76

14th December, 1927

PERSONAL AND CONFIDENTIAL

My dear P.M.,

I arrived here on 10th December, as arranged, after a useful trip.

I saw the west coast of Australia from the air, had a rapid 48- hours look through Java by train and car, stayed with Sir Hugh Clifford [1] and saw the Base at Singapore, motored up through Malaya to Penang and saw something of their worldshaking tin and rubber industries, had 3 days in Cairo and a long talk to Lloyd [2]-then 2 or 3 days each in Rome, Florence, Venice, Vienna (stayed with Leeper [3]), Coblenz, and Paris. It was all most entertaining and we filled in a good many gaps in our maps. I am most obliged to you for having made it all possible by letting me take nine weeks to get home.

I have seen Sir Granville Ryrie [4] and Trumble [5], as well as most of the F.O. and D.O. people. I will have, I think, no difficulty in working harmoniously with Australia House.

Campion [6] called at the Dominions Office lately and, in conversation with E. J. Harding [7], he said that since his appointment with the Commonwealth terminated in 1925, he had been in hopes that his work would have been recognised by the Commonwealth Government. Harding took this to mean that he wanted a knighthood of some sort. He intimated that he had a letter from you, dated 13th June, 1925, in which he quoted you as saying that you were giving the matter your consideration. Harding said, of course, that it was not a matter in which either he or the Dominions Office could interfere. [8]

As to America, I note your letter of 9th October, in which you say that, in view of Sir Hugh Denison's [9] resignation, the matter of an Australian Counsellor at Washington (to handle any diplomatic questions that may arise) may soon be considered by Cabinet. If I may say so, a good deal of the effectiveness of an Australian Counsellor would, in my opinion, hinge on his intimate connection with the Trade Commissioner's Office in New York. There are happily few opportunities, or rather necessities, for diplomatic negotiations between the U.S. and Australia, and unless the Australian Counsellor had some measure of control over the New York Trade Commissioner's office and its doings, he would, I think, be rather wasted. I would submit that, if he is appointed, the Australian Counsellor should spend at least a third of his time in New York and that a regular and important part of his work should be the forwarding of Australian financial and commercial relations by his connection with the Commercial Section of the British Embassy and, through them, through the British Consular Service throughout the U.S.

Also you realise, I know, the high cost of living in Washington.

The pay and allowances of the First Secretary and Counsellor respectively in the British Embassy at Washington are as on attached sheet. [10]

Canada has made application through the Dominions Office to the Foreign Secretary, asking if it is agreeable that they establish Legations in Paris and Tokyo. A favourable reply being naturally forthcoming they are, I believe, setting about this new representation forthwith. They have, I believe, at the same time approached the French and Japanese Governments.

There is a rumour current that the South Africans are about to start a Legation at Lisbon, but I am told that this is premature on account of the expense involved. They have considerable friction with the Portuguese in Portuguese East Africa and Angola, but up to the present the consequent negotiations have been undertaken by the British Ambassador at Lisbon.

The Foreign Office tell me that the South African High Commissioner [11] in London has, in the last three months, begun to address written communications direct to the Foreign Office, not through the Dominions Office.

As to Naval Construction in this country, you know, of course, that two cruisers are cut out of the current year's programme. I hear very confidentially that next year will see two 'B' class cruisers laid down instead of one 'A' and two 'B' and that in the succeeding year (1929) there will be one 'A' and two 'B' (the normal programme), but that the Treasury have the right to challenge the 'A' cruiser if the world position warrants it. This is still all particularly confidential.

Lord Crewe is retiring from Paris and there is great elbowing amongst the senior diplomats for the post-the plum of the Diplomatic Service. The people said to be in the running are Sir George Grahame (now in Brussels), Sir Horace Rumbold (Madrid), Sir Esme Howard (Washington) and Sir Ronald Lindsay (Berlin).

Possibly, however, it may go to some prominent personage not in the Service. [12]

A high official at Buckingham Palace recently said to another highly placed person who is a friend of mine-'I suppose it is not unknown to you that the King doesn't think much of the Foreign Office as at present constituted'.

