My dear P.M.,

Philip Kerr [1] has recently returned from a trip to the United
States and Canada and has had a long talk to Hankey [2] about it-
the gist of which was as follows.

The Washington Conference to reconsider the Naval Disarmament
position must meet some time about 1930. The ground must be
prepared for this Conference at (and before and after) the
Imperial Conference in 1929. By 'preparing the ground' he means
getting the Americans to come to some sort of reasonable
standpoint with regard to this important question of blockade
rights [3] as between America and Great Britain. He thinks that
careful work in the next two years will straighten out people's
ideas about it. No one knows at present what we want and what the
Americans want.

He thinks that Canada can play a big part-a big Imperial part-in
this potential source of friction between the United States and
this country. We have been saying for some time that Canada can
and should be interpreter and honest broker between the United
States and Great Britain by reason of its position and its
understanding of American thought processes. Here is a first-rate
opportunity for Canada to do something really useful in this role.

The lines on which they should set about it, he suggests, might be
as follows.

The Americans are particularly keen about the implementing of the
scheme for the joining of the Great Lakes with the sea, for the
passage of seagoing ships, by deepening and canalising the St.

Lawrence River. Canada is at present only half-hearted about it.

The 'Hoover Commission' [4] report shows how keen the Americans
are on the scheme. Their summarised conclusions were as under:-

1. The construction of the shipway from the Great Lakes to the sea
is imperative.

2. The shipway should be constructed on the St. Lawrence route,
provided suitable agreement can be made for its joint undertaking
with the Dominion of Canada.

3. That the development of the power resources of the St. Lawrence
should be undertaken by appropriate agencies.

4. That negotiations should be entered into with Canada in an
endeavour to arrive in agreement upon all these subjects.

What Philip Kerr suggests, in short, is that Canada should do a
deal with the United States, granting them the facilities (with
whatever reservations are necessary) for carrying out the St.

Lawrence scheme, in exchange for a reasonable arrangement with the
British Empire on the question of blockade rights.

This sounds rather crude when put bluntly, as I am constrained to
put it, in this short letter for want of space on my part and
patience on yours.

The Americans, vide Philip Kerr, are so keen on the super-
industrialisation of the area just south of the Great Lakes on the
Canadian border-New York State and Pennsylvania in particular-that
they will, he thinks, go a long way with Canada in order to get
what they want-cheap sea freight from the Middle West to the
Atlantic through the Great Lakes and St. Lawrence waterway-added
to cheap hydroelectric power which will be a by-product of the St.

Lawrence scheme.

Kerr thinks that there has been a considerable revulsion of
feeling in Canada in recent years and in particular since the 1926
Imperial Conference -towards the Empire and away from the United
States. [5] It is beginning to be borne in on them that their
bread is buttered on the Imperial side rather than on the American
side.

Kerr talked to Mackenzie King [6] about the above scheme and
apparently got quite a good reception.

So here, for the first time I think, one gets Canada suggested as
coming into the real Imperial sphere. It is only Kerr's suggestion
as yet, but he gets his ideas well round amongst people who count
and it may well come to something.

However, it may also well be that Canada will not be content to
barter away her domestic peace of mind for an Imperial benefit. In
the notes on an address by a prominent Canadian that go to you in
another letter by this mail, I set down his ideas of the other
side of the picture-the potential disadvantage to Canada by reason
of this proposed St. Lawrence waterways scheme.

An unfortunate episode has come to light in this last week. A city
financial house is in course of proceeding against a certain Mrs.

Dyne for the recovery of about 40,000 said to have been lost by
her in the course of buying and selling French francs and other
foreign currencies. [7] She is pleading the Gaming Act. The bad
part of it is that the cross-examination has brought out the fact
that several men in the Foreign Office had been associated with
her in some of the transactions-notably Gregory [8], who, as you
know, is Assistant Under-Secretary of State and the third man in
the office. It was stated in the evidence that he had lost 9,000.

The public will naturally be led to assume that he made use of
official information both on his own account and in the course of
the 'advice' that he is said to have given Mrs. Dyne over a fairly
long period. The answer, of course, is that the official
information cannot have been much good to him as the final result
was a heavy loss. However, this will not still criticism. The
Foreign Office is rather on edge about it all and there is much
speculation as to what is going to be done about it. Gregory may
have to go or he may be sidetracked. It won't do the prestige of
the office much good, especially in France.

I enclose the 'Times' reports of the above Case to date, as a
matter of interest rather than importance.

In the course of a conversation with Sir Hugo Hirst [9] a few days
ago, I asked him how the 'Mond' conference [10] between employers
and employees was progressing. He said that, in his opinion, it
was the sort of conference that was of great value while it was
sitting and that, for his part, he would try and ensure that it
sat five years. One can see his point.

He made another interesting remark in this connection, rather too
obscure for me to see the real point, but I got his general drift.

He said that it was his experience that both ourselves and the
Germans had one quality particularly in common. If there were two
notice boards, one with the inscription 'This way to Heaven' and
the other 'This way to a Lecture on How to get to Heaven'-we would
always choose the latter!

