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Thayer Watkins
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The Economic History of Saigon
(a.k.a. Ho Chi Minh City)

The Unappreciated
Significance of Saigon

During the Vietnam War Saigon was frequently in the news. The American general public got the impression that Saigon was an important regional city but nothing more than that. This is far, far from the truth.

With a present population of about 13 million in its metropolitan area Saigon is the largest city in Vietnam. It is comparable in population to the size of metropolitan Los Angeles and it is bigger than metropolitan Chicago. For compariso consider that the entire nine-county San Francisco Bay Area population in 2010 was only a little over 7 million people.

Saigon is now the very heart of the economy of Vietnam both in terms of current production levels and innovations for the future.

An American company, JONES LANG LASALLE IP, INC., compiles an index of the innovativeness of the cities of the world. The top ten most innovative cities in 2017 according to that index were:

1Bangalore, India
2Ho Chi Minh City (Saigon),
3Silicon Valley
(metropolitan San José)
4Shanghai, China
5Hyderabad, India
6London, U.K.
7Austin, Texas
8Hanoi, Vietnam
9Boston, Massachusetts
10Nairobi, Kenya

Saigon grew in population and prosperity precisely because it was not under the control of the Stalinist central planners of Hanoi. But that prosperity made it an irresistible prize sought by Hanoi as a solution to its economic problems. The U.S. prevented that takeover until it accepted the reality that Hanoi was willing to sacrifice millions more in additional to the one million it had already lost. The U.S. was not willing to accept the loss of more tens of thousands of its soldiers in addition to the fifty thousand it had already lost. This is why North Vietnam won the war despite the fact it never won any significant battle against the U.S. and the South Vietnamese army. See How North Vietnam won the War

Hanoi then sent an invasion force south to capture Saigon. There were not enough rebels in South Vietnam to accomplish that; thus demonstrating that the South Vietnamese did not want to be united with the North. When Hanoi tried to direct the operation of the Vietnamese economy it produced a famine that lasted until it gave up the notion that agriculture could be directed by central planners in the city.

The Vietnamese Communist Party's Sixth National Congress in December of 1986 acknowledged that the economic model followed since 1954 had failed. Lê Đức Thọ, head of the Central Organizing Commission of the Communist Party, said

The party has become "a cumbersome and ponderous mechanism, only marginally efficient, marked by ill-defined responsibilities and poorly divided functions."

He further stated that

Confusion within the party over operational responsibilities between the central party leadership, mass organizations and the state, and between higher and lower party echelons has developed into a serious problem, and that a cynical collective mindset within the party has taken hold and manifests itself through corruption, inflexibility and dishonesty.

The economic reform system that developed was known as Doi Moi, which literally means "change and newness." Hanoi captured Saigon and tried to impose its system but that system failed and Hanoi had to adopt essentially the economic system of Saigon for the whole country. In a few years Vietnam went from famine conditions to being the second largest exporter of rice in the world; second only to the U.S.

North Vietnam won the war but, in effect, South Vietnam won the peace.

(To be continued.)

Regional History

The Mekong Delta region was originally under the control of the Cham Empire located in what is now central Vietnam. A small town arose on the Saigon River where Saigon later grew up. Cham control was later replaced by control by the Cambodians (Khmer). But the delta was far to the east of homeland of the Cambodian Empire. On the west the Cambodian Empire was in conflict the Thai people who had migrated into the area from South Central China. It was difficult for the Cambodian Empire to devote power to maintaining control of the Mekong Delta region.

There was also a period in which there was a sizable Thai army seeking to gain control in the Mekong Delta region. They failed and left.

There had been a small Cambodian town called Prey Nokor (forest city) where Saigon grew up. But the potential of the location for the site for a major city and port was not realized until the Mekong Delta region was acquired by the Vietnamese at the very end of the 17th century.

The city of Saigon is located 45 miles from the sea but the river there is deep enough for ship of 30 foot draft. Thus it was possible for Saigon to become the most important port of Southeast Asia with an economy able to support a population of over 13 million people, the largest in Vietnam.

