368. Telegram From the Embassy in the Philippines to the Department of State0

1322. For Harriman. Embtel 1321.1 Have just returned from frank talk with President and Vice President who are greatly distressed about adverse War Damage vote2 and state it will be regarded throughout Phils as serious setback to Phil-American relations. Therefore issue for them is whether or not US visit now will help or aggravate that set-back. Because of present pressures they incline toward a postponement on grounds they must demonstrate control of situation rather than letting opponents take over the issue. I of course argued the other way and minimized vote so far as our relations are concerned. I also pointed out possible detrimental effect on new investment and five year program if trip postponed or cancelled. I think I did persuade President not to make a decision for few days pending review of public reaction and press comments in both countries, as well as analysis of US Congress vote. However, unless reaction here proves far less intense than President and Vice President predict or likelihood of immediate reconsideration or some favorable action in US Congress, fear President will issue strong statement cancelling or possibly postponing the visit. If he does that it will be because he feels visit under present circumstances will worsen situation with Filipino people possibly even leading to election of anti-American President in 1965. On other hand if he cancels or postpones as now seems likely he would hope to hold control of situation and rebuild improved relations over period of time. During conversation they mentioned possibility and advantages of neutralistic position.3

  1. Source: Department of State, Central Files, 211.9641/5–1062. Secret; Niact.
  2. In telegram 1321, May 10, Stevenson reported on his discussion with Pelaez earlier that afternoon on the defeat of the War Damage Bill. (Ibid.)
  3. On May 9, despite solid bipartisan support, the House of Representatives defeated the Philippine War Damage Bill (H.R. 8617) by a vote of 201–171. In analyzing the failure of the bill, the Department recognized that payment to some 325 large claimants drew opposition from Congressmen who were not opposed to payments to small claimants. It was noted that the Philippines had received $1.7 billion in postwar aid, and $73 million would be a windfall to large claimants who had already reconstructed and rehabilitated their businesses. (Telegram 1371 to Manila; ibid.)
  4. At the Department of State’s instigation, President Kennedy sent Macapagal a letter expressing regret for the failure of the War Damage Bill, noting that his administration had given it wholehearted support, and suggesting that it was only a temporary setback. Kennedy stated he looked forward to seeing Macapagal in Washington next month. (Telegram 1370 to Manila, May 10; ibid.)