102.1/7–346: Telegram
The Acting Secretary of State to the Consul General at Manila (Steintorf)
1225. For Hoflich from the Secretary of the Treasury. The following is text of a letter being sent today to the Secretary of State. You [Page 896] may convey this information informally to the appropriate representatives of the Philippine Government:
“Sir: There is enclosed for your info a copy of a letter addressed to this Department by the Under Secretary of the Interior59 transmitting a cable message from the Honorable Manuel Roxas, President of the Commonwealth of the Philippines, stating that the Philippine Government proposes to pay over to the US all of the sinking funds for outstanding bonds issued prior to May 1, 1934, as required by Section 6(g) (4) of the amended Philippine Independence Act, but that the Philippine Government is unable without undue hardship to turn over to the US at this time the total amount required for the ultimate payment of all of its outstanding bonds issued prior to May 1, 1934, and the interest thereon. Consequently, President Roxas requests that the Philippine Government be permitted to continue to provide annually the necessary funds for the payment of interest and principal on such outstanding Philippine bonds. The Under Secretary of the Interior also states that the payment of the total amount at this time would impose severe hardship on the Philippine Government and recommends that the Philippine Government be permitted to pay future principal and interest on an annual basis.
In view of statements of President Roxas, the recommendation of the Under Secretary of the Interior, and analyses of the Philippine fiscal situation which have been made recently in the Treasury, the Secretary of the Treasury has determined that the payment to the Secretary by the Philippine Government, on or before July 4, 1946, of an amount sufficient to insure payment of principal and interest on all outstanding bonds of the Philippines, its provinces, cities and municipalities, issued prior to May 1, 1934, under authority of Acts of Congress, would impose an undue hardship upon the Philippines. Therefore, under the provisions of Section 6(g) (4) referred to above, the Philippine Government shall continue to provide annually the necessary funds for the payment of interest and principal on such bonds until such time as the Secretary of the Treasury of the US determines that the amount in the special trust account is adequate to meet interest and principal payments on such bonds.
It will be appreciated if you will advise President Roxas of this finding by cable through the appropriate channels at the earliest practicable time.60 (signed) Secretary of the Treasury.”