(Part 2 of 3)
Our original plan anticipated the exponential growth of the job market and the dollar remittances from overseas Filipinos. We tinkered with the formula and expanded its scope. We raised the national target to $300 million a year in remittances and sent then President Ferdinand Marcos an urgent memorandum explaining the ambitious plan and its mechanics. On the accompanying note we summed up the proposal: “How to raise an additional yearly $300 million or more for the CB-PNB complex to finance Philippine economic and infrastructure development and service RP foreign debts, etc. and to totally dry up the black market.” Black market dollars had been known then to finance soft-goods smuggling to the Philippines through Sabah, and worse, subversion activities in Southeast Asia.
President Marcos asked us to see him for an additional briefing. “Your proposal looks excellent but I need further study,” the president told us.
We told Marcos that the dollar-remittance agreement with the United States would be “immediately beneficial to Philippine economic, political, security and defense interests – and we were recommending its urgent implementation.”
We thought Manila needed to allay Washington’s fears about the program’s possible harmful impact on the U.S. economy. In later years, we remembered something we told the U.S. and Philippine governments that proved to be prescient: “It is our view that the American turnover of dollars to the CB-PNB will in fact constitute and ensure a ‘return flow’ of dollars to the United States because 95 percent of Philippine dollar reserves are deposited in U.S. banks. The remittance program, far from stopping the flow of dollars across the Pacific, would in fact enlarge it.”
We could not have said it better then. Our series of presentations impressed and eventually persuaded the succeeding Foreign Ministers Narciso Ramos and Carlos P. Romulo, the succession of Central Bank Governors (Alfonso Calalang, Andres Castillo, Gregorio Licaros) and Manila-based U.S. officials, but we now faced a greater hurdle. Washington predictably asked for further data; it wanted a greater scrutiny of the program before it could give official U.S. concurrence. In particular, it asked us to identify the sources of the dollar remittances. We replied with a memo identifying the following possible sources:
• $25 million in additional dollar remittances to PNB from some 14,000 Filipino retirees living in the Philippines;
• $27 million yearly in additional PNB dollar remittances and “X” dollar amounts in dollar bonds to be purchased by some 10,000 to 12,000 Filipino seamen employed worldwide by the U.S. Navy;
• $45 million in yearly contracts awarded by the U.S. government to Filipino contractors for expansion, repair and modernization of U.S. base facilities in the Philippines, which sum should be deposited with or serviced by CB-PNB;
• $100 million yearly representing U.S expenditures to support the U.S. base complex in the Philippines and which sum should be absorbed by CB-PNB;
• $100 million yearly in peso expenditures of some “two million” U.S. seamen at liberty in the Philippines through multiple entries.
Following further refinement that incorporated American concerns, the program evolved in 1969. By then, we had identified more dollar sources such as PNB remittances from Canada and CB-PNB-Development Bank of the Philippines, proposed dollar bond-selling programs for Hawaii, Canada and the U.S. mainland. The program had taken on a convincing format. Giving the program the highest priority, the finance officials and us worked out approval in mid-1969 during the presidency of Richard M. Nixon.
We vividly remember the crucial meeting where the final U.S. action was indicated, presaging concurrence by the State Department, the Pentagon and the U.S. Treasury. This came at a conference between PNB President Roberto Benedicto, Minister James Wilson and Allan Ford, the political-military officer of the U.S. Embassy in Manila, William Pieace of the U.S. Treasury and us. In succeeding talks, the procedure to carry out the plan was finessed. The talks involved the government’s top economic, foreign affairs and military advisers and the country’s leading bankers. We gave them a full briefing on the program’s details and strategy.
Those who sat in on the meeting with the president at various stages were Foreign Secretary Carlos P. Romulo, who succeeded Narciso Ramos, foreign Undersecretary Jose D. Ingles, Finance Secretary Eduardo Z. Romualdez, Central Bank Governor Alfonso Calalang, Roberto S. Benedicto, Representative Pablo Roman (chairman of the House Committee on Banks), DBP Chairman Gregorio Licaros, Defense Secretary Ernesto Mata, Justice Secretary Claudio Teehankee, Presidential Economic Staff Director General Placido Mapa Jr., Labor Undersecretary Raoul Inocentes, PNB Assistant Vice President Isidro Villanos, Pastor Alvarado, and ourself. The registry was a veritable who’s who of Philippine economic and political braintrust.
Due to our spadework at home and abroad, our brainchild was moving to such success that Roberto S. Benedicto, Marcos’ closest ally and classmate, proposed that it be called the “Marcos Dollar Plan,” because Marcos was running for reelection in 1969 and his team viewed the program as a political asset. (One of my assistants quietly protested and proposed that it simply be called the “Philippine Dollar Plan” without names mentioned, including mine).
One afternoon, we were asked by the Monetary Board at the old Central Bank to explain the program’s details and its potential impact on the national economy. We repeated the data we had earlier supplied Washington on the sources of dollars. We spoke for three hours, answering their questions and putting to rest all their doubts. We were well prepared. When we gained the Board’s unanimous approval, we saw our work of over a year coming to full fruition.
(To be continued next week)