The Long View: Parity’s unintended consequences (1)


Parity’s unintended consequences (1)

The anniversary of the ratification of the Parity Amendment 70 years ago (1947) came and went without comment last March 11. On that date, 40 percent of the electorate voted, a majority of which approved the constitutional amendment giving Americans equal economic rights to exploit our natural resources. The circumstances surrounding that plebiscite provide an instructive tale in unintended consequences.

Filipinos had relied on a pledge from Franklin D. Roosevelt at the outbreak of the war that war damages would be recompensed. Among the last visitors FDR met at Warm Springs, GA where he died was President Sergio Osmeña. In fact, the last press conference Roosevelt held, on April 5, 1945, where he discussed reconstruction funds for the Philippines, was with Osmeña.

But his successor, Harry S. Truman, found himself faced with a resurgence of isolationism. American public and political opinion was sick of war, sick of the world, and tired of paying for everything. In 1945 there was a meat and sugar shortage in America and the papers complained about allies getting scarce resources.

Peter Clarke in “The Last Thousand Days of the British Empire: Churchill, Roosevelt, and the Birth of the Pax Americana,” describes how, on V-E (Victory in Europe) Day, President Harry S. Truman promptly signed an order cutting back Lend-Lease to Britain and the USSR—at a time when the civilian populations of those countries needed American supplies as much as at any other time during the war. V-J Day (Victory in Japan) triggered another decision by Washington, to stop sending supplies to all allies within 18 months.

The time frame would turn out to be much shorter because of domestic politics. The historian Susan L. Carruthers recently pointed out that the only thing on the mind of US troops was to go home, and with the end of the war came a near-total collapse in morale and discipline among soldiers eager to go home. The GIs were voters.

The US secretary of War in early December 1945 had announced demobilization would be slower than originally promised. In Manila, on Christmas Day, American GIs mutinied. On Jan. 5, 1946, GIs from all over started converging in Manila and held a demonstration the next day and the day after—their number reaching 2,500—protesting their not being sent home and expressing indignation over being ordered to disarm the Hukbalahap. Other demonstrations were held in Yokohama, Le Havre, Guam and even in Maryland.

This all meant official Washington was in no mood to consider its allies. In the Philippines, for example, the fiscal situation in 1946 was desperate. Infrastructure throughout the country was wrecked. The first budget submitted by Manuel Roxas in June 1946 (for the fiscal year July 1-Oct. 22, 1946) was P250,000,000—with revenues of P40 million. American war damage payments were vital. But Washington was in no mood to be generous. Even the negotiations on US bases faced limits because of penny-pinching by Washington.

On April 30, 1946 the US Congress enacted the Bell Trade Act providing for favorable tariffs and war damage payments, and the Philippine Congress accepted its term on July 2, two days before independence. But the price of the bill was high—involving amendment of the Philippine constitution. Twice before (in 1937 and 1945), Filipino and American businessmen proposed the postponement of Philippine independence on economic grounds. Now they had a chance to insist on full economic participation despite constitutional limits on foreign ownership.

A comparison with the experience of another close American ally, Britain is instructive. The Bell Trade Act made available $620 million in war-damage payments. Around the same time (in 1945) the British also had their backs to the wall, moving heaven and earth to secure a $586-million loan and a  $3.7-billion line of credit to keep their economy afloat. John Maynard Keynes was dispatched to America on this mission to save the British economy from collapse, negotiating a loan on stiff terms in 1946 (with payments beginning in 1950) that was only fully paid off in 2006. Concluded next week

Manuel L. Quezon III.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.