84

5th January, 1928

PERSONAL AND CONFIDENTIAL

My dear P.M.,

I lunched today with Sir Alan Anderson [1] and hasten to send a few lines to you on one of the subjects that we talked about.

He said that he had lately been rather struck by the suspicion with which certain sections of the Australian public regarded the steamship lines serving the Commonwealth. The debate on the want of confidence motion in the House of Representatives regarding the sale of the Australian Commonwealth Line had brought it again to his attention. [2] He said that he imagined that, apart from the quasi-monopoly that the P. & 0. Company had regarding Australian overseas shipping, the unpopularity and suspicion was due to the fact that the capital behind the lines serving Australia was all held out of Australia.

He said that a somewhat similar position existed regarding the Suez Canal prior to the acquisition of a 30% or so interest in the Canal by the British Government. Even although the British interest was insufficient to control policy, the fact of our having a substantial interest and seats on the Board was sufficient to dissipate criticism.

He said that the capital of the Orient Company was held as to something just over 50% by the P. & O. Co. (or by Lord Inchcape [3] personally, I don't quite remember which) and the remainder by himself and his friends. He had made the suggestion to Lord Inchcape that it might be a help towards a better feeling in Australia on the subject if he (Lord Inchcape) were to make available a parcel of his shares to the extent, say, of about a third of the Company's capital to the Australian Government or Australian interests. Lord Inchcape agreed.

Sir Alan thought that on the disposal of the Commonwealth's interest in the A.C.L., a suggestion of this nature might have some attraction. [4]

The shares in the Orient Company are not quoted on the Stock Exchange, but an equitable value could be arrived at by valuation of the ships and other assets.

He made the further suggestion, although in rather vague terms, that it might be good policy for the Commonwealth Government to participate similarly in the stock of the various other lines trading with Australia.

I naturally made no comment on the above other than that it was an interesting and rather novel suggestion.

The rest of the conversation was taken up with talk about lighter- than-air transport, which is always of great interest to him, and about the possible entry of the shipping companies into this field in due course.

We also talked of the position of the Italian Flag Discrimination [5] discussions and the efforts of the Orient Company to attract migrants from Finland, the Scandinavian countries generally and from Central Europe.

I am, Yours sincerely, R. G. CASEY

1 Of Anderson Green & Co. Ltd, managers of the Orient Line.

2 On 8 November 1927 the Labor Opposition leader, Matthew Charlton, had moved a censure motion against the Government for its decision to sell the Commonwealth Shipping Line, and even on the Government side there had been some recognition that in a field dominated by cartels the Commonwealth Line had helped to steady freight rates and maintain schedules.

3 Chairman of the P. & 0. Line.

4 Bruce did not agree. In a letter to Casey of 20 March 1928 (on file AA:A1420) Bruce suggested that a government shareholder interested in economy and service must come into conflict with a private shareholder interested in profit.

5 See note 5 to Letter 83.