1. I had a long discussion with Sir Archibald Clark Kerr this
morning. I had previously met him in Chungking and Singapore and
the interview was very friendly and informal.

2. He discussed his Directive and said that there was very little
he could add to it at the moment as, although he had been doing a
lot of reading, all the impressions he had collected were second
hand. He said that as far as he could see his principal objective
was 'to bash their heads together and make them talk sense'. Since
he had arrived in Singapore he found that the situation was more
difficult than he had expected.

3. I told him that my impression over there was that there was not
such a great divergence between the opinions of Indonesian leaders
and moderate Dutch. Face saving was a vital consideration on both
sides. I told him of the split, on the question of confiscation of
European property and the popular front and he had not heard of
this.

4. He mentioned the difficulties over currency and, when I
suggested that it was precipitate of the Dutch to issue their own
currency in view of the pending negotiations, he stated that Doll,
Chief Financial Adviser in this theatre, had recommended to the
Dutch that they hold the issue so as to avoid an incident which
would occur if the Indonesians decided to carry out their threat
of issuing their own currency. It is likely therefore that the
Dutch currency issue will be stalled for some days. He mentioned
that there was another factor in the currency issue and that was
that the Dutch were trying to peg the Guilder at 7.25 per pound
sterling and, in Doll's opinion, it was not worth more than ten to
the pound sterling.

5. He stated that he proposed to see as many people as possible
over there on both sides, and was particularly interested to hear
of Abdul Kadir's [1]activities (which I have referred to in my
previous report) and would make a point of seeing him in Batavia.

6. We then discussed Australia's representation and policy. Clark
Kerr agreed that it was wise for me to have informed Sjahrir that
the policy of the Australian Government was not necessarily the
policy of the Australian waterside workers. [2] He also agreed
most wholeheartedly that Australia had a major interest in the
Netherlands East Indies' problem from the point of view of the
future, and stated that he would welcome a senior Australian
Representative and would be very happy to work closely with him.

He had previously asked me if I were going to Batavia with him,
but I then stated that I thought that this was undesirable at the
moment in view of the suggestion which I have had from you that a
senior representative might be sent there. I mentioned to him that
I was contemplating sending Brookes across and he promised to
place all facilities at Brookes' disposal.

7. Clark Kerr then said that if an Australian Representative were
sent to Batavia he felt that they should work 'in each other's
offices' and that an independent approach to the Dutch by
Australia, as suggested in your telegram 36, at this moment might
be embarrassing. He stated that he presumed that Australia would
consult with London before making such an appointment and that he
would be very happy to co-operate fully with anybody sent by
Australia as a result of an agreement with the United Kingdom. He
stated in this connection that he had no worries of personal
prestige at all.

8. I asked Clark Kerr if he considered he would be in the position
of mediator or only act as chairman at meetings of the two
parties. He said that he could not form an impression on this
until he arrived at Batavia. He was quite prepared to mediate if
necessary.

9. I mentioned the trouble we were having over shipment of relief
supplies and told him of the suggestion that the Command should
supervise distribution (this is already accepted) [3] and
Sjahrir's request to Indonesian seamen. [4] I told him of the
difficulties I had with both the Dutch and Sjahrir in discussing
this matter in Batavia [5], and he said that he would be glad to
use any influence he might have with both parties as he realized
the vital urgency of getting these supplies up as soon as
possible.

10. There is no further word on the internal situation in Java and
I rather gather that everybody is holding their hand until Clark
Kerr's arrival.

11. Your telegram 42 has just arrived and I am taking the question
of relief supplies up with S.A.C.S.E.A. immediately. I am
considerably influenced in not going to Batavia by the fact that
we have only one set of cyphers. If I sen[d] Brookes to Batavia he
can report factually to me here through S.A.C.S.E.A. channels and
I can interpret it to you. In the meantime I have arranged
Brookes' passage on Saturday morning and request that you advise
me urgently whether in view of this report you still wish me to
proceed. [6]