Reports suggest that Republican authorities may not accept mediation by America, but will ask for mediation by a number of nations.  In the terms of the Council resolution they are not obliged to accept America merely because America is-acceptable to the Dutch. Probably they will want India associated with the mediation.
2. We are endeavouring to get a message through indicating that we would be glad to be associated with any mediation , and we are also endeavouring to persuade the Dutch that, in the interests of a reasonable settlement and in order to prevent the matter being referred again to the Security Council, they might be well advised to accept the Indonesian suggestions on mediation and take the initiative in suggesting to the United States that the United States and Australia act as mediator[s]. 
3. The Dutch action in making more landings after the Security Council decision has done tremendous harm. The Dutch, not the Security Council, set the time for 'cease fire' and not until a considerable time after the decision of the Security Council that there should be an immediate cessation. There will therefore be a strong demand that the Dutch at least return to the positions held at the time of the Security Council decision.
4. Mediation will obviously commence in a situation of tenseness, the Dutch encouraged to believe that they can retain what they now hold, and the Indonesians charging members of the Security Council with bad faith and playing into the hands of the Dutch.
5. The Americans cannot handle the situation. They don't know the parties to the dispute, nor do they know at first hand the many difficulties involved. They know only the Dutch point of view, and the reaction in Australia and India and in other countries is likely to be most unfavourable to active American participation, particularly when the commencing point is one greatly prejudicing the Indonesian interests.
6. The situation is likely to develop again in such a way as to require us to refer the matter to the Security Council again or raise the matter in the Assembly. We cannot be content with the present decision of the Security Council, but must follow it through until there is a just and lasting settlement. Our own security interests require that.
7. We would be prepared, however, to take the present situation as it stands and use our good offices with the Indonesians to secure their co-operation in mediation, if the United States Government would agree to joint United States-Australian mediation.
This would be acceptable to the Indonesians, and the Dutch should be able to see that the alternative is a demand for Indian and other participation, or perhaps a reference again to the Security Council. They know that we are interested in their position in this area, and, in fact, our action in the Security Council was not unrelated to our desire to find a solution other than the complete expulsion of the Dutch which is likely to be the final result of their unwise attitude. Moreover, it is clear to us that mediation by America alone is doomed to failure, and we find it hard to believe that America would undertake mediation which has little or no prospect of success and little or no prospect of support from the main countries interested in Indonesia.
8. An immediate joint offer to both parties (and without endeavouring to find if this is acceptable to one of the parties) of joint mediation would have a tremendously encouraging effect in following up the decision of the Security Council, and we, for our part, feel confident that we are in a position to make the difference between success and failure in mediation.
9. Hodgson will be tied up in New York, but, if at all practicable, he might visit Washington and join with the Ambassador and the Minister in an approach at the highest level in the State Department and to all those who might be responsible in making a decision. If it is not possible for Hodgson to [leave] New York, he will put this point of view forward to the United States representative there, leaving the Ambassador and the Minister to take similar action at Washington.
10. Please act as soon as possible on this telegram and report in detail all reactions, as we are endeavouring to co-ordinate this move in discussions both with the Indonesians and Dutch. We have not advised the United Kingdom Government of the move, because, throughout the whole of these negotiations, there seems to have been an attempt to exclude us, in spite of most direct appeals and protests. Nor are we informing the Indian Government, for, while we want to keep close touch with them on this matter, they appeared to resent our taking the matter out of their hands at the Security Council and will, no doubt, be wanting themselves to be associated with the American offer of mediation, and perhaps they have already taken action to this end.
11. Please make a special endeavour to help us carry through this proposal.