223

24th April, 1929

PERSONAL AND CONFIDENTIAL

My dear Prime Minister,

BALDWIN'S [1] SPEECH

Last Thursday Baldwin made his long anticipated policy speech, of which I enclose a copy, although you will no doubt receive one from other sources. I consider the speech considerably disappointing and it has been generally regarded as not giving any very effective inspiration to the Tory Party for the coming General Election.

My own view is that Baldwin's ambition is to be regarded as a great Conservative Leader. His mistake in 1923 [2], due to great impetuosity, has, I believe, thoroughly scared him with the result that he has reacted violently in the opposite direction and his whole tendency is towards low-toned utterances. To my mind he is also quite seriously handicapped in attacking the Lloyd George [3] and Labour Party proposals for creating work for the unemployed by the fact that the Government has continuously been insisting upon the marked recovery which they allege has taken place in British trade. Had it not been for the necessity, which I suppose he felt that past utterances had imposed upon him, to maintain the legend of the great improvement in British trade, he, could have attacked the Lloyd George proposals in a very effective way by pointing out that, although British trade had shewn some recovery, that recovery was not commensurate with the development of world trade and that the primary necessity of Great Britain was to become more effective in International competition. Any proposals which must be expected to decrease Britain's competitive power in the world were thoroughly pernicious and harmful.

The other day one Liberal candidate, who is a large ship owner, actually praised the Lloyd George proposals on the ground that they would greatly increase imports into this country. I think it is a perfectly sound view that the expenditure of large sums of loan money on such works as Lloyd George proposes would increase imports but that is the weirdest ground for supporting such proposals, except, of course, from the point of view of a ship owner.

In regard to export trade, there were only two constructive proposals in Baldwin's speech-one in order to assist the railways to improve their facilities, and the other his promise that the Tory Party, if returned to power, would assist Colonial development by meeting some of the interest charges on development loans. Baldwin made it perfectly obvious that he did not intend this proposal to apply to the Dominions but it is difficult to see why he should take this line. I have written an unsigned article, which I hope will be published in a few days, generally praising the proposal to assist Colonial development but pointing out that developments in the three Southern Dominions, and particularly in Australia and New Zealand, would do more to assist British employment than developments in any Colony with the possible exception of Nigeria.

POLITICAL CHANCES

This letter will reach you within a day or two of polling day [4] in this country and therefore it would be extremely fool-hardy of me to embark on any further political forecasts. I shall, however, hazard the expression of certain opinions.

It now seems quite clear that one of the results of Lloyd George's theatrical intervention with his absurd pledge [5], backed as that intervention is, with the expenditure of very large sums of money, will be substantially to increase the Liberal poll in the country but it by no means follows that, because the Liberal poll will be increased, the number of Liberal Members of Parliament will be in anything like due proportion to the increase in the number of votes cast for the Liberals.

There appear to be two completely incalculable factors in the forthcoming Election. The first, of course, is the question of how the newly enfranchised young women will vote [6], and the second question is which of the two larger Parties will be most detrimentally affected by the expected increase in the Liberal poll. One has the feeling, at the present moment, that Labour is not doing particularly well. They have too large and amorphous a programme. Philip Snowden's [7] stupid attack on the 'infamous Balfour Note' has certainly not improved Labour solidarity and this may tend, in many districts, to help the Liberals to score at the expense of Labour.

The only forecast I feel inclined to make is that the result of the Election will be something very closely approaching a deadlock, with the result that another Election will be necessary within a year or eighteen months time. I only hope that we get a Government which is capable of carrying on and holding an effective Imperial Conference. One other thing is certain. There will be a very great change in the personnel of the House of Commons. The Election of 1924 brought in an overwhelming number of Tories, all at least verbally pledged to a policy of Empire development. The question of the education of the House of Commons has, therefore, not been particularly urgent during the life of this Parliament but after the coming Election there will undoubtedly be a large reinforcement of the two Parties of the Left, and I am sure that you will agree that one of the outstanding pieces of work will be the education of these new Members to see the importance and urgency of Empire development.

EMPIRE MARKETING BOARD

On Thursday evening there was a debate in the House on the Dominions Office Vote and, by general agreement, the debate was made to include the Votes of the Empire Marketing Board and for Overseas Settlement. [8] I am enclosing a copy of the 'Hansard' and have particularly marked references to the E. M. B. All three Parties took part in the debate and, with the exception of one short querulous speech from a Liberal, combined to bless the work of the Board. Some of the speakers, indeed, adopted an almost extravagantly complimentary style. It would be folly to pretend that one was not gratified to read this debate. My chief feeling was that the debate showed how really useful had been the move to force Amery [9] and the Government to include the Opposition Parties in the personnel of the Board. I am quite sure that, had it not been for the fact that both Labour and Liberals are represented on the Board, the debate would have taken an utterly different tone. As it is, there is one thing of which we can be certain, namely, that whatever change occurs as a result of the Election, the E.M.B. will continue to function without any decrease in its vote or its responsibilities.

