138

21st June, 1928

PERSONAL AND CONFIDENTIAL

My dear P.M.,

Amery [1] thinks that the wireless broadcasting of political platforms before and during an election campaign is of the greatest importance, particularly to Governments having the political convictions of Baldwin [2] and yourself. He thinks that broadcast political speeches of a quiet, restrained nature-almost non-party-are very telling, as they reach listeners in a contemplative mood in their homes when they are not susceptible to mob influence. He thinks from this point of view that broadcasting is of more value in propagating conservative (conservative with a small 'c') principles than it is to radical politicians, who rely more on mob appeal. And from his point of view it should be done, he thinks, from the Broadcasting Studio and not merely broadcast as a side issue from a public platform. This seems to be a good point.

There is a non-public controversy going on at present between the three political parties in this country as to the use of broadcast political speeches prior to and during the General Election campaign. As you know, the Government raised the ban on the broadcasting of controversial matter some little time ago, and the imminence of the Election made it necessary to arrange definitely the relative periods of time that representative speakers of the three parties should be allowed to declaim.

The B.B.C. proposed in the first place that after an inaugural period of three weeks, during which each political party should have equal opportunity, the Government should be given time equal to that allotted to the other two parties put together, i.e.

Government and Opposition given equal opportunity. The Liberal and Labour Parties naturally opposed this and the controversy is proceeding and will, I suppose, end in a compromise.

I spoke to Amery this week with regard to the next Imperial Conference. He is beginning to think that it is rather unlikely that the Conference will be held in 1929. The British General Election will not be before June and may be as late as October. If it were in June it might be just possible to get ready for an Imperial Conference in October or November, but if the election happened to be a month or so after June, it would not be possible.

And as he thinks that the Prime Minister may not be able to make up his mind about the date of the election until well on into next year, he thinks a Conference in 1929 is rather unlikely.

With regard to the May-June-July period for Imperial Conferences in general, he realises how much more pleasant this would be than October-November, and he thinks that if the Conference were put off until 1930, the June period might be possible as the burden of legislation would not be so heavy in the first year of the life of the new parliament. However, with an election in between, he says that it is difficult to get his colleagues to think seriously about the next Conference.

He tells me that before the next election he proposes to try to get the Prime Minister to agree to the Government going to the country with a greater measure of freedom with regard to Imperial Preference than previously. His hope is that he will get the Government to agree to give themselves latitude to switch the food duties about a little so as to give a greater measure of preference to Imperial products. However, he is not particularly sanguine about having any great measure of success in this direction. He says the complex that exists in this country with regard to indirect taxation of food goes very deep and that any tampering with it is a recognised political stumbling block.

I told Amery briefly about the formation of your National Economic Council. [3] He said that he recognised that to get any accurate idea of what the ideal tariff for Australia was, you would have to have each industry examined piecemeal and in its relation to other industries-which was an immense job. As an onlooker for a very brief period the only thing that struck him with any force was the possibility that the Navigation Act might be having more adverse effects than good, as it represented the raw material (transport) for so many industries, and it undoubtedly raised the price of this raw material.

One of the Australian press men here tells me that 'Fleet Street' is forecasting that Churchill [4] will spring an election bombshell in the shape of a promise of considerable income tax relief. Amery says this is quite impossible. He says that even in his most optimistic mood he cannot foresee anything more than a possible reduction of 6d. in the income tax in the course of the next three or four years, with a possible reduction of another 6d.

three or four years after that. This, unless of course, in some spectacular way they are able to convert the 2,000 millions of 5% War Loan on to a much lower basis.

Hankey [5] tells me that Winston told him that Parker Gilbert [6] (Agent-General for Reparation Payments) had been to him lately with the confidential request that we should consider the cancellation of German reparation payments altogether. To which astounding request Winston said he replied that we wouldn't hear of such a thing except on the basis of American cancellation of a corresponding portion of our indebtedness to them. Parker Gilbert is, of course, an American.

I enclose the first copy of Bottomley's new paper, 'JOHN BLUNT'.

[7] It is, of course, a rag but it shews that he has at any rate an elastic spirit to make this rather impudent attempt to get back. His one and only reference to his unfortunate incarceration is rather clever.

The High Commissioner [8] is back from Geneva. I am told he got through the rather trying experience of the examination before the Mandates Commission quite well. The full papers are going to you by this or the next mail.

As you know, he also attended the Labour meeting. The Minimum Wage-Fixing Convention went through. It is loosely worded and can mean very little. In any event it seems to me an advantage to have some obligation, however loose, imposed on low-wage countries to start to bring them up to our Australian wage level.

I have written Henderson [9] a personal letter on the subject of the methods adopted by some members of the International Labour Office in the compilation of I.L.O. pamphlets. It appears that some of them (I have no doubt with the secret backing of Albert Thomas [10]) employ underhand methods of getting highly coloured information on Labour-Capital subjects. This comes to notice at this moment by reason of their having tried to get Labour partisan information about strikes and lockouts in Australia from sources other than the official ones. There is nothing that can be done about it, I think, other than to watch the I.L.O. publications carefully and see that they do not contain distortion of the truth. No doubt if Thomas were tackled on the subject he would disclaim the methods adopted by individual members of the I.L.O.

and we would be no further. There is no need for you to bother yourself with this subject, other than to know that the I.L.O. is always tending to overstep the mark and has to be watched.

The recent 'booms' on the London and New York Stock Exchanges have been of more interest than such flurries usually are.

Euphemistically they have been indicative of a broadening of the investment and speculative markets by the participation of the big outside public who have been for the most part looking for quick- time capital appreciation. You can't put it fairer than that! Both in this country and in the States the popular press is giving increasing space to popularly worded market reports and market tips, which undoubtedly encourage the small man and make him think he knows something.

