42

19th November, 1925

PERSONAL & CONFIDENTIAL

Dear Mr. Bruce,

INTERVIEW WITH MR. BALDWIN [1]

In my letter of October 22nd I reported that Mr. Tom Johnston [2] M.P. had asked me to try and interest Mr. Baldwin in the Labour Party Committee's Report on the Importation of Sweated Goods. [3] I discussed the matter with Mr. Ormsby-Gore [4] and with Mr. Amery [5], to both of whom Johnston had no objection to my confidentially mentioning the idea. I then wrote and asked Mr.

Baldwin for an interview. I saw him on November 16th at the House.

I found he had never seen the Labour Report but, on looking at the signatures, he became interested. Naturally he was quite noncommittal on this point.

I took the opportunity of urging upon him the need for a forward policy on Empire development. He told me that Amery had been speaking to him about an Imperial Economic Conference in 1927 and of the need for preparatory work. So some seed that I have been sowing has found fruitful soil. I suggested the fuller utilization of the Imperial Economic Committee on preparatory work. I do not quite know your view of Mr. Baldwin. So far as I have been able to form an opinion, I think he is entirely honest, quite shrewd, slow in the uptake and a plodder. There is no possible doubt as to his personal popularity in the House.

LABOUR PARTY

I have been invited by the Labour Commonwealth Group to address them upon the work of the Imperial Economic Committee on December 7th. I suggested that they should also get Sir Thomas Allen, the Wholesale Co-operative Representative on the Imperial Economic Committee. To this they agreed and we ought to have a useful evening.

Mr. Alexander [6] (Parliamentary Secretary to the Board of Trade in the Labour Government) tells me that Mr. Ramsay MacDonald [7], Lord Arnold [8] and himself are studying the possibilities of bulk purchases from the Dominions as a Labour alternative to Preference. This, I think, we may take to be a most useful sign that they recognise the rising tide of Empire sentiment in this country for they are all hard bitten free importers and by nature internationalists who would not study Empire problems if they could help it.

IMPERIAL ECONOMIC COMMITTEE

There is, as yet, no news as to how the Cabinet have viewed our Reports. I believe it was considered at today's meeting. The first meeting of the Drafting Sub-Committee was held on Monday. I think we shall produce a really useful Fruit Report which will be of considerable educational and also practical value.

I hope you will find time to give some thought as to how you would like the Committee to be used in future. A cable will reach you before this letter suggesting additional items for investigation, probably Dairy Produce, Tea and Tobacco. I hope your reply, while indicating acceptance, will urge a full scope of enquiry as preparatory to an Imperial Economic Conference.

I should like to suggest that you should draw attention to the vital importance of close settlement if migration schemes are to go ahead and therefore of the urgency of considering how stable markets can be assured to the products of close settlement, namely fruit, wine, butter and pig products.

It appears that the Anglo-German Treaty [9] will make it extremely difficult to advocate any form of Import licence system to assist Empire trade. The Conservatives seem quite hopelessly dull on any ideas in this direction except tariffs and of these they are scared.

I am going to try to prepare for you a memorandum setting out ideas as to how the imperial Economic Committee can most usefully be used to expedite plans of Empire development. I shall try to do this as soon as possible for I feel that during the next three years we have the opportunity of doing real constructive work, and I don't think that the part to be played by the Imperial Economic Committee has yet been properly thought out.

As regards Australian representation on the Committee, I do not, of course, know what may be in your mind. I should, however, think that the best form is to have one man who is more or less a permanent representative, thus securing continuity, and another who would be appointed for the definite session of the Committee and who would provide fresh contact with Australia. I do not quite see the reason for appointing either representative as the Senior.

This practice is not followed by the other parts of the Empire.

Where a man of obviously senior stature is appointed, he would naturally be treated both by the Committee and by his Colleagues as the senior. For instance I should naturally have treated Sir Mark Sheldon as my senior but I suggest that the definite appointment of a senior and junior is unnecessary and might, under certain circumstances, be rather awkward. Sir Mark was so charming

to me that no possibility of anything of the sort arose between us.

I have just learnt confidentially that the First Report did not come before the Cabinet yesterday. The Treasury insisted upon referring the question of the 1,000,000 expenditure to the new National Economy Committee. [10] I understand that it is anticipated at the Board of Trade that the National Economy Committee will report that the Government is pledged to the Empire to expend this sum. It is perfectly clear that the Treasury is doing its best to secure a reduction of the amount.

