My dear Prime Minister,

BALDWIN'S [1] SPEECH

Last Thursday Baldwin made his long anticipated policy speech, of
which I enclose a copy, although you will no doubt receive one
from other sources. I consider the speech considerably
disappointing and it has been generally regarded as not giving any
very effective inspiration to the Tory Party for the coming
General Election.

My own view is that Baldwin's ambition is to be regarded as a
great Conservative Leader. His mistake in 1923 [2], due to great
impetuosity, has, I believe, thoroughly scared him with the result
that he has reacted violently in the opposite direction and his
whole tendency is towards low-toned utterances. To my mind he is
also quite seriously handicapped in attacking the Lloyd George [3]
and Labour Party proposals for creating work for the unemployed by
the fact that the Government has continuously been insisting upon
the marked recovery which they allege has taken place in British
trade. Had it not been for the necessity, which I suppose he felt
that past utterances had imposed upon him, to maintain the legend
of the great improvement in British trade, he, could have attacked
the Lloyd George proposals in a very effective way by pointing out
that, although British trade had shewn some recovery, that
recovery was not commensurate with the development of world trade
and that the primary necessity of Great Britain was to become more
effective in International competition. Any proposals which must
be expected to decrease Britain's competitive power in the world
were thoroughly pernicious and harmful.

The other day one Liberal candidate, who is a large ship owner,
actually praised the Lloyd George proposals on the ground that
they would greatly increase imports into this country. I think it
is a perfectly sound view that the expenditure of large sums of
loan money on such works as Lloyd George proposes would increase
imports but that is the weirdest ground for supporting such
proposals, except, of course, from the point of view of a ship
owner.

In regard to export trade, there were only two constructive
proposals in Baldwin's speech-one in order to assist the railways
to improve their facilities, and the other his promise that the
Tory Party, if returned to power, would assist Colonial
development by meeting some of the interest charges on development
loans. Baldwin made it perfectly obvious that he did not intend
this proposal to apply to the Dominions but it is difficult to see
why he should take this line. I have written an unsigned article,
which I hope will be published in a few days, generally praising
the proposal to assist Colonial development but pointing out that
developments in the three Southern Dominions, and particularly in
Australia and New Zealand, would do more to assist British
employment than developments in any Colony with the possible
exception of Nigeria.

POLITICAL CHANCES

This letter will reach you within a day or two of polling day [4]
in this country and therefore it would be extremely fool-hardy of
me to embark on any further political forecasts. I shall, however,
hazard the expression of certain opinions.

It now seems quite clear that one of the results of Lloyd George's
theatrical intervention with his absurd pledge [5], backed as that
intervention is, with the expenditure of very large sums of money,
will be substantially to increase the Liberal poll in the country
but it by no means follows that, because the Liberal poll will be
increased, the number of Liberal Members of Parliament will be in
anything like due proportion to the increase in the number of
votes cast for the Liberals.

There appear to be two completely incalculable factors in the
forthcoming Election. The first, of course, is the question of how
the newly enfranchised young women will vote [6], and the second
question is which of the two larger Parties will be most
detrimentally affected by the expected increase in the Liberal
poll. One has the feeling, at the present moment, that Labour is
not doing particularly well. They have too large and amorphous a
programme. Philip Snowden's [7] stupid attack on the 'infamous
Balfour Note' has certainly not improved Labour solidarity and
this may tend, in many districts, to help the Liberals to score at
the expense of Labour.

The only forecast I feel inclined to make is that the result of
the Election will be something very closely approaching a
deadlock, with the result that another Election will be necessary
within a year or eighteen months time. I only hope that we get a
Government which is capable of carrying on and holding an
effective Imperial Conference. One other thing is certain. There
will be a very great change in the personnel of the House of
Commons. The Election of 1924 brought in an overwhelming number of
Tories, all at least verbally pledged to a policy of Empire
development. The question of the education of the House of Commons
has, therefore, not been particularly urgent during the life of
this Parliament but after the coming Election there will
undoubtedly be a large reinforcement of the two Parties of the
Left, and I am sure that you will agree that one of the
outstanding pieces of work will be the education of these new
Members to see the importance and urgency of Empire development.

