178

28th February, 1929

PERSONAL AND CONFIDENTIAL

(Due to arrive Canberra 29.3.29)

My dear P.M.,

Your letter of 18th January with regard to the Bank of England and Commonwealth Loans. [1]

My letter on this subject will have crossed yours and will be a reasonably complete reply. I find it difficult to believe that Montagu Norman [2] is not disinterested and genuine in his advice to us.

He has held the finances of this country in his hand for ten years and has maintained his reputation throughout. He could not have done this if he had not had extraordinary ability and honesty. His judgment has been questioned at times but never his character. I think he would base his advice to us on a knowledge of other impending Imperial loans but not for a moment on pending foreign requirements. After all, he is the Governor of the Bank of England and has to balance the family ship, but I am as sure of his Imperial partiality as I am sure of anything.

I find it difficult to believe that the Bank knew anything about Davenport & Cooke's pamphlet criticising the Commonwealth Loan policy. [3] Even if it happened to reflect some criticisms with which the Bank was in sympathy at that time, I do not think it probable that they knew about it, or, if they did, that they offered any opinion about it. If the slightest hint of such subterranean methods got about, it would damage the prestige of the Bank a great deal.

I expect you will have considered getting an Australian on to the Court of Directors of the Bank. I can imagine that it would be a most useful appointment from the Australian point of view. There is a Canadian (Peacock) in the Court now. [4]

With regard to Commonwealth Loans in London, you have to face the position that Glendyne [5] is getting a very old man (80 this year). His son and heir, John Nivison, is a decent, honest, industrious sort of fellow but with, I think, very ordinary character and ability. I asked Montagu Norman some time ago what would happen when Glendyne died, and he threw up his hands. I do not think that John Nivison could hold the business and the body of sub-underwriters together. No doubt your financial advisers have means of coping with this situation when it arises.

I am, Yours sincerely, R.G. CASEY

1 Bruce, in a letter to Casey of 18 January 1929 (On file AA:A1420), had complained that the Bank of England, and in particular Montagu Norman, seemed to be watching the interests of the British money market in the matter of Australian loans rather than offering disinterested advice. In mid-January the Australian Loan Council had decided at once to issue a loan in London, the first since ratification by referendum of the Financial Agreement between the States whereby the Council became the sole agency for the raising of public loans. London had offered a price of 97 1/2 and only after several exchanges did Australia succeed in having the loan issued at 98. During these exchanges, one justification offered for the lower price of 97 1/2 was 'the point of view of the British market'. See also Letter 167.

2 Governor of the Bank of England.

3 See note 16 to Letter 76.

4 Edward Peacock, formerly a Canadian school teacher, was a director of the City firm of Baring Brothers and of the Bank of England.

5 Lord Glendyne (Robert Nivison until his elevation in 1922) was senior partner of R. Nivison & Co., underwriter of Australian loans.