(Due to arrive Melbourne-19.12.25)

My dear P.M.,

I enclose copy of what I think is a very valuable report dealing
with America. The bulk of the report consists of 'vitalised'
statistics-a simply worded exposition of what some of America's
more important recorded figures of her industrial development
mean-what they signify for America and the reaction they must have
on Great Britain.

If you haven't time to read it all, please read Article 10 on
Pages 11 and 12.

If an Imperial Conference does materialise next year, I hope you
will consider the proposal to either come or go by the United
States. If you did it on your way to England, it would not run the
danger of being crowded out by unforeseen circumstances as
happened last time.

Hipwood [1], the Permanent Head of the Mercantile Marine Branch of
the Board of Trade, told Hankey [2] a very curious story lately. A
manufacturing firm in this country was tendering for the supply of
certain material to Japan, the contract being for five years. The
British firm took the advice of its Japanese adviser in Japan as
to the contract and was advised by him to have a War Clause. When
he was asked why this was considered necessary, he said that in
his opinion the old order was changing in Japan and that the young
Japanese party were coming to the fore, and that in the opinion of
a great many people, war with the United States was inevitable in
the course of the next two or three years. This all sounds rather
childish and improbable, but it comes from a responsible source.

Even Captain Egerton, the Director of Plans at the Admiralty (who
is something of a fire-eater himself), with whom Hankey discussed
the story, thinks it is very far fetched.

Lampson [3] gives me an interesting account of Mussolini at
Locarno. He says that he is quite obviously playing a part in
public-chest out, eyes opened very wide so that the whites show,
head thrown back with a jerk when he booms out an instruction or
an opinion. Lampson says that Scialoja [4] and his other
lieutenants positively snap to attention at his slightest word, so
the pose has its effect. But in private or round a table amongst a
few men with whom it is unnecessary or perhaps unwise to be
anything but friendly, he is quite different and is a pleasant, if
rather nervy, man. He says he has a decidedly unhealthy
appearance-considerably more so than 18 months ago, but even so he
can hardly credit that he is suffering from the awful diseases
with which Nitti [5] credits him. Although one hears that the
later stages of one of these complaints is frequently accompanied
by rather supernatural mental and physical vigour, which is a
prelude to the disease attacking the brain.

In great confidence. Amery's [6] Private Secretary telephoned me
yesterday to say that Mr. E. F. L. Wood. [7] (Viceroy designate)
had received a congratulatory telegram from Edmund Jowett [8], but
unfortunately Wood hadn't the least idea who Jewett was! I told
him who he was and a suitable reply is to be sent.

The combined Admiralty and War Office attack on the question of a
separate Air Ministry and Air Force opened last Thursday at a
session of the Colwyn Committee. This Colwyn Committee is a
technical Committee to enquire into economies in the Fighting
Services under the Chairmanship of Lord Colwyn [9], a capable
business peer created by Lloyd George. [10]

Hankey is in the confidence of all three parties and is frequently
very entertained by having his confidential ear filled with their
partisan pleadings, which they try out on him first. He thinks
that the Colwyn Committee will not be unwise enough to give any
real decision on the matter, but will merely record their opinion
that the abolition of the separate Air Force would probably result
in certain savings but that, as the subject is one of great
controversy and is the subject of much feeling in the Fighting
Services, and as probably much more depends on it than the matter
of economy, they are not prepared to make any recommendation.

Hankey thinks that the matter will eventually come to a Royal
Commission. The War Office are rather hiding behind the skirts of
the Admiralty in the attack. Sir Hugh Trenchard [11] is relieved
that the tension is over and that the attack has begun. He is
liable to bite pieces out of any Admiral he meets these days.

For the first time for a considerable period, certain members of
the Cabinet asked that their dissent might be put on record in
connection with the Cabinet decision for the placing on a 'care
and maintenance' basis of Pembroke and Rosyth Dockyards. The
dissenting members were Balfour [12], Austen Chamberlain [13] and
two minor lights.

I have always hitherto been a little sorry for the technical heads
of the Fighting Services by reason of their being subservient to
civilians and politicians. I am rather getting over this feeling,
owing to the narrowness of view of the Fighting Services as such.

They, possibly rightly, take the view that they are responsible to
H.M.G. for the full out roaring-lion efficiency of as formidable
and intransigent a fighting service as possible, irrespective of
the political position of the world, which they say is no concern
of theirs. They are all suspicious of the League and rather
contemptuous of it. Their opinions on such matters as disarmament,
political treaties or even the broad subject of Imperial defence
have to be read with the reserve that comes from the knowledge
that they are looking at the matter through their own narrow
window, and are discounting the political and, in fact, all
considerations other than their own.

I am, Yours sincerely,
R. G. CASEY