Department of Foreign Affairs and Trade

Following is substance of conversation today with Butterworth,
Chief of office of Far Eastern Affairs, U.S.A. State Department:

[matter omitted]

5. Indonesia. Butterworth said that desire of U.S.A. was that
committee of good offices reach early agreement acceptable to both
parties. He admitted Dutch were not altogether reasonable, but
said that account should be taken of fact that they were to some
extent 'neurotic' and out of touch with world opinion because of
length of German occupation of their homeland. He hoped no one
would encourage the Indonesians to be intransigent. There were
many means of bringing international pressure to bear on the Dutch
to accept a reasonable settlement, but there were few means of
bringing similar pressure to bear on Indonesians. Australia had a
great deal of influence on Indonesians and was therefore in a
unique position to [contribute to a settlement]. [1] Butterworth
said that U.S.A. hoped that Netherlands would continue to have
close economic relations with Indonesians. Early recovery of
production in Indies and access by Netherlands to this production
was vital to success of Marshall plan for Europe. He also said
U.S.A. feared that prolonged unrest in Indies would lead to
increase in Communist influence in that area.

[matter omitted]