61

31st March, 1926

PERSONAL & CONFIDENTIAL

Dear Mr. Bruce,

IMPERIAL ECONOMIC COMMITTEE

Today the Fruit Report [1] was signed unanimously and a draft cable, for despatch to the Overseas Governments of the Empire, was discussed and the Chairman [2] authorised to submit the outline of such a cable on behalf of the Committee to the Secretary of State.

[3] After considering the cable which will probably be sent to you, I drafted a cable which is now being despatched to you. The following is the text:-

Imperial Economic Committee signed Fruit Report today proposed cabled summary being submitted to Secretary of State. Following are points additional to official summary. Report stresses value to British industry of Empire development and briefly indicates importance of markets to products of close settlement. Shows that British dependence upon foreign fruit supplies is not advantageous to consumer. Describes fully effect of immense American production sheltered by tariff upon the Empire fruitgrower. Contrasts wages in Empire and foreign dried fruit districts. Makes clear that owing to Anglo-German treaty [4], only available way Great Britain can help in Empire marketing at present is by voluntary preference. This is described as organizing the purchasing power of the country to prefer Empire goods. Normal Tariff methods used by foreign powers to help their colonies pointed out. Recommended that general publicity from Annual Grant for apples, dried fruits and more localized campaigns for canned fruits, oranges etc.

commence immediately British legislation provides identification.

Meanwhile Executive Body when set up can commence general educational campaign recommended. Hidden profits in fresh fruit consolidated handling charges condemned. Strongest support given to organization of producers for marketing. Pointed out that producers cannot expect best results if not effectively represented in United Kingdom. Points of special interest to Australia. Room for increased supplies apples oranges from Southern Dominions pointed out. Research expenditure on transit problems of fresh fruit recommended. At average prices this season Australian sultanas show profit but currants loss. Value tariff preference sultanas indicated. World overproduction dried fruits.

Growers urged concentrate on production high quality for which better prices available. Dried fruit draft allowance condemned.

Restrictions of United Kingdom Dried Fruit Trade Associations adversely criticised. Canned fruit packers urged to be most scrupulous in regard grading in view entrenched position California. Above confidential pending publication of report.

Posting final revised report this mail. Presume publicity campaign will apply meat and other products also.

I sent another cable on the 30th March in the following terms:-

Reference Imperial Economic Committee understand Canadian reply agrees Amery's proposals but raises constitutional difficulties to Overseas representatives on Executive body. Further negotiations proceeding. Anticipate brief parliamentary statement on proposed executive action March 31st.

Under separate cover I am posting to you a copy of the final draft of the Main Fruit Report. There are, you will see, a number of minor corrections and omissions and additions but no further roneoed copies will be available until the report is printed. I sent you last mail a copy of the Banana Report but I cannot send you copies of the other subsidiary reports at the moment because they had been so hacked about by the Committee before approval that it would involve you in a very heavy task in reading them and I think you will prefer to wait until you get the printed copy. I hope that you will think that the Main Report is a useful document. In obtaining a unanimous report from 20 men representing divers interests, it is necessary to compromise and sacrifice quite a number of points that one would like to have seen given clear expression to. For instance I had hoped to have made it abundantly clear that it was to the very great advantage of Great Britain to take a specially long sighted view so far as markets for the products of close settlement-fruit, wine, dairy produce, pig products-were concerned. The Canadian delegates objected and all that I found possible was to get a sentence or two in Section 2, paragraph 10.

You will find throughout the report that, although tariff preference is acknowledged to be outside the present scope of the Imperial Economic Committee, few opportunities have been missed of bringing the idea of tariff preference to the front. This is particularly the case in the subsidiary reports.

The most outstanding features of the report are:

(1) the importance of the fruit trade itself This is clearly shewn in Section 2, paragraphs 7 and 8 and could be made extremely clear in Australia by the statement that the United Kingdom spends on imported fruit not less than from a third to a quarter of the total that Australia spends on all forms of imported goods.

(2) the Committee expresses the definite opinion that the Empire could supply the bulk of Great Britain's imported fruit, whereas today the Empire only supplies 20%.

(3) the advantages to Great Britain of obtaining her supplies from the Empire rather than foreign countries are made very clear in Section 2 and again in Sections 27 and 28. I would draw your particular attention to Section 27, which received very close consideration from the Committee, which I regard as being rather an interesting Section to have had approved, seeing that we have at least two strong Free Traders among our members.

(4) the very strongest emphasis is laid upon the importance of the organization of producers. In our First Report and in our Meat Report I did not find it possible to get the Committee wholeheartedly to endorse the principles of the organization of the overseas producer for the purpose of supervising the marketing of his goods in the United Kingdom. Nothing has been more striking than the way in which the work of the Committee has educated the members in this direction. Today the only members who have any hesitation on the subject of the organization of the producer are the Chairman and Sir Thomas Allen, representing the Wholesale Co- operative. They both approve of organization but continually desire to insert paragraphs pointing out the possible ultimate dangers to the United Kingdom consumer if organization is carried to a high degree of efficiency. This question did not become acute on the subject of fruit but if, as I anticipate, the Committee tackles dairy produce as its next subject, the question of export control legislation will certainly be well in the forefront.

