Foreign Relations of the United States, 1955–1957, Vietnam, Volume I

54. Telegram From the Chargé in Vietnam (Kidder) to the Department of State¹

Saigon, March 4, 1955—6 p.m.

3697. Deptel 3696 repeated information Paris 2294, Hanoi 497.² Embtel 3417 repeated information Paris 951, Hanoi 565.³

1. Apparent from all reports received by Embassy that North Vietnam economic situation has deteriorated materially since take over Hanoi in October 54. This evidenced by black market rate for North Vietnam Dong which currently reported between 60 and 80 per South Vietnam piaster as compared with forced 30 to 1 conversion rate. In addition to French firms planning leave Haiphong, understand Indian and Chinese merchants now getting out because bleak future and increased taxes. Apparently unemployment increasing. Economic troubles North Vietnam seriously increased by failure rice crop in Tonkin which adds to normal rice deficit. Embassy believes rice shipments to North Vietnam offer best means exploitation. This subject discussed briefly with Secretary Dulles in Saigon.

2. Reports received, including those from Hanoi Consulate, indicate rice crop North Vietnam shortest in recent years. Supply may be as low as 45, when almost million people reportedly starved. Recent Viet Minh action to control supply and price of rice may insure better distribution than in 45, especially to groups Viet Minh favor, so that deaths may be reduced. Already reports starvation deaths in rural areas.

3. Appears Viet Minh will not be able bridge gap before next harvest without substantial outside help. Chinese have already made shipments to Viet Minh, but apparently not in substantial quantities. Failure receive adequate supplies this source probably accounts for recent government announcement Viet Minh press proposing facilitate resumption economic relations between North and South. Rice is continuing to move to Haiphong from Saigon, but so far no evidence of substantial movements into Viet Minh area or of stockpiling in excess needs Haiphong before Viet Minh take over.

4. Logical source supply rice North Vietnam is South Vietnam. Believe South Vietnam should be encouraged offer rice to starving people in North under guarantee that recipients fully aware source of relief supplies. If offer accepted, South would gain stature as area where economic conditions favorable. If offer unaccepted, Viet Minh would be guilty before own people and world of starving own people for political purposes. Either action on part Viet Minh could be exploited our advantage propaganda wise. As indicated by reference B South Vietnam would probably agree readily make such offer if funds available to purchase rice.

5. Believe Viet Minh would refuse rice offered under these conditions. However, if offer were accepted, means would have found finance rice shipments. (Barter rice for coal and cement ruled out from exploitation standpoint, since Viet Minh would certainly take full credit for supply and since coal and cement shipments to South would not fully pay for rice shipments to North.) Gifts of rice could not be financed by Vietnam Government or within framework present aid program. Pre-Geneva rice shipments from South to North approximated 100,000 metric tons annually. Believe shipment this quantity in next few months costing about US $10–15 million equivalent in piasters would be approximate order magnitude appropriate program.

6. Believe offer should be made by South Vietnam Government, and if accepted, supplies ostensibly furnished by them. US role should not be publicized. Conceivable US could agree with Vietnam to make available through grant like amount US surplus agricultural products in event Vietnam Government offer accepted. If financial assistance this program were received from other nations, particularly France, Vietnam Government should still reap propaganda benefit.

7. Assume reference A did not seek recommendations in propaganda field covering disparity economic conditions North and South and refugee movement which currently being exploited.

8. USIS strongly concurs.

Kidder

1. Source: Department of State, Central Files, 851G.00/3–455. Secret. Repeated for information to Paris and Hanoi.
2. In this telegram, February 25, the Department requested the Embassy’s current evaluation of the North Vietnamese economic situation (which the Department had reason to believe was deteriorating) and an estimate of whether the situation could be exploited to U.S. advantage. (Ibid., 851G.00/2–2455)
3. In this telegram, February 15, the Embassy reported a discussion in which Foreign Minister Tran Van Do speculated on the possibility of his country sending rice on humanitarian grounds to the North. (Ibid., 851G.49/2–1555)