248

24th July, 1929

PERSONAL AND CONFIDENTIAL

My dear Prime Minister,

LEAGUE OF NATIONS

On Friday last Trumble [1] sent up a copy of a cable from you announcing my appointment as a Substitute Delegate to the Tenth Assembly to deal with economic matters. My feelings were rather mixed on reading the message, for I was by no means personally anxious to go to Geneva. I think, however, that it is probably wise and that it will provide an excellent opportunity for liaison with members of the Government and especially with Graham [2], the President of the Board of Trade.

Graham, I understand, is going for the first ten days and this will probably make it expedient for me to be in Geneva at the commencement of the Assembly. If you have any criticism of the point of view which I expressed at the meetings of the Economic Consultative Committee [3], I very much hope that you will have time to let me know what they are before the commencement of the discussions.

There is one point about which I should like your guidance. If the Economic Organization is to concentrate upon a more effective economic information service, some slight increase of expenditure may be involved. Sir Arthur Salter [4] suggested that a sum of about 5,000 per annum might be needed.

I believe that the Commonwealth Government has tended to criticise League expenditure. I quite agree that there is ample ground for criticism on the International Labour Office portion of the Budget but I doubt whether, in the Economic Section, there is room for economies save by a reduction in the sums spent upon Conferences.

I should like to feel able (a) to pursue with Salter, and perhaps in the Committee of the Assembly, the possibilities of savings in certain directions which could be used to finance an improved economic service; (b) in the event of no such savings being possible, to feel that approval of a slight addition of, say, 5,000, which, of course, might not affect the general budget of the League, would not be disapproved of by the Commonwealth Government.

LORD PASSFIELD [5]

I had a long talk with the Secretary of State on Friday at most of which Lunn [6], the Under-Secretary of State for the Colonies, was also present.

We first discussed Snowden's [7] remarks about Food Taxes.

Passfield made it very clear that he was anxious that Snowden's words should not be taken too seriously.

I asked whether Passfield realised what harm these words had already done, pointing out how difficult they had made your task.

I then urged that the Government should consider whether an undertaking could not be given not to repeal Preferences of vital moment to Dominion industries before Imperial Economic questions had been discussed.

Passfield said he would take the suggestion into consideration and discuss it with his colleagues.

We then discussed the Imperial Economic Conference and Passfield expressed anxiety lest Australia should press for new preferences which his Government simply could not give. This led us naturally to a discussion on ways in which Great Britain could help without raising the fiscal issue. We talked about bulk purchase on a non- State trading basis. He expressed a desire to have such methods thoroughly examined. I agreed but said that I considered an essential preliminary to such examination would be an assurance from the Treasury that the Department would not adopt a non- possumus attitude if, as was probable, some form of Government guarantee were needed to safeguard a Trade amalgamation against contingent loss on a long term bulk purchase contract.

We also discussed the recommendation of the Duckham Mission [8] for the amendment of the 34,000,000 Agreement so as to allow of British financial cooperation in large schemes for demonstrating how the results of scientific research could be applied to Australian Agriculture. I gave him a rough idea of your, proposals to place the Dairying industry on a sounder basis. [9]

I came away with the impression that Passfield, like Graham, was really anxious to find means for cooperation.

MR. PONSONBY [10]

On Tuesday morning I had an interview with Ponsonby, the Under- Secretary of State for the Dominions, and Chairman of the Overseas Settlement Committee. The discussion was chiefly on methods whereby Great Britain could cooperate with Australia in assisting in the intensive development of pastoral and agricultural industries. I found that Ponsonby was quite prepared to take an intelligent interest in the subject and I suggested that he should raise with the Overseas Settlement Committee the paragraphs in the Economic Mission Report [11] dealing with that aspect.

He asked me whether this was not a case in which all the necessary initiative could easily come from Australia.

I said that, while that was undoubtedly the case, there were certain serious objections to leaving it to Australia to take all the initiative. I pointed out that the Treasury attitude was not very friendly and that, under those circumstances, a series of requests from Australia for British cooperation along these lines would probably create some hostility at the Treasury. I therefore made the suggestion that the British Government might very properly send a despatch pointing out how interested they were in the suggestions made by the Economic Mission under this head and asking whether the Commonwealth Government would like to make some concrete suggestions for British-Australian cooperation in the solution of how best to secure the more intensive development of the land.

Ponsonby promised to take this up with the Overseas Settlement Committee.

IMPERIAL CONFERENCE AND IMPERIAL ECONOMIC CONFERENCE

I received, through Casey [12], information that you had asked Casey to arrange for the Dominions Office to send me copies of the various cables which are being exchanged between Governments on this subject. I have, this morning, received another message from Casey to the effect that the Dominions Office are very sticky about this and have intimated that the only way in which they can do so [is] by the High Commissioner [13] making a request for two copies of all such cables to be sent to him and leaving it to the High Commissioner to send a copy to me. This, I feel, would be quite an unsatisfactory method and I expect I had better rely on keeping in touch with Casey and seeing, through him, such cables that affect the situation.

