(Due to arrive Melbourne-27.2.26)

My dear P.M.,

Most people seem to have made up their minds that there is going
to be trouble here in May, when the Coal subsidy is due to end.

[1] The 'coming upheaval', 'serious times ahead' are spoken of in
all the papers. Hankey [2] tells me that the P.M. [3] is going to
keep Parliament as clear of legislative business as possible in
order to keep their hands free in case of a general strike, or,
alternatively, the rapid passage of enabling legislation to meet
the situation.

Personally I get the impression, reading between the lines, that
the Coal owners are remarkably stupid and that the country is
gratuitously shouldering the burden that they should be meeting-or
should have faced years ago, either by modernisation of their
mines, by amalgamations-in short, by 'Americanisation' of their
industry.

The difficulty, I believe, is enhanced by there being no good
spokesman amongst either the representatives of the coal owners or
the men.

In course of several years Hankey thinks that the coal situation
will right itself by modernisation of the pits, possibly low
temperature carbonisation of the coal at the pit's mouth,
reclaiming of by-products, and possible interlacing of the coal
mining industry with the big electrification scheme. However right
this prophecy may be, the immediate trouble is a big one to
surmount.

2. Tom Jones [4] has seen the above reference to the coal
situation and thinks that it is too gravely worded. He himself is
in close touch with the situation on behalf of the Prime Minister
and has discussed it with all the leading people concerned on both
sides. Considering everything, he thinks that trouble will be
avoided. He has told me a great deal of detail on the subject
which will not interest you. In his opinion the subsidy cannot be
cut off abruptly but will have to be tapered down at any rate for
six months or a year.

3. You will have noticed the persistent but restrained note of
cheerfulness in the reports for the last three months of the
Advisory Council to the Board of Trade. In most branches of
industry, it looks as if the immediate position and the prospects
were brighter than they have been for some years. This is borne
out by the really quite hopeful tone of the Annual Report of
Barclay's Bank a few days ago. Goodenough [5], who is a very
progressive but, I believe, very sound banker, is the Chairman.

You may remember some time ago I reported to you a conversation
that I had had with him, in which he gave me to understand in
great confidence that his bank might extend its activities to
Australia. [6] He has already gone as far as creating a subsidiary
organisation-'Barclay's Bank (Dominion, Colonial and Overseas)'-
which is in the course of absorbing the National Bank of South
Africa.

4. The Mosul affair [7] has unconsciously focussed one's attention
lately on Eastern Europe, the possible Balkan Pact, Hungary's
position and Italy's ambitions. Hence the predominance of these
matters in my letters. It is not to say that they have suddenly
become important, but rather that they are all inter-related to a
certain extent with the Turks and Mosul and that one has been
asking questions about them, the answers to which find place in my
letters.

5. Tyrrell [8] personally has hopes that the difficulty with
Turkey over Mosul may be solved by the conclusion of a British-
French-Italian-Turkish Pact of non-aggression. He thinks the Turks
would welcome it, as they very much want a ten-year period of
assured peace to build up and consolidate their domestic affairs.

He (Tyrrell) has not yet put this suggestion up to Sir Austen
Chamberlain [9] (who is still abroad) but will do so at once on
his return. Lindsay [10] (H.M. Ambassador at Constantinople) has
gone to Angora to see what the Turks are thinking about but
without anything much to suggest. If Chamberlain and the Cabinet
think well of the Pact idea, he will no doubt be telegraphed to,
to sound them about it.

You will realise from another letter on the subject by this mail
that there are few opportunities to bring pressure to bear on the
Turk, should he prove aggressive over Mosul, other than by
fighting him.

6. You may remember that Vorovski [11], a Soviet diplomat, was
murdered in Switzerland a few years ago, and that, by reason of
the Swiss giving no satisfaction to Moscow, relations were broken
off.

His death was recently recalled by two incidents. The U.S.S.R.

based their refusal to send a representative to the Disarmament
Preparatory Committee [12] on the fact that it was to be held at
Geneva and that they were not in diplomatic relations with
Switzerland.

The second reminder was quite amusing. An Englishman, who had been
imprisoned and maltreated by the Bolsheviks, eventually got back
to London with his mind a little affected. He spends his days
walking the streets, carrying a sandwich board with his grievance
on it. He spent a week recently in front of the Soviet Legation
and every time Rakovski [13] came out, he shouted: 'After
Vorovski, Rakovski', which so got on Rakovski's nerves that he
asked the F.O. if they could have it stopped!

7. Duncan [14] (from Adelaide), as you probably know, has gone to
Rome as Honorary Attache. I do not know him well enough to know if
he will do any work there and really get into touch, or if his
activities will merely be social. I understand that honorary
attaches are given every opportunity to see all the work of the
Embassy, but that, unless they struggle against it, they are
usually regarded as A.D.C. to the Ambassador.

8. The clash between Chang and the Soviet control of the Chinese
Eastern Railway has been of value in showing China that the
U.S.S.R. can be just as overbearing and bullying as any of the
'Imperialist' nations. [15] One might expect to see signs of a
revulsion of feeling against the U.S.S.R. in China as a result.

I am, Yours sincerely,
R. G. CASEY