My dear P.M.,
I have found myself lately spending a good deal of time with Sir Charles Nathan  on the North Australia Scheme, which I think is progressing slowly.  It occurs to me that the development of the 100-ton tracked roadless train  is opportune and may be a distinct factor in the transport side of the question. Indeed, I think it will not be far from the truth to say that practically the whole problem of North Australian development is a transport one. The anticipated capital expenditure on the railways in North Australia is appalling and they will not pay a penny of even the interest charge for very many years, which will mean a big interest bill to offset against the development. The problem seems to me to represent a first-rate opportunity to develop the roadless train, which promises to be able to fulfil the transport requirements of the North for many years.
McDougall  tells me that the Empire Marketing Board has today agreed to find 60,000 (one half) of the development cost of the roadless train. It will be, I expect, 2 or 3 years before the idea reaches a practical stage. All I want to suggest now is that we should not commit ourselves firmly to this big railway scheme until we know what the performance and the promise of the roadless trains are to be.
Sir Charles Nathan is in the state of mind that he visualises the roadless train as suitable as a feeder for distances of a couple of hundred miles for a main Railway, but he cannot see it taking the place of the main Railway. That is as may be. If the roadless train is of any use at all, it could provide a skeleton transport service over the whole of North Australia, carrying quite sufficient tonnage to serve the needs of the Territory for some years at least, and at an inappreciable capital cost as compared with the formidable millions that a railway would entail. As you know, the cost of 6d. per ton mile is being aimed at as an economic cost figure for the roadless train. Even if the interest charges of a railway were to be borne by the Commonwealth Government, I expect that 4d. a ton mile would mean an additional loss.
I feel strongly that we should, if necessary, contribute substantially towards the development of the roadless train so as to expedite the practical stage of having a machine in Australia to experiment with. And, further, that we should have well in our minds the possibility of exploiting this roadless train scheme to the utmost, both in North Australia and elsewhere where developmental railways are needed to go in advance of settlement to encourage and promote it.
I am, Yours sincerely, R.G. CASEY