215

27th February, 1929

PRIVATE AND CONFIDENTIAL

My dear Prime Minister,

The last letter I received from you was dated the 27th August. I of course recognise that since that date you have been faced with a General Election campaign, with all the troubles and worries of Cabinet reconstruction and by some awkward political crises.

Therefore, although I have looked forward to receiving letters from you, I have not done so with any confident expectation until the last two or three weeks. [1] I am sure that you are aware that I shall not misinterpret the reasons which preclude you from writing and that you also realise how useful it is to me to receive from time to time your personal reactions on some of the points which I write about.

I have been wondering whether you would think that a useful purpose would be served if I was to prepare a report on the work of the Imperial Economic Committee and on the Empire Marketing Board, either jointly or separately. The idea that occurs to me is that such report or reports written for Australian consumption might be quite useful and that you might think it worth while to consider the issue as a Parliamentary paper. I should be glad to know whether you would think such action desirable. [2]

BRITISH ECONOMIC MISSION

On Monday night I dined with the Malcolms [3] and was most delighted to find how enthusiastically they had reacted to their Australian visit. Although Malcolm appeared to be somewhat horrified at certain of our economic experiments, his whole attitude to Australia and to things Australian was so extraordinarily pleasant and cordial.

I told him that my only serious criticism of the report [4] was that the Mission had not indicated, in two or three paragraphs, the inherent possibilities of the intensive development which they so strongly advocated in contra-distinction to extensive development.

Malcolm agreed that it would have improved the report had something of this sort been done but when he told me of the pressure under which the report was written, I can quite understand this omission.

I have been asked by the 'Times Trade Supplement' to write an unsigned comment on the report and I enclose a copy of what I have written herewith. I would particularly draw your attention to the last three pages. I hope that you will agree that it is distinctly useful to draw the attention of financial and commercial people to the enormous scope for intensive development in Australia.

COMMERCIAL TREATIES AND AUSTRALIAN TRADE

In one of my letters of the 14th February I wrote to you on this subject [5] and I enclosed one copy of a statement prepared for me by the Commercial Relations Branch of the Board of Trade. I am now enclosing a second copy, which you may feel disposed to send to the Minister for Trade & Customs. [6] I have sent two copies to Casey [7], one of which he will be forwarding to Henderson. [8]

EMPIRE MARKETING BOARD

Tomorrow it has been arranged that I should address the Imperial Affairs Committee of the Conservative Party on the way in which the Dominions have reacted to the establishment of the Empire Marketing Board. These addresses in the House of Commons are sometimes useful and sometimes pretty futile. It all depends on whether the subject matter under discussion in the Chamber itself is of interest or not. If the House is dull, one may get an audience of 50 or 60 but if interesting affairs are afoot in the Chamber, one's audience may be as small as 10. I feel, however, that it would be a very good thing to create an opportunity whereby Members of Parliament, before going to the Country at the General Election, should realise the importance of the Empire Marketing Board to the economic relations between Great Britain and the Dominions and I, therefore, arranged with the Empire Marketing Board to prepare a summary of extracts of Overseas opinions on the Board's work. I will forward a copy of this to you by the next mail.

I shall try and arrange to address the Labour Commonwealth Group on the same subject and thus, through the medium of these two Groups, to arrange with the Secretary of each Group to circulate the paper among most of the Members of the two Groups which include some 300 Members of Parliament. [9]

In my letter of the 21st February I referred to the proposal of the International Institute of Agriculture at Rome to establish an Agricultural Economics Committee and I informed you that I should be discussing this matter with Mr. R. J. Thompson [10], the British representative on the Permanent Committee of the Institute.

This talk occurred at lunchtime today and I found that Thompson's views are very closely similar to those which I expressed in my last letter to you. He believes that, as it was decided at the General Assembly of the Institute to concentrate the work of the Institute upon economic and statistical questions, a really useful purpose would be served by maintaining an Agricultural Economics Committee for a couple of years at least.

ROME AND GENEVA

The next meeting of the Economic Consultative Committee of the League of Nations will be held on the 6th May. The Consultative Committee is meeting only once a year but, as its function is to review the whole of the work of the Economic Organization of the League, it must be regarded as being of very substantial importance.