There is no doubt that the circle of people is broadening that buys and sells paper securities. On the part of the small man, it is at present a good deal speculative, but it has the effect, I think, of getting him used to the idea, with the result that the industrial 'rentier' class will grow. The democratisation of paper securities cannot but be a good thing although it may bring problems with it-the unloading of many small holders in times of economic necessity, and the like. I expect we will soon have broadcasting of Stock Exchange prices, if the present interest in such matters is sustained.

Another point of interest is in the increasing number of British securities quoted and dealt in on the New York and other American exchanges. It may not be always to the good, this linking of the comparatively staid and steady London market to the more mercurial New York, but it will broaden the market and, if the tendency grows, it may develop into a participation of each country in the booms and 'shake-outs' of the other.

The question of the listing of more Australian industrial and other securities on the London Stock Exchange would, I think, be a means of creating a greater and more intelligent interest in Australian development on the part of people here.

Another matter of some interest is the rise in popularity of the Investment Trust Company. There are now well over 100 of this type of company registered in this country. They distribute their capital (a) geographically, (b) by industries, and (c) by classes of security, i.e. debentures, preference and ordinary shares. The amount of their capital that they can put into any one enterprise is limited, usually to 10%. With experienced directorates and good management, they represent almost an ideal form of investment for a wide range of people. Their capital is usually spread over some hundreds of investments. There are a few sound investment companies of this type in Canada, but as far as I know none as yet in Australia.

Hastie [11] (of J. B. Were & Son) continues to deprecate Australia going to New York for loan money, but he is rather biased, I think, on this subject. His argument briefly is that the status of Australian loans in London is maintained by the London Stock Exchange brokers who keep our loans before their clients, not by reason of sentiment but because of the 'cut' that they get. When they see a loan going to New York, it so depresses them that they are missing an issue out of which they think they are entitled to snatch a few crumbs, that they cease temporarily to push our previous loans, and they sag in the market in consequence. He points to what he says is a fact, that the recent 4 1/2% New York loan has changed hands recently at 89 (issued at 92 1/2) and that at the same time the recent 5% London floated loan is 15/- per cent lower now than before the New York loan was floated. However, I should think that both these facts could be more easily explained by the recent financial slump in New York which undoubtedly affected our New York loan adversely and had its temporary reaction on our recent London loan.

I send in another letter by this mail a brief, simple statement that the Board of Trade has put together for me on the tariff arrangements of the various Dominions.

I saw Grigg [12] this morning, Winston's very able Private Secretary, and found him very irritated. He said he didn't know what to do with Winston who had lately adopted the habit of addressing him as if he were a public meeting. He is evidently in one of his rather mad declaiming phases.

I was recently in Oswald Birley's house in Hampstead. He is the modern portrait painter of the moment. He is of the type of Sargent and has a rapid and rather wonderful facility for painting extremely pleasant and lifelike portraits (I think without any great genius) which he reluctantly parts with for from 500 to 1,000 each. He showed us portraits of the King (in plain clothes for a change), Reading [13], and half-a-dozen others that he has in train at the moment.

I note and thank you for your letter about my continuing to keep you and the External Affairs Department informed on C.I.D.

matters. I have sent copy of your letter to Hankey and have let the High Commissioner and Trumble [14] know your wishes.

I am establishing the habit of seeing Amery about once a week regularly, when I tell him anything that is in your personal letters to me that I think it is politic and wise that he should be aware of.

I am seeing a good deal of Sir Charles Nathan [15] and have been able to be of some little assistance to him in one or two directions. He is no doubt keeping you fully informed of what he is doing so I will not deal with it here.

I send you a handwritten letter by this mail.

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

1 Leopold Amery, Secretary for the Colonies and for Dominion Affairs.

2 Stanley Baldwin, Prime Minister.

3 Late in 1927 Bruce had appointed a committee to report on the Australian tariff. Its Chairman was J. B. Brigden, Professor of Economics in the University of Tasmania, and members were D. B.

Copland, Dean of the Faculty of Economics in the University of Melbourne, E. C. Dyason, a Melbourne stockbroker and former mining engineer, L. F. Giblin, Deputy Commonwealth Statistician for Tasmania and C. H. Wickens, Commonwealth Statistician and Actuary.

Their confidential report in 1928 advised that Australia by protection had increased the size of the population at small cost to living standards (i.e. wages) but that protection had gone far enough. Increased protection would be to the detriment of Australia's standard of living. The report was finally published as The Australian Tariff: an Economic Enquiry, Melbourne University Press, Melbourne, 1929.

4 Winston Churchill, Chancellor of the Exchequer.

5 Sir Maurice Hankey, Secretary to the Cabinet.

6 New York lawyer and Assistant Secretary to the U.S. Treasury 1920-21 and Under-Secretary 1921-23, Agent-General for Reparations Payments in Berlin since 1924.

7 Horatio Bottomley, Radical M.P. and financier, had been jailed in 1922 for fraud. John Blunt was based on the same recipe as Bottomley's old and successful John Bull, but the times had changed and he died in poverty in 1933.

8 Sir Granville Ryrie.

9 Dr Walter Henderson, Head of the External Affairs Branch.

10 Director of the International Labour Office.

11 See Letter 129.

12 P. J. Grigg was Principal Private Secretary to successive Chancellors of the Exchequer 1921-30.

13 Lord Reading had been, inter alia, Lord Chief Justice 1913-21 and Viceroy of India 1921-26.

14 Thomas Trumble, Official Secretary to the Australian High Commissioner.

15 West Australian businessman and Vice-Chairman of the Australian Development and Migration Commission 1926-27.