Foreign Relations of the United States, 1951, Asia and the Pacific, Volume VI, Part 2

796.5–MAP/3–1551

Memorandum by the Deputy Director of the Office of Philippine and Southeast Asian Affairs (Melby) to the Staff Assistant for Regional Programs in the Bureau of Far Eastern Affairs (Parelman)

confidential

[Washington,] March 15, 1951.

Subject: ECA Program for the Philippines.

I wish to enter a general and emphatic objection to the proposed ECA program for the Philippines.¹ Reading the breakdown² of this program, it is apparent that it has not been thought out as an over-all program, or that it has any particular reference to specific Philippine needs. In brief, it is spread over far too much ground and would, in my opinion, only result in the dissipation of $50 million without producing any tangible or constructive results. One gets the impression that someone sat down, listed every conceivable avenue of expenditure and then pro-rated the funds presumably to be available.

It is impossible to make any effective impact with $50 million by dividing it between administration, public health, industrial development, agricultural production, fisheries and road building. Furthermore, a number of the recommended industrial projects would appear to be an invasion of a field more properly to be handled by private investment. Too much at this stage of the agricultural projects appear to be long-range scientific development and not enough at the start of the sort of thing which would rapidly increase basic production. For example, the item for fertilizer, which could this year raise rice production significantly, seems too small. The vague suggestions on abaca production totally ignore the basic problem in this respect, namely, land tenure and squatters. On the importation of food stuffs every single item listed falls in that category which is consumed by the wealthy classes and makes no provision for basic mass subsistence.

Rather than dissipating resources over a limitless area, which incidentally I presume would require hundreds of American staff members, I believe attention should be focused on three or four dramatic projects which would rapidly and significantly increase basic food stuffs and also increase income and revenue-producing raw materials such as abaca. I believe a significant contribution could be made by the right kind of road program in Mindanao. Although a gold mining project has a certain understandable appeal in some quarters I suspect that Congress might take a dim view of grant aid for the industry from the American taxpayers’ jeans. Finally, I believe that any such program should in the first instance be drawn up in Manila by those who are closest to Philippine problems and then submitted to Washington for consideration.

With reference to Mr. Checchi’s monumental telegram³ justifying an ECA program and suggesting one of his own, this makes even less sense than the ECA presentation. Ninety percent of the telegram is devoted to a fatuous, irrelevant and in large measure erroneous, if not positively dangerous, elaboration of Mr. Checchi’s views on the political and economic situation in the Philippines. His recommendation introduces the somewhat novel element of a $100 million program for next year of which $75 million is to be spent on imported consumer goods. I am at a loss to understand what the purpose of this is unless it be a gigantic boondoggle. Its consequences seem to me too apparent to require recapitulation.⁴

1. This and following underlinings are apparently the work of the author.
2. Unsigned memorandum titled “The Philippines”, not printed, attachment to memorandum of March 21 from Mr. Parelman to Mr. Melby, also not printed. (796..5–MSP/3–2151)
3. Toeca 211, March 12, not found in Department of State or ECA cable files. Other references indicate this telegram was approximately 40 pages long.

4. In a memorandum of a conversation held March 15 between representatives of PSA and representatives of the ECA’s Far Eastern Program Division, Mr. Leonard S. Tyson, an economic officer in PSA, stated in part that the PSA representatives had emphasized that “the ECA presentation is overly weak in explaining the origin, objectives, and fundamental reasons for a large program in the Philippines. It was felt that if a $50 million program is to be sold to the Bureau of the Budget and the Congress it will have to be in terms of the unique situation in the Philippines and our special objectives in that country”. The PSA officers then suggested recasting the program justification in terms of the objectives stated in the Bell Report and the means to them outlined in the Quirino–Foster Agreement. The PSA officers suggested also that the aid program concentrate only on the more critical aspects of the Philippine economy. “The ECA representatives agreed that it would be desirable to increase the amount programmed for resettlement, abaca, sugar, ramie and highway transportation and to eliminate the Maria Cristina [hydroelectric power] project.” Both PSA and ECA officers agreed that “no real planning [could] go forward” until better technical analyses of Philippine development needs were made. Mr. Tyson went on to say:

   “A recurrent theme throughout this entire discussion, however, was the fact that in all likelihood it will be impossible to effectively spend $50 million a year in the Philippines to finance only the cost of U.S. materials needed for the development program. For example, everyone acknowledged that a major road building program is needed in the Philippines and that the cost of a reasonable program would probably range around at least $10 million a year but that 80 percent of this cost would be in terms of local currency. The Philippines already have most of the capital equipment that would be needed for such a road program. If, therefore, a U.S. development program is to be inaugurated it will probably be necessary for the U.S. to somehow cover the local currency costs.” (896.00R/3–1551)