Foreign Relations of the United States, 1952–1954, Indochina, Volume XIII, Part 1

851G.131/5–1353: Telegram

The Chargé at Saigon (McClintock) to the Department of State

confidential

Saigon, May 13, 1953—10 a.m.

2190. Repeated Paris 366, Bangkok 96, Singapore 61, Hong Kong 85, Tokyo 85, London 39, Hanoi, Phnom Penh, Vientiane unnumbered. Strong communiqué issued yesterday by Vietnamese Government (Embassy telegram 2178, May 11, information Paris)¹ indicative of consternation and high feeling Vietnamese Government and business circles here over devaluation, particularly manner in which effected. Dominant note is that action is flagrant violation Franco-Viet accords which calculated deal sharp blow to confidence in French. Bao Dai reported be in black mood.² French businessmen similarly perturbed, but essentially because of expected repercussions on their financial position. French functionaries reaction relatively calm, but some concern expressed over likelihood rising living costs.

French officials here stress devaluation strictly decision taken in Paris in attempt to ease political crisis facing French Government over budgetary questions. Privately they do not hide their discomfiture at lack of consideration shown for interests Associated States. Ironic note: Letourneau himself was not consulted prior to his government’s action.

While there is much talk of a steep rise in prices and serious economic disruption, prevailing situation is one of confusion, with no one having clear idea degree to which devaluation will affect economic and political position Associated States. Certain Nationalists take view that devaluation not unfortunate since it indicative inherent weakness France and favors greater Vietnamese direction of own affairs. View this group is that Vietnamese should not make much of breach accords since it in interest Vietnam not lean on accords, particularly Pau accords which alleged already largely out of date.

In contrast to Vietnamese Government and business leaders, Vietnamese in general have only hazy impression devaluation and up to now more concerned over what devaluation will bring to them in form of economic problems than in political implications thereof.

Viet Minh expected to exploit devaluation propagandawise.

Cabinet met yesterday to discuss measures cope with situation. Press account steps projected by government in following telegram.³

McClintock

1. On May 10, the French Government announced the devaluation of the piaster from 17 to 10 francs. Telegram 2178 from Saigon, May 11, not printed, contained a free translation of a communiqué issued by Le Van Hoach, Vice President of Vietnam, denouncing the French action. (851G.131/5–1153)
2. In telegram 2123 from Saigon, May 11, McClintock reported that the French apparently had obtained the assent of Bao Dai to the devaluation by allowing the Chief of State to make a last-minute transfer of piasters at the old rate of exchange. (851G.10/5–1153)
3. Telegram 2191 from Saigon, May 13, concerning measures contemplated by the Vietnamese Government, is not printed. (851G.131/5–1353)