The Immigration of
Chinese to South Vietnam

It is generally thought that the Vietnamese rulers encouraged the migration of Chinese into the newly acquired region of the Mekong Delta to help establish Vietnamese control the region. It served that purpose but the actual chain of events was more complex.

The Ming Dynasty had successfully ruled the Empire of China for more than two centuries. There was a relatively minor problem of attacks on the Empire from Manchuria by the Manchus, a people related to the Koreans. Armies were sent from Bejing to ward off these attacks. While these attacks were being warded off, a rebel named Li Zicheng raised a peasant army and invaded Beijing, The rebels captured the Emperor and forced him to abdicate and made Li Zicheng the new emperor. The old emperor hung himself.

The general commanding the Chinese troops fighting the Manchu invaders was so enraged that he switched sides and joined with the Manchu invaders to attack Beijing. The two forces captured Beijing, deposed Li Zicheng and established the Qing Dynasty to rule the Chinese Empire. This was in 1644.

Ming officials held out in South China for almost two decades but eventually they were defeated by the forces from Bejing. The supporters of the Ming Dynasty had to face the prospect of living under the control of foreign rulers. Many chose to migrate south into what is now Vietnam.

When those migrants arrived in Hué, the capital, the rulers accepted them as immigrants but did not want them as a possibly dangerous element in the capital so they sent them on the newly acquired Mekong Delta region which included the town which eventually became Saigon.

Those South China immigrants were a very valuable asset for the economy. They established businesses such as trading in rice, the principal product of the area. They brought new technology and knowledge to the area.

The Turmoil of the Tay Son Rebellion
and the Eventual Victory of Nguyen Anh

The traditional royal family of the Empire of the Vietnamese was the Nguyen. They operated from Hué. In the late 18th century they were having financial difficulties and found it necessary to raise taxes and impose new burdens on the already hard-pressed population. An example of an additional burden was requiring boat owners to transport rice from the South to the North without any payment. An additional problem was that tax collectors were allowed to get their salaries from the tax payers in addition to the official taxes they were required to collect. The burden of the taxes could be heavier in some provinces than in others.

There were three brothers who were members of the Ho family. An ancestor of theirs had been ruler of a kingdom in the Hanoi area. More immediate ancestors had been forced to become pioneers in the South. The family changed their family name to Nguyen in hopes of getting better treatment from the government.

The three brothers' names were Nguyen Nhac, Nguyen Lu and Nguyen Hué. Nguyen Nhac was a tax collector and a betel-nut trader. He was accused of abusing his authority as a tax collector and fled to a mountain area called Tay Son to avoid punishment. He began to gather an army of discontents including his brothers. At first he said he wanted fight for the Nguyen emperor against a government official who was abusing his power and was the real source of the problems of the people.

In 1773 Nguyen Nhac and his Tay Son rebels captured the city of Qui Nhom and its fort. The merchants of the city supported him in hopes of an improvement in their conditions. The local Chinese, who were overseas traders, supported him in hopes of his improving trade relations.

After their success at Qui Nhom the rebels moved south to attack the capital Hué. The emperor had to flee from this unexpected attack. He fled to the city that became Saigon thus making it his temporary capital. This was in 1774.

Nhom had his brother Lu take a force up the Saigon River to attack from an unexpected direction. The ploy worked and the Tay Son rebels captured Saigon in 1776. The Emperor had to flee again. His general who had stayed in Saigon managed to regain control of Saigon and the Emperor returned. But the Tay Son amassed an even greater force and took the city a second time in 1777. The Emperor again retreated but this time the Tay Son defeated the remnants of his army and took him and others of his family prisoners. They were taken to Saigon and publically executed. It appeared that the entire Nguyen royal family had been wiped out. But a 15 year old nephew of the Emperor, Nguyen Anh, escaped through the marshes and made it to the forest near the important city of Ha Tien. He lived in the forest for about two months. There he met a French priest who tried helping him then and later. Nguyen Anh, as the likely next Emperor, began organizing a new army.

The Tay Son in 1782 retook Saigon and destroyed the army of Nguyen Anh. The French priest helped Nguyen escape to a safe refuge on an island off the coast of Thailand.

