James told me that he wished I was brave.
Direct speech uses quotation marks, and is exactly what someone said.
Indirect speech, on the other hand, does not use quotation marks and does not have to be word for word.
When saying who is being spoken to (ie, the indirect object), you use a form of "tell" (in this case, "told") rather than "say", as "say/said" is used for when there is no indirect object (eg, "she said there was a cat on the road" vs. "She told me that there was a cat on the road")
Now, "would that" is usually used, as it is in this case, to mean "if only". So, instead of saying "would that you were brave", you could say, "if only you were brave".
See? It still has the same meaning.
Then, as you probably know, saying, "if only" is basically the same thing as saying, "I wish".
Therefore, I would change that sentence to, "James told me that he wished I was brave."
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