STABILIZATION AND AGRICULTURAL PRICES

In the debate referred to in the above paragraphs, each speaker from the Labour side dwelt upon the necessity for the extension of the Empire Marketing Board's work to include attempts to reduce the 'spread' between the producer and the consumer. Some Labour speakers also brought forward the proposal to create through the E.M.B. a system of bulk purchases of Empire goods.

I was extremely interested to find that Arthur Duckham [10] has come back from Australia very keen on the idea of a system of bulk purchase, deliberately aimed at stabilising agricultural prices on a level remunerative to the efficient producer.

As I think I told you in a previous letter, Sir Daniel Hall [11], who, I suppose, is regarded as one of the really leading authorities on agriculture in this country, is also trying to educate opinion in this direction.

Under these circumstances, I should be extremely glad if you would consider to what extent it would suit your purpose if we were to stage a fresh discussion of the Stabilisation ideas at the next Imperial Conference. I should particularly like to have your views on this point as soon as you can conveniently let me have them after receipt of this letter, because a great deal of exploratory and educational work will be required if the subject is to be thoroughly thrashed out in 1930. [12]

ECONOMIC CONSULTATIVE COMMITTEE

On May 4th I have to leave here for Geneva for the annual meeting of this Body. Up to the present, the only indication I have had of your thoughts on the subject is your cable to Senator McLachlan [13] giving him instructions for the 1928 Assembly in regard to the economic side. I am hoping that the next mail may bring me some word about your general attitude and especially your reply to my questions about the relationship between Rome and Geneva. [14] If I do not receive anything from you then, I shall probably send you a cable next week.

I am now receiving masses of papers in connection with the work of the Economic Organization of the League and the outstanding fact is that, during 1928, the attempts to secure a lowering of tariff barriers have been practically unsuccessful and that the tendency in the world is still towards an increase in tariffs. I feel very much inclined to draw marked attention to this and to use it as a lever suggesting the importance of more constructive work by the League Organization on information and other general services.

THE UNITED STATES TARIFF

I was extremely interested to see that the Commonwealth Government had sent a note to Washington on the proposed tariff changes in America [15], but at the same time I cannot help but feel that if Hoover [16] is forced by the farmers to agree to a substantial increase in the tariffs on agricultural produce, the result will be to throw Canada into our arms, and to make it quite certain that the discussions of economic subjects at the Imperial Conference will be both interesting and important. I shall watch with the very keenest interest what happens in the next few weeks at Washington.

I rather assume that in sending the Commonwealth Government's note to America, you did not really anticipate checking the expected development, but that you are endeavouring to place Australia in a sound strategical position to retaliate against the increases in the tariff which appear almost inevitable.

Yours sincerely, F. L. MCDOUGALL

1 Stanley Baldwin, Prime Minister.

2 The Conservatives lost office in 1923, after an election campaign in which Baldwin strongly advocated protection.

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

4 30 May.

5 See Letter 219.

6 Women over 30 had been enfranchised by the Representation of the People Act 1918. The Equal Franchise Act 1928 lowered the voting age for women to 21.

7 Chancellor of the Exchequer 1924. See note 17 to Letter 221.

8 House of Commons, Parliamentary Debates, fifth series, vol. 227, cols 433-530.

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

10 Sir Arthur Duckham, chemical engineer prominent in the coal industry; leader of the British Economic Mission to Australia 1928.

11 Chief Scientific Adviser, Ministry of Agriculture and Fisheries; Director of the John Innes Horticultural Institute.

12 In a letter dated 28 June (file AA:M111, 1929), Bruce recalled his discussions with the Labour Commonwealth Group in 1926, when it became clear that this matter, and especially the issue of distribution of bulk purchases, posed problems for Britain.

Although he wished to see the matter discussed, Bruce felt it should be raised by the British Government. He asked McDougall to prepare a memorandum, covering his own views and those of the Labour Party, so that he could consider the matter further.

13 A. J. McLachlan, Honorary Minister; leader of the Australian delegation to the League of Nations Assembly 1928.

14 See Letter 215.

15 In a Note handed to the Secretary of State by the British Ambassador on 12 April, Australia protested against the proposed raising of American tariff protection (implemented, in fact, by Congress in the following year as the Hawley Smoot Tariff), noting her trade balance in the United States' favour and the possibility of trade being diverted to Britain. A copy of the Note is on file AA:A981, Trade 425, i.

16 Herbert C. Hoover, President of the United States.