200

13th December, 1928

PERSONAL AND CONFIDENTIAL

My dear Prime Minister,

In my last letter I referred to the effect of the Most-Favoured- Nation Clause on the prospects of a Dominion being able to make satisfactory arrangements with Foreign Countries for the marketing of primary products.

During the last few days, a great deal of press publicity has been given to the effects of the German-South African Treaty [1] and I prepared a note on the subject which I sent to Sheldrake [2], the Editor of the 'Times Trade Supplement' for editorial use. He had already prepared something himself and is blending his own stuff with mine so as to give a true picture of the situation.

I am enclosing my note because the article will not be published until tomorrow. [3] I should be extremely interested to know to what extent you think the points set out in the enclosed statement affect the possibility of Australia making satisfactory trade agreements with foreign countries.

CHAMBERS OF COMMERCE

Yesterday I had lunch with the Secretary of the Associated Chambers of Commerce. [4] He was anxious to discuss the action that the Associated Chamber was prepared to take along the lines of my address to the Sheffield Chamber of Commerce. [5] He said that his Directing Committee was very much impressed with the desirability of early action to elucidate the point of view of British commercial interests before the next Imperial Conference, and that a decision had already been reached whereby the Associated Chambers of Commerce had agreed to set up a special small Committee to consider the economic question in connection with the Imperial Conference and that the Associated Chambers had sent letters to the Federation of British Industries, the Chamber of Shipping and to the Banking Association, asking them if they were prepared to take similar action. He told me that he confidently expected to get these four Bodies all working on the problem after Christmas.

This I think is a very good move. In 1923, about two months before the Imperial Economic Conference met, the President of the Board of Trade [6] sent for these four Bodies and asked them to prepare their views on the subject of the Imperial Economic Conference.

This time we shall have these Bodies starting to examine the matter a year in advance and it is probable that they will make the President of the Board of Trade consider the problem instead of vice versa.

IMPERIAL AGRICULTURAL BUREAUX

The public announcement in regard to the proceedings of the Imperial Body, which has recently been considering the formation of the new Imperial Agricultural Bureaux, appeared in the Press today. I enclose a copy of the statement and a quite excellent leading article from the 'Times' and also an announcement of the position of the Empire Marketing Board to support an extension of Onderstepoort Veterinary Research Station in South Africa (Sir Arnold Theiler [7]).

MECHANICAL TRANSPORT

The Imperial Mechanical Transport Directing Committee is just commencing to function. A press announcement, together with a special article by General Hammond [8], appeared in the 'Times' last week and at the request of Ormsby-Gore [9], I wrote a letter to the 'Times' pointing out how important this move was from an Australian point of view. [10] I enclose a copy of my letter.

IMPERIAL ECONOMIC COMMITTEE

The Imperial Economic Committee recently held a meeting at which an important discussion occurred on principles. This was occasioned by the fact that the Committee is about to commence a series of investigations into raw materials whereas, apart from Timber and Tobacco, it has up to the present time only investigated Foodstuffs.

It was generally agreed that the principle of voluntary preference, which we had advocated in all our Foodstuff reports and also in our Tobacco and Timber Reports, would not be appropriate in Raw Material Reports. It was, therefore, decided that the Committee should prepare a comprehensive list of raw materials and should append thereto what in effect would be a report on the significance of an examination of raw materials to the cause of Empire Development. A very small Sub-Committee was appointed to prepare the draft of this report, the Committee consisting of the Chairman [11], M. M. S. Gubbay, the Managing Director of the P. & O. Banking Corporation [12], and myself, together with Sir David Chadwick. [13]

Yours sincerely, F. L. MCDOUGALL

1 The Treaty of Commerce and Navigation between South Africa and Germany, signed on 1 September 1928 and ratified on 11 June 1929.

2 T. S. Sheldrake.

3 Times Imperial and Foreign Trade and Engineering Supplement, 15 December. The article emphasised the unprecedented nature of South Africa's action in granting most-favoured-nation status to Germany and commented, '...nothing less than the principle of Preferential Trade within the Empire is at stake'.

4 R. B. Dunwoody.

5 See Letter 197.

6 Sir Philip Cunliffe-Lister, who changed his name from Lloyd- Greame in 1924.

7 Director of Veterinary Education and Research in South Africa until his retirement in 1927.

8 F. D. Hammond, an expert on railways and adviser on transport problems in Africa, Iraq and Jamaica; member of the Committee- appointed by Leopold Amery, Secretary for the Colonies and for Dominion Affairs-to investigate transport problems within the Empire. Hammond's article outlined problems to be considered by the Committee, with special reference to Africa, and acknowledged the Empire Marketing Board, which, in financing the first year of the inquiry, had recognised the importance of better and cheaper transport in under-developed areas. See 'Transport in the Empire.

A Search for New Methods. The Key of Trade', Times, 10 December.

9 William Ormsby-Gore, Parliamentary Under-Secretary for the Colonies; Chairman of the Publicity Committee of the Empire Marketing Board.

10 Times, 12 December.

11 Sir Halford Mackinder.

12 Representative of the Government of India.

13 Secretary to the Imperial Economic Committee.