148. Telegram From the Department of State to the Embassy in Vietnam1

478. Eyes only for Ambassador Lodge. Para 2 your 555.2 We have been giving careful thought to your views re desirability avoiding actions on aid which would hurt standard of living of masses. We believe continued holding up of commercial import programs and new PL 480 sales will have greatest effect on monetized sector of economy, limited effects on less monetized sector, and little or no effects on non-monetized sector.

We would accordingly expect that effects on mass of rural people who subsist largely on what they produce (except for textiles) would be minimal. In cities prices almost all items consumed except domestically produced foodstuffs could be expected to rise, but again we would estimate that these foodstuffs (rice, nouc man and fish) represent [Page 291] major items in budgets of mass of people. We would anticipate in case of key item of rice that GVN would in interest its own political position endeavor keep prices under control through export licensing restrictions, as it has traditionally done in recent years whenever rice prices threatened to rise.

If contrary to expectations aid suspension did result in sharp price rises for little man perhaps effects could be offset by expanded program of PL 480, Title II, relief operations in countryside. Could such operations be administered in cities through private organizations like Catholic Relief Services and analogous Buddhist organizations to prevent channeling relief supplies through GVN?

  1. Source: Department of State, Central Files, AID (US) S VIET Top Secret, Priority. Drafted by Mendenhall; cleared by Barnett, Bundy, and in substance by Janow of AID; and approved by Hilsman.
  2. Document 137.