896.51/9–1446: Telegram
The Ambassador in the Philippines (McNutt) to the Secretary of State
[Received September 14—5 a.m.]
371. Part I. Embassy has received following note addressed directed [sic] to the Ambassador:
“Under the terms of the act passed by the last session of the United States Congress, authorization was given the Reconstruction Finance Corporation of the United States to extend to the Philippine Government a $75 million loan to meet budgetary expenses. We are now in need of funds to meet current expenses. In readjusting our budget we have counted on the $75 million loan and it would be most convenient if the necessary action were to be taken early by the Reconstruction Finance Corporation in response to this present request. Should the government wish to have more specific data on our immediate fiscal needs, my government will be pleased to supply whatever data is required. In that event my government would be content to receive an immediate loan credit of $25 million, and the balance at a somewhat later date when we will have been able to provide all [Page 917] the statistics and supporting data which might be required by the Reconstruction Finance Corporation of the United States.
I would like to be able to report to Congress, prior to its adjournment on September the 18th, that your government has taken the necessary steps to make this credit available in accordance with the authorization which your Congress was generous enough to give.[”]
Part II. The cash position of the general fund of the Philippine Government is declining rapidly and it is the opinion of the Embassy that first proceeds of the loan will be needed for disbursements early in December. Legislation has been introduced for very substantial increases in tax rates and much of it will be enacted during the present Congressional session but will not substantially increase government income until the first half of next year. The government has been experiencing extraordinary costs in its efforts to reestablish law and order in central Luzon. Inasmuch as it is well known locally that the $75 million “loan” is in fact only an authorization, a positive expression of intention is needed prior to the adjournment of Congress to sustain the confidence of government employees and institutions including the Philippine Army in the financial stability of their government during the immediate future period. I therefore most urgently recommend that on or before September 18, Reconstruction Finance Corporation announce that $25 million of the loan has been made available to the Philippine Government for withdrawals on and after November 1st.