84

24th August, 1926

PERSONAL & CONFIDENTIAL

Dear Mr. Bruce,

I have, in a separate note, replied to the more personal parts of your letter of July 6th. [1]

While I fully appreciate the fact that I cannot expect you to reply to the bulk of my letters and communications, your letter was especially welcome.

I shall be very glad of the opportunity of meeting Mr. Gepp [2] at Port Said, and I shall be glad to commence a correspondence with Mr. Paterson. [3]

As it seems to me, the more permanent Australian representative on the Imperial Economic Committee, and on the Empire Marketing Board, ought to be in liaison with both the Minister for Markets, and also with the Development and Migration Commission.

The purpose of the first liaison is too obvious to require comment. As I have visualised the work of the Commission, it will have three main spheres- (a) Migration (b) Development of Transport and of Primary Industries (c) Development of power schemes and of Secondary Industries.

I am not clear whether I am right in assuming that the Commission will be concerned with secondary industries, but my impression is that such a body charged with national stocktaking, and with development, cannot but have considerable concern with manufacturing policy. If it is desirable for me to be in touch with the Minister on marketing, it seems equally clear that I should be in touch with the Commission in reference to the production side of Primary development. The Research side of the Empire Marketing Board is even now bringing me into contact with aspects of scientific research which must be of intense interest to Australia.

I have a strong feeling that occasional reports on the progress of research, written by a fairly intelligent layman with some general knowledge of agriculture to a lay body such as the Development Commission, may prove very useful, no matter what form of interchange of scientific information may be arranged between the specialist in Great Britain and the specialist in Australia. It is recognised that, owing to a lack of method of making the results of research available in a form intelligible to producers, much valuable work is lost in the dry records of proceedings of scientific societies, and work of immense importance -such as the Mendelian principles-may, like them, be lost to the productive side of agriculture for many years. It also not infrequently happens that the scientist fails to convince the laymen of the importance of certain advances; this is specially the case when the scientist is highly specialised and cannot himself see more than his own problem.

This matter, however, involves the whole question of the Research side of the Empire Marketing Board, and I will not weary you with the written word when the matter can soon more easily be discussed.

EMPIRE MARKETING BOARD

Although all the Ministers, and most of the other members of the Board, are away from London, a nucleus sub-committee on Publicity is carrying on, and on the Research side I am keeping in touch with the Board's secretariat. As Parliament is meeting on August 30th and 31st, there will be official meetings of the Research and Publicity Committees about that date.

Considering the short life of the Empire Marketing Board, I am fairly well satisfied with the progress we are making.

Publicity

At present we are in difficulties with the Advertising Agents over the question of commission. The Treasury objects to paying 10% on so large a sum as we may eventually expend. I hope, however, that this week we shall either obtain an accommodation from the Agents, or be in a position to inform the Treasury that they must settle the question one way or the other for us. I very much dislike our being in the position of being expected to fight a battle on behalf of the Treasury.

So far as the poster campaign goes, we are making good progress on the preparatory arrangements, and shall, I hope, be able to show the Conference the type of work which we contemplate using. If all goes well, we shall have some first posters on the hoardings during the Conference, and shall be able to start the special frames not very long after its dose.

The other sub-committee on Publicity in the schools, and through the cinema, has not yet made any progress.

Research

Up to the present time the Research Committee have made only a limited number of final decisions involving expenditure. These include a substantial preliminary grant of �25,000 to the Low Temperature Research Station at Cambridge, to carry out the work recommended by the Imperial Economic Committee on the freezing and chilling of meat, and of the transport of fruit in cold storage.

They have also endorsed the scheme of Economic Research and Economic Education to be conducted by the Board of Agriculture, mainly in the interests of the British farmer, this involving a total expenditure of �40,000, and as I have reported to you before, commitments have been made for about �20,000 in respect of the Imperial College of Tropical Agriculture at Trinidad. Definite expenditure has been approved, to the extent of �10,000, for work on the Mineral Deficiencies of Pastures.

In addition to these definite commitments, a considerable amount of exploratory work is being done prior to the definite consideration of schemes by the Research Committee, which exploration includes such widely different problems as- (1) Survey of the Entomological Services of the Empire being provided by the Imperial Bureau of Entomology,-and (2) An examination of the question of grubs in Australian Dried Fruits.

Considerable progress is being made in establishing connection with Research Institutions in the Dominions. Owing to my discovery that Dr. Richardson [4], the head of the Peter Waite Institute (Adelaide University), was in London, we have been able to conclude tentative arrangements whereby the work on the mineral deficiencies of pastures will be commenced in Australia. The arrangements are purely tentative, but Richardson has cabled Adelaide, who have agreed in principle.

