219

21st March, 1929

PERSONAL AND CONFIDENTIAL

My dear Prime Minister,

SIR HUGO HIRST [1]

Yesterday I saw Sir Hugo Hirst and had quite an interesting talk.

Everything connected with the Business Mission convinces me that your move in arranging for its occurrence was a really brilliant one and one which may be expected to lead to the very substantial advantage of Australia for a number of years.

I was very delighted to hear from Hirst that you had asked the Mission to keep together and meet from time to time so as to form a nucleus for the discussion of problems connected with Australian development between now and the coming Imperial Conference.

Hirst is, of course, greatly absorbed by his controversy with his American shareholders [2] but his enthusiasm about things 'Australian' is obviously very great.

Duckham [3] has not yet returned but is expected back during the weekend.

EMPIRE MARKETING BOARD

My address to the Imperial Affairs Committee of the Conservatives, which I referred to in my letter of the 27th February [4], was postponed until last Thursday. I enclose a copy of a paper which I circulated to members present. The discussion which occurred was very keen and I was especially asked by several members and by Amery [5], who was in the Chair, to prepare a short statement as to the importance of Empire markets to British trade for the year 1928. I was asked to make this very brief and just in the form of a series of striking points which could be used by speakers. I enclose a copy of this statement, of which I am sending copies to all the Members of Parliament that I know, irrespective of Party.

I think you will agree that the table on page 3 would afford speakers a series of effective points.

After the meeting, Amery detained me for a while and told me that he had in mind the possibility of getting the Cabinet to agree to a proposal that the Empire Marketing Board should, in addition to the 1,000,000 a year grant, definitely be associated with a scheme for the research and publicity throughout the Empire on behalf of Empire manufactured goods, for which the British Government should make available to the Board an additional sum of somewhere between 1,000,000 and 2,000,000 a year. He further said that he wanted to get a promise from the Cabinet to make available another 2,000,000 a year for what he described as Colonial developmental purposes, the money to be used for meeting part of the interest charges on development loans for the Colonies.

I said to Amery that I assumed that what he had in mind was proposals which would be considered at the Imperial Conference. He said that what he really had in mind was some immediate promise by the Government to enlarge the scope of the Empire Marketing Board in these directions if returned to power after the Elections.

We did not have time for any long discussion of these ideas. I should rather doubt the political wisdom of an eleventh hour promise by the Government to do more in this direction when they have done so little for Empire development during the last four years, apart from the work that has been done through the E.M.B., which is, of course, considerable. I am also more than doubtful whether Amery will succeed in obtaining his colleagues' consent to a proposal of this sort.

SIR EDWARD HILTON YOUNG [6]

Last night Hilton Young addressed in the House of Commons the Compatriots Club, of which I am a member, on his East Africa report. [7] He spoke extremely well and once again confirmed to my mind the impression of his marked ability.

As I think you know, he is one of the men in the House of Commons who is intensely keen about Empire matters. I had a short talk with him afterwards about the next Imperial Conference and we agreed that, as soon as the Election is over, we should spend a couple of hours together really going into some of the economic questions. Baldwin [8] is supposed to have a very high regard for Hilton Young and it occurred to me that, through Hilton Young, one might do a good deal of useful preparatory work. [9]

LLOYD GEORGE [10] AND THE ELECTION

You will have seen from the cables that Lloyd George made a sensational speech in which he promised that, if returned to power, he would reduce unemployment to normal proportions in a single year without adding one penny to national or local taxation. [11] Following this speech, a pamphlet has been issued by the Liberal Party indicating the action which the Liberal Party would take to make good this pledge. I enclose a copy of the pamphlet. I think the general feeling is as follows:-