I have seen the British Government's circular cables Nos. 31, 32 and 33. I take it that you will agree to the proposal that the Imperial Economic Conference and the Imperial Conference should be held in conjunction and that, as you have already indicated in your cable to Casey, you will insist on both Conferences being held in London. I cannot too strongly emphasize the important effect that an Imperial Economic Conference would have in London under present circumstances. [14]

On the general subject of Imperial economic cooperation, I had a most important talk with Neville Chamberlain [15] yesterday, about which I am writing to you under separate cover.

EMPIRE MARKETING BOARD

I enclose the Third Report of the Empire Marketing Board [16] which I hope you will find of some interest. Personally I feel that the form of the Report could have been considerably improved but it is a Report prepared by the Secretariat and of which the members of the Board merely take collective responsibility. but play no part in its preparation.

IMPERIAL ECONOMIC COMMITTEE

During the last ten days we have held six meetings of the Drafting Committee on the Report of Pig Products, sitting on two occasions until late at night. We have finally revised the draft which will come before the Main Committee on the 13th August and will then, I presume, be formally accepted, summaries telegraphed to the Dominions and permission for publication requested. The report should be printed and available about the middle of September.

I hope to be able to forward my report on the work of the Imperial Economic Committee and the Empire Marketing Board by the next mail.

EMPIRE MARKETS AND BRITISH TRADE

You will remember that in my letter of the 29th May [17] I forwarded to you a new memorandum in which I had rather exhaustively gone into this question. In consequence of some criticisms received from Chadwick [18] and also the more general criticisms that I received from Simpson [19] and Gepp [20] as a result of my early paper on the same subject being read in Australia, I have considerably amended the form of this document, reducing the use of percentage figures and incorporating in each instance the figures showing the changes in the total trade. As it now stands, it is, I think, a pretty solid piece of work which ought to serve a useful purpose in inducing people to think. I hope that you will have time to read this revised edition but, as Parliament will be sitting, I expect that you will be terribly busy.

DR. ADDISON [21]

Dr. Addison has been appointed Parliamentary Secretary to the Ministry of Agriculture in the new Government. He was present at a meeting of the Research Grants Committee of the Empire Marketing Board yesterday and he came and asked me to meet him in the near future to have a talk about the cooperation between British and Dominion agriculture.

I was very interested to get this sign of intelligence from him and I am meeting him for an hour's discussion on Monday prior to a full meeting of the Empire Marketing Board.

I am enclosing a further article in the Empire Free Trade Campaign by Sir Harry McGowan. [22]

Yours sincerely, F. L. MCDOUGALL

1 Thomas Trumble, Official Secretary to the High Commissioner.

2 William Graham.

3 See Letter 227 4 Director of the Economic and Financial Section of the League of Nations.

5 Secretary for the Colonies and for Dominion Affairs.

6 William Lunn.

7 Philip Snowden, Chancellor of the Exchequer. See Letter 246.

8 British Economic Mission to Australia 1928, led by Sir Arthur Duckham, a chemical engineer prominent in the coal industry. See Letter 212.

9 See Letter 235.

10 Arthur Ponsonby.

11 'Report of the British Economic Mission', Commonwealth Parliamentary Papers 1929, vol. 11, p. 1231.

12 R. G. Casey, Commonwealth Government's Liaison Officer in London. See note 9 to Letter 247.

13 Sir Granville Ryrie.

14 The Canadian Government had proposed an Imperial economic conference in Ottawa either late in 1929 or mid-1930, to be followed by an Imperial conference in London in 1931. The British Government accepted the Canadian invitation for 1930. The Australian view that both conferences should be held simultaneously in London was generally supported by New Zealand, South Africa and India. Both New Zealand and the Irish Free State were willing to attend an economic conference in Ottawa. At the 1930 Imperial Conference, held in London in October, it was agreed that a meeting should be held in Ottawa within twelve months, in the interests of developing inter-Imperial trade, but the Ottawa Conference was subsequently postponed until July 1932.

15 Conservative M.P.; Minister of Health 1924-29.

16 Empire Marketing Board May 1928 to May 1929, E.M.B. to, London, 1929.

17 Letter 234.

18 Sir David Chadwick, Secretary to the Imperial Economic Committee.

19 Julian Simpson, Bruce's Private Secretary.

20 H. W. Gepp, Chairman of the Commonwealth Development and Migration Commission.

21 Christopher Addison, Professor of Anatomy, London, Cambridge and Sheffield; Liberal Minister 1914-17; Minister of Health 1919- 21.

22 President and Deputy Chairman of Imperial Chemical Industries Ltd.