The Ambassador in the Philippines (McNutt) to the Secretary of State

No. 632

Sir: I have the honor to report that on March 7, the date of the announcement of the signing in Washington of the 25 million dollar loan, President Roxas issued a lengthy statement expanding on the official United States announcement regarding the signing of the loan. The heart of the President’s statement was in his assertion “I view the terms of the loan to be a provisional arrangement; as additional information is made available from studies now under way, a basis will be provided for a review of the terms of this loan.”

The original Reconstruction Finance Corporation statement was issued in Manila by the American Embassy after the President had indicated his preference that it be an Embassy release. The press gave major play to the Embassy’s announcement and used the President’s statement in a supplementary position. The text of the Roxas statement follows:

Statement by President Roxas Commenting on the Signature of the $25,000,000 Loan From the RFC

I have been advised that Ambassador Elizalde today signed the contract for the extension of a $25,000,000 credit to the Philippine Government by the Reconstruction Finance Corporation of the United States. I am happy that the negotiations leading to this loan contract have been successfully concluded. The difficulties involved in arriving at a final conclusion to the negotiations arose in large part because this loan was unprecedented on the part of the RFC which has never before extended a loan directly to a foreign government. This loan meets our immediate fiscal needs. Meanwhile I have already directed that an application be made for an additional loan of $50,000,000 to meet the balance of the requirements for the Government for the remainder of this fiscal year. This application will involve the balance of the $75,000,000 authorized by the United States Congress to be lent to us by the RFC.

The signature of the loan contract in Washington concludes months of negotiations. The exact terms of the loan were originally prepared [Page 1107] in accordance with the recommendations of the United States Government’s National Advisory Council on International Monetary and Financial Problems. The statement issued by the RFC to accompany the signature of the loan contract was worked out in consultation between Ambassador Elizalde and officials of the United States Government. Secretary of the Treasury Snyder, Undersecretary of State Clayton and Representative C. Jasper Bell participated in the preparation of the statement. It is therefore of considerable significance. The statement points out that the date of the maturity of the loan (January 1, 1952) was set on the basis of such information as was available in Washington at the time of the formulation of the recommendations of the National Advisory Council. I view the terms of the loan to be a provisional arrangement; as additional information is made available from studies now under way, a basis will be provided for a review of the terms of this loan.

The Joint Philippine-American Financial Commission is now at work gathering and preparing comprehensive data on the status of the finances of the Philippine Government. This material will soon be available for the purpose I have mentioned.

My original request was for a loan to mature in 25 years, with amortization of principal to begin in 5 years. Depending on the findings of the Joint Financial Commission, I have every reason to believe that the United States Government will sympathetically consider our desires on this matter in the light of complete factual information which will soon become available.

My report to the nation on the state of our fiscal affairs submitted to Congress in the form of a budget message on February 11, 1947, contained a plain statement of our situation requiring loan assistance. With the $75,000,000 we expect to obtain for this fiscal year, we will be able to meet our needs up until June 30, 1947. The Filipino people must be grateful to the United States Government for this much needed assistance. I wish to express my gratitude to President Truman, to Representative Bell, who is the author of the original congressional loan authorization, and to the other high officials of the United States Government for their sympathetic interest in our situation which has reflected itself in the unflagging efforts to arrive with us at a suitable conclusion to the negotiations. Ambassador Elizalde, who has played an extremely able role in this situation, received every attention and found American officials, including President Truman himself, at all times ready to work with us on this matter.

I wish also to express our gratitude to Ambassador McNutt and the American Embassy officials in Manila who have consistently and vigorously supported our loan application from the very day of its submission.

Respectfully submitted,

For the Ambassador:
Comdr. Julius C. C. Edelstein
Acting Director of Information and Cultural Relations