Foreign Relations of the United States, 1961–1963, Volume XXIII, Southeast Asia

384. Letter From the Ambassador to the Philippines (Stevenson) to the Assistant Secretary of State for Far Eastern Affairs (Hilsman)⁰

Manila, May 6, 1963.

Dear Roger: I cannot emphasize enough how unhappy we are out here about the pending new war damage legislation (Fulbright Bill).¹ There are a number of reasons for our concern.

In the first place, the Bill is predicated on so many erroneous assumptions, e.g., that the damage to properties here was largely a Japanese action, whereas we had a large, if not the largest, share in it; that the principal purpose of the 1946 Act² was to assist the Philippine national economy, whereas that was very incidental and aid to individuals who had suffered such severe losses largely at our hands was the main objective; that the claimants’ interest in final payments was largely kept alive by the two lobbyists, whereas thousands of them have been counting on this money ever since we offered it many years ago; that the claims will “net out” close to the $73 million figure, whereas it is our information (based on consultations with representatives of the Foreign Claims Commission in Manila) that as much as $15 million to $25 million may not be required; that the Department has continuously favored settlement on a government-to-government basis, whereas the Department testified to the contrary before the Senate Foreign Relations Committee a year ago.

The theory is most unconvincing that these two lobbyists, by the machinations alleged against them, (1) shifted the whole theory of the Act from government-to-government to government-to-people basis for their own benefit; (2) stirred up 88,000 people to continue to seek monies promised them but never paid on the theory that they did not need the money or did not want it, and (3) by payments totaling about $9,000 to the campaign funds of twenty members of Congress, secured the passage of legislation which would otherwise not have been adopted, or at least would have been adopted in some other form.

Regardless of the factors mentioned, our biggest concern is about the ultimate result and the strong likelihood that American goodwill here will suffer a tremendous setback.

In considering the situation as it has been developing, the GOP has faced a dilemma: (1) If it took no action there was a better chance that a controversy in the Congress would not arise which could lead to the revocation or emasculation of the 1962 Bill and, most important of all, the GOP would be the beneficiary of the considerable sum received but not claimed. Fully recognizing that serious problems, including the likelihood of local irregularities, would probably occur when, as and if the local government did attempt to settle with the various claimants, the desire to get the “bonus” money—especially in an election year—has been a paramount factor in preventing the GOP from facing this whole issue forthrightly; (2) If the GOP protested, it ran an almost certain risk of controversy in the United States Congress and strong likelihood that the 1962 Act would be drastically amended or even appealed. Also, the extra millions would be lower.

Assuming that a turmoil is not about to blow up when this new legislation reaches the House, the ultimate adoption of the Fulbright legislation and the payment of the whole $73 million to the GOP will almost certainly have these consequences: (1) At the very least there will be long delays in settling with the claimants; (2) Irregularities of various types are almost certain to arise, based on past experience; (3) The U.S. image will have suffered greatly from having “passed this buck” to the local government: Incidentally, as this whole situation is receiving more and more attention in the local press, the suggestion is being made that claimants may be able ultimately to receive their money via the Philippine Government and then to sue the United States Government for the balances due them. Whether or not they should ultimately be successful, this will certainly prolong the agony and keep alive anti-American sentiments.

It may well be that nothing can now stop this unfortunate matter from taking its dire course. I did feel, however, that at least for the sake of the record you would want me to write you quite frankly about the situation as we see it from here. I would stress that the fact that the Phil Government has not spoken up strongly against the pending legislation should not, in my judgment, be considered as too important a factor. If it did not believe (as we do here) that there is a substantial bonus coming its way I am confident that it would have protested vigorously. In other words, GOP silence has been procured because of its eagerness to secure this windfall.

With your knowledge of the Philippines, you are well aware of the historic charge that “we take them for granted”. I cannot help wondering whether the pending action on this War Damage Bill does not substantiate their claim. In other words, would our legislators have proceeded as they have if the U.K. or some other major power had been the one involved. After all the difficulties we have been through because of the false start on the war damage legislation last year in the Congress—and I cannot emphasize enough the innumerable antagonistic attitudes and problems which have confronted us over the past few months as a result of that situation—it seems almost tragic for us to take another action which not only will efface most of the goodwill which we have so patiently reestablished, but can also lead to much additional and permanent bitterness. Certainly the timing is unfortunate, just when—as the Filipinos view it—we are supporting our British ally in its Malaysia plan rather than siding with our own “ward”. Also, the GOP is greatly concerned about the reduction in our Military Aid Program.

The U.S. image became tarnished by the original congressional action last year. By hard and patient polishing, the tarnish has pretty well faded. This new action not only will reestablish the tarnish but probably increase it.

From the standpoint of Phil-American relations, I believe we should complete the payments as expeditiously as possible under the 1962 Act. If it can be done, the lobbyists should be dealt with in some other way. It is far more in the United States interest to see that these claimants are paid directly by the U.S. Government as presently contemplated than to change the concept and procedures at this late date in an attempt to punish two lobbyists for actions which the Congress feels were objectionable if not offensive.³

Sincerely yours,

Bill Stevenson

0. Source: Department of State, EA/Phil Files: Lot 66 D 502, POL 27–9 War Damages. Confidential; Official–Informal.
1. Fulbright placed before the Senate Foreign Relations Committee on April 23 a bill to provide for government-to-government payment of war damage claims in lieu of private payment as provided for in P.L. 87–616. (Memorandum from Assistant Secretary of State for Congressional Affairs Frederick Dutton to Harriman, April 20; ibid.) Regarding P.L. 87–616, see Document 375.
2. 60 Stat. 128.
3. In a letter drafted by Ballantyne and cleared by Bell and Rice, May 20, Hilsman replied to Stevenson that the Department agreed with his comments. Hilsman reported that “a very high level in the Department” and President Kennedy had discussed the matter with Senator Fulbright who still believed that the legislative process had been tampered with and Congress misled. Fulbright considered that the importance of rectifying this situation overrode potential adverse effects of his bill in the Philippines. Hilsman stated that the attitude of the House of Representatives was different. (Department of State, EA/Phil Files: Lot 66 D 502, POL 17 (Amb. Stevenson))