While it is of course clear that the decision as to what shall or shall not be included within the scope of Lend Lease rests ultimately with the United States Government we have been most anxious to secure that if changes are made it shall only be after opportunity for full discussion. As you are aware the United States Authorities have confronted us in recent months with a number of unilateral 'decisions' to some of which we felt bound to take strong objection. We regard it as essential that this method of procedure should cease and that the matter should proceed on the basis of full and frank prior discussion.
At the same time it is clear to us that modifications in the scope of Lend Lease must be expected from time to time. We have been conscious that certain items might be regarded as marginal and as such might not continue indefinitely within the scope of Lend Lease.
Our efforts therefore have been directed primarily to adoption of procedure which would ensure prior notification and discussion whenever changes were desired by the United States and thus give us opportunity of resisting such part of the decisions as we found intrinsically unreasonable without necessarily opposing American action in toto.
2. The latest American approach when early this month a general list of proposals was presented to His Majesty's Ambassador for consideration and discussion was therefore a considerable advance in the right direction and as such welcomed by us.  We have to recognise however that this procedure involves our expressing agreement with proposals which we find reasonable as a corollary to expressing our dissent from those which we find unreasonable.
We should hope that by dealing with matters in this way we shall strengthen our position to resist any inherently unreasonable proposals that the United States Authorities may contemplate and shall also build up a better atmosphere in which to settle outstanding problems.
3. It seems to us that items covered by the note can be divided into three categories- (A) items included in list communicated to us in October, e.g capital goods.
(B) Additional items which we can accept without further question, e.g. Iceland fish and Caribbean sugar and molasses.
(C) Miscellaneous items including [some], e.g. agricultural machinery and tobacco for the Forces, which we feel bound to resist.
4. As regards (A) as explained above our objection to the October proposals was primarily against the manner and time of presentation. We could not hold that in principle the inclusion of all classes of capital goods on Lend Lease could continue indefinitely. Now, therefore, that we have established the principle of prior consultation and that the details of the proposals have been examined and worked out we feel that, for reasons given in my telegram No. 23, we shall be wise to accept this item.
As regards (B) we have long realised that Iceland fish, Caribbean sugar and molasses would be excluded sooner or later and, in present circumstances, we consider it right to accept the proposed exclusion now.
As regards (C) the position is that each item will be considered separately and that we shall endeavour in discussion to secure deletion from list of those we regard as unreasonable. [If] in spite of this, United States Authorities were to insist on retention of any given item, this would of course represent a unilateral decision.
5. We hope that you will share our view that having regard to the way in which negotiations in Washington have developed the best course will be to deal with individual items as they arise on the basis outlined above. In view, however, of your telegram  we have asked our representatives in Washington in authorising them as in paragraph 5 of my telegram No. 23 to make it clear that we cannot of course speak for the Empire as a whole and that there may be special considerations affecting individual members which may have to be taken into account.
6. Our preliminary comments on particular categories of goods listed by the United States Authorities are given in my immediately succeeding telegram. 
7. We much regret shortness of time for this exchange of views but we had understood that full background was already available to you from Washington where our representatives in these negotiations have thoughout been in close touch with Dominion Missions. We are considering how machinery for co-ordination of views on these and kindred matters could be improved, bearing in mind that Washington must inevitably be the centre of discussions, and would welcome any suggestions from your standpoint.