197. Letter From the Counselor of the Embassy in Vietnam (Kidder) to the Director of the Office of Philippine and Southeast Asian Affairs (Young)1

Dear Ken: I refer to Dept Circular Telegram 653 of May 10,2 a joint State–FOA message, requesting that Embassy and USOM participate in the preparation of the MCA [ MDA ?] Program for FY 1957.

The base paper3 was prepared by MAAG in compliance with its instructions and USOM and ourselves made the requested contribution which is included as Appendix IX of the document. The complete submission went to CINCPAC in four copies.

I believe no useful purpose would be served by our having the very lengthy document recopied and sent to the Department as it is primarily a CINCPAC matter and CINCPAC would want to add its comments for any submission to Washington. I should like however to point out that Embassy and USOM were obliged to dissent from Iron Mike’s point of view.4 He has projected for CY 55 and 56 a total of 150,000 men divided into four field divisions and six light divisions. For CY 57 and for FY 58 and 59 he has estimated that a troop basis for Vietnam of 125,000 will be required.

Mike bases his position on a number of factors, all except one of which were recognized and taken into consideration when the original Collins estimate of 100,000 was accepted. The one new factor, and from a realistic point of view an extremely important one, is the continuing state of insecurity in the country which has made it necessary to either stop or slow down the rate of demobilization. No propaganda background for the demobilization program has been laid and the program is way behind schedule. That, as well as the problem of added integrees from the sects, was recognized when Ambassador Collins requested an additional forty million dollars. We are up against a major problem in pushing demobilization, but I do not believe we have any alternative other than to stretch out the demobilization period and perhaps put off the program for conscription for perhaps a year. The latter program will be most difficult to organize until the census about to be commenced in connection with elections [Page 425] has been completed. MAAG does not envisage this conscription program being implemented up to the 30,000 figure until the close of the calendar year 1958—the added cost involved in this slowdown would be substantial.

A major factor which I do not believe MAAG fully appreciates which mitigates against their estimated requirements is the economic one. This is the subject of the following paragraph taken from the Embassy–USOM comments, Paragraph d:

“d. Wholly apart from the question of Vietnam’s ability to finance its armed forces, considerable difficulty has been experienced in such financing through U.S. aid. This aid is granted in dollars but is used principally to finance piaster expenditures within Vietnam. This means that unless goods are imported equivalent to the dollar aid, its conversion into piasters is perforce inflationary, irrespective of the mechanics used. For a variety of reasons, some political, some institutional, there seems to be serious doubt that imports can be maintained at a level comparable to aid requirements already posited for the military. Already there has been built up potential inflation by the creation of piasters for military expenditures. USOM and the Embassy believe that any material increase of this potential inflation would create a dangerous situation which could vitiate all of our programs in Vietnam if it became rampant. It is of the utmost importance, therefore, that everything be done to avoid increasing the amount of dollar aid over and above the amounts required to maintain the armed forces at the 100,000 man level originally planned.”

I believe Mike’s basic feeling on the subject of force levels is well expressed in the comment which he added at the end of the Embassy–USOM position paper: “I feel that primary emphasis now should be placed on the number of troops that are needed to do the job, keeping in mind the basic plan for long term reduction gaged upon national progress.” Personally I just do not see where the money is going to come from to support his force level, nor do I see how we would be able to pump it into Vietnam, if it were available, without the attendant danger of severe inflation.

Fred Reinhardt arrived a few days ago and is already deep in background papers and in getting his feet on the ground. We pushed his schedule for presentation of credentials in order that he might be able to attend the various functions being given in honor of General Ely previous to his departure. Those dinners and receptions gave him an excellent opportunity to meet most of the leading characters on the present scene without delay. We are all delighted to have him here and hope that we will be able to back stop him properly.

With all best wishes.

Sincerely yours,

Randolph A. Kidder%%5
[Page 426]

p.s. Ambassador Collins’ views on the subject of forces basis was set out in Top Secret Despatch 393 of May 11 on “Problem of Combatting Communist Subversion in South Vietnam.”6

  1. Source: Department of State, Saigon Embassy Files: Lot 61 F 22, C 2857. Top Secret; Official–Informal.
  2. Not printed. (ibid.)
  3. Titled “Development of a Force Basis for a Timed-Phased FY 57 Mutual Defense Assistance Program for Indochina,” dated May 23, not printed. (Ibid., C 2854)
  4. In Appendix IX to the document cited in footnote 3 above, the Embassy and USOM recommended adhering to the ultimate goal of a Vietnam armed force of 100,000 as had been advocated by Collins. The phased reduction to this goal was to be achieved by early 1956.

    “Iron Mike” was the nickname of Lieutenant General John W. O’Daniel.

  5. Printed from a copy which bears this typed signature.
  6. In this despatch, signed by Kidder as Chargé, the Embassy stated in part: “Ambassador Collins’ views remain those he expressed while in Washington 22–28 April, i.e. a reduction in the strength of the Vietnamese Armed Forces as early as practicable is desirable. The force structure as originally planned, when properly trained and led, would be adequate for performing the missions of maintaining internal security and providing a blocking force in event of external aggression while awaiting action by the Manila Pact Powers. However, the crisis created by the sects has required the suspension of planned force reduction. In addition, the Government has integrated into the Army certain sect units for political reasons. These developments have increased rather than reduced the size and costs of the armed forces this calendar year. Nevertheless, when and if the sect crisis is resolved, whether by forceful or political measures, forces above 100,000 would not be required. Implementation of the planned force reductions should resume promptly so as to minimize the costs borne by the US, and to hold within bounds the magnitude of US dollar funds injected into Vietnam which, under present programs, approach the upper limit that can be absorbed without adverse inflationary consequences.” (Department of State, Central Files, 751G.5/5–1155)