6. Telegram From the Special Representative in Vietnam (Collins) to the Department of State 1

2562. 1. Diem has confirmed to Fishel statement Luyen made to me ten days ago that government would not extend Binh Xuyen gambling and other concessions when contract expires January 15. We have had some reports, so far unconfirmed, that Binh Xuyen are preparing to sabotage public utilities Saigon if contract is not renewed.

2. Daridan came to see me today. He had heard same rumors and said French were disturbed by Diem’s intention not renew contract because of threat to public order at a time when 14,000 Vietnamese civilians have been on strike against French Army for six weeks. Daridan said that strikers who have thus far been peaceable are now threatening to take “direct action”.

3. Daridan said that he and Ely both believe that strikers’ claims are in large measure justified, and that with Ely’s backing he has [Page 15] asked French Government make available 800 million francs to settle dispute. I suggested, that in the interests of avoiding what might be serious trouble and in order not to dissuade Diem from his firm stand, it might be desirable for US to support Daridan agreed.

4. Since there is some basis for French concern over Vietnam Army capacity to handle both strikers and Binh Xuyen without police support I recommend Department instruct Embassy Paris to inform Foreign Office we take serious view of continuing strike as added threat to security of free Vietnam and hope that French Government takes prompt steps to settle it.

5. In this connection I told Daridan that if Diem were forced to temporize with Binh Xuyen with respect to contract renewal, Prime Minister would probably suffer serious reversal in obtaining agreement of Cao Dai and Hoa Hao to the gradual elimination of their private armies and their cooperation in a land-reform program.

  1. Source: Department of State, Central Files, 751G.00/1–455. Secret; Priority. Repeated for information to Paris.