(Due to arrive Canberra 22.2.29)

My dear P.M.,

I send out in another letter by this mail copy of Hilton Young's
[1] Report of the East Africa Commission-a bulky document. My
object in sending it is not so much for the interest to us of the
subject itself, as the possible analogy it may contain with
respect to the possibility of some sort of amalgamation of the
Administrations of Papua and the Mandated Territory of New Guinea.

Sir Hubert Murray (Papua) [2] came in to see me yesterday. I asked
him in the course of conversation if he thought that the Dutch
laid great store on Dutch New Guinea, and he said, to my great
delight, that it was his definite impression that they did not and
that they would sell it for a song. I hope and trust that you will
empower me to sing the necessary song at an early date. But I
really doubt whether my voice is good enough.

With regard to the development of Papua, he surprised me by saying
that whereas about 10,000 natives are now employed, it is doubtful
(on their present information) if more than a total of 20,000 will
ever be available. The same order of figures applies to the
Mandated Territory. If these are anything like correct, then
mechanical aids to development will be essential. This movement is
practically non-existent at present as there are probably not
half-a-dozen tractors in the whole of Australian New Guinea.

Is it impossible to think of mechanical aids to tree-felling,
scrub demolishing, road making, in tropical countries? One hears
that Henry Ford is developing such methods in the huge areas in
the vicinity of the Amazon in South America that he is putting
under rubber.

Murray seems to think that there is not very much wrong with the
administration of the Mandated Territory, other than that it is
carried out by people who are inexperienced. He thinks it
essential that Wisdom [3] should be allowed to come to Geneva to
defend his administration before the Mandates Commission.

I send in another letter a map showing the boundaries of Australia
as they are specified in the Letters Patent for the individual
States. The Constitution lays down no continental boundaries and
it is suggested that as the Commonwealth is now an international
entity, some consideration of the situation on the part of the
Attorney-General might be appropriate.

I attach a circular issued by Rowe & Pitman, a well-known Stock
Exchange firm, with regard to Imperial Finance. As you will see,
this is the latest form that Davenport & Cooke's attack on our
Australian finance has taken. [4] Cooke is a member of this firm.

It is a clever memorandum and one that is difficult to answer.

I enclose cuttings about the Commonwealth Loan. It is improving to
par much quicker than expected.

At lunch with Philip Kerr [5] this week, he put forward the
following stimulating theory. Periods of expansion and prosperity
have followed the successive waves of introduction of mechanical
and industrial machinery. But up till the War only 500 million out
of the world's 1,800 million people have benefited (or been
exploited) by the rising tide of mechanisation and
industrialisation. The majority of mankind still till the soil in
primitive fashion and live their lives untouched by modern
processes. The next phase will be the supplanting of the wooden
man-pulled plough and its prototypes in backward countries (China,
India, Africa, Java, etc.) by the tractor and the rest-with
bettered standards of living and increased wealth to swell the
markets of the big established producers of the world-England and
America. The handful of rice that is all that the native has been
able to produce for his own needs will be multiplied, and his
increasing requirements (which he will be able to satisfy through
his increasing production) will put new life into English and
American factories. This can come about but slowly and by virtue
of the export of capital for development from Great Britain and
the United States. British capital is limited and earmarked to a
great extent for home and Dominion development. American capital
is abundant and looking for avenues for employment. But America is
inexperienced in financing the development and exploitation of
backward countries, whilst we have great experience. Co-operation
between American money and British brains and experience is
indicated and would provide a useful additional link to cement the
Anglo-American English speaking entente. The combination would be
world powerful. Mond's [6] 'Finance Company of Great Britain and
America Ltd.' may represent the first step in canalising American
credit through British channels into appropriate fields.

The Americans have given some indication that they do not
necessarily want control of the foreign investments into which
some of their surplus credit goes. If they have confidence in the
British individuals who organise and run the business, and have
nominees on the Boards, they appear to be willing, at present at
least, to let British brains run the business although possibly
American money may be predominant in the enterprise.

Kerr sees the possibility of a new period of prosperity in the
coming generation arising out of the development of the backward
lands by virtue of the marrying of British direction to American
money.

I send a collection of papers on Belligerent Rights with another
letter by this mail.

I spoke to Amery [7] this week about the difficulty of proper
consultation with the Dominions on the very complex subject of
Belligerent Rights. It is so important and so many sided that it
is next to impossible to give a balanced picture of the subject in
telegrams and despatches. He recognises this and says that in the
event of our being threatened with a conference on the subject by
the Americans, he will make every effort to have it postponed
until after the next Imperial Conference.

Sir Hugh Trenchard [8] spoke to me yesterday about the decision,
that the Commonwealth Defence Department has come to, to move the
Australian Air Liaison Officer from the Air Ministry to Australia
House. He thinks personally that it is a retrograde step but he is
not prepared to make any representations about it as it is, he
says, our business and not his. Although Australia House is close
to the Air Ministry, it will be awkward as he (Trenchard), I think
quite rightly, will not allow files to go out of the Air Ministry.

I suppose Defence have very good reasons, but it is not obvious to
me what benefits will result to offset the fact that it will not
be possible for the Air Liaison Officer to keep as well in touch
as he was before.

I enclose copy of a despatch from the British Ambassador at Rome
regarding the anti-Italian incident at Innisfail. [9]

I write another letter by this mail drawing attention to the fact
that Australian wheat in the last year or so has been shipped in
abnormally large and increasing quantities to the isolated island
of Guam in the Pacific. This is an American Naval Station, to
which there is no regular shipping service from Australia-a fact
that rules out the possibility of the wheat going there for re-
shipment. In the year 1926/27 the export of wheat to Guam from
Australia was roughly 40,000 tons. In the year ended 30th June,
1928, over 82,000 tons went to Guam, and in the three months ended
30th September, 1928, over 33,000 tons was shipped there. The
records prior to these dates show no shipments at all. As the
population of the island consists of 16,000 natives and 1,000
whites, it is difficult to see what these enormous tonnages are
required for. Even if they are building up a reserve for naval
purposes, the amounts seem very large.

Winston is absorbed again in the pangs of authorship. He is
producing another book called 'The Aftermath'. [10] It was to a
certain extent due to Amery having read several chapters in
manuscript and having made some useful suggestions that Winston
mellowed to the extent of giving Amery an opening to tackle him
about the loan of the 'Discovery' to Australia.

A good impromptu of Winston Churchill's. A Labour member was
criticising some action of his, and stopped in his harangue to say
severely-'The right honourable gentleman shakes his head, but he
must remember that I am only stating my own opinion'-to which
Winston said mildly-'And I am only shaking my own head'.

I am, Yours sincerely,
R.G. CASEY