In my following telegram  is contained text of telegram received by Churchill from Roosevelt, setting out completely new proposals for general conduct of whole World War. In the absence of any other reply to your telegram 166  which was despatched to Roosevelt by Churchill as advised in my P. 61 , this seems to me, though not expressly stated, to be meant to cover the substance of telegram 166.
2. To remove complexity and simplify responsibility the President suggests that the World War theatre should be divided into three areas:
(a) the Atlantic under joint British and American responsibility;
(b) the Indian, Middle East and Mediterranean areas under British responsibility;
(c) the Pacific, including China, under United States operational responsibility.
The Pacific area includes Australia and New Zealand. Its western boundary, though not stated by the President, would be the boundary indicated in your telegram 41  [for]  the Anzac Area and agreed by the Pacific War Council.
3. This proposal places the whole responsibility for all operational decisions in the Pacific area in the hands of the United States Chiefs of Staff, subject to the overriding proviso that the grand strategy of actual operations in the three areas would remain, as they are to-day, the subject of study and decisions of the Combined Chiefs of Staff both in Washington and London. The joint committees on raw materials, shipping and munitions would continue to function as they do now, all subject to joint approval of Churchill and Roosevelt.
[4. Churchill, who will send full telegram containing his views tomorrow , favours in principle the American proposals. He thinks that there should be in London an active Pacific War Council following the whole course of the war, and especially making certain that the problems of every constituent country are seen in proper perspective and making recommendations to both the United States and British Chiefs of Staff with regard to operations which deal with zones adjoining the boundary line. It is felt that decisions for many activities along this region may have to be made by either body or jointly.] Churchill is replying to the President saying that his proposals are being considered by the Pacific War Council and are being forwarded to the respective Governments immediately.
5. The Dutch Government feels that the proposals have the merit of greatly simplifying procedure, but are very keen on the Pacific War Council functioning vigorously in London. They point out that the idea of the original agreement between the Prime Minister and President envisaged twin control, in which balance was held between Washington and London, and that, to keep the centre of gravity right, the Pacific War Council must continue to function in London especially in view of the possibility that the course of recovery of the territory ravished by Japan maybe from the western, just as well as from the eastern side, and [control] of both offensives will need to be closely coordinated.
6. The initial offensive through China must be through territory under British responsibility and China also feels that there should be a live representative body in London. Both countries would welcome as well the suggested advisory representation in Washington.