25th March, 1926
PERSONAL & CONFIDENTIAL
(Due to arrive Melbourne-24.4.26)
My dear P.M.,
INFORMATION LEAK RE NEW AUSTRALIAN SHIPPING SCHEME 
The investigation of this leak was taken up vigorously at this end. Hankey  took the matter up with the Prime Minister , who conferred with the Attorney-General , with Scotland Yard, and the Home Office, and eventually had the Official Secrets Act put into operation.
A representative of the Government, with a police escort, went to the offices of the 'Daily Express' and demanded to know the source of their information. They asked for a little time to consider their position as the matter was by then some fortnight old. In the meantime they sought the advice of Sir John Simon.  There were several meetings and a great deal of talk about which I need not worry you, except to say that, in the end, the 'Daily Express' agreed to give the name of their informant if they were assured that the Government would make no further investigations in the matter as to any other go-betweens. The Prime Minister agreed to this condition and the 'Daily Express' handed over to the Attorney-General a letter containing the information, signed by a man who turns out to be a clerk in the Treasury.
It seems a pity that the Prime Minister gave his word that no further investigation would be made, as it has been found that there is some individual or organisation which constitutes a pool for illicitly acquired information of this sort. This pool purchases information from certain spies, presumably in Government offices, and sells this information again like any other commodity in the highest market. Now that it is known that this pool exists, every effort will be made to discover more about it. If the Prime Minister had not given the stipulation that he did, no doubt the defaulting clerk in the Treasury would have told everything.
I was able to do a little towards cleaning up the mystery through the man whom I mentioned to you in my letter to you No. 264-Maundy Gregory.  I set him on the track of what was wanted and he produced some of the missing links in the story, which Hankey was able to use with good effect.
The defaulting clerk in the Treasury admitted that he had been responsible for leakage in connection with about ten other similar incidents. His job was to collect the 'out' trays from the offices of certain officials and distribute the documents either to the Registry or to the individuals to whom they were marked. He is apparently a man with a good memory and in the habit of reading through such of these documents as looked important and memorising their contents. I have not heard what his fate is going to be although I expect he will merely be sacked and no further action taken in order to avoid the public scandal that would result were he to be prosecuted under the Official Secrets Act.
The whole story is going to be put before the Cabinet at an early date. I don't think that it is going to be given any further publicity.
One good effect that it is having is that all Government departments are to be overhauled and made to take steps aimed at the greater security of secret documents.
A Cabinet Committee has been appointed to enquire into the measures necessary to ensure the utmost secrecy in connection with confidential documents, consistent with the expeditious conduct of public business.
Your strong protest has had good effect, and already departments are taking steps to put their own houses in order.
One lucky coincidence is worth recording, for your confidential information. The Chief Clerk in this office was going home by tube a few nights ago and was surprised to see the man next him reading a copy of a secret document of which he was able to see and memorise the title and the distribution number, and by which he was able to identify it next day as having been issued from this office to the Home Secretary.  Investigation showed that the man was the latter's Private Secretary. He was summarily sacked.
It is a rule in this office that no officer leaves his room even momentarily without closing the lids of the snaplock boxes in which secret papers are distributed. One man went into another's office a few days ago and found he was out and that some secret papers were lying on his desk. He promptly put them in his pocket and went back to his own office, kept the papers for two hours and then (when the other man was in what the Irish call a 'sweat of dread') returned them in a locked box to him, with a slip 'With the compliments of the Editor of the Daily Express'!
One pleasant aspect of the whole pother is the voluntary statement of a witness connected with the 'Daily Express' affair, that 'the Cabinet Office and the Colonial Office are regarded as watertight from the point of view of information getting to Fleet Street'.
I am, Yours sincerely, R. G. CASEY