Ext 6116/46(S) 'Secret Weekly Political Intelligence Summaries, nos 356-416, August 1946-November 1947' [‎69r] (137/978)

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committed by the peace treaty to the main
tenance of a decentralised economy.
A temporary decrease in the currency in
circulation suggests that the momentum of
inflation has moderated, though black
market prices continue to rise. Controlled
prices have been raised in an unsuccessful
attempt to combat the black market, and
both official and unofficial prices were re
ported to be about 10 per cent, higher in
August than in July. The present level of
industrial production is officially estimated
at only 45 per cent, of the average from
1930 to 1934, and neither production nor
trade is expanding uniformly. The recent
admission of Allied merdhants up to a
maximum of 400 has resulted in a moderate
number of contracts being concluded with
American firms but British merchants com
plain that within the present restrictions
it has not been possible to re-establish the
long-term trading in which they are
interested. Generally speaking merchants
of all nationalities are reported to be
disappointed with the outcome of their
visits. On the other hand, representatives
of banking, insurance and shipping
interests, who have been admitted on a
more permanent basis, appear to be reason
ably satisfied with the position.
The late Mr. George Atcheson has been
replaced as Chairman and United States’
Representative on the Allied Council in
Tokyo by Mr. Sebald. The acting British
Representative in place of Mr. MacMahon
Ball is Mr. P. E. Shaw, acting head of the
Australian Liaison Mission in Tokyo.
In view of the present financial and man
power situation His Majesty’s Government
have been in communication with the
Australian and other Commonwealth
Governments concerned on the question of
the immediate withdrawal of the United
Kingdom contingent from B.C.O.F.
Indonesia
Although the Consular Commission in
vited by the United Nations Security Coun
cil to report on the post “cease-fire”
situation in Indonesia had not completed
their investigations, their work had
advanced sufficiently by the 22nd Septem
ber to enable them to draw up an Interim
Report (see under “United Nations”).
On the following day the Commission
issued a communique announcing their
decision to invite the Republican Govern
ment to state their case in relation to the
“ cease-fire ” order, and on the 26th Sep
tember, with the exception of the United
States and Chinese Consuls-General who
were occupied on other business, all the
members of the Commission proceed to
Jogjakarta, where at a meeting attended
by the entire Indonesian Cabinet and their
military advisers, a series of prepared
points were discussed. On the Commis
sion’s return to Batavia, exactly the same
procedure was followed with the local
Netherlands Authorities, and the Commis
sion then turned to the work of collating
reports and information that they had
received. While the real urgency of the
matter is fully appreciated a short delay
in the completion of their main report was
rendered unavoidable in the late arrival of
the United States military observers and
the natural anxiety of Dr. Foote, the U.S
Consul-General, to await their conclusions.
However, by the 1st October, the Commis
sion found it possible to inform the United
Nations Security Council that work had
been started on the drafting of the main
report, which, it was hoped, might be
finished within a fortnight. It has also
been decided that the Sub-Committee of
Military Observers shall draw up a report
on the more detailed aspects of the military
situation and that this report, although it
will take considerably longer to prepare,
will form an appendix to the Commission’s
main report.
In their interim report to the Security
Council the Commission expressed their
inability to advance any suggestion likely
to lead to effective observance of the
“cease-fire” order. Nevertheless, they
have continued to concentrate on this
problem, and the following two suggestions
have been discussed with the Military Sub-
Committee, as possible ways of relieving the
tension until such time as the “ Three
Power Committee ” assumes charge of the
situation :—
The establishment of a demarcation
line between the Dutch and Indonesian
forces; and
The arrangement with both sides for a
mutual cessation of war-like activities—
the Dutch to cease their “ mopping-up ”
operations, and the Republicans to
refrain from making further attacks on
Dutch patrols.
The Military Sub-Committee believe,
apparently, that it should prove possible
to arrange for the establishment of a
demilitarised zone not exceeding 10 km. in
breadth between the two forces, provided