227

15th May, 1929

PERSONAL & CONFIDENTIAL

My dear Prime Minister,

I am forwarding by this mail my official report to you on the work of the Economic Consultative Committee [1], but I am anxious to accompany it with comments of a type which would be quite unsuitable for publication.

Firstly you may be interested to know that the general atmosphere was rather pessimistic so far as the tariff issue was concerned.

No one really appeared to think that nations were going to take any direct action at least in the near future as regards the lowering of their tariffs as a consequence of the resolutions of the World Economic Conference. The fact that during the actual meetings of the Consultative Committee reports were appearing in the press about the intentions of the United States of America as regards the upward revision of its tariff, made any optimistic attitude practically impossible. Loucher [2] made a singularly frank declaration in favour of the formation of a series of European cartels which, he said, should be used to counter the coming great increase in American competition. This view found little support, but I think chiefly because it was felt that what Loucheur was really interested in was not European trade but the national interest of France. I am enclosing an extract from a speech made by Herr Lammers [3], one of the German delegates, and also an extract from Loucheur's.

Secondly, you will be glad to know that the point of view of which you have so definitely approved, namely that the League of Nations should place the international economic information service in the forefront of its programme, received very substantial support. I brought it forward in my first speech [4], and then in committee secured the inclusion of a series of paragraphs which culminated in a definite request to the Economic Organisation to re-study the resolutions of the World Conference on industrial information and to do its utmost, in collaboration with the appropriate national authorities, to secure a greater provision of comparable data. The printed report will probably not be ready for some days owing to the necessity for exactly harmonising the English and French versions, but I am enclosing a copy of the draft report, in which of course there were some amendments, and I have marked the portions referring to industrial information. The other general idea which you have so strongly held, namely that it is dangerous for the League of Nations to attempt in any way to dictate to States on economic policy, was the basis of some quite vigorous discussion at the final plenary session.

The report of the committee on commercial policy which came up for discussion included a paragraph which I have also marked in this report, which in its original form drew the attention of nations to the 'permanent rules laid down by the Economic Conference' and recommended that Governments should when submitting tariff bills to their parliaments 'try to show that these bills are in conformity with the policy recommended by the Conference of 1927', and further 'should, if necessary, explain their reasons for any slight departure from that policy'. I strongly opposed this draft, pointing out once again the necessity for a certain realism, and when it became clear that the Conference was anxious to include some general reference which might draw the attention of Governments to the desirability of bearing in mind the World Economic Conference resolutions when framing tariff measures, I submitted an alternative draft which was, after being supported by the British delegation and by the French, unanimously accepted. In order to avoid worrying you to look through the draft report, I am enclosing the original text and my amended text which was finally incorporated.

Another of the draft reports contained a reference to the 'economic policy of the League of Nations'. I drew the attention of the British Delegates [5] to this and asked them to secure the excision of any suggestion that the League of Nations had a definite economic policy. I told them that I would prefer them to do it as I was already opposing a good number of points. They agreed and the undesirable phrase was omitted.

At the end of the draft report on general questions there had been inserted a reference to the work of various international bodies which had during the past year commended the resolutions of the World Economic Conference to the attention of nations. The chief body referred to was the International Chamber of Commerce, but a congratulatory reference had also been made to the Federation of League of Nations Societies, and particularly in regard to a so- called international conference which had been held under the auspices of this Federation at Prague in 1928. This Conference at Prague had been the occasion for a number of British free-traders, including Sir Hugh Bell [6], to claim that the World Economic Conference had endorsed the free trade point of view. I therefore proposed the excision of all reference to the Federation of League of Nations Societies. This proposal, coming as it did during the last half hour of the plenary session, was regarded with some consternation by the Secretariat and I was very strongly appealed to to withdraw my amendment. Having regard to the very late stage of the discussion I decided that it was just as well to be content with a protest and I therefore withdrew on the understanding that there would be incorporated in the minutes of the Conference my protest against an organisation such as the Federation of League of Nations Societies being regarded as an economic authority, and my comment that the so-called International Economic Conference at Prague had made the mistake of confounding the policy of Freedom of Trade which was adopted at the World Conference, with the dogma of Free Trade. I found at the conclusion of the session that a very considerable number of delegates were strongly in sympathy with this protest. These included the Chairman, M. Theunis. [7]

The amount of time wasted at this Conference on the delivery of set speeches convinced everyone of the necessity for an alteration of procedure, and I think it is fairly certain that delegates will be required to submit any set statements in advance and that these statements will be duplicated and circulated. We shall then have a debate on the general documentation, in which in all probability a time limit for speeches will be adopted. This will certainly lead to a much more useful discussion and I think to more satisfactory results.

