896.51/9–1346: Telegram
The Ambassador in the Philippines (McNutt) to the Secretary of State
[Received September 14—9:55 a.m.]
363. For State and Treasury. ReEmbtel 359 of September 12. Part I. Question whether under Section 342 Philippine Trade Act of 1946 Philippine Govt can reduce currency reserve requirement without agreement Pres US. If Philippine Govt permitted to reduce currency reserve at this time, I am apprehensive of reaction of investors whose capital also needed to rehabilitate Philippine economy. Moreover, bankers who recall 1919–21 impairment of Philippine reserves likely to be hypersensitive to amendment currency laws so soon after independence.
Part II. It might be well to suggest that Roxas finance the bank solely through proceeds sale surplus and currency conversion program [and?] sufficient capital could be obtained from these sources to finance bank until Export Import Bank and International Bank prepared to consider rehabilitation loan to Philippine Govt, if additional capital later found to be necessary.