751G.5 MSP/8–552: Telegram
The Ambassador at Saigon (Heath) to the Department of State
302. Rptd Paris 69, Hanoi unnumbered. During call in which I presented Gen Trapnell, Pres Tam told me the budget has now been submitted to Bao Dai. The budget he said will increase Vietnam’s contribution in 1952 to pay and maintenance of national army from 900 million piasters to 1,700 million piasters (roughly from $45 million [Page 235] to $85 million). This wld not mean, Tam said, any expansion of Viet natl army. It merely meant that Vietnam wld pay a greater and Fr a smaller share of natl army budget for 1952 which Tam estimated at 400 million piasters ($200 million).
Comment: When we have full budgetary data the matter will have to be explored with Fr here and in Paris. During Letourneau talks we agreed increase our MSA allotments to France in 1953 around $150 million on grounds that Fr mil expenditures wld be greater in calendar year 1953 than in 1952. If in fact the Viet contribution is to be greater, the 1952 and 1953 Fr mil budget for IC may in fact be less than forecast.
It is also to be noted that Tam places 1952 army budget at 4 billion piasters. Other estimates had forecast the natl army budget at from 5 to 6 billion piasters.
- 2.
To my inquiry where he had discovered increased budgetary resources Tam answered that at first Vietnamese financial auths had taken into account only tax and customs revenues and had omitted from consideration their recourse (legal right) to short term advances from new RPC new Institute of Emission.
Comment: Apparently Vietnams increased mil contribution will be largely derived from inflationary borrowing from the Institute of Emission. When budget is published we will go into matter with Min of Fin.
- 3.
- Tam said he was already to start on his agrarian reform. He had already found one Fr and one Viet landowner who were willing to sell their holdings to their present tenants. Tam said big landowners were willing to sell now since, due to condition of “half-way security,” they were able to collect only portion of their rents. Tam said the state must take advantage this temporary situation of rural insecurity and encourage landlords to sell and tenants to buy. The state wld insist that tenants have first right of purchase. If landlords prices were too high the state cld intervene and threaten to set equitable prices. This would induce landlords to come to terms with purchasers. Tam remarked that great many “highly placed individuals” had warned him that agrarian reform wld be a difficult, delicate and dangerous operation. He said he was confident that he wld succeed in effecting the bread [break up?] of large, rice-land holdings through voluntary sale by owners to tenants “before people had realized it had happened.”
- 4.
- Tam indicated he had hoped to convene the Natl provisional Council before Bao Dai‘s departure for France on August 10. This had proved impossible. He expected however Bao Dai‘s prompt approval of the slate of Councillors and Council shld meet very shortly.