Chap 21, pg 1

Chapter 21: Diosdado Macapagal Era 1961-1965

Diosdado Macapagal served as the ffth President of the Philippines.
At frst, Macapagal was very popular: he was articulate, charismatic, and he inspired great
expectations of economic, political, and ethical reforms.
He began a set of programs he called New Era:
Within months of his inauguration, Macapagal plunged into the turmoil of scandals and controversies spawned
by his reforms, and he quickly lost his original popularity.
1962 Stonehill Scandal
Harry Stonehill was a very successful American businessman in the Philippines.
Justice Secretary Jose W. Diokno was investigating him for alleged corrupt
practices when Diokno discovered that Stonehill had a black book listing top
Philippine Government offcials whom he had bribed. The list of names report-
edly included President Macapagal, his predecessor President Garcia, and much
of the ruling Liberal Party and the opposition Nacionalista Party. Macapagal fred
Secretary Diokno. When it seemed imminent that Stonehill would be forced to
testify, with the potential scandal resulting in an impeachment of the president,
Macapagal had Stonehill deported so he couldnt testify.
Macapagal had campaigned against Garcia on a platform of fghting corruption in government, promising to
eliminate them if elected. But his administration was soon tainted with corruption charges by a big scandal:
New Era Programs
1. Emergency Employment
2. Economic Liberalization
President Macapagal tried to boost the Philippine economy by giving jobs
to young Filipinos through a new program called Emergency Employment
Administration (EEA). Thousands of jobs were created in reforestation,
land clearing, and home industries.
3. Anti-Corruption Drive
Under pressure from the US Government and international fnancial institutions, Macapagal reversed Garcia-era
economic policies with economic liberalization policies:
Lifting of foreign exchange controls: Under Garcia, foreign (mostly American) companies in the Philippines
had been prohibited from taking their profts back to the US. Macapagal lifted the controls, allowing foreign
businesses to send their profts home. This resulted in a shortage of foreign currency. The government was then
forced to seek foreign loans to avoid a currency crisis.
Floating Peso: Under Garcia, the Peso had a fxed exchange rate, to keep low prices
for domestically-produced goods and food. Macapagal allowed the Peso to foat on
currency exchange markets, causing a nearly-100% devaluation of the Peso, leading
to increased consumer prices, hurting Filipino consumers.
Lifting of import controls: Under Garcia, foreign imports were limited, to encourage
domestic production by Philippine businesses. Macapagal lifted these limits, with the
result that foreign imports fooded in, hurting domestic industries and agriculture. But
US businesses were happy.
Chap 21, pg 2
Friction with the USA
The issue of jurisdiction (legal control) over American soldiers in the
Philippines, which had not been fully settled after the 1959 discussions,
continued to be a problem. During the period 1960-1965, there were a
series of incidents, including murders at Clark Air Base, which aroused
anti-American demonstrations. Negotiations led to a 1965 agreement
which had provisions which it was hoped would solve the problem.
1965 Philippine Presidential Election
In 1965, Macapagal ran for re-election to the Presidency and was challenged by his former party-mate, Senate
President Ferdinand Marcos, who had switched to the Nacionalista Party.
According to historians, the U.S. Government remained neutral and uninvolved in the 1965 Philippine national
elections. Both candidates hired American authors to write their biographies in time for the election.
In the election, Ferdinand Marcos won with 52% of the votes.
More Problems at the U.S. Bases
In 1962 the U.S. House of Representatives rejected additional Philippines
monetary claims for the destruction caused by the American military
during World War II. The rejection set off a wave of public anger in the
Philippines, just before Macapagal was scheduled to make a state visit to
the United States.
Macapagal postponed his U.S. visit, and wrote to President John Kennedy:
The feeling of resentment among our people and attitude of the U.S.
Congress negate the atmosphere of goodwill upon which my state visit
was predicated.
President Macapagal then changed the offcial celebration of Philippine
Independence Day from July 4 (the date in 1946 that United States granted
independence) to June 12 (the date in 1898 that Emilio Aguinaldo declared
independence from Spain).