DEPARTMENT OF STATE Memorandum of Conversation
DATE: August 9, 1949
SUBJECT: Situation in the Philippines
PARTICIPANTS: Elpidio Quirino, President and Secretary of Foreign Affairs of the Philippine Republic Pio Pedrosa, Secretary of Finance of the Philippines Jose Yule, Member of the Council of State of the Philippines Joaquin M. Elizalde, Philippine Ambassador The Secretary Myron M. Cowen, U.S. Ambassador to the Philippines W. W. Butterworth, Director for Far Eastern Affairs
Copies to: S FE U PI G AmEmbassy, Manila
Since President Quirino had been vague and haphazard in the interchanges which the President and I had had with him at the dinner given by the President in his honor last night, the President asked me to call upon President Quirino this morning to see if I could set a constructive framework within which the conversations at the White House this afternoon could be conducted. Inasmuch as President Quirino had little comprehension of the import of the analysis of the Philippine situation which the President of the World Bank had set forth in his communication of August 4, Ambassador Cowen arranged that the Minister of Finance, Mr. Pedrosa, and Mr. Yulo together with Ambassador Elizalde be present.
I called upon President Quirino at eleven a.m. and we talked for the better part of an hour. After the usual exchanges of courtesy, appropriate references by me to the close relationship of the Governments and peoples of the two countries, to the difficulties which have faced the Philippines in the postwar world and the constructive steps that had thus far been taken, I went on to point out the basic facts that lay behind such apprehensions as those set forth in the communication from the World Bank. I emphasized particularly the extent to which American $s had been made available to the Philippine economy and the fact that many of the reconstruction and other projects would be completed in the not too distant future with the result that the $s available to the Philippine Government for capital reconstruction would diminish. I expounded on the dangers arising out of the internal budgetary position, the external balance of payments and the disproportionate amounts being expended on consumer goods as compared with capital reconstruction. In this connection, I mentioned that the President was considering the question of a further payment in the matter of the war damage claims and that the manner in which the ensuing $s would be employed in terms of the larger fiscal framework was an important consideration, particularly since it might well be - if it eventuated at all - the last of the major wartime assistance measures.
President Quirino said that he and I were approaching the question of his discussions in Washington from different points of view; that he had drawn up a list of specific problems that he wanted to talk about and he showed me the first page of this list which contained some twelve or fifteen items which corresponded roughly with the various items listed in the memorandum prepared by the Department for the President. He made mention of military assistance which he emphasized arose from the Agreement between the two countries. He stressed its importance later in the conversation when he discussed the Huk problem and the question of law and order in general. He minimized the problem of internal security and alleged that law and order prevailed throughout the Islands and that the Huks who had at one time amounted to some 40,000 now were a mere 5,000 who had been driven into the hills from which they foraged from time to time. He also referred to the fact that aside from the $500 war damage claims, payments for war damage had only been made to about 30 percent whereas the legislation had referred to 75 percent payments of claims and upon this he and his advisers dissertated at some length and to my mind with validity. Then he touched on the question of loans and this he had to admit would involve the larger framework of the considerations which I had raised. He then launched into a thirty-minute dissertation which added up to an expression of confidence that all was well in the Philippine Islands; that everything was being done that could be done; and that without the application of any painful measures it would all turn out all right in the end. During the latter part, however, he seemed to change his tune somewhat concluding on the note that we had taught the Philippines to live in American style and, therefore, they must have the consumer goods, luxuries though they be, which went with that way of life. His advisers then stepped in to steer the conversation into more factual channels to illustrate the rapidity with which the Philippines were going about restoring their sugar, abaca, rice and other productive crops and exports. One or two specific assertions made may be useful for future reference. President Quirino asserted that the Philippines, under the present arrangements that his Government had effected, would be entirely self-sufficient in rice within five years. I commented that in view of the importance of this item that was a long time. On the other hand, Mr. Yulo asserted that within two or three crops, the Philippines would be self-sufficient in rice. Both the President and Mr. Yulo asserted that the import controls were being made effective, the President adding that he had taken certain steps just before he left the Philippines and contemplated taking others in a couple of months. Incidentally, he made mention of possible allegations by the American import community of discrimination if import controls were more severely enforced. Mr. Yulo cited the figures of rice and sugar production and asserted that the hemp industry was expanding correspondingly.
Whereas it is difficult if not impossible to get President Quirino down to brass tacks about the Philippine situation, as differentiated from the specific things he wishes to obtain from us, I think his advisers took appropriate note of our apprehensions and will have their hands strengthened in their operations in the future by these manifestations of our concern. Our conversation ended on a note of indefiniteness and came to a somewhat abrupt close due to the fact that the President was scheduled to appear in a few minutes in the House and Senate.
FE:WWButterworth:msa