So far as agricultural and International economics are concerned, there are two opposed schools of thought which manifest themselves at Geneva and at Rome. The tendency of the Scandinavian and Central European States, including Germany, is towards making Rome the agricultural organ of the League of Nations, provided Rome is prepared to be truly International, and, failing the reform of Rome, to transfer the major activities of the International Institute at Rome to Geneva. The other school which includes France, Spain, of course Italy and particularly Argentina, are for increasing the status of Rome. France and Italy are by no means opposed to Rome being recognised as the Agricultural Organ of the League of Nations provided the effective autonomy of Rome is not impaired. Argentine, being somewhat hostile to the League of Nations, is opposed to any direct association between Rome and Geneva. Belgium I think is pro-Geneva. The position of the United States of America is peculiar in that it states that it is prepared to support Rome and does not desire to see Rome and Geneva more closely associated but in point of fact has, however, practically withdrawn its financial support owing to its irritation at the marked pro-Italian policy of the International Institute of Agriculture at Rome. The attitude of the British Government is not markedly pro-Rome or pro-Geneva, although with a tendency towards supporting the Geneva point of view.

There is no doubt that the British authorities are distinctly sympathetic to the American attitude of dissatisfaction with the way in which affairs have been managed in Rome but there is a decided feeling that the Americans have not played their cards at all skilfully if they really desired to bring about reform.

I should be particularly glad if you would give me some indication of the attitude which the Commonwealth Government would desire me to take in regard to these matters. I believe I have already made it clear that, in my judgment, it would be as well to throw what influence we possess into the scale of attempting to induce Rome to become a more efficient organization and that, provided there were definite signs of such an improvement, to agree to the closer association of Rome and Geneva.

I am clearly aware of the misgivings which you entertain in regard to the economic activities of the League and I shall, of course, do everything I can to assist to steer the Economic Organization of the League into useful rather than dangerous channels. I do not think that it would be possible for Australia to bring about a drastic curtailment of the League's economic activities and I therefore feel that we should display a sufficient interest so that we can exert a useful influence and prevent the League being captured by the economic doctrinaire and thus become a platform for the British free traders. If the League is to perform useful functions in regard to statistics and intelligent information, for which its central position peculiarly fits it, it seems most desirable that it should be concerned not only with commerce and with industry but also with agriculture. This I feel strongly about, because an Economic Organization, exerting considerable influence in the world, which is entirely divorced from the consideration of agricultural problems, will certainly take a lop- sided view and, from the point of view of a country such as Australia, would have its utility seriously curtailed. In spite, however, of this definite feeling that Geneva ought to be interested in agriculture, I should doubt the wisdom, at the present stage, of increasing the size and therefore the status of the Economic staff at Geneva and would prefer to see Rome reformed and acting as the Agricultural Organ of the League with its work subject to review by the Economic Consultative Committee rather than to scrap Rome and to build up a new wing to the Geneva Organization.

These questions may, or may not, come up for discussion at the meetings of the Economic Consultative Committee but whether they come up publicly or not, there is certain to be a great deal of discussion in the lobbies on the subject and I should particularly like to receive from you some indication of the way in which your mind tends in these matters. If it were possible for you to let me have a reply on this subject by the mail following the receipt of this letter, I should receive it just before I go to Geneva.

Should this not prove possible, perhaps you would be good enough to send me a cable before the end of April indicating your reactions. [11]

THEILER [12] AND PASTORAL RESEARCH

As you will, of course, know, it had been impossible to obtain from Theiler any definite reply to the proposal of the Commonwealth Council for Scientific and Industrial Research that he should become the head of the Animal Health Division of the Council's Organization. Theiler made it quite clear to me, both verbally and by letter from Basle, that he was not prepared to come to any final decision until he had had an opportunity of a discussion with Orr. [13] I therefore arranged, after cabling Rivett [14], to take Orr to Basle in order that we might have the consultation which Theiler's health had precluded when he was in London. This occurred on the 16th and 17th of February. We found that Theiler had really made up his mind not to accept the Council's offer but, as a result of our joint discussions, he promised me that he would give the most favorable consideration to an invitation to go to Australia for a year to act as adviser to the Council on the establishment of direct attack on problems of animal health. I, of course, cabled this information to Rivett and have received from the Council a confirmation of the idea and instructions to try to finalise arrangements with Theiler. [15]

