[ 11 ] See (pp. 70-105) article from "The Anglo-Saxon Review."
[ 12 ] There has been so much misconception and misrepresentation about this payment of twenty millions that the following exact summary of the facts may be convenient.
When Spain sued for peace in the summer of 1898, she had lost control of the Philippines, and any means for regaining control. Her fleet was sunk; her army was cooped up in the capital, under the guns of the American fleet, and its capture or surrender had only been delayed till the arrival of reinforcements for the American Army, because of the fears expressed by foreigners and the principal residents of Manila that the city might be looted by natives unless American land forces were at hand in strength ample to control them. The Spanish army did so surrender, in fact, shortly after the arrival of these reinforcements, before the news of the armistice could reach them.
In the protocol granting an armistice, the United States exacted at once the cession of Porto Rico and an island in the Ladrones, but reserved the decision as to the control, disposition, and government of the Philippines for the treaty of peace, apparently with a view to the possibility of accepting them as further indemnity for the war.
When the treaty came to be negotiated, the United States required the cession of the Philippines. Its Peace Commissioners stated that their Government "felt amply supported in its right to demand this cession, with or without concessions," added that "this demand might be limited to the single ground of indemnity," and pointed out that it was "not now putting forward any claim for pecuniary indemnity, to cover the enormous cost of the war." It accompanied this demand for a transfer of sovereignty with a stipulation for assuming any existing indebtedness of Spain incurred for public works and improvements of a pacific character in the Philippines. The United States thus asserted its right to the archipelago for indemnity, and at the same time committed itself to the principle of payment on account of the Philippine debt.
When it became necessary to put the Philippine case into an ultimatum, the Peace Commissioners did not further refer to the debt or give any specific reason either for a cession or for a payment. They simply said they now presented "a new proposition, embodying the concessions which, for the sake of immediate peace, their Government is, under the circumstances, willing to tender."
But it was really the old proposition (with the "Open Door" and "Mutual Relinquishment of Claims" clauses added), with the mention for the first time of a specific sum for the payment, and without any question of "pacific improvements." That sum just balanced the Philippine debt—40,000,000 Mexican, or, say, 20,000,000 American dollars.