I have recently given renewed consideration to the question of an exchange of diplomatic representatives between the Netherlands Government and Australia, and feel strongly that in view of current developments an early decision is desirable.
You will recall that the formal proposal for an exchange of diplomatic representatives between the Netherlands and Australia was initially made by the Netherlands Minister in London  to Mr. Bruce  last October.  In putting forward this proposal the Netherlands Minister stressed the common interest and dangers of Australia and the Netherlands East Indies, and the close trade and personal contacts between the two countries. He urged that as the Netherlands Government had been transferred to London, the Australian High Commissioner in London acting in a dual capacity could be accredited as Minister. In consideration of this proposal here it was felt that while a Netherlands Minister would be welcome in Australia, it was doubtful whether Australia would derive any real benefit from the exchange if the Australian Minister accredited to the Queen of the Netherlands was located in London. I believed, however, that we should view favourably a proposal to station the Australian Minister in Batavia. 
To this course it appeared that two main objections were seen by the Dutch. One was the formal objection that under the Netherlands constitution diplomatic representatives must be accredited to and can only deal direct with the Netherlands Court and cannot be accredited to a colonial government. The other objection arose from the fear that the location of an Australian Minister at Batavia might lead the Japanese to demand the same facility for themselves-a result which would be unwelcome to the Dutch.
In spite of this I believe that in the present circumstances when closer contact with the Netherlands East Indies administration is becoming increasingly urgent and important in the conduct of our external affairs, the value to both countries of an exchange of Ministers is manifestly so great, and is recognised to be so by the Dutch themselves, that it is by no means certain that the Netherlands Government would maintain its objection to the stationing of the Australian Minister at Batavia if the suggestion were pressed.
If, however, the Dutch are disposed to insist that an Australian Minister accredited to the Queen of the Netherlands should be located in London or wherever the Netherlands Court is, there are three other courses which would be in accordance with diplomatic practice and which would in effect give us the desired practical advantages of a diplomatic exchange in the Netherlands although falling short of the original proposal. They are:-
(i) Accrediting of an Australian Minister in London (i.e. High Commissioner) with nominal relations with the Netherlands sovereign, but with say a Counsellor or First Secretary at Batavia.
(ii) The appointment of an Australian Charge d' Affaires. As such a representative could be accredited not to the Netherlands sovereign but to the Netherlands Minister for Foreign Affairs, the Dutch might not feel that the same objection would attach, to his location at Batavia.
(iii) The appointment of an Australian 'diplomatic agent' at Batavia accredited to the local administration. There is ample precedent for this class of diplomatic representative in countries which are not fully sovereign.
Of the above, (iii) would seem to be the best course and in the event of failure to overcome the Dutch objections to the location of a Minister Plenipotentiary at Batavia, I suggest that we might put it forward.
In my conversations with Dr. Van Kleffens  during his recent visit to Australia I found him very strongly in favour of concluding an early exchange of representatives between Australia and the Netherlands, and I have no doubt that he personally would now welcome definite proposals from the Commonwealth Government.
These I think could best be made through Mr. Bruce, but before offering any specific suggestion, I should be pleased to learn whether in the course of discussions which you may have had either in London or with Dr. Van Kleffens in Auckland on this subject anything emerged which would assist us in our approach to the Netherlands Government.