851G.00/4–952: Despatch
The Minister at Saigon (Heath) to the Department of State1
No. 495
[Extracts]
Ref:
- Legdes 485, Documents relating to the Organization of Indo-china’s Rice Export Trade.2
Subject:
- French Economic Interests in the Economies of the Associated States.
For MSA, Agriculture, Treasury, and Commerce in addition to any other usual addressees.
summary
Introduction
French and Vietnamese public opinion on issue of continued French domination of Indochinese economy. This may affect forthcoming Paris trade talks between Associated States and France.
Companion studies
On basic governmental economic controls: on transfer of power agreements and on foreign trade, prices, exchange, taxes, and credit policy. These need to be supplemented by present study of private economic power nucleuses.
French economic interests in Indochina
Conclusions drawn from Enclosures 3, 4, and 5. French enterprises hold almost all key positions in Indochina’s economy. Indochinese forcible entry into French private industries forbidden by Agreements between Associated States and France.
Business organization and restrictive trade practices
Bank of Indochina and three other “dominant” concerns control to some extent 119 companies. In addition strong private trade associations control all rice exports and all petroleum imports.
Capital and profits
Present French private investments estimated at roughly 1.7 billion 1952 dollars. Profits on declared capital were very high during 1950, but percentage figures can only be used with the greatest caution.
Conclusions
Recommendations
. . . . . . .
Conclusions
- 1.
- French enterprises together with a few foreign firms control most of the key points of the Indochinese economy. They may have been influential in supporting the Metropolitan French Government’s determination in the years after 1945 to maintain the French presence in Indochina.
- 2.
- The Bank of Indochina occupies an important position among French enterprises not only as a direct investor in individual enterprises, but because of its interests in four or five of the principal holding or managing firms which in turn have certain inter-locking director relations among themselves.
- 3.
- Segments of the Indochinese economy, for instance rice exports and petroleum product imports, are strictly controlled by what amount to monopolistic trade associations.
- 4.
- Profits of most French firms in the controlled areas were substantial in 1950—both in absolute terms and relative at least to declared capital.
- 5.
- There has been surprisingly little criticism of French economic power in Indochina as compared to French political power. Possibly this may be due to censorship, but more probably to the fact that, except for a very small group of progressive Vietnamese businessmen, political reforms seem generally both more popular and more urgent than economic reforms. French domination of business has thus possibly not been contested because the Vietnamese have been putting first things first, arguing for a constitution and political liberties. It is possible also, that the average Vietnamese had simply expected a better distribution of this world’s goods to follow somewhat automatically from “independence” as embodied in the March 8 Agreements. When this does not happen, it is logical to expect that he will begin to transfer his efforts to the economic field. Criticism of France’s economic hegemony over Indochina can, therefore, be expected to grow.
Recommendations
The Legation has gone almost as far as it can with information available in Saigon, without arousing local resentment or suspicion, to collect and present the extent of, and the personalities engaged in, French enterprises in Indochina. If the Department and the Embassy in Paris agree with the Legation that the importance of these enterprises have been demonstrated to be sufficiently significant to warrant further study, it would appear that such investigations must be primarily concentrated in Paris. For evidently it is in the hands of a relatively few French business men in Paris that the centers of economic power in Indochina presently lie. In any event, however, if the concentration of economic power over Indochina is found to be as suggested herein, it is recommended that:
- 1.
- The United States find some tactful way—possibly through American business circles in Paris?—of encouraging those French business elements which would like to admit Vietnamese, Cambodians, and Laotians to a greater share in the economy of Indochina.
- 2.
- These same interests be encouraged to reinvest a greater part of their demonstrably high profits in the Associated States.
- 3.
- The attitudes of the business circles mentioned in this despatch be kept under review with the object, if possible, of forestalling possible pressure upon their part to influence members of the National Assembly or of the press against continuance of the war in Indochina.
In short, our object would appear to be to influence these interests to assist rather than, potentially, to frustrate United States objectives in Indochina; i.e., (1) to promote the continuance of French participation in the unpopular Indochinese war and (2) to promote the development of strong national governments as well as substantial middle-class groups in the Associated States without which the States will continue to be liabilities rather than real assets to the evolving French Union as a whole.
Action
A carbon copy of this despatch is being transmitted directly to the Embassy in Paris. It would be appreciated if an additional copy could be sent to that Embassy together with a copy to the Legations in Phnom Penh and Vientiane and to the Consulate in Hanoi, and three copies to the Legation in Saigon. Irrespective of what action may be taken in connection with the above recommendations, the Legation would greatly appreciate it if any information available regarding the membership and general position of the Union des Syndicats Professionels Indochinois and the Union Intersyndicale de l’Industrie d’Outre-Mer, both of which have their headquarters in Paris could be forwarded to Saigon.