This time the Tay Son massacred 20 thousand they accused of being supporters of the Nguyen. This included ten thousand Chinese from city of Cholon, the city of Chinese adjacent to Saigon.They provoked a split of the Chinese away from the Tay Son whom they had before supported. The Tay Son buried most of those they executed in a massive burial ground. Some however they simply threw their corpses into the Saigon River polluting it for significant period of time.

The Tay Son were not engaged only against the Nguyen royal family. They prevented an invasion by a Thai army of the Mekong Delta. They also stopped the entry of a military force from China into Northern Vietnam.

Occasionally the three brothers fought against each other. During one of those episodes Tay Son troops were withdrawn from Saigon and its Tay Son governor, who was one of the brothers, left. Thus Nguyen Anh was able to enter Saigon and start creating a new government. But militarily things did not go too well for Nguyen Anh. Its forces lost Saigon again.

In 1782 forces allied with Nguyen Anh captured Saigon only to have a Tay Son army storm back in in 1783 destroying not only Nguyen's army but also his small navy. Without ships and boats to transport his forces Nguyen Anh was nearly helpless.

But Nguyen Anh did not give up hope. He journeyed to Bangkok, Thailand to negotiate help from the Nguyen's sometimes enemy. The Tay Son's reputation was so bad that the Thai's agreed to help him. In 1785 they provided him with an army of 20 thousand and 300 ships. The army had to reach Vietnam by crossing Cambodia which had been client state of Vietnam when it was ruled by the Nguyen family in the past. The ships came by sea intending to sail up the Mekong River. But the Tay Son forces were ready for them and defeated and nearly destroyed both the Thai army and the Thai fleet. Nguyen Anh returned to Bangkok.

One of the Tay Son brothers, Nguyen Hué, was reputed to be a highly skilled military tactician and from the military successes of the Tay Son that appeared to be the case. But despite their military success the economy under their control was devastated.

In 1792 Nguyen Hué died and in 1793 Nguyen Nhac, the founder of the Tay Son rebellion, also died. Without them the Tay Son movement diminished and finally in 1802 Nguyen's forces defeated the remnants.

The Colonial Period

In 1859 France captured the territory of southern Viet Nam which it subsequently named Cochin-China. In 1862 this territory was ceded to France by the emperor of Vietnam and France made Saigon its capital of Cochin-China. A few years later France annexed the rest of Vietnam.

France landscaped the streets of Saigon to the extent that Saigon was referred to as The Little Paris of the East.

To exploit their colonial control the French developed coal exports from the North and rice exports from the South.

(To be continued.)


The Name of the People

The culture of the Kinh (Vietnamese) people developed the basin of the Red River. (Vietnamese is the name given to them by the Chinese. It means the foreigners to the south of China.)

The final nh in kinh represents the ny sound as in canyon. The French wrote Vietnamese in Roman letters based on a dictionary of Vietnamese words compiled by a Portuguese monk. In Portuguese the ny sound is indicate by nh. In Spanish the ny sound is denoted by ñ. The Spanish spelling of kinh would be kiñ.

The Chams

The Chams were the descendants of the Malay traders who came to what is now central Vietnam. The Malays occupied what is now Indonesia, the Philippines and Malaysia. Some were first converted to the Hindu religion and the people of the island of Bali retains that religion. Later most were converted to Buhhdism. And still later most were converted to Islam.

The Malay traders explored far and wide. To the west they reached India and then went beyond to the east coast of Africa. They went south and discovered the unoccupied island of Madagascar. The traders decided to settle in Madagascar. They found wives on the east coast of Africa. Linguist later discovered this long forgotten migration of Malay traders to Madagascar when they found the language of the Madagascarians was closely related to the language of the Malays.

In addition to their explorations to the west the Malays spread east .Some established a colony on the Vietnamese coast centered near where the city of Hué is now located. The empire of the Chams extended down into the region of the Mekong Delta and a Cham village named Prey Nokor existed where the city of Saigon grew up. But the Chams had no influence on the nature of Saigon. Even today a fraction of one percent of the people of Vietnam identify themselves as Chams.

The Khmer (Cambodian) People

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