EMPIRE MARKETING BOARD

On Thursday evening there was a debate in the House on the
Dominions Office Vote and, by general agreement, the debate was
made to include the Votes of the Empire Marketing Board and for
Overseas Settlement. [8] I am enclosing a copy of the 'Hansard'
and have particularly marked references to the E. M. B. All three
Parties took part in the debate and, with the exception of one
short querulous speech from a Liberal, combined to bless the work
of the Board. Some of the speakers, indeed, adopted an almost
extravagantly complimentary style. It would be folly to pretend
that one was not gratified to read this debate. My chief feeling
was that the debate showed how really useful had been the move to
force Amery [9] and the Government to include the Opposition
Parties in the personnel of the Board. I am quite sure that, had
it not been for the fact that both Labour and Liberals are
represented on the Board, the debate would have taken an utterly
different tone. As it is, there is one thing of which we can be
certain, namely, that whatever change occurs as a result of the
Election, the E.M.B. will continue to function without any
decrease in its vote or its responsibilities.

STABILIZATION AND AGRICULTURAL PRICES

In the debate referred to in the above paragraphs, each speaker
from the Labour side dwelt upon the necessity for the extension of
the Empire Marketing Board's work to include attempts to reduce
the 'spread' between the producer and the consumer. Some Labour
speakers also brought forward the proposal to create through the
E.M.B. a system of bulk purchases of Empire goods.

I was extremely interested to find that Arthur Duckham [10] has
come back from Australia very keen on the idea of a system of bulk
purchase, deliberately aimed at stabilising agricultural prices on
a level remunerative to the efficient producer.

As I think I told you in a previous letter, Sir Daniel Hall [11],
who, I suppose, is regarded as one of the really leading
authorities on agriculture in this country, is also trying to
educate opinion in this direction.

Under these circumstances, I should be extremely glad if you would
consider to what extent it would suit your purpose if we were to
stage a fresh discussion of the Stabilisation ideas at the next
Imperial Conference. I should particularly like to have your views
on this point as soon as you can conveniently let me have them
after receipt of this letter, because a great deal of exploratory
and educational work will be required if the subject is to be
thoroughly thrashed out in 1930. [12]

ECONOMIC CONSULTATIVE COMMITTEE

On May 4th I have to leave here for Geneva for the annual meeting
of this Body. Up to the present, the only indication I have had of
your thoughts on the subject is your cable to Senator McLachlan
[13] giving him instructions for the 1928 Assembly in regard to
the economic side. I am hoping that the next mail may bring me
some word about your general attitude and especially your reply to
my questions about the relationship between Rome and Geneva. [14]
If I do not receive anything from you then, I shall probably send
you a cable next week.

I am now receiving masses of papers in connection with the work of
the Economic Organization of the League and the outstanding fact
is that, during 1928, the attempts to secure a lowering of tariff
barriers have been practically unsuccessful and that the tendency
in the world is still towards an increase in tariffs. I feel very
much inclined to draw marked attention to this and to use it as a
lever suggesting the importance of more constructive work by the
League Organization on information and other general services.

THE UNITED STATES TARIFF

I was extremely interested to see that the Commonwealth Government
had sent a note to Washington on the proposed tariff changes in
America [15], but at the same time I cannot help but feel that if
Hoover [16] is forced by the farmers to agree to a substantial
increase in the tariffs on agricultural produce, the result will
be to throw Canada into our arms, and to make it quite certain
that the discussions of economic subjects at the Imperial
Conference will be both interesting and important. I shall watch
with the very keenest interest what happens in the next few weeks
at Washington.

I rather assume that in sending the Commonwealth Government's note
to America, you did not really anticipate checking the expected
development, but that you are endeavouring to place Australia in a
sound strategical position to retaliate against the increases in
the tariff which appear almost inevitable.

Yours sincerely,
F. L. MCDOUGALL