you that the main issue of the next Conference ought to be economic but he was by no means sure that a separate Imperial Economic Conference sitting alongside the Imperial Conference was the most convenient way of arranging matters. He did not, however, give any very interesting reasons to indicate why he did not think that an Imperial Economic Conference was suitable.

I reminded him of the immense publicity which the Imperial Economic Conference of 1923 obtained and he agreed but said that he thought the same results could be achieved for the economic side of an Imperial Conference without having a separate Imperial Economic Conference.

Amery then proceeded to deal with the question of the date of the Imperial Conference and explained that there were two factors that made it extremely difficult for any decision to be made at the present moment. The first was the possible death of the King. [3] If this unhappy event took place, everything would be upset and he thought that the probability would be that efforts would be made to get the Dominion Prime Ministers to attend the Coronation, with the idea of holding an Imperial Conference immediately afterwards.

The other point was that, although the Government intended to make the most resolute efforts to have their Election in June, yet the Government were not sure that they would be able to catch the June tide. If they failed, it was regarded as impossible to hold the Election in July, August or September, owing to the interference with harvest and, under those circumstances, the General Election would have to take place in October.

Amery said that he quite appreciated my point as regards the desirability of an Imperial Conference being held before Philip Snowden [4] had an opportunity of introducing a Budget. He thought that if the Government came to the conclusion that it could hold the Imperial Conference in October 1929, it would be necessary to secure an agreement of the Opposition. I suggested that it was really to the advantage of the Opposition itself to have the Imperial Conference before Snowden's Budget. In the event of the Tories losing the Election, Philip Snowden would undoubtedly be Chancellor and if he introduced a Budget before the Imperial Conference, he would be certain to try to decrease the value of preferences. He would experience very considerable opposition inside his own Party before he was allowed to formulate such a policy but supposing he succeeded and supposing within a month or two of the Budget an Imperial Conference met, the atmosphere which would be created against his possible anti-preference policy would be so vigorous as to prove extremely embarrassing to any Labour Government.

I suggested to Amery that that point of view might well be put privately to J. H. Thomas [5], William Graham [6] and Tom Johnston. [7] Amery then talked about some of the subjects which an Imperial Conference might deal with. He said that as regards Tariff Preference, a very great deal depended upon the nature of the pledges which Baldwin [8] gave during the Election Campaign in regard to food taxes. He was, unfortunately, only too aware that to raise that issue in Cabinet at the present moment would only lead the Cabinet to insisting upon much more definite pledges than he considered necessary. He very much hoped that the pledges would be of such a nature as to allow, at least, some re-arrangement of food taxes so that the taxes on, say, tea could be diminished and taxes to an equivalent amount on some other produce which would have much more preferential importance could be adopted.

Amery went on to say that he thought that the Imperial Conference ought to agree to an increase in the powers of the Imperial Economic Committee and he proceeded to talk about the possibility of inducing the Dominions to start something equivalent to the Empire Marketing Board, or, alternatively, to get them to join in the work of the existing Empire Marketing Board and agree to the extension of its operations to the advertising of Empire produce in the Dominions.

I told him that I thought that was a subject which would need very careful consideration because I was by no means sure that the time was ripe for such a suggestion. I very strongly urged on Amery that whatever date might be adopted for the Imperial Conference, it was eminently desirable that an immediate action should be taken in regard to the preparation of documentation. I pointed out that, in the past, the economic side of the Imperial Conference had suffered very severely from there being no satisfactory documentation and that the members of the Imperial Conference received far less information to help them in their economic discussions than did members of such a body as the Economic Consultative Committee of the League of Nations.

Amery agreed to go very carefully into this question with the President of the Board of Trade. [9] He asked me to make a point of seeing Sir Horace Hamilton, the Permanent Head of the Board of Trade, in order to try and get his agreement before Amery took up the matter with Cunliffe-Lister.

After this interview with Amery, I asked Casey to add to a cable that he was sending to you some information on the points discussed.

I am proposing from now on to devote as much time as I can possibly arrange to the preparation of information for the next Imperial Conference. I have already made a very small start with some notes on certain items which I am submitting for your consideration, with the idea of their inclusion in the Agenda.

This first set of notes is included herewith. I hope from time to time during the next couple of months to send further suggestions in regard to the Agenda. I very much hope, however, that you will be good enough to let me know pretty clearly what you have in your mind and what are the main issues that you desire to stress. The earlier that I could have the information of this sort, the more thorough I could make my investigation of the subjects in order that really solid and useful material may be prepared for your use when the Conference occurs, Apart from the sort of material that I am proposing to send to you, I am starting to have a survey made of the value of Empire trade to all the more important British industries. I shall do this in such a form as to allow of the figures being brought up to date and hope, before the Conference occurs, to have in this office a pretty complete file shewing the significance of the Empire as a market and also of Australia as a market to each important British industry.

I am also obtaining from the principal Chambers of Commerce a list of the chief industries carried out in their areas so that if, as I very much hope, you are able to make another tour through the Provinces, I shall have collected the necessary information about their industries which is so useful as a basis for speeches.

In recounting the course of my discussion with Amery, I omitted to mention that Amery had said that he had been giving very serious consideration to the suggestion in your cable that it might be necessary for Australia to propose direct negotiations with Great Britain. He said that he was by no means sure that the time might not arrive when there would be considerable advantages in a direct trade treaty between Great Britain and one of the Dominions, but went on to say that he thought in any Inter-Imperial trade treaties it would be necessary to have an Imperial Most-Favoured- Nation Clause so that any concessions given by Great Britain to, say, Australia were also given to the rest of the Empire.

It seems to me that the idea of an Imperial Most-Favoured-Nation Clause rather detracts from the desirability of trade negotiations between Australia and Great Britain, especially as Australia's policy in regard to Preference has been only to extend a preference in Australia to other Dominions on the basis of reciprocal agreements.

Yours sincerely, F. L. MCDOUGALL [Handwritten postscript]

I am afraid the English of the Memo on the Imp. Econ. Conf. is very rough but I have not had an opportunity of correcting the dictated draft.

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

2 Leopold Amery, Secretary for the Colonies and for Dominion Affairs.

3 King George V had been suffering from a serious lung infection since late November and was gravely ill throughout December. His health remained precarious for several months.

4 Labour M.P.; free trader; Chancellor of the Exchequer 1924.

5 Labour M.P.; Colonial Secretary 1924.

6 Labour M.P.; Financial Secretary to the Treasury 1924.

7 Scottish Labour M.P.; Editor of Forward, a Glasgow labour paper.

8 Stanley Baldwin, Prime Minister.

9 Sir Philip Cunliffe-Lister.