896.51/6–1446: Telegram

The United States High Commissioner in the Philippines ( McNutt ) to Mr. Richard R. Ely, of the Office of United States High Commissioner, Washington


PIW 542. Ely deliver following from me to Treasury Secretary Snyder, copy to Romulo.

Commonwealth President Roxas has asked me transmit following message to you in connection with Philippine loan application on which he is most desirous of obtaining speedy action. I have added to his message my own endorsement. Roxas message to you is as follows:

“My dear Mister Secretary: I know you face great problems in connection with your new duties. Yet because of critical situation here I cannot refrain from [intruding?] upon your first days in your new office with appeal for early action on Philippine emergency government loan application which I in company with Commissioner McNutt made during our recent visit to Washington. That application has been before your department since mid May although it has never been submitted in a formal manner because Treasury Department experts were to advise me of most suitable legal formula for presenting it.

“I have asked for government loan of $100,000,000 for fiscal year beginning July 1st, second loan of 12½ percent less than 100,000,000 for succeeding fiscal year and three additional loans decreasing by same percentage each fiscal year making total of five installments of loan which will approximate $400,000,000. Terms for repayment were not specifically discussed but I agreed to begin interest and amortization payment during sixth year on gradually increasing scale.

“Next fiscal year confronts us with expectable revenues of $25,000,000 while bared to the bone budget contemplated expenditures $130,000,000 which is decrease from current year. In war torn land beset with hundreds of problems incidental to war and independence we dare not paralyze functions of government lest we invite chaos and precipitate disaster, yet our potential national economy is completely capable of supporting government and providing rising standard of living as well as discharging fiscal obligations of proposed loans, provided we receive transitional assistance to enable us recover from war. [Page 884] One fifth of our essential expenditures this year are necessary maintain law and order to restore internal security of property and persons which deteriorated dangerously as aftermath of war and ancient economic maladjustments which we are seeking energetically to cure constructively.

“I urgently request your speedy consideration of our loan application and earliest submission to Congress if that is formula decided upon. President Truman [and] former Secretary Vinson were completely sympathetic with our needs on this matter but time is of essence since our cash resources are almost to disappearing point and rehabilitation program has not yet begun whereas government expenses continuing.”

End Roxas message.

As High Commissioner I have discussed matter at length with Roxas as well as with American officials and I add my urgent recommendations to those of Philippine President. We are about to launch Philippines on road to independence. Roxas has indicated by word and deed his desire to follow American pattern of government and retain closest ties with us in all matters including military bases deemed essential to mutual security but involving great political risks on Roxas part. I urge you to use your good offices to support Roxas application. Delay may endanger stability of government and would drastically interfere with rehabilitation programs which have been planned in consultation with us.39

  1. In a memorandum to Mr. Vincent on June 17, Mr. Lockhart stated that “The question of a substantial loan to the Philippines, to be authorized by legislative action, is under active consideration”. (896.51/6–1446)