The idea of the organization of the producer runs through the entire report but I would draw your special attention to Section 11 and to the continual references to the necessity of effective representation of the overseas producer on the United Kingdom market.

(5) I am not very satisfied with the Sections on Finance and would have liked to have seen rather stronger recommendations made but it is I think quite implicit that finance lies at the bottom of all schemes for effective organization of the producer.

(6) the sections dealing with the methods of selling fruit, both wholesale and retail, in the United Kingdom will be sure to arouse a considerable amount of criticism from those having vested interests in the trade but I think you will agree that remarks on this subject have been carefully expressed and they have been very closely scrutinized by the Committee. The Chairman has continually insisted that, as an Imperial Body, we must, as far as possible, avoid interfering in domestic affairs. Having regard to our terms of reference, I am not at all sure whether he has not over stressed this point of view. One result of his attitude is that the report may be considered weak in definite recommendations.

(7) on the Publicity Section No. 28, I should particularly like to receive from you an expression of your views. Mr. Crawford, the Publicity Expert whom the British Government placed on the Committee, produced a report which contained nothing but the vaguest of generalities and in effect recommended a great sentimental appeal based on ties of blood and the development of a fruit consciousness. I strongly took the line that what we had to do was to develop not a fruit but an Empire consciousness in the people of Great Britian and that the appeal must be directed to the reason and not to the emotions. It would be very helpful to me to know how the paragraphs in Section 28 strike you.

This report for the first time shows quite clearly that, owing to election pledges on the one hand and to the Anglo-German Treaty on the other, there is no road open whereby Great Britain can assist the marketing of Empire products except the road we have indicated, namely, voluntary preference. It was, of course, impossible even to suggest that in this report we should indicate what most of us felt would be the result of a really well conceived educational publicity campaign. I have the gravest doubts as to whether educational publicity will be in any considerable degree a substitute for tariff preference or definite schemes based on import licences but I feel that, in two years time, such a campaign ought to have an immense effect upon the electorate and perhaps result in making it possible, after the next general election, to carry into effect policies which are at the present moment regarded as being politically impossible.

With regard to expenditure out of the Annual Grant, you will see from the Banana Report and also from the Main Report that certain definite expenditure is proposed in order to assist the establishment of this industry in the West Indies and West Africa and that further small grants are to be devoted towards organizing producers in the Crown Colonies. As there is no mention of any definite sums of money in connection with the Dominions, there may be some criticism in Australia that Dominion interests have been neglected while those of the Crown Colonies have been pushed.

Actually nothing could be farther from being the case because, as far as the Committee is able to see, the only Crown Colony fruit product which is in sufficient supply to be advertised is bananas and it is unthinkable that we should advertise bananas while they remain a monopoly of an American Corporation; thus, out of the total expenditure which may be incurred, probably only about 30,000 or 40,000 will be spent on behalf of the Crown Colonies, Protectorates and, for the matter of that, India, while the remainder will be used to benefit the Dominions and British agriculture.

SUBSIDIARY REPORTS

With the exception of the Banana Report, almost all the matters of general interest have been extracted from the various Subsidiary Reports and placed in the Main Report. The Subsidiary Reports, however, contain a mass of very interesting statistical information on the various fruit trades.

From the point of view of the fruit growers of the Empire, these Subsidiary Reports attached to the Main Report ought to make the whole document of really great value to the Dominion Producers.

They will be able to see what they are up against and how large a market remains to be conquered in the United Kingdom. The Apple Report is considerably the longest, whereas the reports on jam and Nuts are only brief summaries of the position. I am quite sure the general form and in fact the usefulness of the separate reports would have been much increased if they had received more attention from the Committee. The Banana Report, as you know, was prepared by a separate Banana Committee, the Apple Report and, to a lesser extent, the Citrus Report received a fair amount of attention. I naturally saw that the Dried Fruit Report contained a considerable amount of matter but so far as the others are concerned, when you realise that even this morning when we were taking the final reading of the Canned and Bottled Fruit Report, the Chairman was alone among the members of the Committee I think in reading it for the first time, you will realise the sort of difficulty that one has been up against.

As the report will be before you at the same time as this letter, I will not go into further details about it but I should like to repeat this remark that if, after reading it, you could find time to let me have a fairly full expression of your views about it, it would be of very great assistance in consideration of further subjects. I am unfeignedly glad that this report is finished because owing largely to the circumstances referred to above, I have had to devote a good deal of time, and a good deal of it wasted time, to getting the report completed.

THE ECONOMIC SIDE OF THE IMPERIAL CONFERENCE

I am enclosing a draft of a proposal for exploring the ground before the Imperial Conference, which I hope you will be able to look through. The draft is, I think, self-explanatory but so far I have only given a copy to Sir Sydney Henn [5] but I propose to discuss it with Lord Burnham [6], with whom I am lunching on April the 12th. The work that I am suggesting this little unofficial Committee should do for the Government is work that really ought to be within the province of the Imperial Economic Committee but, of course, as you know it is not the case at the present moment.