There are two other points that I want to deal with in this letter. The first is the relationship between Rome and Geneva on agricultural questions. The Agricultural Sub-Committee brought forward a proposal that the Economic Consultative Committee should recommend to the Council of the League the appointment of a small body of agricultural experts, who should from time to time meet the Economic Committee of the League and advise it on matters concerning agriculture or where agricultural interests were affected by questions concerning general commercial or industrial policy which were being dealt with by the Economic Organisation.

In the discussions at the plenary sessions the representative of the International Institute of Agriculture at Rome and one of the Italian delegates, M. Belloni [8], attacked this proposal. The representative of the Institute took the ground that the appointment of such a body would infringe the charter of Rome to deal with all international agricultural questions. This protest left everyone entirely unmoved because it is obviously stupid to imagine that one body such as the International Institute can claim the sole right to consider international questions affecting agriculture, and further that a body with a total income of 50,000 as is the case with Rome simply has not got the resources to make good its claims. M. Belloni took a much cleverer ground in that he thought if the right of agriculture to have a body of experts to advise the Economic Organisation of the League of Nations was admitted, it would be equally proper to arrange for a body of experts in regard to any other economic question. I proposed a compromise to the effect that the small body of agricultural experts should be regarded as a purely temporary measure to enable the Economic Organisation thoroughly to appreciate the outstanding agricultural problems. Belloni was prepared to accept this, but it did not meet with the approval of the agricultural people, specially the French. There arose therefore the question in regard to reservations which I have dealt with in my official report.

The other point to which I want to draw your attention is one affecting the International Management Institute and the general question of standardisation. I shall be writing to you a separate letter about the International Management Institute [9], but a very important question arose in the sub-committee on industry.

The draft submitted to the sub-committee contained a recommendation that the International Management Institute should work in the closest harmony with the International Standardisation Association. This International Standardisation Association is a body in which German influence is predominant and which is suspected of working for the adoption of German or at least continental standards. I pointed out that as neither the British nor American Standardisation Associations were associated with the so-called International Standardisation Association, it was very undesirable to make any such reference, and the draft was amended accordingly. I was very glad to find that the Director of the International Management Institute [10] is keenly alive to the necessity of avoiding the support of what is really a European standardisation interest. You will of course agree that the adoption of engineering standards may be an even more potent factor in influencing the direction of trade than tariffs.

There is one final point that I particularly want to make before concluding this letter. I should like very strongly to recommend that the question of the attitude of the various portions of the British Empire to (a) the Economic Organisation of the League of Nations, (b) the International Labour Office, (c) The International Institute of Agriculture at Rome, and (d) The International Management Institute, should be discussed at the next Imperial Conference, and I think that these items should be placed on the agenda of the economic side of the Conference and that proper documentation briefly setting out the objects of these Organisations, and, in so far as Great Britain or the Dominions may desire, regarding the present attitude of the various parts of the Empire to these bodies, should be prepared and circulated in order that there might be a really useful discussion on these points at the Conference. It is quite clear that if the British Empire delegates at Geneva or at Rome take similar ground in dealing with these problems, we shall be able in the course of a year or two to bring about the type of amendment that we should desire.

Yours sincerely, F. L. MCDOUGALL

1 League of Nations. Economic Consultative Committee. Second Session, held at Geneva, May 1929. Report of the Australian representative (Mr. F. L. McDougall)', Commonwealth Parliamentary Papers 1929-31, vol. 11, P. 715.

2 Louis Loucheur, French Minister of the Interior; a Vice- President of the Economic Consultative Committee.

3 C. Lammers, member of the Reichstag.

4 McDougall's speech was printed as Appendix A to the Report cited in note 1.

5 See note 6 to Letter 224 6 Ironmaster and colliery owner; Chairman of London and North- Eastern Railway Co.

7 Georges Theunis, Belgian Minister of State.

8 E. Belloni, Italian industrialist.

9 Not found.

10 Lyndall Urwick, British industrial engineer.