(Due to arrive Canberra 28.12.28)

My dear P.M.,

Sir Hugh Clifford [1] called in at this office this morning before
going back to Singapore tomorrow. He had seen Sir Eric Geddes [2],
who had discussed with him the question of a subsidy for the
England-Australia air route that would traverse the Malay States.

Clifford told me confidentially that Geddes suggested a Malayan
subsidy of 50,000 a year, which Clifford told me he thought was
out of the question. However, Clifford is anxious that Malaya (and
Singapore in particular) should not be left out; the chain, as a
fast mail service from England, was worth something to them. He is
evidently anxious that they should not antagonise Imperial Airways
to the extent of their hopping over Malaya.

You may be able to frame some idea from the above as to the amount
of subsidy that Geddes will approach you about for the Singapore-
Australian link. From the tone of what he said to me, I gathered
that he was anxious to ascertain if you would consider the
question of a subsidy at all, so that you should find yourself in
a fairly good bargaining position.

I send particulars in another letter of the heavy subsidising of
American merchant shipping that is proceeding under the terms of
the Jones-White Act. [3] This came to my notice through an
announcement about new ships being constructed for the Matson Line
from America to Australia.

I write in another letter about the employment of
interdepartmental meetings as a regular part of the machinery of
government business. [4] This letter is really an extension of my
letter on Liaison of six months ago. If the system of regular and
ad hoc meetings between representatives of various departments is
not in use to any extent in Australia, the question of the
adoption of the system might be worth your consideration.

I enclose copy of an extract from a recently published book,
'Canada and the Empire', which I think you may be interested to
read. I send the book itself by this mail.

Henry Ford is to invade England in the shape of the Ford Motor
Company Ltd., with a capital of 7 millions, 2 1/2 millions of
which is to be raised in England in early December. The company
will serve the whole of the British Isles, Europe and Africa. Such
a gigantic proposition is sure to make quite a flutter amongst the
motor manufacturers.

The directors of the Bank of England have announced that they
propose to recommend to shareholders in April next that Montagu
Norman be reelected for another term-which will make his tenth
year as Governor. Harvey [5] from being Comptroller is to become
Deputy Governor. I am on good terms with both Montagu Norman and
Sir Otto Niemeyer [6] and can always approach them confidentially
if you wish it.

Three weeks ago Sir Josiah Stamp [7] made people's flesh creep by
stating in a public speech that'...the changes in the price levels
in the last three years have increased the burden of the National
Debt by 1,000 millions, or added an invisible shilling to the
income tax. ...'. He followed this up by a letter to the 'Times'
on 14th November, in which he explained more fully what he meant.

He points out that whereas the United States is rich enough to be
able to prosper even with continually falling price levels, he
does not think we are. The British National Debt in fixed gold
terms is a higher proportion of our total production than is the
case with America or other nations-so that as price levels fall
(or as gold becomes more valuable), so our debt becomes more
onerous. So that, he argues, falling price levels affect this
country more than any other.

I discussed this with Professor Gregory [8] of the London School
of Economics. He admits that what Stamp says cannot be
controverted, but he thinks that the falling price levels of the
last few years is but part of a swing, and that it is most
probable that there will be a rebound.

I believe it is now decided that Trenchard [9] leaves the Air
Ministry at the end of 1929. His successor is not yet decided on.

The notification of his retirement will be made on the last day of
this session of Parliament.

I am, Yours sincerely,
R.G. CASEY