152. Telegram From the Embassy in Vietnam to the Department of State 1

602. Reference: Department telegram 478.2

No disagreement with your analysis in general terms. In my para 2 Embtel 555,3 I was thinking of poor people in towns and cities who may get caught up in inflationary spiral following in the wake of aid cut-off. Agree food, clothing and shelter represent bulk their expenditures, but aid imports not unrelated these items. In direct sense, milk and cotton financed in past by us. We also finance such things as medicines, raw material for many other products consumed by such people. It is our estimate that if shortages and price increases occur for various commodities this may have radiation effect on other commodities having no relation to shortage imported commodities. This, in short, was intent my message.
Agree that government will try insure stability rice prices and present GVN stock position such that effective demand can be readily satisfied. Your questions on free distribution surplus foods difficult to answer. CRS unable cope with present program for lack qualified administrative personnel; no analogous Buddhist organization in existence. Further, there are considerable stocks flour in Saigon warehouses under CRS program which could be quickly put to use, if necessary. Our guess that in such eventuality GVN would insist on getting into act.
My staff is continuously assessing economic and price indicators and so far see no reason for altering our present posture “maximum administrative delay”.
  1. Source: Department of State, Central Files, AID (US) S VIET. Top Secret; Priority; Eyes Only. Received at 1:36 a.m. and passed to the White House and to Rusk at USUN.
  2. Document 148.
  3. Document 137.