LONDON, March l2, l940.
 
     At one o'clock I lunched with Sir John Simon at
 
ll Downing Street.
 
        The other guests were Lord Hankey, Lord Chatfield, 
 
Minister of Coordination, Sir Kingsley Wood, Minister for 
 
Air, Sir Andrew Duncan, President of the Board of Trade, 
 
Sir Horace Wilson and Sir Robert Vansittart.
 
     Sir John Simon discussed with me nothing beyond his 
 
own success in floating the first War Loan, which had been 
 
oversubscribed that same day. He expressed the opinion
 
that his policy of issuing repeated War Loans in rela-
 
tively small amounts, was the only sane financial policy 
 
to pursue, inasmuch as it would avoid in the future the 
 
need to refinance, or to pay off, staggering sums at any 
 
one given moment. Unlike his French colleague, M. Paul 
 
Reynaud, he made no reference to the relations existing 
 
between his own Department and the American Treasury 
 
Department.
 
     Sir Kingsley Wood, who is a small, chirping, man, 
 
told me that British aviation production was coming 
 
along amazingly well. His greatest difficulty lay in 
 
finding enough physical space in England for the construc-
 
tion of airplane factories and trial airdromes. Now that 
 
production was also under way in a large scale in Canada 
 
and in Australia this handicap was largely overcome.
 
        Sir Andrew Duncan, whose career up to recently had been 
 
removed from politics, as a large industrialist, spoke of 
 
the attitude of British labor. He expressed great satis-
 
faction with the loyal support given by labor in the prose-
 
cution of the war. He said that this support was far more
 
                                                       sincere