(Due to arrive Melbourne-1.8.25)

My dear P.M.,

There will be nothing very profound in this letter, so do not read
it if you are busy.

In this regard, I sometimes feel rather guilty in sending you the
volume of matter that I do. However, you have Henderson [1] to
read it and extract from it such stuff as is of immediate
importance. I have no alternative to sending you out all I can lay
hands on, as although an item may not be of importance today, your
having it on file may elucidate something that comes at a later
date.

The Rake's Progress of the French franc continues. The Treasury
people's attitude here is that it is most unlikely that it can get
better than about 90 as far ahead as one can see, and that there
is a sporting chance of it going downhill altogether.

It is said to have been controlled artificially by the French
Government in varying degree ever since the war.

The French banks, during and after the war, bought into the
Belgian banking system and the French Government bought large
quantities of Belgian francs, which they have used since the war
to purchase their own currency and so help to maintain the French
franc. Their supply of Belgian francs is now said to be
approaching exhaustion. This process, of course, has depreciated
the Belgian franc, which has been sacrificed unmercifully by the
French in the process.

The 'Morgan' loan is also supposed to be up Caillaux's [2] sleeve,
and he will presumably use it in whole or in part to check the
franc's decline at some point. This, however, can be at best a
palliative. It is thought that he will attempt to maintain it at
about 100. He naturally keeps it very secret as to when and how he
uses this very useful dollar poultice, in order to discourage the
franc speculators.

The service of the French debt absorbs roughly half the French
budget, with the franc at 90-100. If the franc were miraculously
to be brought back to 50, it would absorb practically all their
revenue. If the franc gets to 500, the debt service becomes a
relatively unimportant item in the budget. The French exporter,
however, would, in this latter case, be sacrificed and the just-
favourable trade balance which exists at present would go to the
bad, with other unpleasant consequences. It seems generally to be
thought, therefore, that, all things being considered, somewhere
about 100 is the least unpleasant point for the franc to remain.

The story seems to be as follows. The small French Rentier used to
lend his money to the Government on short term Treasury bills,
which he was in the habit of renewing from time to time, until he
found that, as the end of each period came along, the francs he
got back were worth less and less. He then began to demand cash,
instead of renewing, with the result that the Government began to
get embarrassed.

To meet this position and to recreate confidence in Government
issues, Caillaux has evolved this scheme of issuing tax-free 4%
'gold bonds', which, although issued in francs, are to be repaid
on maturity by as many francs as will be the equivalent of the
sterling exchange value of the issue on the date of issue.

However, the French budget (with the franc at 90-100) very nearly
balances, and will probably be made to balance in a year's time.

She is to receive gold equivalent from Germany under the Dawes
Scheme, and as she has no intention of paying America or Great
Britain in the near future, this valuable gold credit will ease
her exchange position.

I have met F. C. Goodenough, Chairman of Barclays Bank, twice
lately. On the second occasion, he told me confidentially that he
was attempting to bring to maturity a scheme whereby his Bank
would interest itself in Australia. I took him to mean that they
would open branches in Australia. He said he thought that such a
move was the logical development of British banking, and he
anticipated beneficial results to all concerned. He said that all
obstacles were not yet removed. He impressed on me the importance
of the above being kept entirely confidential. I said that you
were the only person I would mention the matter to. He said he was
not sure that it was yet sufficiently mature even to tell you.

Goodenough is said to be one of the progressive and unconventional
bankers of the Big Five. [3]

I keep in fairly close touch with 'The Times', mainly through
Peterson [4], who is Acting Foreign News Editor. I was at school
with him and know him well. He has sources of information, through
their correspondents and otherwise, which are useful. I very
frequently telephone him for news on certain points and he is
quite useful to me.

He told me recently that he considers that Maxwell [5], the
Publicity man at Australia House, has a very good organisation-
quite the best of such offices at any of the High Commissioners'
establishments. He thinks Maxwell an efficient man at his job.

I met A. R. Dickinson, the British Phosphate Commissioner for the
U.K., lately. He has, naturally, an implacable hatred for his
colleague, Pope, in Melbourne. He said in confidential
conversation that, in his opinion, the British and Australasian
Governments need not have paid the 3 1/2 million that they did
for the Pacific Phosphate Company's assets. He suggested to W. M.

Hughes (the moving spirit in the business) the scheme of valuing
the assets at so much (he said 4) per share and giving the
shareholders debentures to this amount, the Governments
guaranteeing the interest. He (Dickinson) was Managing Director of
the Pacific Phosphate Co. at the time and says he is sure that
such a scheme would have been acceptable. [6]

Dickinson said that Pope was heading towards a libel action by
reason of his remarks about the bonuses received from the Pacific
Phosphate Co. by its late servants.

Dickinson seems a very reasonable man and is said by the Colonial
Office to know his job and to be satisfactory and acceptable to
them. He is naturally out for this country's interests but they
say he is quite straight and that they think quite highly of him.

Philip Kerr [7] lunched with me lately. He has been made Secretary
to the Rhodes Trust in succession to Grigg. [8] He hopes to get
out to Australia on a trip in the course of the next 12 months. He
is a very pleasant fellow, with considerable mental attainments,
and, of the 'Round Table' people, he has his feet most firmly on
the ground. As to his prior history, he was one of the young
intellectuals affected by the Oxford movement, and went so far as
to start to train himself for the Roman Catholic Church. However,
he got over this, and the only remaining noticeable effect is that
he is teetotal, doesn't smoke, and sits at the feet of Lady Astor.

[9] He started life as 'one of Milner's young men', and, of
course, was Private Secretary to Lloyd George [10] for five years.

I lunched with Bankes Amery [11] yesterday. He goes to Australia
shortly as H.M.G. representative-on-the-spot to oversee the
working of the new Migration Agreement. He is a good quiet type.

It is a poor article on Dominion relations that does not sooner or
later work in:-

'Daughter am I in my mother's house,
But mistress in my own'.

However, this conception of a dual role doesn't get you very far.

People want to know if they are speaking to the daughter or the
mistress-and how far the daughter will march with her mother and
with the rest of the family.

A new portmanteau word has just caught my eye-
'Czechoslovakification'.

I have just come from lunching with Sir Campbell Stuart (Canadian,
Director of 'Times'), whom you know. I have not yet quite gathered
what is at the back of his picturesquely rapid career.

He explains Beaverbrook's [12] explosive attack on the Pact [13]
in the 'Express' and the 'Standard' by his desire to damage Baldwm
[14] (whom he is said to detest), coupled with an attempt to put
himself right with Canada, where he is (by reason of his former
cement activities) persona non grata. [15] He went on to say that
Beaverbrook's new friend is Sir Robert Horne. [16] He (Stuart) is
keen on the idea of Dominion Ambassadors to this country and would
extend it further to the extent of having an exchange of quasi-
diplomatic representatives between Dominions, so that each
Dominion would have at its seat of Government a highly placed
representative of each of the others.

Without having had time to consider this, it would undoubtedly
have the effect of bringing prominently before the public of each
Dominion the fact of the existence of the others, and by discreet
publicity should engender some more sympathetic recognition of
each other's problems and of what should be the common imperial
ideal.

He is going to speak in Canada on this subject later in this year.

He hopes to visit Australia in the first half of next year.

His ideas about Canada contain nothing that would be new to you.

Sir James Elder [17] and his Private Secretary [18] arrive in
London in the near future.

With best wishes, I am, Yours sincerely,
R. G. CASEY