Sterling Balances
I welcomed your telegram 2804 which confirmed my own reactions and
gave me confidence for my further talks. Bridges gave me a dinner
on Monday night at which Eady and others were present. The
atmosphere was very friendly, and following the dinner we talked
for two hours on sterling balances. I said that I was greatly
disappointed with the Treasury letter and would have to be frank.

As a response to my representations, the letter rather reminded me
of the description of Mrs. Simpson's hat. They hadn't heard it so
I had to relate it-'three bows, no crown, turned clown all round'.

This made a bit of background, so I proceeded to deal at length
with the position as I saw it, and concluded by saying that the
proposals were unacceptable.

2. I then put forward a suggestion for an entirely different
approach, which I felt would be simple and effective, and hoped
they would seriously consider it. My idea was a high level letter
to you, which would embody suggestions as to how Australia could
help, but should leave you [practically] [1] free to exercise your
own judgment. It is outlined in my report attached. They accepted
the idea without hesitation. I hope this will meet with your
approval and I will co-operate in the drafting of the letter.

3. I am attaching an official report of the talks in order to put
on record what I said and their reactions.

4. At the close, I asked questions on other subjects because the
opportunity was too good to be lost, and I will send some notes
later.

5. I had personal apologies from Bridges and Eady for not having
contacted me before, but everything is now on a better basis. I
think it is only fair to say that they are having a very sticky
time, but the top men should have come into the picture earlier.

6. I might add that when I had waited some two to three weeks
without hearing anything I spoke to Mr. Beasley and he took the
opportunity of a few words to Dr. Dalton, whom he met at a private
dinner. I think this stirred them up and did not do any harm. I
also had a friendly talk yesterday to Glenvil Hall, the
Parliamentary Financial Secretary. This followed the word to Dr.

Dalton.