Although it is very much too early for me to make any comment on this subject, I find, amongst the several people I have talked to, the same impression that I once before mentioned in a letter to you-that the F.O. is not as keen and persistent a weapon as it was under Eyre Crowe. [13] Crowe had a resolute, masculine, possibly German, mind whereas Tyrrell has an ingenious and resourceful but feminine type of mind. The F. O. now tends to be more 'diplomatic', more ready to compromise, and-as it was put to me today-with less guts than before. This is just an impression and is not based on much more than most impressions are.

Great efforts are being made (I am told most confidentially) to discover the source of the British Communist Party's funds.

Evidence is practically conclusive that they come from Moscow.

Whilst in Vienna I had talks to Lord Chilston (the Minister), Leeper and the Commercial Secretary of the Legation. The one thing of interest to us that they had to say was that the time seemed ripe for Australian trade representation of some sort in Vienna to serve not only Austria but Czechoslovakia and the other contiguous countries. Before the war Phillpotts [14], the present Commercial Secretary, was British Consul there and was allowed by H.M.G. to be given a small annual retaining fee by Sir George Reid [15] in return for his carrying out the job of Australian trade representative as part time work. He hardly got going before the war came. He cannot do such work now, but says there are one or two English business men in Vienna who, he thinks, would perform the same function for us at a small fee, say 100 per annum. He suggests in particular that the sale of frozen mutton to Austria and Czechoslovakia could be started by judicious propaganda. They are beef-eating countries and mutton is now practically unknown. I have passed my notes on the above to Australia House.

Phillpotts told me that the Canadians make use of him a good deal for commercial enquiries but that no other Dominion seems to think it worth while to do so.

I went last night to a small Group Meeting of the Royal Institute of International Affairs at which Cooke, of Davenport & Cooke, the authors of the pamphlet critical of Australian Finance [16], read a paper in which he reviewed the 'reforms' in Australian Finance since (and he rather implied-consequent upon) their pamphlet of a year ago. Andrew Williamson [17] and a few others connected with Australian industry and finance were there. Cooke does not propose to publish this paper but is to let me have a copy of it, which I will forward to you in due course.

Yours sincerely, R. G. CASEY

1 Governor of the Straits Settlements (Singapore).

2 Lord Lloyd, High Commissioner for Egypt and the Sudan.

3 Allen Leeper, First Secretary at the Legation.

4 Maj Gen Sir Granville Ryrie had succeeded Sir Joseph Cook in London as Australian High Commissioner in 1927.

5 Thomas Trumble, Secretary of the Department of Defence in Melbourne from 1918 until his appointment as Official Secretary to the Australian High Commissioner in London in 1927.

6 C. A. B. Campion, formerly Manager in London of the Commonwealth Bank.

7 Assistant Under-Secretary at the Dominions Office.

8 Bruce seemed to regard a tour of duty for Campion on a League economic committee as adequate recognition. (Letter from Bruce to Casey of 20 March 1928 on file AA:A1420.) 9 See note 3 to Letter 75 and Letter 110.

10 A counsellor's salary ranged from 1200 to 1500, with a 110 marriage allowance and a 70 rent allowance.

11 Jacobus Smit.

12 In fact, Sir William Tyrrell stepped down as Permanent Under- Secretary to take the Paris Embassy in 1928; he was replaced by Lindsay (Grahame went to Madrid, Rumbold to Berlin and Howard remained at Washington).

13 See Letter 9.

14 O.S. Phillpotts.

15 Australian Prime Minister 1904-05, Sir George Reid was High Commissioner 1910-16. He then entered the House of Commons, and died in 1918.

16 S. R. Cooke and E. H. Davenport, City of London brokers, had circulated at the 1926 Imperial Conference a pamphlet extremely critical of Australian loan raising behaviour. Explicit criticism was aimed at Australia's 'voracious' loans appetite but the authors probably reflected, too, British dissatisfaction with the degree to which Dominion borrowers were inhibiting domestic investment.

17 Chairman of the English, Scottish and Australian Bank Ltd, of Australian Estates and Mortgage Co. Ltd, and of the London board of Mt Lyell Mining and Railway Co. Ltd.