896.51/12–2047: Telegram

The Ambassador in the Philippines (O’Neal) to the Secretary of State


1623. Reference Deptel 1259, December 4. Interview arranged with President Roxas December 17 on request for financial aid. President revealed dissatisfaction with procedure for getting aid on project basis referring specifically to technical requirements for obtaining Eximbank loans regarding these requirements as onerous. He pictured procedure under which Eximbank would rediscount paper of miscellaneous type previously discounted by RFC or similar Philippine institution, consisting of industrial mortgages, home residential loans and loans on small commercial or agricultural properties. He stated unfortunate that current excellent revenue collections Philippine Government resulting Philippines penalized as recipient financial aid.

Embassy pointed out that sound business loans on specific projects accorded with United States foreign investment policy; hence advisable request loans not on basis charity but on prospect of affording fair investment return. He made clear on such basis substantial loans might be forthcoming and this procedure far superior to requesting merely grandiose sum for purpose or purposes not clearly defined. He characterized suggestion of President about making large number of small loans by Philippine institution which might be rediscounted under government guarantee as procedure followed in United States with success and that it appeared feasible. (It was explained, however, Eximbank had not previously engaged this type financing.) It was agreed matter would be explored further and in detail with Philippine Secretary Finance with view to setting forth specific projects, amounts and categories.

President referred to plans for creation central bank stating draft legislation would be presented to Philippine Congress forthcoming session. He has requested loan of two advisers from Federal Reserve Board to serve several months without cost Philippine Government. Roxas indicated intention central bank to be promotional in nature and would aid in launching new industrial enterprises as well as managing [Page 1125] currency. It was pointed out to him delineation of functions desirable and central bank activities should not overlap functions PNB or RFC. President indicated conviction some form import control necessary but under no circumstances would any action be taken to endanger special trade agreement between United States and Philippines. He expressed alarm action might be taken at Habana which would reduce value of preferences currently existing.41 Ely agreed consult other Department officials and report exact status current negotiations multi-lateral general agreement on tariff and trade.

  1. For documentation on United States policy looking toward establishment of an International Trade Organization, see vol. i.