1. Forsyth saw Morgan in order to follow up State Department undertaking that we would be kept informed of developments in Indonesia.  Morgan was not aware that Foote had returned to Batavia and said that official report on Foote's visit to Djokjakarta  had not yet been received.
2. Morgan said that the object of Foote's visit had been to explain to the Indonesian leaders that the United States was offering 'good offices' and not at this stage at any rate mediation, i.e. the United States was willing to bring the parties together [but] in offering 'good offices' was not undertaking to preside over the process of settlement.
3. Forsyth mentioned that the Indonesian Government had accepted Australia's offer to join in a joint mediation with the United States. In the discussion to which this gave rise he gathered the following based in part on a call by Van Kleffens at State Department at noon today.
(a) The Dutch emphatically do not accept the suggestion that the Security Council appoint a commission of supervision.
(b) The Dutch Government had instructed Van Kleffens to propose to the United States and to the Security Council tomorrow, that they themselves voluntarily invite some neutral Governments to supervise the 'cease fire'.
(c) The State Department officials concerned thereupon suggested to Van Kleffens that it would be more acceptable if the Indonesians could be persuaded to join with the Dutch in such a proposal.
(d) Van Kleffens is telegraphing this suggestion to The Hague but may not receive revised instructions before the meeting of the Security Council tomorrow.
4. Morgan thinks that the United States would regard the Dutch suggestion above as constituting a sufficient 'next step'. The offer of 'good offices' would remain in effect but United States would take no positive step toward mediation or arbitration in the meanwhile.
5. Reference our telegram 1057  Morgan said that press report that the United States was prepared to mediate was not at all his understanding of what General Marshall had said. It was definitely not United States policy to mediate at any rate at this stage.
6. Forsyth asked whether Morgan thought the 'cease fire' would ever have happened if the Security Council had not taken the initiative. Morgan replied that the 'cease fire' could have been brought about by other means, explaining that he meant by diplomatic action.
7. This last point was made in the course of a brief general discussion of the situation in the course of which Morgan also took pains to stress the serious implications of Security Council intervention in disputes which might be held to be not between states but between one part of a state and another part, especially at early stage in the development of the United Nations.
United Nations Delegation has been informed.