896.00/9–2250

Memorandum of Conversation, by Mr. Eugene H. Clay of the Office of Philippine and Southeast Asian Affairs

confidential

Subject: Consultation with Subcommittee on the Far East and Pacific Ocean Area of the House Foreign Affairs Committee on Bell Report and Recommendations1

Participants: Members of the Foreign Affairs Committee and Subcommittee2
Members of the American Economic Survey Mission to the Philippines3
Department of State—Mr. Dean Rusk, Mr. Ben H. Brown, Jr.,4 Mr. Eugene H. Clay

Mr. Bell

Mr. Bell stated that the Mission was sent by the President and outlined the purpose of the Mission as set forth in his terms of reference. He stated who the members of the Mission were, and gave a brief background description of the Philippines including reference to their loyalty to the United States and their resistance to the Japanese. He described the current extremely serious internal financial situation and the large imbalance in international payments. He stated that there had been a large flight of capital and described the over-all conditions in agriculture and other fields. He then said that the Mission was recommending that the United States provide the Philippines with $250,000,000 in loans and grants over a five-year period. Mr. Bell stated that the Mission was recommending a long-term mission be sent to the Philippines which would include advisers and experts in practically every field of the economy.

Mr. Chiperfleld

Mr. Chiperfield said that it would take a man of great ability to head the mission and that it would be an extremely difficult task.

[Page 1491]

Mr. Rusk

Mr. Rusk said it would be a good deal like U.S. operation in Greece.

Mrs. Bolton

Mrs. Bolton asked why we hadn’t done more about it in the years during which the Philippines were under our control.

Mr. Bell

Mr. Bell said that a good deal had been done before the war but that the war and the years of occupation destroyed a great deal that had been accomplished. He stated that the Civil Service was demoralized and the prewar leaders were either dead or too old to now be effective.

Mrs. Bolton

Mrs. Bolton asked if this was an example of what we were up against in the whole Southeast Asia area.

Mr. Rusk

Mr. Rusk said that the problem was similar. He said that all of these countries had insisted on their independence and freedom and that we had supported them in this desire. We now had the problem of helping them develop at least the skeleton of adequate governments.

Mr. Smith

Mr. Smith asked if the Filipinos were really ready for the type of guidance that was being recommended and suggested that Filipinos should be sent here for training instead of a mission going to the Philippines.

Mr. Bell

Mr. Bell said it was too late for this approach. He said, however, that he considered one of the primary tasks of the mission would be to train Filipinos there.

Mr. Smith

Mr. Smith asked about corruption.

Mr. Bell

Mr. Bell said that there was no doubt about corruption and that it was widespread throughout the Government. He stated that one reason for the existence of such corruption was the almost complete absence of adequate checks and balances.

Mr. Ribicoff

Mr. Ribicoff said it was going to be an extremely difficult task to persuade the propertied class to go along with the recommendations [Page 1492]and he wanted to know how tough the United States was prepared to be.

Mr. Bell

Mr. Bell said that the United States should be prepared to be extremely tough and the Mission’s task was to exert whatever pressure was required.

Mr. Ribicoff

Mr. Ribicoff said that if there was an extreme crisis the incompetents might be thrown out and that therefore we might be doing more harm than good by taking action to avoid such a crisis;

Mr. Bell

Mr. Bell said that we could not now take this risk.

Mr. Rusk

Mr. Rusk said that the Mission would act as a check on inefficiency and corruption.

Mr. Kee

Mr. Kee asked if the Mission had any opinion on the War Damage Bill.

Mr. Rusk

Mr. Rusk said that he would appreciate it if that question could be answered in two parts, first by Mr. Bell and then by himself on behalf of the Department of State.

Mr. Bell

Mr. Bell said in the opinion of the Mission additional war damage funds would not be justified. He said that enterprises that could economically operate had been restored and that almost all of those who would receive the additional war damage payments had made enormous profits in the period since liberation and had had ample funds with which to reconstruct. He stated that the $100,000,000 could be used much more effectively in another way.

Mr. Rusk

Mr. Rusk said that the Department continued to feel the same about the moral obligation as at the time of the hearings on the war damage bill. He said, however, that this did not mean that the bill was on the list of must legislation.

Mr. Judd

Mr. Judd said that he hoped when operations were undertaken that favorable consideration would be given to joint commissions as were used in the latter days in China.

[Eugene H. Clay]
  1. The Chief of the American Economic Survey Mission to the Philippines, Daniel W. Bell, accompanied by Deputy Assistant Secretary of State for Far Eastern Affairs Livingston T. Merchant, also called upon Senators Tom Connally and Alexander Wiley of the Senate Foreign Relations Committee on September 28. Clay’s memorandum of that much briefer meeting is not printed (896.00/9–2850).
  2. An attachment to the source text indicates that this meeting, which was held in the House Foreign Affairs Committee Room on the morning of September 22, Was (attended by the following Congressmen—members of the Committee: Mike Mansfield of Montana, A.S.J. Carnahan of Missouri, Thurmond Chatham of North Carolina, Abraham A. Ribicoff of Connecticut, Robert B. Chiperfield of Illinois, Joseph L. Pfeifer of New York, Lawrence H. Smith of Wisconsin, Walter H. Judd of Minnesota, John Kee (Chairman) of West Virginia, George A. Smathers of Florida, Frances P. Bolton of Ohio, and Thomas S. Cordon of Illinois.
  3. Mission members present were Chief of Mission Bell and Mission Chief Economist Edward M. Bernstein.
  4. Deputy Assistant Secretary of State for Congressional Relations.