245

1st July, 1929

PERSONAL AND CONFIDENTIAL

My dear Prime Minister,

REPORT ON I.E.C. AND E.M.B.

In your letter of the 30th April [1] you warmly commended my suggestion that I should prepare a report an the work of the Imperial Economic Committee and on the Empire Marketing Board. You also said that you would probably publish this as a Parliamentary paper.

I have sketched out the basis and have completed part of the report but I feel that it will be wise to wait for a week or two before completing it. My point is that, within a very brief period, we ought to have some official pronouncement for the new Government here in regard to the E.M.B. I have no doubt that the Government will support the Board. When this is announced, we shall be in a position to say that the policy recommended by the Imperial Economic Committee in its first report has now become the national policy of Great Britain. I feel sure that you will agree that the report would be much strengthened by such a conclusion and I therefore trust you will concur in the slight delay which seems to me to be desirable.

SIR SYDNEY CHAPMAN [2]

In my last letter I gave you some account of a conversation with Chapman about the economic side of the Imperial Conference. Since I wrote I have seen Chapman again and we have had further discussions.

Chapman talked again about the Imperial Conference but he was chiefly anxious to discuss International economic questions. He is going to Geneva for the whole Assembly and told me that he regarded it as a most important time. European countries are tending to discuss getting together in the face of the American tariff threat and he is most anxious that the Labour Government should not be led into European economic adventures. He strongly urged me to try and be there. I have not yet received any reaction from you about the suggestion that I should go for a part of the Assembly as an additional delegate.[3] I notice that no news has yet been received in London as to the fifth Australian delegate.

You doubtless wish to fix this before deciding upon the other question.

THERE RESIGNATION HONOURS LIST

The list of Honours recommended by Baldwin [4] on his resignation seems about the limit in honouring the mediocre. So much was this the case that the 'Times' in a leader, which I enclose, suggests that honours rarely come to politicians who do not ask for them.

Rather a severe stricture from a Conservative newspaper. Peel [5], after holding the India Office for a few months, is made an Earl but the worst is the list of Privy Councillors: Wolmer [6], Sassoon [7], and other incompetents of like kidney. Baldwin has, I should imagine, in the last four years created a record by the honours given to party hacks. The Birthday list was full of unknown persons who were regarded as workers in the Conservative cause.

BEAVERBROOK [8] AND THE EMPIRE

On Sunday the 'Sunday Express' published, with a great flourish of trumpets, an article by Beaverbrook entitled 'Who is for the Empire?' I am enclosing a copy of article which I feel sure you will be interested to read. This publication is, I think, all to the good at the present time, although, of course, the idea of free trade within the Empire is hopeless.

I happen to know that R. G. Boothby [9] M.P. is in touch with Beaverbrook and I am going to try and get Boothby to show Beaverbrook how stupid it would be to centre his campaign on an Imperial Fiscal Union with free trade between all its parts and to suggest the alternatives which might attract Beaverbrook and lead him to campaign along sounder lines.

3.7.29

EMPIRE MARKETING BOARD

Yesterday Tallents [10] sent me a note to let me know that a new Liberal M.P. had put down the following question:

To ask the Chancellor of the Exchequer [11] whether he will consider what economies might be secured by the abolition in whole or in part of the Empire Marketing Board, I saw Tallents who was rather worried because he had learnt that the Treasury, which has always been somewhat hostile to the E.M.B., would prepare the answer and the combination of Philip Snowden and the Treasury might produce a stupid answer which the Government might regret later. I arranged to see Elliot [12] in the House of Commons and also arranged for him to see several Labour men, including William Graham [13], and perhaps Thomas [14], and to point out the need for a clear and unequivocal answer approving of the Board. I also spoke to Sir Horace Hamilton [15], of the Board of Trade, and pointed out what a very depressing effect would result from a noncommittal answer and how any tendency by the Treasury to economise on the E.M.B. grant would jeopardise the increasingly happy prospects for an important economic side of the Imperial Conference. I also saw Whiskard [16] at the Dominions Office and satisfied myself that he was fully seized of the position.

I do hope that a satisfactory answer will be given but it is not unlikely that the questioner will be asked to repeat his question later.

IMPERIAL ECONOMIC COMMITTEE

Yesterday's meeting of the Imperial Economic Committee proved important. The subject for discussion was the first draft of the report on Pig Products. I had given notice of an intention to raise the larger issues, including the question of how Great Britain could guarantee her markets to the agriculture of her own countryside and of the overseas Empire. We had a lively discussion and finally decided not to introduce these ideas into the Pig Products Report but to ask leave from the Governments of the Empire to draw up a report based upon our experience gained in consideration of the various matters into which we have enquired.

So you will be receiving a cabled request for authority to do this. I am doubtful whether Canada will agree unless the United States Tariff threat has caused a saner point of view there.

The ideas which I think this proposed general report might contain would be somewhat as follows: The I.E.C. has, in its investigations and reports, laid down certain principles, the outstanding ones being (a) the need for productive efficiency with which must be associated efficiency in presentation and marketing;

(b) the mobilization of the British consumer to use his purchasing power for his country's economic advantage, illustrated by voluntary preference and the publicity campaign of the E. M. B.

Both these things are, and will continue to be, essential but under certain circumstances even high productive and marketing efficiency associated with well developed voluntary preference may not secure the British markets for Home or Overseas Empire agriculture.

What should be done in such cases? (The cases would be illustrated from our previous reports.) The argument would be that a stable and prosperous Empire agriculture is of such immense economic importance to Great Britain as to justify a British Government in giving a guarantee that, where such cases arise, the Government should take such action as may be found appropriate to secure privileged access to the British markets.

