Memorandum of Conversation, by the Acting Assistant Chief of the Division of Philippine Affairs (Mill)


Ambassador Elizalde called on Mr. Armour today and briefly discussed several matters of interest to his government. He opened the conversation by referring to the Philippine Rehabilitation Act, or the “Philippine War Damage Act”, as he termed it, and particularly singled out for discussion Section 104 of the Act which grants priority in award to claimants with claims less than $500. He strongly criticized this latter provision and said that it was responsible for retarding much of the economic rehabilitation of the islands. He said that claimants obtaining these payments of less than $500 were spending their awards very loosely and contributing to an inflationary situation while at the same time the businessmen who needed funds to rehabilitate the sugar mills and other industrial enterprises of the islands were forced to defer plans for rehabilitation of their businesses. He said further that there were so many claimants for awards under $500 that there would undoubtedly be no money left for payments to businessmen after the smaller claims had been paid off. The Ambassador said that he was not trying to blame Congress for the war damage provisions for, according to the Ambassador, many people, including “some people in our own government”, were responsible for this “mistake” [Page 1123] regarding the $500 priority award. The Ambassador stated in summary on this subject that “I served seven years in Congress and the War Damage Act is the worst piece of legislation I have ever seen.”

Mr. Armour stated that former Minister-Counselor Nathaniel P. Davis had been in to see him a few days ago and that Mr. Davis had informed him that considerable progress was being made by the United States rehabilitation agencies operating in the Philippines under Title III of the Philippine Rehabilitation Act. The Ambassador acknowledged that considerable progress was being made by the US rehabilitation agencies. He said, however, that President Roxas thought that the 120 million dollars authorized under Title III would have to be at least doubled in order for the work of the rehabilitation agencies to be effectively carried out.

Mr. Armour stated that he had also heard that the copra industry was reviving rapidly in the Philippines. The Ambassador said that this was true but that copra was an exception. In reply to a further question from Mr. Armour concerning progress being made in the hemp and sugar industries, the Ambassador acknowledged that the hemp industry was making a considerable recovery, but he stated that the sugar industry was way behind and that exportations of sugar were just now beginning. In connection with the export of copra to this country, the Ambassador brought up the matter of a first-person note which he has sent to the Acting Secretary of State protesting a reduction in the rate of duty on coconut oil imported from other countries, which new duty is contained in the General Agreement on Tariffs and Trade approved at Geneva and due to become effective in this country on January 1, 1948. Mr. Butterworth39 advised the Ambassador that we had not yet received this note.

The Ambassador referred several times during the conversation and at the conclusion of the conversation to the Philippine request for additional financial assistance made to Mr. Armour on November 17, 1947. He stated that he had been advised by President Roxas that Ambassador O’Neal40 had talked to the President concerning the Philippine request. Mr. Armour stated that we had informed Ambassador O’Neal of the Philippine request and had requested him to talk to President Roxas on this matter. Mr. Butterworth advised the Ambassador that we had had no reply from Ambassador O’Neal except to the effect that he expected to talk with President Roxas soon. Mr. Butterworth suggested that Ambassador O’Neal might be transmitting [Page 1124] a reply to the Department in the form of a despatch and that this was the reason we had not heard more from Ambassador O’Neal on the matter. The Ambassador stated that we would undoubtedly soon hear from Ambassador O’Neal and that we would know more fully then of the reasons for the request for additional assistance made by the Philippine Government.

  1. W. Walton Butterworth, Director of the Office of Far Eastern Affairs.
  2. Emmet O’Neal had succeeded Paul V. McNutt as Ambassador to the Philippines.