230

17th May, 1929

PERSONAL AND CONFIDENTIAL

My dear Prime Minister,

I regret that, in writing to you about the work of the Economic Consultative Committee, I omitted to refer to one point, namely the recommendation made by the Economic Consultative Committee to the Economic Organisation of the League that consideration should be given to the idea of summoning a conference of business men, including both producing and consuming interests, to study the possibility of the increase of world trade in certain definite groups of commodities and the further suggestion that the commodity chosen should, if possible, be one of equal interest both to industry and to agriculture and the consequent suggestion that agricultural machinery might be the subject chosen.

This recommendation was the result of a strong initiative taken by the British Delegation. You will remember that last year it was decided to recommend to the Economic Organisation that studies should be made of certain definite commodities with the object of seeing to what extent it was possible to arrange for nations to take unilateral action so far as these commodities were concerned.

The Economic Organisation decided to select for study cement and aluminium. They then proceeded informally to consult certain Governments as to the willingness of these Governments to take part in a conference on the subject. The results of these consultations were unsatisfactory.

Sir Sydney Chapman [1] strongly expressed the view that two mistakes in policy had been made. Firstly, in attempting to induce Governments to be formally represented in a conference of this sort and, secondly, that a discussion on a single commodity was quite unpromising and that better results might be achieved through the study of a group of commodities.

The whole British Delegation were quite solid on the desirability of avoiding direct approach to Governments by the League and substituting therefor a conference of business people definitely concerned with a group of commodities. They were also strongly of opinion that agricultural interests should be brought into the picture.

At the meeting of the British Empire representatives, I very strongly urged that if this proposal was put forward, it should be based not on the idea of summoning a Conference of business people to discuss the reduction of tariffs but to discuss the possibilities for the improvement of world trade in the group of commodities selected.

W. T. Layton [2] and Mr. Pugh [3], the Trade Union Representative, were rather opposed to this line of thought but Sir Sydney Chapman and Mr. Mitchell [4], the President of the Association of British Chambers of Commerce, supported me. I also urged that no definite reference should be made to agricultural machinery. In this, however, I could get no support. When I came to study the draft report, I found that the way in which the suggestion was actually drafted was sufficiently ambiguous and harmless to render public opposition on my part unnecessary and, I think, undesirable. I therefore made no comment when that section of the report was under discussion.

The section of the report to which I refer is the first paragraph on page 22 of the draft report forwarded to you. [5]

Yours sincerely, F. L. MCDOUGALL

1 Economic Adviser to the British Government; Vice-President of the Economic Committee of the League of Nations.

2 Editor of the Economist.

3 Arthur Pugh, Vice-President of the General Council of the Trades Union Congress; General Secretary of the Iron and Steel Trades Confederation.

4 G. A. Mitchell.

5 The report was printed as League of Nations Publication 1929.11.23