113 Richardson to Wheeler

Letter SYDNEY, 9 July 1947

PERSONAL

I have read Dr. Burton's memorandum about Indonesia [1] with considerable interest. For reasons well known to you, it is impracticable for me to pay another visit to that area in the near future. Nevertheless, I am really interested in the problems that exist there and as I was a 'Treasury Representative' for a time I am taking the liberty of making the following observations and leaving it to you to use them as you see fit. [2]

What I have to say is based on acceptance of Burton's statement 'It is considered that the Government should now be in a position to follow up the initial approach already made to the two parties by a concrete suggestion that, provided the interim Government is established, we would be prepared to assist in the rehabilitation of Indonesia'. Perhaps our offer to assist would be more likely to be accepted if we indicated clearly at the outset how we planned to implement such an offer.

I think the first essential is that Australia should be prepared to send to Batavia a mission led by a man with wide experience, proved ability and a world reputation. I think that Professor Copland would be an admirable selection if he could be made available and if he would accept the assignment. There is no need for me to stress the value his advice would be to both parties if they could be persuaded to seek his assistance.

But the mission is not a one-man job and I think the leader would need technical assistants to work on the many problems that can be expected to arise. In particular I think there would be need for- (a) A trade representative to handle matters related to both Australian exports to and imports from the area. I think that in fact a Trade Commissioner for Batavia has already been selected.

[3] If So, he could be attached to the proposed mission.

(b) The Trade representative would need a close liaison with the Commonwealth and Dutch shipping authorities. The need to add a shipping man to the mission might be explored.

(c) A financial man. I think someone with a knowledge of how trade is financed and, more important, how an Exchange Control can be managed effectively and with fairness to all parties, would be needed.

(d) Also, from what Burton has written, there would seem to be a case for sending other technical men in the fields of transport, engineering, production, education, etc., but maybe it would be wise to let the need for these, and the good work they could do, be demonstrated by the effectiveness of a mission with an able leader and good technical assistance in trade and finance.

Proceeding from point (a), there arises the question of finance and supply. On the latter it would be essential that there should be activity at this end to procure the supplies that Indonesia wants, and I am in full accord with Burton's idea of a Departmental organisation to do the job. The organisation should have a clear direction from the highest quarter that it must get results and it must be given all the support that the Government can bring to bear through its various Departments and Agencies.

As to finance, the Bank is writing officially on this subject. I think the proposal for a revolving trade credit of 3 to 5 million is as much as we can afford and, in any case, it should be sufficient to give a start to the exchange of trade between Australia and Indonesia.

Much larger loans will be needed over the next few years and these must come from the United States. I think the prospects of obtaining such loans would be greatly enhanced if the interim Government were to accept Australian help in the initial [stage] [4] and with this help demonstrate its ability to manage its affairs in an efficient manner.

Point (b) does not call for special comment.

Turning now to point (c), you know that present difficulties in Indonesia are being added to by failure of the two parties to agree about the rights of estate owners and control of the overseas exchange arising from exports; as a result the Dutch have placed a naval blockade on Republican controlled ports.

The solution to the first problem must be a compromise which, presumably, will be arrived at by the interim Government, but I think that advice from such a person as I have suggested as leader of the Australian Mission might well prove helpful in this connection, if both parties would agree to bring him in to the discussions.

The present exchange control in the area is Dutch controlled and presumably will be brought within the ambit of the interim Government. The Republicans are highly suspicious of it. I think their suspicions would be considerably allayed if someone with a knowledge of procedure in other countries were available to examine and advise on the plans proposed and to demonstrate how the total proceeds of exports can be brought to account as we do in Australia.

I realise that what I have said in the foregoing paragraph leads up to the question of someone from the Bank being attached to the Mission and this presents a difficulty. However, the Governor might be requested to make one of our younger officers available for the purpose.

Point (d) does not call for elaboration at this stage.

You will understand, of course, that the foregoing represents my personal view and the Bank must not be held responsible in any way for what I have said.

1 Document 105.

2 At Wheeler's request, Richardson forwarded a copy of his letter to Burton on 9 July.

3 On 4 July, the Department of Commerce and Agriculture agreed to a suggestion from the Department of External Affairs for the appointment of a commercial representative at Batavia and tentatively designated H. Wrigley as its choice to serve as Australian Government Trade Commissioner. Action to establish the Trade Commission was subsequently deferred owing to political and military developments in Indonesia.

4 Amended by hand. The text originally read 'steps'.

[AA:A1068/1, ER47/70/8]