Low [11], the Australian cartoonist (who made his name in the
'Sydney Bulletin') is in course of making a very good place for
himself in this country. He did a series of particularly good
cartoons of leading people in this country for the 'New Statesman'
a year ago-J. H. Thomas [12], Lloyd George [13], etc. He is now
cartoonist for the 'Evening Standard'. I enclose two of his latest
efforts that are particularly apt. 'The High Priests deliver the
Oracle' is, I think, very nearly perfect as a cartoon. It came out
just as the yearly pronouncements of the 'Big Five' bankers [14]
were thundering out. The other-featuring J. H. Thomas-is in answer
to a 'Conservative' who wrote to the 'Evening Standard' following
an earlier cartoon of J. H. Thomas, saying that he thought this
sort of thing was in bad taste and fostered class feeling. The
answer is that J. H. Thomas is delighted with the cartoons and
they are done with his knowledge and consent.

Hankey thinks that the domestic negotiations in departmental
circles in London in regard to blockade rights are coming round to
his point of view -that we should do nothing in the way of
initiating conversations with the Americans for twelve months at
least. Philip Kerr has talked at length to Chamberlain [15] on the
lines of the necessity of doing nothing prior to the Presidential
election. Kerr thinks we should let them get their Bill safely
through Congress regarding the new big Navy, as anything we do in
the meantime, if it became public, would be taken as an attempt to
influence their decision in this domestic matter. In any event, as
we're not building against the Americans, it doesn't greatly
matter what they build, or rather make plans to build. And they
will be in a much more complacent mood to discuss blockade rights
when the Bill has become law and they are, in their own eyes, well
on the way to complete parity with us. And besides, it isn't much
use opening conversations with this administration that may have
to be started all over again if a new party succeeds to the
Presidential chair.

So that I think you can take it that the matter will not actively
be taken much farther than it is for a year or even possibly two
years from now.

I don't know whether you have read any of the works of Andre
Siegfried -'Postwar Britain', 'America comes of Age', etc. They
are regarded by those competent to express an opinion as being
extremely acute summaries of the life, present position and
tendencies of these countries. He is a French historian who, by
the above and other books, has reached a high position amongst
contemporary publicists. To indicate his style and something about
him, I enclose an article by him from today's 'Times'. Personally,
I have read only the above two books and was greatly interested
and entertained by his penetrating remarks. Would it not be a good
thing to get such a man to go to Australia and tell us what he
makes of us and where we stand in the world? As has been said, the
nearest thing one can get to the judgment of posterity is the
objective judgment of an intelligent contemporary foreigner. I
hope to meet him in the near future and to have an opportunity of
putting the idea of Australia into his head. Both the above books,
by the way, are in the External Affairs Library in Canberra. Even
if you don't read them all, it would interest you, I think, to
look through his chapters (in 'Postwar Britain') on the Empire,
and to skim through the American book.

P.B.B. Nichols [16], the Foreign Office man who goes to New
Zealand as Liaison Officer, will just about be approaching
Canberra with a view to meeting you, as this letter arrives. He is
a thoroughly good fellow and I hope you'll be able to talk to him
a little.

The question is in the air of who is to be sent to Canada as
British High Commissioner. The papers have got hold of the name of
E. J. Harding [17] (recently ennobled by a K.C.M.G.) but I don't
think this is correct. [18] I know that the Prime Minister [19]
has promised Chamberlain that it shall be a Foreign Office man and
not a man from the Dominions Office, and that Amery [20] has been
telegraphed to in Canada, saying not to commit himself on the
subject in any way while he is there. He is to be a fairly senior
man, I know, Counsellor or Minister, and there are not so many
suitable men about. A man is wanted who will be able to do the
technical part of the job, who is presentable, who can speak in
public, and who can compete at least on equal terms with the
American Minister at Ottawa.

If you wish to see a short, easily readable account of the general
situation in Mexico, you will find this in F.O. print that goes to
you by this mail, A.60/60/26 (Section I of January 3rd, 1928).

I send copies of two important documents to you under cover of
separate letters-the Defence of India report (with supporting
documents) and the Report to the South African Government on their
Coast Defences. Although I have made several references to both
these documents in previous letters, the final approved print has
only just come from the Foreign Office printers. I send two copies
of the South African Coast Defence Report as you may wish to let
Defence have a copy at once. What I said in my personal letter to
you of 12th January, regarding Coast Defence, still holds good and
I will not repeat it here. [21]

I am sending you a personal letter by this mail on rather a large
subject-the influence of international finance on peace and war.

It sets out merely to state what I want to discover, or rather the
points on which I hope to get some light, as they cannot be
categorically answered. I have made appointments to see Hawtrey
[22] and Niemeyer [23] of the Treasury, and have written to
Montagu Norman [24], so that in the course of the next week or so
I may be able to send you a record of their views. I take it that
it would be of interest to you to get the views of experts on this
general type of subject which normally never comes into the light
of day. Before I launched into this enquiry, I took draft of it to
Hankey and, through Hankey, to Winston Churchill's [25] very
active-minded Private Secretary Grigg [26]-both of whom agreed
that it would be particularly interesting to get some good views
on the subject.

Since I have been back in London I have adopted the principle of
sending you rather longer or fuller personal letters than
heretofore. I have gone on the supposition that you haven't time
to read the collection of 'Dear Sir' letters that I send, so I now
make it a practice to give you in brief form in this personal
letter anything to which your attention should be drawn from
amongst the other letters that I write-together with a good deal
of quite indiscreet news that comes my way in the course of the
week. I regard these personal letters as a medium in which I can
say what I like without fear of ever being called to account for
it. I do not know whether you show them to Henderson [27] or not.

I would be glad to know if you like this procedure or if the
volume of what I send is tending to become burdensome.

The number and volume of the letters addressed 'Dear Sir' in
recent weeks has reached colossal proportions I am afraid.

I am, Yours sincerely,
R. G. CASEY