Office of the Historian

896.00–R/3–1551: Telegram

The Secretary of State to the Embassy in the Philippines

secret
[Washington,] March 15, 1951—7 p. m.

2114. Cowen from Melby. Treasury is strongly objecting to ECA program on grounds Phil dollar position increasingly favorable, hence grant program unnecessary and aid should be in form of increased and strengthened technical assistance.1 Treasury favorable to State–Defense mil budgetary aid proposal and uses this as further argument against large scale grant program. It is likely Treasury will accept some form of compromise between grants and loans with emphasis on latter. It is possible ECA would accept comparable formula with emphasis on grants in the first year.

I have reason to believe Treasury would accept compromise involving maximum of 50 million military budget aid, 15 million ECA grants and 50 to 75 million export–import loans in first year. What do you think of this? What would Phil reaction be? [Melby.]

Acheson
  1. A summary of a memorandum of a conversation held on or about March 13 between Mr. Tyson and Arthur W. Stuart (Chief of the Far Eastern Division, Office of International Finance, Treasury Department) reads in part as follows: “In commenting on the suggested ECA program for the Philippines, the Treasury Department noted that Philippine foreign exchange reserves have been rising, that the aggregate of the ECA program and the military aid program now under consideration probably amounts to more aid than the Philippines require, that the Philippine balance of payments position does not warrant aid on the scale proposed by ECA, and that many of the projects proposed by ECA are not necessary. Treasury therefore believes that the ECA aid program for the Philippines should be cut from $50 million a year to around $10 million, although it recognizes that the Foster–Quirino agreement may constitute a commitment on our part to extend a greater measure of assistance than would otherwise be required and argues that this additional assistance should be made available through loans extended by the Export–Import Bank from its own funds and on its own authority.” (Memorandum of conversation not found in Department of State files; summary from S/SR Files, Lot 52–241, Daily Secret Summary for March 14.)↩