I think the Government needs shaking up and shall arrange for some suitable Parliamentary questions to be asked.

SOUTH AFRICAN POLITICS

I have recently met several prominent South Africans who tell me that a very interesting situation is developing in the Union. You will doubtless be aware that references to a re-approachment between the moderate Nationalists led by General Hertzog [11] and the South African Party have appeared in the Press.

I am told that the extreme Transvaal Nationalists led by Mr.

Tielman Roos are creating an extremely awkward situation for General Hertzog. The Prime Minister as a result of experience of office has become convinced of the value of the Imperial connection and is personally favourable to a closer understanding with the South African Party. General Smuts' [12] personality is, I am told, the greatest obstacle to a re-approachment, but it is believed that General Smuts can be induced to take a prolonged holiday from South African politics.

The recent appointment of an extreme Socialist as a Labour Minister is expected to have some disintegrating effect upon the Nationalist Labour Pact, as the average Boer farmer has an extreme dislike for advanced Labour ideas.

I do not know how accurate any of the above is, but I gather that well informed South Africans anticipate a change of parties before very long.

EMPIRE FARMERS AND EMPIRE DEVELOPMENT

I have reported the foregoing about South Africa for two reasons.

Firstly, I felt it might be of some intrinsic interest and, secondly, because I think the time is ripe for an intense effort to place Empire Development upon a better basis. In this country Empire sentiment is rapidly growing and only needs education to make it the dominant economic policy of the country.

If Baldwin & Co. will only wake up and make it clear that the British Government means business in helping Empire trade in British markets, then what appears necessary is that the primary producers of Australia, Canada, New Zealand and South Africa should be made clearly to see that, as you said at the Empire Press Conference 'it was vital to the Dominions that Britain should be prosperous, that her industries should expand, and that her commerce should retain its preeminent position'. The Election results in Australia and New Zealand [13] should make an educational campaign in this direction easily possible. In Canada, the Farmer Progressives still hold the balance of power and probably could be educated. In South Africa, perhaps more than anywhere else, the idea that Great Britain is prepared to help Empire produce needs to be rubbed home.

Suppose these two things could be done, namely (1) Great Britain make it perfectly clear that Empire trade was to receive maximum help.

(2) That the Farmers of the Empire could be made to realise that No. 1 was a living reality.

I suggest that a most fruitful Imperial Economic Conference would follow at which it might be possible to arrange for definite action to do three things:

(a) To provide in Great Britain for markets for the produce of the Empire.

(b) To expedite migration for land settlement.

(c) To arrive at some general understanding that the countries of the Overseas Empire should assist the British export trade to the greatest possible extent consistent with the wise development of their own secondary industries.

The whole edifice that I have tried roughly to sketch is dependent upon the British Government making absolutely clear their determination to assist Empire trade to the greatest possible extent. It appears to me that we ought to aim at an Imperial Economic Conference in 1927 and to undertake to see that the necessary educational propaganda for its success is carried on in Great Britain, Australia, Canada, New Zealand and South Africa. I should greatly appreciate an expression of your views on these points.

Yours sincerely, F. L. MCDOUGALL

1 Stanley Baldwin, Prime Minister.

2 Scottish Labour M.P.

3 See Letter 36.

4 William Ormsby-Gore, Parliamentary Under-Secretary for the Colonies.

5 Leopold Amery, Secretary for the Colonies and for Dominion Affairs.

6 A. V. Alexander, Co-operative (Labour) M.P.

7 Leader of the Labour Opposition.

8 Under-Secretary for the Colonies 1924.

9 The Treaty had been ratified on 8 September. For an explanation of its effects see Letter 50.

10 i.e. Cabinet Standing Committee on Expenditure. This Committee was to recommend, in Cabinet Paper 31(26), presented to Cabinet on 3 February 1926, that the 1 million grant to develop Empire trade be postponed 'in view of the present financial circumstances'.

11 J. B. M. Hertzog, Prime Minister of South Africa.

12 J. C. Smuts, Leader of the South African Party; Prime Minister of South Africa 1919-24.

13 In the New Zealand General Election on 3 and 4 November, the non-Labour Reform Party, led by J. G. Coates, was returned with a substantially increased majority. Bruce's majority was similarly increased on 14 November. See note 1 to Letter 41.