The Reds Arrive

Two days before Communist Vietminh troops marched into Hanoi last week (see FOREIGN NEWS), a company of bare-chested Legionnaires marched into a factory and went to work. They smashed huge holes in the brick walls, hauled out all the machines they could carry and loaded them into waiting trucks. Within hours, the prosperous $15 million Brewery & Cold Storage of Indo-China was a wreck, but much of its equipment was headed south into the French zone. Like many another French business, the Brewery had first hoped to stay in Hanoi after the Geneva truce partitioned the country last July. But at the last minute, the owners changed their minds, frantically salvaged all the machines they could.

Flight was about the only choice left for the 880 French businesses with an in vestment of $240 million in Northern Indo-China, most of it in Hanoi. What the businessmen wanted after Geneva were solid guarantees of freedom and a sound financial basis for trade. What they got was the familiar Communist doubletalk of vague, high-sounding promises coupled with arbitrary action that showed Frenchmen--and all Western businessmen--the hopelessness of doing business under Red rule.

Fact & Fancy. Under the truce, the Communists promised businessmen "fatherly protection." Said a Red declaration on trade: "Establishments and properties will be safeguarded . . . In all cases of requisition, expropriation, or suppression of licenses, legitimate interests of French citizens will be taken into consideration."

The terms of the truce also called for each side to turn over public services in operating condition. Accordingly, French Premier Mendes-France sent a personal emissary to Hanoi to persuade the four big French-run public utility companies--the power plant, water company, Yunnan railway, and Hanoi's municipal streetcar system--to stay on under the Communists.

The first taste of trouble came with an announcement of Communist fiscal policy. The only currency valid in the Northern zone was to be Communist Ho Chi Minh's piasters, a printed currency that had no value before Geneva. The Communists arbitrarily based it on the price of rice, 230 piasters for two pounds of grain. But since rice prices fluctuate wildly from area to area and from season to season, the currency would depend on the crop, thus make it impossible for any Northern businessmen to set up a solid business. Imports would be next to impossible to get since few outside businessmen would accept the unstable Red piasters.

What happened in the textile city of Namdinh (pop. 100,000), the third largest city in the north, was enough to scare even the most optimistic French businessman. As soon as the Reds arrived, everybody was ordered to turn in his nationalist piasters (value: 3-c- U.S.) for Ho Chi Minh piasters, got the arbitrary rate of 22 Ho Chi Minh piasters to one nationalist. Prices soared. After a short period of false prosperity, while merchants sold their stocks at wild prices, all business came to a standstill. Import taxes of 30% to 40% were levied on new goods, killing off store after store. The town's two big cotton and silk mills, supplied by Japanese silk and imported cotton from the U.S., shut down because the Communists did not know how to operate them, could not get new supplies.

Refugees from the countryside told of another Communisi device to take over. Systematically. Red troops seized the properties of some 100 French settlers, in all 370,000 acres of paddyfields. coffee and tea plantations, dairy and beef cattle farms. A month ago, the last Frenchman lost his land, 35,000 acres of paddies, and fled south completely ruined. In Hanoi French businessmen took the lesson to heart.

The March South. Those who could sold their goods for what they could get, or moved them to Haiphong 60 miles away, where the French have until May 1955 to get out. The two banks closed, Hanoi's biggest printing plant moved; the leading bicycle manufacturer sold his business for a third of its value. The bottom dropped out of the real estate market; not even Chinese buyers were interested. Those who owned hotels and other buildings simply locked them up and left. The French power company abandoned its installations rather than work under the Communists.

A few French businessmen hopefully set up shop in Haiphong, waiting to see what would happen in the next eight months. Shell Oil Co., which supplies 70% of the northern market, frankly hoped that business would return to normal after a while. Said a spokesman: "We will try to continue our operations in the north." But the two U.S. oil companies in Indo-China, Standard-Vacuum and Cal-tex, were not so hopeful. Stanvac closed down completely in Hanoi, was only doing a small business in Haiphong. Caltex took out everything movable. Said one veteran Caltex man: "Our experience in China, where we lost five huge refineries, taught us that there is no possibility of coexistence with Communists."

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