The report would go on to discuss briefly but sympathetically the possible methods, Tariffs being mentioned only to be dismissed as outside the I.E.C.'s terms of reference. The main discussion would be upon bulk purchase schemes and particularly on such schemes as did not involve State trading.

I think some such report which might also deal with capital investment, transport problems, etc. would present a valuable picture before the Imperial Conference.

4.7.29

BRITISH EMPIRE SOCIETIES

The Editor of the 'Morning Post' [17] recently sent one of his staff to see me about a proposal from Canadian sources for the creation of a new Empire Society to push the Empire buying spirit throughout the whole of the British Empire. My immediate comment was that there were already a superfluity of Empire Societies and that what was required was a consultation of existing Societies rather than the creation of any new ones. This interested Gwynne, the Editor-in-chief, quite considerably and he arranged for the publication of an article and a leader on the subject. [18] I enclose both herewith. I do not know whether anyone will follow this move up but there can be no doubt about the waste of effort and indeed of money through the duplication of effort that occurs in this country.

THE KING'S SPEECH

I am enclosing the 'Hansard' giving the text of the King's speech and also the commencement of the Address in Reply. I should like particularly to draw your attention to Snell's [19] speech in moving the Address. It was very pleasing to find that Snell took this opportunity for placing Empire development in the forefront.

Snell is a quiet little man with a gentle manner and I have been told, both by Tory and Labour Members, that the effect of his speech on the House was very marked indeed. I am also enclosing yesterday's 'Hansard' as it includes the very important speech made by Thomas, who seized the opportunity of the Debate in Reply to outline his schemes for dealing with unemployment. [20]

In Thomas's schemes there is no element of socialism and in fact had the last Government had a little energy they could have introduced the whole of Thomas's proposals without deviating a hair's breadth from their principle, except, perhaps, the one underlying principle of rigid financial economy about the effect of which upon democracy I wrote to you some time ago.

Thomas's references to Empire development were almost confined to the Colonies but on that subject he was very sound and has already stirred up action.

THE VALUE OF EMPIRE PREFERENCE TO BRITISH TRADE

With my letter of the 12th June [21], I forwarded to you some statistical tables illustrating the competitive position faced by the British electrical industry. I have now completed a further study on tables dealing with apparel. I am sending a complete set to Simpson [22] but am enclosing with this letter the summary which I think you will like to look through yourself In the case of apparel, national custom and habit obviously play a very much greater part than is the case with industrial goods but the importance of the Empire markets to British exports of apparel are brought into very clear relief by these figures.

I am proposing to go on and to deal with each major industry in turn in this way and I think I shall probably send copies of the summary of each industry to Mr. William Graham, of the Board of Trade, as I am sure it will prove excellent educational material.

In general I have been very much impressed during the last fortnight by the marked revival of interest that is occurring in Empire economic questions. The basic reason for this is probably the American Tariff [23] and the American Farm Relief Act [24] but your speeches and the indications of the change in the attitude of the Canadian Government have given points in substance for discussion. The general atmosphere strongly reinforces my feeling that, by the time the next Imperial Conference takes place, we shall have an infinitely better atmosphere for Inter-Imperial economic cooperation than ever before in the history of the British Empire. I only hope and trust that you will be available to take the leading part which is already marked out for you at the Conference itself.

Yours sincerely, F. L. MCDOUGALL

1 The letter is on file AA:M111, 1929.

2 Economic Adviser to the British Government; Vice-President of the Economic Committee of the League of Nations. See Letter 241.

3 See Letter 228.

4 Stanley Baldwin, Prime Minister 1923-24, 1924-29, 1935-37.

5 W. R. W. Peel, Secretary for India 1922-24, 1928-29; First Commissioner of Works 1924-28.

6 Viscount Wolmer, Conservative M.P.; Parliamentary Secretary, Board of Trade 1922-24; Assistant Postmaster-General 1924-29.

7 Sir Philip Sassoon, Conservative M.P.; Under-Secretary for Air 1924-29.

8 Lord Beaverbrook, Chief Proprietor of the Daily Express, Sunday Express and Evening Standard.

9 Conservative M.P.; Parliamentary Private Secretary to the Chancellor of the Exchequer, Winston Churchill, 1926-29.

10 S. G. Tallents, Secretary to the Empire Marketing Board.

11 Philip Snowden.

12 Walter Elliot, Conservative M.P.; Parliamentary Under-Secretary for Scotland and Chairman of the Research Grants Committee of the Empire Marketing Board until 1929.

13 President of the Board of Trade.

14 J. H. Thomas, Lord Privy Seal and Minister of Employment.

15 Permanent Secretary at the Board of Trade.

16 G. G. Whiskard, Assistant Secretary at the Dominions Office.

17 H. A. Gwynne.

18 'Bold Policy for Empire Trade' and 'An Empire Policy', Morning Post, 2 July.

19 Henry Snell, Secretary of the Labour Commonwealth Group; House of Commons, Parliamentary Debates, fifth series, vol. 229, cols 50-54.

20 ibid., cols 91-107.

21 Letter 239.

22 Julian Simpson, Bruce's Private Secretary.

23 See note 15 to Letter 223.

24 An Act establishing a loan fund to promote orderly marketing of crops and co-operative associations of farmers. A Debenture Plan (export bounty scheme) was debated by the Senate but was not included in the Act. There were fears, especially in Canada, that American farmers would be given the protection they were demanding in the Tariff Bill.