366. Memorandum From the Deputy Assistant Secretary of State for the Far East (Rice) to the President’s Deputy Special Counsel (Feldman)0

SUBJECT

  • Your Request to Assistant Secretary Edwin Martin for Information on Administration Support for the Philippine War Damage Bill (H.R. 8617)

The Administration has consistently supported passage of the Philippine War Damage Bill (H.R. 8617) on the grounds that:

1.
Original legislation (The Philippine Rehabilitation Act of 1946 (S. 1610, 79th Congress)) provided for payments for rebuilding, replacement or repair of damaged private property up to a maximum of 75 percent of the approved amount of each claim after an initial $500 had been paid on each claim. The $400 million appropriated under the Act for this purpose was sufficient only to pay the initial $500 on each claim and approximately 52.5 percent of the amount of each approved claim in excess of $500. Thus this program was not carried out as fully as the law permitted due to the shortage of funds appropriated.
2.
Payment in settlement of this matter would be of substantial assistance to the United States in attaining its foreign policy objectives. This is true because the Philippine Government and people sincerely feel that the failure of the United States to appropriate additional war damage compensation has defeated a legitimate expectation of assistance to a firm ally which suffered severe damage in the mutual war effort.
3.
This Bill or similar ones were introduced annually for some years in an attempt to clear this moral obligation of the United States to the people of the Philippines from the books. H.R. 8617 was held up in the Rules Committee last year due to pressure of other business. At that time the President issued a statement regretting that the Bill had been held over, emphasizing that the Administration continues to give whole hearted support to such legislation, and expressing hope that it would receive Congressional approval this year.1
4.
Payment this year would make an especially significant contribution to the foreign exchange reserves of the new Philippine Administration of President Macapagal which has recently undertaken removal of foreign exchange controls, with stabilization of the peso at its [Page 794]true value and which is returning to a free-enterprise economy pledged to development with the assistance of foreign private investment.

ER
  1. Source: Department of State, Central Files, 211.9641/2–762. No classification marking. Drafted by McFarland and cleared by Bell:
  2. See footnote 1, Document 360.