The thing that I think will particularly interest you in these discussions was the way in which, when Theiler and Orr got together, they immediately agreed that what was really required in Australia, so far as the pastoral and dairying industries were concerned, was not, at least at this stage, the establishment of great central laboratories at Canberra but the direct attack on outstanding problems of economic importance through the establishment of two field stations, one in Queensland and one in some district of Southern Australia in which marked deficiency diseases existed. It was indeed on the assumption that the Council would agree to such a programme that Theiler expressed his willingness to consider acting as adviser in order to get such a scheme started.

On my return from Basle, I saw Walter Elliot [16] and suggested to him that if the Commonwealth Council approved of the idea, the Empire Marketing Board ought to be prepared to agree to the diversion of the grant, which had been promised to Australia for the establishment of a Tropical Agricultural Research Station in Queensland, to the purposes of this direct attack on animal health problems. Elliot readily agreed to this idea and I informed Rivett that, in considering the Thieler and Orr proposal, he could take into consideration the probability of the Empire Marketing Board being prepared to come in on a 50-50 basis in lieu of the Queensland grant. [17] There does not seem, at the present time, any prospect of the establishment of a Tropical Research Station in Northern Queensland and it would be much better to use this money for more immediate objectives.

RUSSIAN COMPETITION IN DRIED FRUITS

I am enclosing copy of a letter which I am sending by this mail to Mr. W. C. F. Thomas, C.B.E., the Chairman of the Commonwealth Dried Fruits Board. I should be particularly glad if you would read this, as it gives an extremely interesting instance of the way in which Russia is prepared to trade. [18] I shall make a point of seeing that Tom Johnston [19] and some of the other Labour men who are keen on Empire Development know the facts about this transaction.

Yours sincerely, F. L. MCDOUGALL

1 Bruce had written on 10 February.

2 Bruce thought this suggestion 'admirable' and suggested its publication as a Parliamentary Paper. His letter, dated 30 April, is on file AA:M111, 1929. A memorandum, 'The Origin, Function and Work of the Imperial Economic Committee and the Empire Marketing Board', is on file AA:AA1970/555.

3 D. O. Malcolm, a director of British South Africa Co., was a member of the British Economic Mission to Australia 1928.

4 'Report of the British Economic Mission', Commonwealth Parliamentary Papers 1929, Vol. 11, p. 1231 5 See Letter 213 (20 February).

6 H. S. Gullett.

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

8 Dr Walter Henderson, Director of the External Affairs Branch, Prime Minister's Department, Canberra.

9 In his letter cited in note 2 Bruce agreed that McDougall should 'take every opportunity that offers itself of trying to educate the members of the different Parties in the House of Commons to the importance of the Empire Marketing Board, and also upon general questions of inter-Imperial Trade relations'.

10 Assistant Secretary at the Ministry of Agriculture.

11 Bruce replied on 30 April that McDougall had interpreted his views correctly; he preferred to see agricultural research pursued adequately in Rome rather than by an expanded League bureaucracy in Geneva.

12 Sir Arnold Theiler, Director of Veterinary Education and Research in South Africa until his retirement in 1927, was then engaged in research at the University of Basle.

13 J. B. Orr, Director of the Rowett institute for Research in Animal Nutrition, Aberdeen.

14 David Rivett, Deputy Chairman and Chief Executive Officer of the Council for Scientific and Industrial Research. A copy of the cable, sent on 18 February, is on file AA:A461, E398/1/6.

15 A full account of the discussions in Basle, together with a draft memorandum recording the discussion and Rivett's reply, are on file CSIRO:30, [1]. In the letter cited in note 2 Bruce regretted that Theiler was not coming to Australia permanently, but observed that a year's visit would be of material assistance.

16 Parliamentary Under-Secretary for Scotland; Chairman of the Research Grants Committee of the Empire Marketing Board.

17 A copy of McDougall's cable to Rivett, dated 19 February, is on the file cited in note 14.

18 The letter describes the sale in London of sultanas from Samarkand at prices which McDougall believed to represent 'sheer and complete loss'. The letter is in AAV:B4242, vol. 8.

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