2nd July, 1925
(Due to arrive Melbourne-1.8.25)
My dear P.M.,
There will be nothing very profound in this letter, so do not read it if you are busy.
In this regard, I sometimes feel rather guilty in sending you the volume of matter that I do. However, you have Henderson  to read it and extract from it such stuff as is of immediate importance. I have no alternative to sending you out all I can lay hands on, as although an item may not be of importance today, your having it on file may elucidate something that comes at a later date.
The Rake's Progress of the French franc continues. The Treasury people's attitude here is that it is most unlikely that it can get better than about 90 as far ahead as one can see, and that there is a sporting chance of it going downhill altogether.
It is said to have been controlled artificially by the French Government in varying degree ever since the war.
The French banks, during and after the war, bought into the Belgian banking system and the French Government bought large quantities of Belgian francs, which they have used since the war to purchase their own currency and so help to maintain the French franc. Their supply of Belgian francs is now said to be approaching exhaustion. This process, of course, has depreciated the Belgian franc, which has been sacrificed unmercifully by the French in the process.
The 'Morgan' loan is also supposed to be up Caillaux's  sleeve, and he will presumably use it in whole or in part to check the franc's decline at some point. This, however, can be at best a palliative. It is thought that he will attempt to maintain it at about 100. He naturally keeps it very secret as to when and how he uses this very useful dollar poultice, in order to discourage the franc speculators.
The service of the French debt absorbs roughly half the French budget, with the franc at 90-100. If the franc were miraculously to be brought back to 50, it would absorb practically all their revenue. If the franc gets to 500, the debt service becomes a relatively unimportant item in the budget. The French exporter, however, would, in this latter case, be sacrificed and the just- favourable trade balance which exists at present would go to the bad, with other unpleasant consequences. It seems generally to be thought, therefore, that, all things being considered, somewhere about 100 is the least unpleasant point for the franc to remain.
The story seems to be as follows. The small French Rentier used to lend his money to the Government on short term Treasury bills, which he was in the habit of renewing from time to time, until he found that, as the end of each period came along, the francs he got back were worth less and less. He then began to demand cash, instead of renewing, with the result that the Government began to get embarrassed.
To meet this position and to recreate confidence in Government issues, Caillaux has evolved this scheme of issuing tax-free 4% 'gold bonds', which, although issued in francs, are to be repaid on maturity by as many francs as will be the equivalent of the sterling exchange value of the issue on the date of issue.
However, the French budget (with the franc at 90-100) very nearly balances, and will probably be made to balance in a year's time.
She is to receive gold equivalent from Germany under the Dawes Scheme, and as she has no intention of paying America or Great Britain in the near future, this valuable gold credit will ease her exchange position.
I have met F. C. Goodenough, Chairman of Barclays Bank, twice lately. On the second occasion, he told me confidentially that he was attempting to bring to maturity a scheme whereby his Bank would interest itself in Australia. I took him to mean that they would open branches in Australia. He said he thought that such a move was the logical development of British banking, and he anticipated beneficial results to all concerned. He said that all obstacles were not yet removed. He impressed on me the importance of the above being kept entirely confidential. I said that you were the only person I would mention the matter to. He said he was not sure that it was yet sufficiently mature even to tell you.
Goodenough is said to be one of the progressive and unconventional bankers of the Big Five. 
I keep in fairly close touch with 'The Times', mainly through Peterson , who is Acting Foreign News Editor. I was at school with him and know him well. He has sources of information, through their correspondents and otherwise, which are useful. I very frequently telephone him for news on certain points and he is quite useful to me.
He told me recently that he considers that Maxwell , the Publicity man at Australia House, has a very good organisation- quite the best of such offices at any of the High Commissioners' establishments. He thinks Maxwell an efficient man at his job.
I met A. R. Dickinson, the British Phosphate Commissioner for the U.K., lately. He has, naturally, an implacable hatred for his colleague, Pope, in Melbourne. He said in confidential conversation that, in his opinion, the British and Australasian Governments need not have paid the 3 1/2 million that they did for the Pacific Phosphate Company's assets. He suggested to W. M.
Hughes (the moving spirit in the business) the scheme of valuing the assets at so much (he said 4) per share and giving the shareholders debentures to this amount, the Governments guaranteeing the interest. He (Dickinson) was Managing Director of the Pacific Phosphate Co. at the time and says he is sure that such a scheme would have been acceptable. 
Dickinson said that Pope was heading towards a libel action by reason of his remarks about the bonuses received from the Pacific Phosphate Co. by its late servants.
Dickinson seems a very reasonable man and is said by the Colonial Office to know his job and to be satisfactory and acceptable to them. He is naturally out for this country's interests but they say he is quite straight and that they think quite highly of him.
Philip Kerr  lunched with me lately. He has been made Secretary to the Rhodes Trust in succession to Grigg.  He hopes to get out to Australia on a trip in the course of the next 12 months. He is a very pleasant fellow, with considerable mental attainments, and, of the 'Round Table' people, he has his feet most firmly on the ground. As to his prior history, he was one of the young intellectuals affected by the Oxford movement, and went so far as to start to train himself for the Roman Catholic Church. However, he got over this, and the only remaining noticeable effect is that he is teetotal, doesn't smoke, and sits at the feet of Lady Astor.
 He started life as 'one of Milner's young men', and, of course, was Private Secretary to Lloyd George  for five years.
I lunched with Bankes Amery  yesterday. He goes to Australia shortly as H.M.G. representative-on-the-spot to oversee the working of the new Migration Agreement. He is a good quiet type.
It is a poor article on Dominion relations that does not sooner or later work in:-
'Daughter am I in my mother's house, But mistress in my own'.
However, this conception of a dual role doesn't get you very far.
People want to know if they are speaking to the daughter or the mistress-and how far the daughter will march with her mother and with the rest of the family.
A new portmanteau word has just caught my eye- 'Czechoslovakification'.
I have just come from lunching with Sir Campbell Stuart (Canadian, Director of 'Times'), whom you know. I have not yet quite gathered what is at the back of his picturesquely rapid career.
He explains Beaverbrook's  explosive attack on the Pact  in the 'Express' and the 'Standard' by his desire to damage Baldwm  (whom he is said to detest), coupled with an attempt to put himself right with Canada, where he is (by reason of his former cement activities) persona non grata.  He went on to say that Beaverbrook's new friend is Sir Robert Horne.  He (Stuart) is keen on the idea of Dominion Ambassadors to this country and would extend it further to the extent of having an exchange of quasi- diplomatic representatives between Dominions, so that each Dominion would have at its seat of Government a highly placed representative of each of the others.
Without having had time to consider this, it would undoubtedly have the effect of bringing prominently before the public of each Dominion the fact of the existence of the others, and by discreet publicity should engender some more sympathetic recognition of each other's problems and of what should be the common imperial ideal.
He is going to speak in Canada on this subject later in this year.
He hopes to visit Australia in the first half of next year.
His ideas about Canada contain nothing that would be new to you.
Sir James Elder  and his Private Secretary  arrive in London in the near future.
With best wishes, I am, Yours sincerely, R. G. CASEY