89

20th January, 1927

PERSONAL & CONFIDENTIAL

My dear Prime Minister,

THE RT. HON. J. H. THOMAS [1]

In my last letter I mentioned that Mr. J. H. Thomas had asked me to see him about the marketing of Australian apples.

I called on Tuesday and he introduced me to two Australians in whom he was interested. They are in the wholesale and retail fruit trade in London and, so far as I could judge, Thomas has some financial interest in their business. It so happened that one of the two Australians had been the Orderly Room Sergeant for my reinforcement at Mitcham, South Australia, in 1915, and sailed to Egypt with me; the other had been a teller in the Renmark Bank in 1913.

We had a discussion which lasted an hour on the marketing of Australian fruit and at the end of it Thomas stated that he proposed to devote a good deal of attention to this particular phase of Empire marketing on the Empire Marketing Board. He asked me to meet him in the House of Commons just after the House met, to go further into the subject.

If it should prove possible to get Thomas's interest really keenly aroused on the subject of the marketing of Dominion produce, it will be a matter of considerable importance.

LABOUR AND THE EMPIRE

I should like to draw your particular attention to an article by Philip Snowden [2] that was printed in the second issue of Haden Guest's [3] new paper 'The London Weekly', of which I forward a copy. This article shows so great an advance in Snowden's public attitude to Empire questions that it must be regarded as being very significant. Personally I have always been of opinion that Snowden has a very keen political nose and I think he must have come to the conclusion that the movement within the Labour Party in the direction of the Empire has become so strong that it is necessary for him to associate himself quite definitely with the movement.

Just a year ago, at a dinner of the Political Economy Club, I heard Snowden say that free trade interests in this country ought to organize to point out the ridiculousness of campaigns based on the idea of buying British or Empire goods. Whether his internal change is as great as appears on the surface I have not any idea.

As a further indication of the way in which labour is beginning to take a stronger interest in questions of Empire trade, I enclose a series of articles from the 'Railway Service journal' dealing with Empire problems. This journal is the organ of the Railway Clerical Workers Trade Union.

I am not quite sure whether, while you were over here, you noticed the fact that Tom Johnston, the Clydeside M.P. who is now so keen an imperialist, has become a member of the Labour Party's Executive and, as such, has been promoted to the Front Bench in the House of Commons. In the election for members of the Executive, Johnston was fourth in the list and this, I think, indicates pretty definitely that if, in a couple of years' time, the Labour Party reaches office, Johnston will obtain at least a junior ministerial post.

In the third issue of the 'London Weekly' there is an article by Arthur Pugh, the General Secretary of the Iron & Steel Trades Federation on 'Labour and Migration' which is also of decided interest. I enclose a copy of this third issue.

AUSTRALIAN WINE

Sir Horace Hamilton, the Chairman of the Board of Customs and Excise, asked me to lunch with him last Friday. He was anxious to discuss the question of how the Australian wine industry would be affected by changes in the demarcation at which light and heavy wines are taxed. We had a very long talk and I finally promised to write him a personal letter on the subject. Naturally Hamilton is extremely anxious that the whole subject should remain strictly confidential until the budget. I am forwarding copy of my letter to Sir Horace Hamilton which makes the matter quite clear but it will be necessary to regard this communication as being strictly confidential to yourself.

In this connection I am under the impression that I gave you an incorrect idea about the way in which the British Government has, by resolution of Parliament, attempted to stabilise the preferences. I believe I said that if the duties on wine were increased it would automatically increase the amount of preference. Of course if I said this to you, I was wrong. The stabilising of preferences resolution was intended to stabilise the money value and not the proportion of preference. This explains the latter portion of my letter to Sir Horace Hamilton.

[4]

If, by the time this letter reaches you, you have not received any cable from me, it might be desirable for you to discuss with some really reliable person whether Australia has any marked preference between 26 and 25 for the demarcation limit.

Hamilton was, of course, careful not to indicate at all definitely what action the Chancellor [5] is likely to take.

I am troubling you personally with this matter because it is a very delicate subject and if any leakage of information occurred, individuals who rightly forecasted the Chancellor's intentions would be able to make quite a considerable amount of money by speculating in the cheap Spanish and Portuguese wines. Perhaps you would be good enough to indicate to me whether, in forwarding this personal letter to Sir Horace Hamilton for your consideration, I am taking the right course of action or whether you would have preferred me to have sent a letter of this character to Mr.

Paterson [6] direct.

EMPIRE MARKETING BOARD

At the meeting of the Research Committee of the Empire Marketing Board, held on Tuesday, Walter Elliot [7] explained what had passed between you and himself on the subject of a Tropical Agricultural Research Station in Queensland and the Committee unanimously supported what had been done and decided to bring the matter before the Board at its next meeting on the 2nd February.

IMPERIAL ECONOMIC COMMITTEE

There is still no definite news as to whether Chadwick [8] is going to accept the Secretaryship. In the meantime the absence of Mackinder [9] and the fact that there is no Secretary is holding up any development. A report on Eggs and Honey is on the stocks in the charge of a Sub-Committee with a very junior person acting as Assistant Secretary. I decidedly resent the long delay in beginning to approach our problems and I feel that it will be necessary to throw a good deal of driving power into the work of the Committee as soon as it is properly restarted.

Yours sincerely, F. L. MCDOUGALL

1 Labour M.P.; General Secretary of the National Union of Railwaymen; Colonial Secretary 1924.

2 Labour M.P.; free trader; Chancellor of the Exchequer 1924.

3 L. Haden Guest, Labour M. P. and writer; Secretary of the Labour Party Commonwealth Group.

4 McDougall argued in his letter that if different rates of duty were levied according to alcoholic strength, there was a danger that preference for the bulk of Australian wine imported into Great Britain would be only 1/- over the Spanish and Portuguese wines which were their most important competitors. His letter to Hamilton, dated 20 January, is on file AA:M111, 1927.

5 Chancellor of the Exchequer, Winston Churchill.

6 Thomas Paterson, Minister for Markets and Migration. On 23 February, Bruce replied, '... where the question is one of such delicacy and really deals with the forecasting of what will be in the British budget...you adopted the right course in communicating with me about it, rather than with Mr. Paterson direct'. His letter is on the file cited in note 4.

7 Parliamentary Under-Secretary for Scotland; Chairman of the Research Committee of the Empire Marketing Board.

8 Sir David Chadwick, Secretary to the Government of India, Commerce Department, had been offered the post when H. Broadley took up a position as Assistant Principal at the Board of Trade.

9 Sir Halford Mackinder, Chairman of the Imperial Economic Committee.