Your telegram No. 31 Lend Lease. [1]

1. We are grateful for this further expression of your views which
we have found most helpful. We recognise force of argument in
paragraph 1 of your telegram and fully understand desire of
Commonwealth Government to protect themselves against any possible
encroachment on their own freedom of action in relation to
reciprocal aid to United States.

2. We do not feel, however, that procedure now proposed in
relation to United States restrictions of Lend Lease should
involve this danger. Our insistence on prior discussion will
enable United States authorities to have our comments before
arriving at final decision, but it is of course clearly understood
that decision in each case must rest entirely with them in
pursuance of their own responsibility to Congress.

3. So far as expressing 'agreement' or 'acquiescence' is concerned
we think it would be difficult to insist on prior discussion and
yet to decline in such discussion to say whether proposal in
question is acceptable to us or not. No doubt some of the
proposals will not be acceptable to us and our position in
expressing disagreement with these will, we feel, be materially
strengthened if in the case of other items we indicate acceptance
rather than tacit acquiescence. In this way, we should hope to
build up better atmosphere for resolving these questions and feel
that procedure for prior discussion, as opposed to mere
notification of decisions already taken, marks in itself a
substantial step forward.

4. Matter has now been brought to a head by desire on part of
Foreign Economic Administration to make public announcement that
the British Empire have agreed to elimination of items (a) and (b)
in my telegram No. 24. [2] We understand that United Kingdom
Missions in Washington have discussed this proposal with Dominion
Missions. We do not feel that we are in a position to object to
such announcement so far as the United Kingdom is concerned, but
in so informing our representatives in Washington we have made it
clear that particular care be taken to ensure that nothing is said
which might misrepresent position of those Governments, which have
felt themselves bound to a greater or lesser extent to take up a
position different from our own.

5. As to paragraph 3 of your telegram, we are of course most
anxious that machinery for consultation should be as effective as
possible. We think ourselves that if fresh suggestions are made by
Foreign Economic Administration best procedure would be for all
such suggestions to be discussed as and when made by United
Kingdom and Dominion Missions in Washington and referred by them
to their respective Governments. if it appeared to us that any
important questions of principle arose we should at once telegraph
our views to you and at the same time explain position to our
Missions in Washington and we hope that the Commonwealth
Government would adopt corresponding procedure at their end. If no
such questions seemed to us to arise we should simply send
instructions to our Missions who after comparing notes with
Dominion Missions would then be able to put our views to Foreign
Economic Administration. We hope that this procedure will be
acceptable to you.

6. We understand that United Kingdom and Dominion Missions are
maintaining close contact in regard to further list of proposals
submitted by Foreign Economic Administration last week. [3]
Although on certain of these proposals we have comments on points
of detail, which we are instructing our Missions to bring to the
notice of the United States authorities, we do not think that any
important questions of principle arise. Matter becomes therefore
one of dealing with individual items on their merits in the light
of exchanges of views between the respective Missions in
Washington.