The suggested basis is that on an estimate, furnished by Richardson for this particular research, of a capital cost of �6,000, and an annual expenditure of �3,750, the Research Committee will recommend to the Board that 50% of both capital and annual cost be met by the Board, the annual for a term of five years,-the Waite Institute to find the remaining 50%. This particular research into mineral deficiencies in pastures affords an interesting example of the way the Research Committee is visualising its job. The problem involves all parts of the Empire, being of special interest in Scotland, Australia, South Africa, Kenya, the Falkland Isles, and Palestine.

The Rowett Institute at Aberdeen has commenced the fundamental scientific work, and field workers have been, or are about to be, sent to Kenya. South Africa is carrying on parallel work in the Transvaal. The Waite Institute in Adelaide has been interested, and the Jewish authorities in Palestine are prepared to come in on a 50-50 basis for research work in Palestine.

The general idea is- (a) To make the Rowett Institute basic for this particular job of work.

(b) For the Board to contribute the whole cost of the basic work, at present estimated at �10,000.

(c) For the basic institute to be a clearing house of information for all work on this subject within the Empire.

(d) For the Board to be prepared to assist further research in other parts of the Empire on this particular general Empire problem, by contributions on a 50-50 basis, each Imperial research station undertaking work to be free to follow its own lines of developing the problem, but to be required to report regularly to the basic Institute the scope and nature of work undertaken.

In this way we hope, without any cumbrous machinery, to encourage original work; to solve the problem more rapidly than if the whole research was centralised; without impairing the freedom of each unit, to avoid unnecessary duplication of donkey work by the prompt circulation of results obtained to all engaged in the research. Finally, we hope to evolve a suitable method whereby the Board can circulate authenticated results to the farmers of the Empire in language they can appreciate, probably through the medium of the various Agricultural departments throughout the Empire.

I have described this piece of work at some length because I hope to discuss the Research side of the Empire Marketing Board with you, and I therefore would like to put this into your mind beforehand.

Last Tuesday I visited the Fruit Research station at East Malling, and feel convinced that there work is being done which will prove of the utmost value to the Fruit Industry of Australia, and which I hope will lead to the establishment of parallel research work in Australia.

IMPERIAL ECONOMIC COMMITTEE

The Dairy Produce report will not be published until September 2nd, as the Stationery Office are working with a nucleus staff during August.

I am forwarding to you an uncorrected page proof which you will, I hope, find readable. The text has been slightly modified in places to eliminate repetition, but this copy is substantially accurate.

I hope you will have time to read the reports, but I have marked the portions which I think will be of the greatest interest.

On the cover the phrase 'Marketing and preparing for Market of Foodstuffs produced in Overseas Parts of the Empire' has, in consequence of the decision to include British Agriculture, been altered to 'Produced within the Empire'.

Generally speaking, the really important sections of the Report are V from our point of view, VIII, and XIII, XVIII, XIX, XXI, XXII, XXVI, XXIX, XXX. I feel that you will find the section dealing with Wholesale and Retail prices, and with the Export Control Board, the two most interesting portions of the report.

The margarine report does not very vitally concern Australia-I have, however, marked the portions that you would certainly desire to see. On the other hand, the whole of the margarine report is of very considerable Imperial interest, as it concerns India, and East and West Africa, to a considerable degree, and I therefore hope that you will have time to look through it.

If you read the report carefully, you will probably come to the conclusion that having regard to the very small share that Canada holds in the Dairy Produce trade of the Empire, the amount of space given to Canada, and the amount of, shall I say, gratuitous advertisement given to the Canadian Department of Agriculture, is the weakest feature of the report. So far, in every one of our reports we have had some form of difficulty with the Canadian representatives. Canada has been represented by Officials who have been immensely sensitive to any possible reaction from either their producers, or more probably the heads of their departments, and it is only with the utmost difficulty that any suggestion that everything in Canada is not super-perfect can be brought into the text.

Should it so happen that this kind of treatment has made Canada feel the Imperial Economic Body is a very useful body, a good purpose will have been served. Had the Chairman [5], however, done any real work on the subject, and become fully seized of all the points, he would have been able to have dealt much more properly with this sort of thing.

THE POSITION OF BRITISH INDUSTRY

I have prepared several memoranda dealing with the position of British Industry which I am enclosing with this letter.

They consist of the following papers:-

I. The Growth of American competition-(A copy of this was forwarded to you in Australia).

II. The Growth of European competition.

III. Far Eastern Markets.

IV. A note on South American Markets.

V. A note on Empire Markets.

VI. British Position in World Markets.

I have gone to considerable length on these matters, because I feel convinced that it is of the utmost importance to show the Conference that, although in 1923 it was possible to believe that the restoration of Europe would bring back prosperity to Great Britain, the position in 1926 is such that any such hope is almost obviously illusory. Throughout I have worked up to the 31st March, 1926, so as to avoid any unfair use of the Coal Strike effects. I hope you will have time to look through these papers.

