851G.50/11–2047
The Consul at Saigon (Reed) to the Secretary of State
No. 395
Sir: I have the honor to report, in advance of a detailed report upon the recent Economic Conference at Dalat, a resolution adopted unanimously by the assembled delegates of the States of Indochina (Viet Nam, Cambodia and Laos) and of France, addressed to the Government of the French Union, in which it is asked that a part of the reparations in kind due from Japan to the United States be diverted to Indochina in the form of a loan.
The text of the resolution is as follows:
“Fully conscious of the immensity of the task of reconstruction and of re-equipment in an Indochina ruined by Japanese aggression and its consequences and of the paucity of primary resources of the Federation it is strongly insisted that the Government of the French Union:
- 1.
- Defend in international conferences with absolute firmness the right of Indochina to reparations and to obtain that the needs of reconstruction of victim peoples be satisfied before those of the Japanese aggressors;
- 2.
- Undertake when the moment is propitious negotiations with the Government of the United States with a view to borrowing a part of the Japanese reparations in kind which will be allocated to that Government and which it will not use;
- 3.
- Ask in the course of the peace negotiations that the peacetime level of the Japanese economy be fixed in such a way as to prohibit to Japan the reconstruction, directly or indirectly, of its war potential and of an economy not corresponding to its natural resources; and
- 4.
- Prohibit upon the occasion of those negotiations the pre-war Japanese commercial practices which, specifically through dumping, [Page 148] constituted economic aggression and which resulted, as has been shown, in compromising the peace.”
There is no doubt but that such a loan would serve a most useful and worthy purpose, as the progressive and systematic rehabilitation and re-equipment of Indochina is being hampered by the lack of primary products from France and by the lack of foreign exchange with which to purchase such products from foreign countries. However, until political stability is obtained in Indochina it would appear to be a wasted effort to make available large amounts of primary products which might only remain on the docks and deteriorate, as has been the case with many items shipped to Indochina during the past two years.
It would also appear that coincident with such a loan it should be exacted that American business and enterprise be given equal opportunity in this country and that it not be permitted that the French economic exclusivism of the pre-war period be re-established. That the French will endeavor to do so is reasonably certain, despite protestations to the contrary, and, after almost two years of observing French tactics to regain and maintain their economic ascendency and monopoly, I feel that all possible means should be invoked to prevent that any loan, in kind or in money, obtained through American cooperation and generosity be used to further French economic and commercial interests to the detriment of legitimate American interests, not to mention to the detriment of Vietnamese interests.
At the present time, although French interests are being granted licenses to import films from the United States, the Metro-Goldwyn-Mayer Company has been refused such licenses, even though the American company has offered not to ask for exchange to remit its profits until conditions are more favorable. From what the representative of that company relates it is reasonably patent that French interests are behind the refusal. This is but one example of the difficulties that American companies encounter under an economy directed to regain and maintain the French economic hegemony.
The above is not to say that I am unsympathetic to the French in their efforts to re-establish the shattered economy in Indochina. As a matter of fact it is in the interest of the world that that economy be put upon its feet and that its many products again flow into world markets. But having in mind the waste and the senseless expenditure of foreign exchange in the past two years I am inclined to believe that to give vast amounts of material goods to this country, without any degree of control, is but to repeat this waste and to stimulate what a French observer termed a seemingly systematic mismanagement. Notoriously, the French Purchasing Mission expended large sums for [Page 149] items not required nor useful in French Indochina—as witness some thousands of drums of asphalt purchased at a high price for one purpose and now found to be useless for any purpose.
Today all French of position and all Vietnamese in the good graces of the French have their new American automobiles and their new frigidaires, while the bulk of the population is struggling along as best it can and the city of Saigon does not have running water half of the time. How can the touted French directors of Indochina’s economic program explain that medicines are lacking but there is no rationing of gasoline? How can they explain that many basic items of life are unavailable whereas the shops of Saigon are glutted with luxury items, perfumes, costume jewelry, brandy and champagne?
The loan of the nature in mind has much in its favor as there are may items of Japanese manufacture which the United States would not want but which would assist the restoration of the economy of French Indochina. But until the political situation is settled and there is definite assurance that the flow of such goods will not be directed through the hands of a favored few, for their exclusive benefit, the possibility of such a loan is a matter of future consideration. In any event a loan in the form of material items appears to have more in its favor than a loan of money.
Remarks upon French shortcomings should not be taken as an endorsement that the Vietnamese would do better by themselves and the majority of unbiased observers view with doubt any appreciable amount of materials or any substantial sum of money being turned over unreservedly to a strictly Vietnamese regime. The same waste would occur, the same channeling of distribution for the profit of a favored few would take place, the same misappropriations would be noted—with the added danger that the ubiquitous Chinese man of affairs would soon have the commerce and economy of Viet Nam in his capable hands.
The Vietnamese are not to be blamed entirely for what one might call economic and financial untrustworthiness. They have, under the French “colonialist” regime of the past 60 years, witnessed the creation of a most efficient machine of exploitation and self-interest, centering in the Bank of Indochina and the fabulous French import-export firms, but also extending throughout all grades and ranks of French commerce and officialdom. The laxness and self-seeking of the past has had its effect, the present day example has strengthened this effect. And, with this in mind, who can blame the Vietnamese, from the highest to the lowest, for wanting to get aboard the “gravy train.”
The above is a pessimistic picture, but it is a reality, and much must be done to create a sense of responsibility, an atmosphere of confidence, [Page 150] and a basis for uncontrolled credit, before one can be certain that Indochina, either under its present ruling class or under a native regime, will be a sound and going concern. It is a pity, as both the French and the Vietnamese have much in their favor and as the country itself, if properly ruled and developed, would be a rich source of many things for which the world has need in these critical times.
There are men of good will and of honest intentions in both French and Vietnamese ranks. But the confusion of the political situation makes it difficult for these to emerge to the foreground and to take the necessary steps to ensure an economy directed not to the benefit of the few but to the benefit of the country as a whole.
Respectfully yours,