811B.5151/6–1946: Telegram

The Consul General at Manila ( Steintorf ) to the Secretary of State

us urgent

1028. For Secretary of Treasury No. 180 from Hoflich.

Part 1. Following cable June 17 McNutt to Ely repeated at McNutt’s request.

“For the Secretary of the Treasury. My legal adviser and local representative Foreign Funds Control Office point out, and I concur, that the passage of Philippine Property Act, section 3, clothes the President of the United States, under section 5B Trading with Enemy Act, with continued authority for operation of Foreign Funds Control Office activities in the Philippines after July 4. I believe that the continuance of this activity by the Treasury Department would be extremely helpful to the Philippine Republic and avoid serious legal problems. However, if the Treasury Department objects, the President could discontinue this activity or delegate authority to another office or agency to complete this service.

“The passage of the Property Act insofar as activities of the Foreign Funds Control Office of the Treasury Department are concerned, is simply permissive. Because of the urgency and absolute necessity that this act be passed before July 4, I strongly urge that the Treasury Department not oppose or propose to amend it in any way as any delay in its passage prior to July 4 would destroy the benefits which are necessary and desirable.”

Part 2. Section 3 of Property Act provides in part: “The trading with the Enemy Act … shall continue in force in the Philippines after July 4, 1946, and all powers and authority conferred upon the [Page 887] President of the United States or the Alien Property Custodian by the terms of said act as amended with respect to the Philippines shall continue thereafter to be exercised by the President of the United States or such officer or agency as he may designate.”

Part 3. Property Act drafted in Manila. Treasury office was neither consulted nor advised. First information obtained from June 16 newspapers. Press reaction favorable but no reference to foreign funds implications.

High Commissioner states that while Property Act was not intended to continue Foreign Funds Control by US Treasury he considers such continuation desirable. He states that in his opinion Roxas would not object in spite of statement in message to Congress (our telegram 169)43 and that satisfactory basis of operations could be worked out after passage of Property Act.

We did not commit Treasury to any position on matter.

Part 4. In view of this development plans to establish Philippine Republic Foreign Funds Control are at standstill. [Hoflich.]

  1. Transmitted in telegram 910, June 4, 4 p.m., from Manila; it quoted from President Roxas’ opening address on June 3 to the Philippine Congress, in which he proposed establishment of a frozen-funds control office in the Philippine Department of Finance, replacing the U.S. Treasury functions which would end July 4 (811B.5151/6–446).