751G.00/11–2750: Telegram
The Minister at Saigon (Heath) to the Secretary of State
950. Re Deptel Paris 2458 [2558], November 11, repeated information Saigon 555 and London 2475. Legation concerned possible implication that fourth paragraph reftel to effect “Department eager maximize protection French economic interests Indochina” connotes change Department policy. Hitherto understood Department agreed with Legation that certainly it was important to ensure that Bao [Page 939] Dai Government given means attract fence sitters and, even more, given incentives engage Viet Minh militarily as it was to assure French proceeding with present program. One of the strongest economic inducements offered by Viet Minh to attract waverers is assurance independent Vietnam under their auspices will be freed from French economic domination.
Even staunch Bao Dai supporters in Vietnam business circles are extremely bitter about continued and persuasive [pervasive?] French economic controls. It not enough for Legation attempt assure these that such controls reasonable as long as piaster tied to franc and as long as French subsidizing Viet economy. They point out, and with some reason, that at one time piaster much stronger than franc and that with security Viet economy could as for decade prior war stand squarely on its own feet. To Viet business circles economic liberty almost as important as profit. Nor is it enough for Legation explain that French economic leadership necessary due lack Vietnam capital and know-how. Viet businessmen reply by asking why, if French so capable, etc., they afraid permit Viet competition in granting import licenses when foreign exchanges are deadlocked. Although neutral US firm of Langis Bros., Saigon, believe Viet fears French controls exaggerated, its representative Clark admits that when company deals with French it always does so through French subsidiary.
Governor Tri among many others have pointed with bitterness even to texts March 8 Accords which provide that “legal regime of enterprises and property belonging by rights French union in Vietnam can only be modified by joint agreement” between the two governments and that Vietnam can increase taxes having a “particular incidence on subject of French union” only after “preliminary consultation” between two governments. Latter provision presently blocking institution individual income tax in North Vietnam.
In view above situation, which well known Department, Legation assumes Department recognizes that economic liberty important in eyes Viets and that Department not changing its position, but merely indicating its willingness have French maintain preferred position Viet economy vis-à-vis other foreign countries. Please instruct.
Department pass Paris. Sent Department 950; repeated information Paris 457.