896.24/9–1346
The Acting Secretary of State to the Secretary of the Treasury (Snyder)
My Dear Mr. Secretary: With reference to your letter of September 131 concerning the surplus property agreement recently negotiated by Mr. McCabe with the Philippine Government, your understanding that its provisions release this government of all obligation for redemption of the emergency and guerilla currency supplied to our armed forces during the war by the Philippine Government is correct. As you know, this problem is practically impossible to state in correct quantitative terms since there are no adequate records of the various currency issues.
[Page 927]The contract specifically provides that in consideration of the payment of $25 million to the Philippine Government for redemption of guerilla and emergency currency, and other obligations, and the transfer of $37 million at fair value of other surplus property, in addition to the $100 million of surplus transfer under the Philippine Rehabilitation Act, the Philippine Government “releases and acquits the United States Government of the unpaid balance of the financial obligations and responsibilities aforesaid, and shall forever indemnify and hold the United States harmless from all claims and demands of every nature arising therefrom by any person or persons whomsoever”.
President Roxas, in his message to the Philippine Congress of September 12, 1946, stated his agreed intention to avoid the windfall gains as follows: “I feel that we should do all that is possible to redeem guerilla currency as speedily as we can, but we must and will take the proper precautions to keep profits and unconscionable gains out of the hands of speculators, hoarders and others who would make profits out of patriotism.”
It was agreed by President Roxas that, since there was no proper record and in the nature of things could not be for years to come, the Philippine Government could “effect a more sympathetic and intelligent redemption of guerilla currency by its own efforts …”2 than could United States agencies.
Ambassador McNutt and the then Foreign Liquidation Commissioner McCabe were agreed with President Roxas on the desirability of the settlement of this government’s obligations in this manner and President Roxas on his part apparently felt that the method adopted was most expeditious and best suited to this transaction between the two governments.
Sincerely yours,