Office of the Historian

103.02–ECA/11–850: Telegram

The Administrator of the Economic Cooperation Administration (Foster)1 to the Secretary of State

confidential
Manila, November 8, 1950—7 p. m.

1200. From Foster.

1.
Negotiations initiated in two discussions of about two hours each with Quirino. Lopez and Yulo participated. Also met with Perez and about 35 Congressmen for period of question and answer.
2.
Discussions were cordial in tone.
3.
President’s main preoccupation was with “control and supervision” aspects of an ECA program. Our response was that we had a responsibility to Congress and US taxpayer to make sure ECA funds were effectively used but we had worked out satisfactory arrangements with other countries on this problem without affronting their sovereignty and we were sure we could do it with the Philippines. Believe we can arrive at an agreement in principle this point but that specific day to day implementation will be long hard job for permanent mission requiring utmost in tact and firmness.
4.
Taxation discussions have not yet come to the point. President agrees that more revenue is needed but has ducked issue of calling special session now and sponsoring tax legislation of the order of magnitude that is needed. Have made it clear to him there is little prospect of Philippines receiving financial assistance from US until [Page 1513] appropriate tax program passed. Will smoke him out on matter of special session before departure.
a.
The question was raised as to what proportion of any aid would be loans and what would be grants. Told the President this was a matter to be worked out later when we had further opportunity to study Philippine needs.
5.
President concerned over size of possible mission. Had heard report it would consist of 900 people. Told him we hadn’t yet got down to these specifics but that, in any case, this figure absurd. The size of the mission would depend on the kind of program we could develop together.
6.
In discussions covering use of technicians, President stated he thought technical assistance would be forthcoming outside of ECA, through Point Four. Told him this was possible but not certain; that any ECA program would attach great importance to technical assistance; that we would be prepared to provide technicians for full time work in Philippine Government departments.
7.
President raised question of what kind of Philippine organization should be created to utilize US aid. He thought Philippine Development Corporation proposed by Bell could be such a body, organized with Americans serving as minority members of the board. Told him that organization of such a corporation might be a possible means of improving coordination of Philippine Government development activities but that US mission would still have to control disbursement of funds and could not abdicate this responsibility to a Philippine Government organization, even though this organization had American representatives on it. On whole, am cool to idea of Americans serving as minority members of Philippine Development Corporation. Believe that better arrangement, at least in beginning, would be for Quirino to appoint high level committee with which our mission could work in planning, use of aid. This will probably be solution finally adopted.2
8.
Through non-Presidential source, have learned that technicians studying Bell report for President are in favor of 25 percent import levy. We will, of course, discourage this type tax in favor other methods raising needed revenue.

Please pass ECA. [Foster.]

Chapin
  1. This telegram was transmitted through the facilities of the Embassy in the Philippines. Regarding the Foster Mission to the Philippines, see the editorial note, supra.↩
  2. Foster left Manila by airplane on November 9 for visits to Japan and Korea before returning to the Philippines on November 14 to sign the memorandum of agreement with President Quirino whose text had been prepared in negotiations between members of Foster’s party and a Philippine committee headed by Presidential adviser Yulo.↩