314. Memorandum From the President’s Special Assistant for National Security Affairs (Bundy) and James C. Thomson, Jr., of the National Security Council Staff to President Johnson 1


  • Authorization for Negotiations on Uses of Philippine War Damage Funds

The attached request from the Secretary of State2 is an outgrowth of the troublesome Philippine War Damage Legislation of 1962, as amended in August 1963.3 It is also an outgrowth of your joint communiqué with President Macapagal of October 1964.4

In brief, $28 million in War Damage funds have been set aside in the U.S. Treasury as a “Special Fund for Education”, to be used to the mutual advantage of the Philippines and the United States. State now [Page 687]asks that you authorize negotiations with the Philippine Government on the uses of this Special Fund.

In addition, the Filipinos came forward last year with a proposal that a portion of this money be devoted to a Land Reform Education program in connection with the implementation of Macapagal’s Land Reform Code of 1962.5 State also asks that you authorize conclusion of an agreement committing us to the support of this program for Land Reform Education through disbursements from the Special Fund for Education.

These War Damage funds have had a difficult legislative history and have previously caused deep irritations between our two countries (Macapagal cancelled his 1962 State Visit in pique over Congress’s failure to pass the War Damage Bill). So our first objective should be to move without unnecessary delay on the uses of the money now that the funds are available. At the same time, we should do all we can to ensure that these funds go to solid, viable projects that can contribute effectively to the Filipino development process. State’s terms of reference provide for project-by-project review by Embassy Manila and the relevant U.S. agencies; no funds will be moved from the Treasury until a particular project has been approved; and the Filipinos will issue periodic reports to us on the progress of each project.

Finally, there is a current political angle that we should keep in mind: the Philippine Presidential elections in November. State intends to move with sufficiently “deliberate speed” to avoid any charges, on the one hand, that we are providing goodies for Macapagal to announce on election-eve, and on the other hand, that we are pulling the rug on our commitment to him and thereby supporting his opponent. As matters now stand, it is unlikely that any funds will be actually disbursed to the Philippines before the elections.

State’s package makes sense in delivering on a firm U.S. commitment in the context of adequate safeguards. We recommend that you approve the two authorizations.6

  1. Source: Johnson Library, National Security File, Memos to the President, McGeorge Bundy, Vol. 4, 9/1/65–9/22/65. No classification marking.
  2. Not attached and not found.
  3. On August 30, 1962, President Kennedy signed P.L. 87–616, authorizing $73 million for Philippine damages from World War II. The Fulbright-Hays amendment contained in P.L. 88–94, August 12, 1963, earmarked part of this money for educational programs to benefit both the Philippines and the United States. The texts of P.L. 87–616 and P.L. 88–94 are in American Foreign Policy: Current Documents, 1962, pp. 1089–1091 and ibid., 1963, pp. 829–831.
  4. Text ibid., 1964, pp. 946–949. See also Document 302.
  5. See Document 300.
  6. A note on the memorandum indicates that the President approved the two authorizations on September 20.