In this connection I am enclosing some cuttings from this week's 'Statist'. They are interesting as typifying the immense inertia of the British Free Trade point of view. If you will read the one on the state of the Lancashire Cotton industry, you will observe a spirit of unreasoning optimism which is unfortunately only too typical.

I am tempted to remind you of the attitude of the Catholic Church to a Protestant of saintly life. The Church declares in such a case that he may achieve heaven because of God's grace in recognising his state of 'invincible ignorance'. I am not sure that such an attitude is not equally applicable to the keen and patriotic individual of the Manchester school, who is so bemused by an outworn Theory, that he is impervious to the steady accumulation of economic facts which disprove his Thesis.

Incidentally, I am not at all sure that 'invincible ignorance' could not also be applied to some exponents of extreme protection in Australia.

THE AUSTRALIAN TARIFF

The recent change in the Tariff on Iron and Steel products seemed to be sufficiently interesting to draw attention to some of its implications in the Press. I enclose an article thereon which I sent to the Times Trade Supplement. [6]

AGRICULTURAL POLICY

I enclose a marked copy of the report of a committee of the Labour Party on Agricultural Policy. The portion on marketing may prove of interest to you. Your phrase of 1923 about fluctuation of prices is once again quoted. [7]

THE ECONOMIC SIDE OF THE IMPERIAL CONFERENCE

I have, through Casey [8], had an opportunity of looking through the papers on the Economic side, prepared by H.M. Government for the Imperial Conference. Apart from two interesting papers upon Migration, they seem the dreariest lot of stuff that could have been put out. I hope that the responsible Departments will brief their Ministers better before the actual Conference.

The main Theme that I have in mind at present is 'The Orderly Development of Empire Resources'.

In your opening speech at the Imperial Economic Conference, 1923, (Cmd 2009 page 64)-you commented upon the growth of Dominion trade from 1880-1921, and you referred to the statesmen of 1880, and finished the paragraph with 'while we made no really serious effort to develop the Empire at all The Empire has merely developed of its own initiative.' You went on to say 'Up to date there has been no concerted plan, and I venture to suggest, no real and genuine effort'. This was a perfectly fair comment. It is true to say that Great Britain has been content with a policy of laissez faire in regard to the Empire. Development has been left to private enterprise without any General Staff work. Latterly there has been some attempt at organized development in West and East Africa, with excellent results which show themselves in the increased export trade which Great Britain is able to carry on with these Colonies. Generally speaking, however, the Imperial Economic Committee and the Empire Marketing Board are the first real moves towards an orderly conception of Empire Development.

These bodies only represent a hesitating start, though they appear to contain all the elements necessary for developing into an Empire Development Commission such as that recommended by the Empire Royal Commission in 1917.

Real progress, however, cannot be made simply by the setting up of bodies in London. It is also necessary that there should be bodies charged with national stocktaking and development in each of the Dominions, and perhaps in groups of Colonies such as East and West Africa and the West Indies, etc. Australia has, in the immediate past, set up such a body in the new Development Commission, and if this example could be followed in other parts of the Empire, and direct liaison established between Imperial bodies in London and the Development Commissions overseas, it might be Claimed that a real start towards an orderly system of development for the whole Empire would have been commenced.

The foregoing merely suggests machinery. Of course, much more is required. On the financial side it is necessary to direct the investment of capital into channels that will not only bring profit to the individual, but also yield the best return to the Nation and the Empire.

In the past Empire Development, particularly in the Crown Colonies, has been starved through the cheese-paring financial policy of the Treasury. If progress is to be made, all that must be remedied, but the remedy will not be forthcoming unless the people of the United Kingdom realise how greatly their own future prosperity depends upon development of their Empire inheritance.

Then science must be harnessed to the service of the Empire.

Scientific research cannot only immensely improve the productive capacity of agriculture throughout the Dominions and Colonies, it can also immensely affect the available manpower, particularly in the Colonies, where there is little doubt that the standard of physical well-being can be greatly improved, and the death-rate substantially lowered by the application of scientific facts already well established. Thirdly, there is the whole subject of Markets, and the whole mass of Economic Research that requires to be done. In this field the Empire lags far behind the United States of America.

It would be very easy to show, in the clearest possible way, what this suggested orderly development might mean to Great Britain. So far as the Dominions are concerned, the story is already well known, but if the Empire Economic Committee could devise means for improving the standard of living, and the purchasing power of the Indian agriculturalist, immense reserves of prosperity would be made available to the whole Empire, but particularly to industrial Great Britain. In India it is estimated that there are two hundred million people engaged in agricultural pursuits. If their purchasing power could be increased by only one shilling per head per year, it would mean a total increase of imports into India of ten million pounds, of which, at the present time, Great Britain would obtain five millions. In the same way, the nineteen million people in Nigeria-who already purchase more per head from Great Britain than do the citizens of the United States-could be made a more important market to Great Britain than many of the populous Continental nations.

