851G.50/12–646: Telegram
The Consul at Saigon (Reed) to the Secretary of State
[Received December 7—11:12 p.m.]
472. During visits Moffat to high French officials latter almost invariably stressed French desire arrive at peaceable settlement with Vietnam, commenting difficulty dealing with Vietnam and that latter almost always tried put political aspect to even simplest economic negotiations, and hinting France could and would go only so far in the desired settlement. One interesting remark by Commissioner for Finance was to effect France not working for political federation in French Indo-China, but rather build up economic federation in which all interests would be represented and protected—he pointed out inability Vietnam understand purely economic questions and present indifference to such primary matters as affect the national economy. He and another high official stressed willingness even desire for foreign capital investments in FIC if they were for constructive purposes and not (mentioning Chinese specifically) speculative, Commissioner for Finance, however, recommending foreign capital should be united with French knowledge conditions. In above connection question is raised whether French would insist upon larger share capital and/or majority board directors. Commissioner for Economic Affairs was optimistic for next year’s rice crop, estimating at least 250,000 tons exportable surplus and if political conditions improve as much as 500,000. Prospect for rubber not so bright (perhaps 30,000–35,000 tons) unless labor question solved and mentioned plan under study import 5,000 Chinese coolies but said FIC natives would possibly not react kindly to this. Mentioned also allocations of FIC rice exports this year have not been taken up completely. Among other points Commissioner for Political Affairs stated personnel all mixed commissions envisaged by modus vivendi have been named but still discussion where they are to meet—understand Mixed Military Commission has temporarily suspended its work in Hanoi until situation is clarified. Almost all officials remarked in one form or another Communist character of regime in north and one stated specifically [Page 70] Soviet mission here (mytel 451, November 2174) has already violated its undertaking not to engage in political activities in FIC.
In comment above and previous telegrams feel French would accept solution protecting interests but will only go so far (witness present stiffer attitude) but hesitate believe French would engage upon full scale military operations unless absolutely forced. French appear to realize no longer possible maintain closed door here and non-French interests will have chance to participate in unquestioned rich economic possibilities. Before this can happen political situation must be settled and in doing this Cochin China question will be turning point—still believe French will find it difficult to save Cochin China unless prepared to fight, for in choice between Vietnam and French the Cochin Chinese will join former despite dislike of Tonkinese and fear of economic and political exploitation by them.
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