104

23rd February, 1928

PERSONAL AND CONFIDENTIAL

My dear P.M.,

I haven't had an opportunity to get any further ahead with the enquiry into the effects of large scale finance and business on international affairs. There are so few people whom it is worth while approaching and these few are not easy to approach. The Foreign Office notoriously has no economic knowledge and even Tyrrell [1], I think, has no opinion that is worth while on the subject.

I feel that there is a much better indication of the trend of things to be had than that which I have already sent you. But it is difficult to clear away the unnecessary detail and bite down to the bone on the subject. The world has had sufficient experience of these matters for there to be a tendency sticking out for those to see who have properly trained eyes and brains.

If there are any other subjects of this or any other nature that you would like to have some light on, I would be glad if you would write me, as it is comparatively easy for me now to get in touch with the right people in most lines of activity. I welcome such missions as an antidote to the bald collection of information.

There is the awful tendency to develop into a paragraphist in this job, which I fight against.

Poliakoff [2] came to see me yesterday for an hour. As you know he is a Russian and has been Diplomatic Correspondent of the 'Times' for four years or so. He is not a man that I trust, and yet I am always glad of an hour with him as he is curiously stimulating. He has a courageous (if irresponsible) penetrating but quite un- English mind. The dangerous thing about him is that he quotes people freely and is a born intriguer. But he has a most forward thrusting mind which delights in dealing with the untrammelled future.

I went up to Cardington to see the Government airship last week.

They think that it will put its nose outside for the first time about 1st January 1929. The 'Burney' ship will be finished and in the air within three or four months, they expect. I went up with Sir Alan Anderson [3] and others.

Ray Atherton, Counsellor of the American Embassy, lunched with me today. He has, he tells me, had two talks to Sir Hugh Denison [4] who has an engagement to dine with the American Ambassador [5] shortly. He asked me to dine too, but I thought it politic to have another engagement. He says Sir Hugh makes no secret of his hope that Australia will, on the representations that he will make on his return, establish a Legation at Washington. [6] Atherton had received the record from the State Department of Sir Hugh's talk both to them and to the President, which I gathered was essentially the same as Sir Esme's [7] despatch that I send you under another cover. [8]

There is no doubt that the Americans are very keen that we should establish a diplomatic post at Washington and that they should then send an American Minister to Australia. Atherton and Houghton always mention the subject when I see them. Atherton today went to the extent of adumbrating about the type of man that they would send to us, not an out-and-out commercial type who would be out to make every post a winning post, but a man who would better relations and understanding between the white races of the Pacific.

Atherton says he is convinced that the United States before long must revise her tariff policy. She cannot expect to receive mountains of gold from abroad and, at the same time, practically debar foreign countries from sharing in the internal trade of the United States by a huge tariff wall.

He says that if he had to bet about the American Presidency he would say that General Dawes (now Vice-President) had the best chance.

I am told on good authority that Sir Horace Rumbold will go from Madrid to Berlin as Ambassador to take Sir Ronald Lindsay's place, and that Sir George Grahame from Brussels will go to Madrid. [9]

The discovery of oil in Iraq has brought about a situation of interest. You know that the Turkish Petroleum Company was formed as an international company to take over any oil discovered in Iraq. The Anglo-Persian is the main shareholder, but the French, Italians and Americans also have interests. The very rich oilfield that has recently been brought to light in Iraq has necessitated a pipe line to the Mediterranean. The question of the route that this pipe line should follow is creating the interesting situation. The shortest route is along the line of the old incomplete pre-war Bagdad Railway to the Gulf of Alexandretta in the French Mandated Territory of Syria. British interests want the line to go through the British Mandated Territory of Palestine to Haifa, which necessitates an additional 100 miles.

Whichever way the pipe line goes, it will necessitate the building of a railway of some sort to transport the pipes. At the worst a light contractors' railway which would be dismantled when finished with, and, at the best a full sized railway that would remain.

Quite apart from the question of the pipe line, certain financial interests in London, including Sir Albert ('Bertie') Stern, Schroders, and others, have proposed a railway from Bagdad to Haifa, which would connect up with future railways to be constructed in Persia and so make the basis of a new land route to India and the East.

To connect the idea of this proposed railway with the proposed pipe line was obvious, and if the railway matures, it is thought that the Turkish Petroleum Company would take a considerable interest in it on account of the value to them of having a permanent railway alongside their pipe line.

The people financing the railway will, of course, want proper financial safeguards and guarantees of interest, etc. from the Governments concerned -Iraq and Palestine-with probably an overriding guarantee from His Majesty's Government. This is all being lobbied in subterranean financial and Governmental cellars at the moment.

The international complication arises out of the desire of France on the one hand for the route through Syria and of Great Britain on the other for the Palestine route. I believe that there are minor intrigues going on such as the International Sleeping Car Company having bought up all available shares in the old Bagdad Railway at bargain counter prices, with the idea in mind of using their efforts to get the pipe line alongside the Bagdad Railway.

I am, Yours sincerely, R.G. CASEY

1 Sir William Tyrrell, Permanent Under-Secretary at the Foreign Office.

2 Vladimir Poliakoff.

3 Of Anderson Green & Co., managers of the Orient Line.

4 Australian Commissioner in the United States 1926-28.

5 Alanson Houghton, U.S. Ambassador to the United Kingdom 1925-29.

6 In a handwritten note to Casey of 14 April 1928 (on file AA:A1420) Bruce informed him that no decision would be made until Denison's return to Australia but that probably the Commonwealth would decide to appoint an Australian Counsellor to the British Embassy in Washington and that Casey would be offered the job.

7 Sir Esme Howard, Ambassador to the United States.

8 See note 2 to Letter 103.

9 Casey's information proved correct. Lindsay was brought back to London to succeed Sir William Tyrrell as Permanent Under-Secretary at the Foreign Office in July 1928.