Editorial Note
On April 24, 1951, the ECA appealed previous action taken by the Bureau of the Budget with regard to the proposed fiscal 1952 $50 million grant aid program for the Philippines. Sometime after the Budget Bureau hearing on the matter, held March 30, the Bureau had recommended that the total be reduced to $25 million on the grounds that $15 million in grant aid was already available for fiscal 1951 and that other funds were available to the Philippines in the form of Export–Import Bank loans.
In telegram 3020 from Manila, April 4, Ambassador Cowen, who had received instruction to determine the attitude of the Philippine Government toward a combined grant and loan program, stated: [Page 1531] “During past few days I have separately found occasion to sound out both Quirino and Yulo as to acceptability to Phil Govt of a part grant part loan aid program without of course going into any detail on possible proportions. I found no resistance from either as to this general approach.” (896.00–R/4–451)
However, in telegram 3195 from Manila, April 16, sent jointly by the Ambassador, Mr. Checchi, and Mr. May, the combined U.S. civilian agencies in the Philippines recommended that if $50 million were to be the total fiscal 1952 program, at least $45 million should be in grant aid. They argued that since the Philippine Government had now passed the major legislation required by the Quirino–Foster Agreement, the U.S. would put itself “by cutting grant aid in untenable position of welching on at least implied commitment.” The ECA program was intended as a “lever” with which to encourage the Philippine Government to enact reforms specified in the Bell Report. There was less leverage in loans than in grants. Many influential Filipino politicians were stressing that their country had been asked to fulfill more preconditions to aid than had others in the area. A cut in grant aid might fuel resentment of this fact, a development which could be fatal to the entire aid program. A reduction in grant aid would also create difficulties by automatically reducing counterpart funds. “Most basic projects for example agricultural reform road bldg credits to homesteaders etc. depend much more on peso expenditures than on dollar contribution.” In future years, the proportion of loan to grant aid might gradually be increased as the ECA program took hold.
The telegram concluded: “Embtel 3020 shld not be interpreted as being counter this recommendation but only as tentative probe of possibilities if comparatively small portion of first years funds were to be made available as loans. It does not take account possible public reaction or delve into loans as means leverage.” (896.00–R/4–1651)
In its appeal of April 24, the ECA recommended “after interdepartmental consideration of the Bureau’s action” restoration of $10.4 million of the $25 million previously cut from grant aid. ECA, in explaining the criteria for restoration, stated: “Since the capital development projects were eliminated by the Bureau on the premise that they were bankable and in view of their strong position against attempting to retain them on a grant basis, we have, in the revised program, in effect restored non-capital goods items which were contemplated in the original Bell Program so as to restore the Philippine grant program to the minimum for effective impact.”
ECA summarized its requests in tabular form as follows:
[Page 1532]Philippines
economic program
| Project | Budget Submission | Revised Allocation | Resubmission (Appeal) |
| (Thousands of dollars) | |||
| A. Emergency Relief | — | — | — |
| B. Public Health | $2,208 | $2,250 | $2,250 |
| Training and Research | 310 | 300 | 300 |
| Health Teams | 1,153 | 1,200 | 1,200 |
| Maternal and Child Care | 267 | 275 | 275 |
| Sanitation | 310 | 300 | 300 |
| Quarantine | 168 | 175 | 175 |
| C. Agriculture, Forestry, Fisheries | 13,902 | 11,100 | 14,900 |
| Training, Research, Experimentation | |||
| Experimentation and Research | 821 | 150 | 150 |
| Department of Agriculture | 1,825 | 1,825 | 1,825 |
| Extension Service | 75 | 75 | 75 |
| Cadastral and Soil Surveys | 200 | 200 | 200 |
| Irrigation and Reclamation | 2,000 | 2,000 | 3,000 |
| Disease Control | |||
| Kadang-Kadang | 200 | 200 | 200 |
| Abaca Production | |||
| Nursery | 250 | 250 | 250 |
| Mosaic Disease Eradication | 250 | 250 | 250 |
| Supplies and Equipment | |||
| Fertilizer | 3,040 | 3,000 | 3,000 |
| Agricultural Machinery | 1,400 | 1,400 | 1,400 |
| Seeds and Animal Stock | 800 | 800 | 800 |
| Rural Credit and Assistance | 500 | 500 | 2,500 |
| Forestry | |||
| Equipment for Forest Laboratory | 100 | 100 | 100 |
| Forestry Nursery | 200 | 200 | 200 |
| Forestry School | 156 | 150 | 150 |
| Fisheries | |||
| Vessels, gear and refrigeration | 645 | — | — |
| Canning | 640 | — | — |
| Fish Ponds | 800 | — | 800 |
| D. Transportation, Communications, Power | |||
| Other Public Works | 10,150 | 3,000 | 6,750 |
| Transportation | |||
| Railroads | 750 | — | 750 |
| Highways | 4,000 | 100 | 2,100 |
| Power | 2,500 | — | — |
| Public Works | |||
| Water Supply Systems | 500 | 500 | 500 |
| Flood Control and Drainage | 400 | 400 | 400 |
| Resettlement | 2,000 | 2,000 | 3,000 |
| E. Manufacturing, Mining, Other Industry | 7,250 | 400 | 500 |
| Manufacturing, Other Industry | |||
| Miscellaneous Manufacturing | 2,129 | — | — |
| Handicrafts | 500 | 250 | 250 |
| Industrial Surveys | — | — | 100 |
| Mining | |||
| Surveys | 171 | — | — |
| Development of Strategic Materials | 300 | — | — |
| School of Mining Industries | 150 | 150 | 150 |
| F. General Engineering Advisory Services | — | — | — |
| G. Information | — | — | — |
| H. Education | 500 | 500 | 500 |
| Technical Assistance to Department of Education | 150 | 150 | 150 |
| Assistance to Elementary Education | 350 | 350 | 350 |
| I. Public Administration | 500 | 500 | 500 |
| J. Other Commodities | 15,490 | 7,250 | 10,000 |
| Totals | $50,000 | $25,000 | $35,400 |
(“Appeal of Budget Markings on Philippine Economic Program”, undated, unsigned enclosure to a memorandum of April 24 from Mr. Griffin to Mr. Bissell, not printed; FRC Lot 53 A 441: ECA Deputy Administrator’s Files.)
In Ecato 486 to Manila, May 24, approved by Mr. Griffin, the ECA stated that the Budget Bureau had granted the agency’s appeal for $35.4 million in grant aid [on a date unspecified] and continued in part: “These funds are illustrative and at present confidential and Phils cannot consider this firm amount even after Congressional appropriations. These funds to be considered fluid within Asia and Pacific total area request of $375 millions, but we believe will be completely available grant programming on suitable fiscal ’52 projects. Actual amount on loan basis through ExIm Bank not determined as yet but policies for integration being worked out and formal note to Phil Govt in process.… this … is for your information and cannot be transmitted to Phil Govt at this time.” (ECA Cable Files: FRC Lot 53 A 278)