I hope that a small and effective Committee can be set up to work quite in private and really to do three things. First of all to consider the ground and tender advice to the Prime Minister [7] and the Secretary of State for the Dominions; secondly to educate the House of Commons and thirdly, to inaugurate a Press Campaign to educate the country. I quite deliberately consider that a Committee of this sort would be much better at the present time if it was on a purely party basis. I think practically everybody agrees that, unless some catastrophe occurs, the Conservative Party will be in office for the next eight years and as they will have the executive power, it is necessary to devote special attention to them.

LABOUR PARTY

I had a long talk last night in the House of Commons with Mr. Tom Johnston [8] on the subject of progress of Empire ideas in the Labour Party and he agrees with me that slow but definite progress is being made. He yesterday asked an interesting supplementary question of Amery, after Amery had made the statement about the Executive Body for the Imperial Economic Committee, to which I would draw your attention when you are considering the line to take in public speeches when you are over here in the Autumn. I hope that you will bear in mind the importance of associating Empire development with good standards of labour conditions. I am sure that it would have a very good effect, both on the Labour Party and also on the younger Conservatives.

THE VALUE OF THE EMPIRE TO BRITISH INDUSTRIES

I have started to prepare schedules showing the value of the Empire as a market to certain industrial districts in Great Britain and I enclose the statements for Birmingham and Leicester.

I have selected all the industries of a given district in which Empire markets absorb about 50% or over of the total exports from Great Britain. You will see what an excellent story can thus be made. I am sending copies of the figures to members for the districts when I know the member personally and feel that he will make good use of the figures. I am asking these members to confine their use of the schedules to material for speeches and not to publish it. In the case of Birmingham, I have sent the figures to Messrs. Amery and Neville Chamberlain [9] and to Sir Evelyn Cecil.

[10]

TIMES TRADE SUPPLEMENT

I enclose two further articles from the above paper on the Economic Problems of the Empire. [11]

NEXT ENQUIRY OF IMPERIAL ECONOMIC COMMITTEE

I learn that on March 30th Amery cabled the Governments of the Empire stating that the Imperial Economic Committee proposed to investigate Dairy produce during the forthcoming months.

I assume that there will be general agreement, though perhaps India may suggest the addition of a further subject of interest to the tropical parts of the Empire. If Dairy produce is approved, I feel sure that the critical question will be the Export Control Legislation of New Zealand and Australia.

The present personnel on the Committee will take a sympathetic attitude to this legislation with the possible exception of the Chairman and Sir Thomas Allen, the representative of the Co- operative Wholesale Society. I feel that it is very desirable that any additional representatives of Australia should be in sympathy with the policy of the Government on this question of Export Control. If this letter reaches you in time to be of any value from this point of view, perhaps you will consider this point.

EMPIRE PARLIAMENTARY ASSOCIATION

During the last two or three weeks, every time I have seen Sir Howard d'Egville [12], he has been trying to get me to cable you an expression of my own opinion that it was desirable to postpone the Empire Parliamentary Association's visit to Australia till next year. He very strongly takes the view that it is absurd to have a Parliamentary visit to Australia while the Imperial Conference is on.

I told him that I did not feel inclined to cable any expression of my own views because I felt sure that you were in a position fully to appreciate the situation and that, in addition, I thought that the visit of a Parliamentary Party to Australia during the coming Autumn was more important from an educational point of view than any possible value of conferences arranged by the Empire Parliamentary Association might have. He has told me that Lord Burnham cabled asking for an expression of your view and that you replied leaving a decision in the hands of the British Association, but expressing your own view that the visit should proceed this year.

Casey [13] tells me that d'Egville has also suggested to him that he should cable an expression of his views that the trip should be postponed but Casey, I gather, took the same view as I did.

Incidentally I was amused to find the last time I met Casey, that he had, by the last mail, sent you a copy of the 'Secret of High Wages'. [14]

Yours sincerely, F. L. MCDOUGALL

1 Report of the Imperial Economic Committee on Marketing and Preparing for Market of Foodstuffs Produced in the Overseas Parts of the Empire. Third Report-Fruit, Cmd. 2658.

2 Sir Halford Mackinder.

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

4 See Letter 50.

5 Conservative M.P.; representative for the Colonies and Protectorates on the Imperial Economic Committee.

6 Proprietor of the Daily Telegraph; President of the Empire Press Union.

7 Stanley Baldwin.

8 Scottish Labour M.P.; Editor of Forward, a Glasgow labour paper.

9 Minister of Health; M.P. for Ladywood (Birmingham).

10 Conservative M.P. for Aston (Birmingham); Chairman of the Unionist Parliamentary Committee on Empire Migration, 1926.

11 Economic Problems of the Empire. III.-Redistribution of Man- power' and IV.-The Excess of Male Migration' appeared in issues of the Times Imperial and Foreign Trade and Engineering Supplement, 27 March and 3 April respectively.

12 Secretary of the United Kingdom Branch of the Empire Parliamentary Association.

13 R. G. Casey, Commonwealth Government's Liaison Officer in London.

14 See note 3 to Letter 60.