“But Diem’s not in power anymore,” I protested. “How is his family still involved?”
“When Diem’s family ran things everybody had to buy from them or business that paid them for the privilege of doing business. Americans call it a tax. Now we have to buy from the same businesses run by Diem’s family but they have to pay Thieu. So it’s even more expensive.
“But father’s not on Thieu’s favorites list so he can’t buy dollars at half price. He refuses to ship for Thieu’s cronies. He says they won’t let him audit the manifests so he won’t take the chance of jeopardizing his business with the Americans.”
“This doesn’t make any sense to me at all. How does anybody get dollars at half price,” I protested. Much of Viet Nam didn’t make sense. And it seemed every time I asked a question the country and the war made less sense.
“If he was on Thieu’s favorites list, he could take advantage of the Commercial Import Program.
“I didn’t know there was such a thing. I suppose you’re about to explain what it is.”
“I will, but have some patience. You can’t understand the black market in currency without understanding the Commercial Import Program.”
“You sound like you’re beginning an economics class lecture.”
“Do you want to know or not?”
“Yes, yes. I want to know why this black market exists. I already know a bit about how from DB”
“DB may have told you how money change system works but did he tell you why?
“I wonder. He may not know himself. That’s what I’m trying to tell you.
“It’s a program to promote industrial growth of the country. Industry buys at a discount on the international market. As I told you before, we Vietnamese are now completely dependent on you Americans. We depend on you for fight the communists and we depend on you to keep the economy going. And the wealthy have turned that dependence to their benefit. The difference between the market rate and the official rate is now almost two-to-one.
“In the program the Americans give the Vietnamese central bank dollars to invest in industry.”
“Oh! Foreign aid — that’s what the American conservatives are constantly yelling about. Barry Goldwater and that crowd. I never understood the point of it.”
“It’s part of an international strategic plan to prop up US friendly governments as a defense against communism. It’s happening all over the world. I learned this in an international affairs class I took at university. So it’s a French perspective.
“The conservatives hate communism so I don’t understand why they would be against foreign aid either. It seems that the Americans are often their own worst enemy. Now stop interrupting. I can’t keep my train of thought.
“Anyway this foreign aid program has been going on since 1955 and for Viet Nam it’s called The Commercial Import Program. It works like this; now don’t interrupt me. This is hard. The U.S. gives the Saigon government money. It’s supposed to be for industrial development but the Saigon government can’t spend it directly; the American economists say it would be inflationary if they didi that. That’s a laugh! Absolutely a laugh. When you consider that the exchange rate that Diem negotiated was something like 35 to one in 1955 and now 24 years later it’s like135; No one can tell me with a straight face that the structure of the Commercial Import Program prevents inflation. It just promotes corruption.
“The program requires the Viet Nam central bank to sell the dollars to Vietnamese industries for piasters. The industries are supposed to buy American goods on the international market with the dollars. The government can do whatever with the piasters. But, of course, Thieu picks the companies that can buy at half price and i don’t doubt that he gets a kickback somewhere.
Not only that but the Americans dictate that the central bank sell the dollars for half the open market rate. That’s half price; like a going-out-of-business-sale. So if you monsieur merchant can buy dollars for half the street price, say 110 piasters then go to the bank and be credited for 220, what would you do? Buy a cement plant?”
“Hell no! I’d put it in the bank.”
“So do most of the merchants and they mostly don’t put the money in Vietnamese banks.
“They could buy whatever they want: Coca Cola, motorcycles, televisions, whatever, except no alcohol or jewelry and they do, as you can see on the street. But if they really do want to buy a cement plant it has to be OKed by the Americans. Father says the paperwork is enormous.
“So the piasters that the government gets from the sale of dollars is supposed to pay salaries of the army and police but Thieu’s wife owns the bank and so they pocket some of the money. That’s why the police have all their petty protection rackets. The government is supposed to pay the army officers to pay the troops but there is no audit so the soldiers don’t always get paid, so the they steal, ‘shake down,’ is that the American term? They shake down the villagers for anything they can sell. The villagers don’t have money so they take rice or pigs or chickens. The peasants are left with nothing so they come to Saigon expecting things to improve.