EXTENSIVE VERSUS INTENSIVE AGRICULTURAL PRODUCTION

I have from time to time mentioned to you the idea of putting before the British people the contrast between extensive and intensive agricultural production, and of it being suggested that while Great Britain may not feel that it is practicable to consider any method of guaranteeing her markets for wheat and meat to Empire production, yet that after all wheat and meat are both chiefly produced extensively. Extensive methods do not involve any large degree of close settlement; on the other hand, there are a number of agricultural industries which are predominantly intensive, and therefore particularly suitable for migration settlement. Such industries are fruit and wine production, dairying, and pig-raising. If Great Britain could assure to the agriculturalist of the Empire-whether farming at Home, in the Dominions, or in the Colonies-the markets for these intensive forms of production, very great progress would be made.

I have tried to bring this theme into both the Fruit Report and the Dairy Produce Report of the Imperial Economic Committee. In both cases I encountered some Canadian opposition, and have had to be content with much less than I should have liked to have seen on the subject. I am mentioning it now because I feel that you may care to consider to what extent this idea might form part of your general point of view on economic matters, as expressed during your visit to England.

This letter has already grown to inordinate length, and as I hope to see you within ten days of your receiving it, you may feel that such a length is rather unnecessary. I have, however, felt that it was desirable to put a certain number of ideas on paper, so as to facilitate discussion.

I do not propose to comment here upon the future of the imperial Economic Committee, the future of the Empire Marketing Board, nor upon the relation of these two bodies. That is a subject which needs careful and close discussion.

I have arranged to see both Major Walter Elliot [9], M.P., and Captain Ormsby-Gore [10], M.P., on the night of Monday, 30th August, in the House of Commons, to have a talk with them about these particular subjects. Unfortunately I shall not be able to see Mr. Amery [11] before coming to meet you, for he has departed to Switzerland for six weeks for a complete holiday.

AUSTRALIAN MARKETING ARRANGEMENTS IN LONDON

I am very glad to see, from your letter, that you are proposing to go closely into this question white you are over here. I do not, however, think that any particularly useful purpose will be served by my commenting on this point at the moment. Here again is a subject requiring careful discussion and study.

26th August, 1926

THE IMPERIAL ECONOMIC BODIES

With regard to the future of the Imperial Economic Committee, and of the Empire Marketing Board, I have already said that I am discussing these questions during the coming fortnight. I propose to prepare on paper, the rough outline of two or three alternative schemes dealing with methods whereby these bodies may become of much greater assistance to the Empire. I shall bring these notes with me to Port Said with the idea of their affording a basis for discussion.

I feel very definitely that the Imperial Economic Committee must receive an enhanced status, and enlarged terms of reference. Up to date I feel that the Committee has achieved fairly useful work. If that is the case, it is due to the zeal and determination of two or three members of the Committee, and rather in spite of the Chairman. A continuation on the lines already adopted would, I fear, tend to become somewhat futile.

I must sincerely apologise for the amount of written matter which I am inflicting upon you by this mail. I can only hope that you will find it of use, and in some sort of harmony with your own point of view.

Yours sincerely, F. L. MCDOUGALL

Bruce attended the Imperial Conference held in London in October and November of 1926. While there, he agreed that McDougall should act for the Commonwealth Development and Migration Commission and for the Council for Scientific and Industrial Research, both of which would join the Department of Markets and Migration in providing his salary. Bruce also decided that McDougall should have two assistants (A. S. Fitzpatrick and A. W. Stuart Smith).

1 Not found.

2 H. W. Gepp, distinguished metallurgical engineer. Gepp was appointed Chairman of the Commonwealth Development and Migration Commission on 1 August, and travelled with Bruce to the 1926 Imperial Conference.

3 Thomas Paterson, Minister for Markets and Migration in the Bruce-Page Government.

4 A. E. V. Richardson, Professor of Agriculture and Director of the Waite Agricultural Research Institute, University of Adelaide.

5 Sir Halford Mackinder.

6 'Australian Tariff Changes', by 'A Correspondent', Times Imperial and Foreign Trade and Engineering Supplement, 21 August.

The British preferential rate was not changed, but the general tariff rate for a range of iron and steel products was substantially increased.

7 In his speech at the 1923 Imperial Economic Conference Bruce had said, 'In the interests of both the producer and the consumer, fluctuation of price is generally detrimental. Fluctuations only benefit the speculative middleman'.

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

9 Parliamentary Under-Sccretary for Scotland; Chairman of the Research Committee of the Empire Marketing Board.

10 William Ormsby-Gore, Parliamentary Under-Secretary for the Colonies; Chairman of the Publicity Committee of the Empire Marketing Board.

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