Office of the Historian

896.10/10–1051

Memorandum of Telephone Conversation, by the Assistant Secretary of State for Far Eastern Affairs (Rusk)

confidential
[Washington,] October 10, 1951.

Subject: Philippine RFS Debt

Participants: Mr. Daniel Bell—President, American Security & Trust Co.
Dean Rusk—Assistant Secretary of State

Mr. Bell said that during Mr. Cuaderno’s recent visit1 the two of them discussed at some length the funding of the Philippine RFC debt.2 The present arrangement is that this debt should be paid in two installments, one on January 1, 1952 and the other on January 1, [Page 1571] 1953. Mr. Bell said that obviously this was too steep a requirement for the Philippines to meet at this time and that he believed it should be funded over a period of ten years at the present interest rate.

Mr. Bell said that he had discussed the refunding of this RFC loan with Mr. Stuart Symington3 and Mr. Symington had indicated that he would be agreeable to the ten-year funding aspect but would look to Treasury with respect to the interest rate. Mr. Bell then talked to Secretary of the Treasury Snyder about the interest rate and pointed out to him that we are now spending a good deal of money in the Philippines for economic and military assistance and that we should not put ourselves in the position of seeming to take back our assistance by charging a higher interest rate on the RFC loan. Mr. Bell said that Secretary Snyder indicated sympathy with the idea and commented “that we should not pat someone on the shoulder and at the same time kick him in the back”.

Mr. Bell asked me to call this to the attention of the State Department representatives in NAC in order that the State Department might support the refunding of the RFC loan over a period of ten years at the present rate of interest.

I told Mr. Bell that I would get in touch with Mr. Willard Thorp4 immediately and discuss this with him.

  1. Governor Cuaderno was in the United States during September.↩
  2. Reference is to $60 million outstanding of loans granted the Philippine Government during 1947 for budgetary purposes. For documentation, see Foreign Relations, 1946, vol. viii , and 1947, vol. vi, pp. 916 ff. and pp. 1102 ff., respectively.↩
  3. Administrator, Reconstruction Finance Corporation.↩
  4. Assistant Secretary of State for Economic Affairs.↩