Firstly that Lloyd George was perfectly safe in making the pledge because by no conceivable chance can the Liberals obtain power as a result of the Election and, secondly, that the pledge might have been a very effective electoral asset if it had been made about a month before the Election but that the scheme is open to such serious and obvious criticism that, having been made ten weeks before the Election, it will, by the time the Election occurs, be so heavily discounted as to cease to be an asset of any appreciable value. It remains, however, true that Lloyd George's strong intervention has sensibly heightened public interest in the Election campaign. It is a thousand Pines that Lloyd George, with his dynamic forces and executive ability, is not championing the cause of Empire development, especially as I understand that he is really quite keen about it but that he feels that to play that card would quite definitely be to play the Tory game. If there is any truth in the well founded rumour that Lloyd George returned to England in the Autumn of 1923 prepared to make Empire development the centre feature of his campaign and was merely forestalled in doing so by Baldwin precipitating the 1923 Election issue [12], it is perhaps one of the greatest disservices that Baldwin has done to the Empire.

POLITICAL

This week the results of five by-elections will be published.

Henry Mond [13] has already been returned for Liverpool with a severely reduced majority but on a very low percentage poll.

Midday today the result of the Eddisbury By-election became known- a Liberal gain in a straight fight between a Liberal and a Conservative. This must be regarded as an indication of increasing Liberal voting strength and I cannot but regard it as being somewhat sinister from a Governmental point of view.

EXTENSION OF WORK OF THE EMPIRE MARKETING BOARD

Last night in the House of Commons there occurred a brief debate raised by Captain Cunningham Reid [14] on the extension of work of the Empire Marketing Board. It was by no means an important debate but Cunningham Reid's point that the scope of the Board should be extended was supported from the Labour side. It may be worth your while to glance through what was said. I am, therefore, enclosing a copy of the Hansard with the portion marked.

Yours sincerely, F. L. MCDOUGALL

1 Chairman and Managing Director of General Electric Co. Ltd;

member of the British Economic Mission to Australia 1928.

2 Early in March General Electric Co. Ltd offered 1 6000 000 new shares for purchase by British shareholders only. A committee of American shareholders protested at the inequity of the arrangement. Some weeks of controversy ensued, during which an American deputation visited London and a revised offer was made.

Hirst defended the scheme, explaining his concern on finding over 60 per cent of shares in American hands, and his belief that the company's best interests lay in keeping the major shareholding with potential customers in the British Empire (Americans were precluded by tariffs from purchasing the products). When the new issue was finally abandoned the Times, 20 April, observed, 'American electric interests have long desired to bring the English General Electric Company into a merger scheme'.

3 Sir Arthur Duckham, chemical engineer prominent in the coal industry; leader of the British Economic Mission.

4 Letter 215.

5 Leopold Amery, Secretary for the Colonies and for Dominion Affairs; Chairman of the Empire Marketing Board.

6 Conservative M.P.; Editor-in-Chief of the Financial News;

Chairman of the Royal Commission on Closer Union of the Dependencies in Eastern and Central Africa.

7 Cmd. 3234, January 1929.

8 Stanley Baldwin, Prime Minister.

9 In a letter dated 30 April (file AA:M111, 1929), Bruce agreed:

'Hilton Young is an extraordinarily competent person, and it is quite a good thing that you should keep in touch with him and get some of your ideas into his mind'.

10 David Lloyd George, Prime Minister 1916-22; Leader of the Liberal Party.

11 An account of the speech was published in the Times, 2 March.

12 The major issue of the election was protection.

13 Conservative M.P.; a director of Barclays Bank and Imperial Chemical industries Ltd; son of Lord Melchett.

14 A. S. Cunningham Reid, Conservative M.P. Reid suggested using the Board's resources to advertise British manufactured goods in the Dominions. William Ormsby-Gore, Parliamentary Under-Secretary for the Colonies and Chairman of the Board's Publicity Committee, replied that extension of the Board's function beyond agricultural products would require the sanction of an Imperial Conference. See House of Commons, Parliamentary Debates, fifth series, vol. 226, cols 1813-20.