A BLUNDERING VIETNAM POLICY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP66B00403R000200160010-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 16, 2016
• Document Release Date: December 29, 2004
• Sequence Number: 10
• Publication Date: September 3, 1964
• Content Type: OPEN

' ;Approved Fore
n
tion of the country should declare ignorance
to be entitled to as much political power as
knowledge"
A SUPERFLUOUS COURT?
Yet this, swinging to the opposite extreme,
is precisely what the Supreme Court declares
in its strongly egalitarian ruling. Equality
means, literally, deficient in quality and to
eliminate quality has never been a dominant
American objective, In the choosing of leg-
islative bodies or in any other function.
Though "all men are created equal," in the
sense of being entitled to equal social con-
sideration and legal protection, they do not
remain equal in their abilities and accom-
plishment. Equal opportunity has never im-
plied that competition is undesirable. The
customs and laws of the country have al-
ways encouraged individuals to "get
ahead"-which means to become unequal.
Justice Harlan has the, importance of ex-
cellence in mind when he warns that the
reapportionment edicts have "portents for
our society and the Court itself which should
be recognized." We shall have a very differ-
ent society if a dead level of mediocrity is
successfully established as the national im-
age. If the Federal structure Is destroyed to
gain this objective, there will no longer be
any function for the Supreme Court. Its
only constitutional purpose is to maintain
the delicate balance between the National
and State Governments. If the latter lose
their autonomy the Court becomes super-
fluous.
There is no similar organ In the Soviet
Union, where totalitarian democracy is
triumphant, at the cost of representative
government.
The Layman's View of Bankruptcy
HON. JOHN V. LINDSAY
os 21FW. 7t oRK
THE HOUSE OF, REPRESENTATIVES
Thursday, September 3, 1964
Mr. LINDSAY. Mr. Speaker, Mr.
Allyn M. Schiffer, one of my distin-
guished constituents, is active in credit
and collection fields, and heads a large
asicl successrui cpminexcial.agency known
as ,Allyn M. Schiffer, Inc.,, at 77 Lexing-
ton Avenue,. New York City. Mr.
Schiffer Is considered an expert on the
subject of credit. He has, lectured be-
fore business groups and schools in this
country and abroad, and is the coauthor
of "Credit and Copeotlon. ,#naw-How"
and also, ,the recently published bk~
"Profitable Use of Credit in Selling and
Collecting," published by Fairchild Pub-
lications, Inc., of New York City.
Recently Mr. Schiffer wrote a most
interesting article in the July 1964 issue
of Commercial Law , -Journal, entitled
lithe ,ayman's View of bankruptcy." I
am taking the liberty of inserting Mr.
Schiffer's excellent article in the R9coxn
for the edification of my colleagues in
the Congress:
THE LAYMAN'S Vi,,aw OF BANK UPTCY,_.
(By Allyn M. Schiffer)
"Bankruptcy." What a frightening word.
Prior to the great depression of 1929, gen-
erally speaking, a man's entire business life
came to an end with bankruptcy. When
a business "took bankruptcy," the proprietor
lived for the day when he could retrieve a
lost reputation, sometimes by repaying his
just debts to creditors, who had "staked"
; 66 AM- ii X200160010-0 A401
Sio ?rz `
him in his enterprise. With tiie advent of
the depression, a new approach was tried
in the form of Government aid through the
Reconstruction Finance Corporation. In ad-
dition, after the 1929 crash, the Bankruptcy
Act was expanded so that utilities and pub-
licly held corporations could reorganize un-
der sections 77 and 77B (now chapter X)
respectively, instead of liquidating. This al-
lowed the firm to continue in business as
a going concern. Unlike actual bankruptcy,
the new sections improved on the equity
receivership to enable a debtor to submit a
reorganization plan for the,approval of its
creditors. Later, chapter XI was added.
Under this amendment to the bankruptcy
laws, any business can propose an arrange-
ment with its unsecured creditors. Chapter
XI is available to individuals, partnerships,
and corporations, whether owned by a few
a salutary purpose. By discharging his
debts, it may give the petitioner a new lease
on his business life. It may enable him to
reappraise his talents and abilities and to
use them to advantage in a new undertaking,
and also to accept a new responsibility in
the business community. Unfortunately a
few will not accept the law as it was in-
tended to operate. Some men go in and out
of business like the proverbial revolving
door. They find it not too difficult to re-
incorporate, buy up the assets of the bank-
rupt firm under a different corporate name,
and even continue the same business at the
same old address. They may sell their busi-
ness under the bulk sales law. They may
comply with all the provisions of the law,
but still the creditors end up with a small
settlement. Creditors can only resent such
action, unless they choose protracted litiga-
tion to set aside the sale at an expense that
What effect has all this new legislation had _ would prove burdensome.-~It may be desira-
.. -1 ---
---
_
to
the
filing under chapter XI or X have been able
to pay off dollar for dollar to creditors.
Why? Is it because bankruptcy legislation
perhaps appears to put the stamp of approval
on business tactics that jeopardize a credi-
tor's position? The Wall Street Journal
(May 20, 1963), headlined "Big Jump Re-
ported in Bankruptcy Frauds." It is not
an easy matter to prove fraud. Proof of
fraud generally requires the production of
facts showing a "state of mind." Eliciting
such facts from witnesses and documents in-
volves substantial services on the part of
attorneys, accountants, creditors, credit, and
collection agents. The objective of a prose-
cution, if it is to be successful, must be the
presentation of proof that a bankrupt, or
debtor under chapter XI or X, has "hidden,"
"gambled," or "diverted" assets. However,
a petitioner under the bankruptcy laws is
not always fraudulent. Perhaps he has been
a'poor manager or frittered away his assets
negligently. This, of course, is not com-
forting to creditors. In a recent chapter XI
proceeding, the attorney for the petitioner
stated that "there has not been a certified
audit for 47 years." How appalling
Can suppliers be blamed for the Increasing
number of petitions under the Bankruptcy
Act?, The urge for increased sales on the part
of management may be a factor. Credit
executives, to meet competition, may find
themselves in a dilemma, unless they can
convince their management of the extent to
which the credit risk overbalances the ad-
vantage of higher sales. The National Asso-
ciation of Credit Men through its Fraud Pre-
vention Department is bending ever effort to
work with the, U.S. Department of Justice
,,to uproot the parasitical growth." (Novem
her 1963 issue-Credit and Financial Man-
agemont.) The small recovery realized by
creditors on their claims is equally appalling.
Some suppliers have turned. to credit insur-
ance to reduce their losses. However, credit
insurance companies charge premiums, and a
credit? executive must evaluate the cost of
his policy with the profit on sales 'and the
cost of collection. Credit departments can
obtain some protection by selling to pur-
chasers on a guaranty or copurchasing basis.
Such action serves as an additional "cushion"
in the event of bankruptcy or chapters X or
XI. Despite the precautions taken by cred-
itors, the recovery in a proceeding under the
Bankruptcy Act remains small. Frequently
the Government receives the lion's share.
Federal, State, and local taxes are entitled to
priority over general creditors. Some effort is
Jeing made to place a limitation on the pri-
ority of tax claims in bankruptcy: (H.n.
3438.) Should this bill become law, unpaid
tax claims over 3 or more years would be
dischargeable and would not have priority
under the Bankruptcy Act. This would be a
small step forward toward helping creditors
share in ' a greater portion of the assets.
Today, a bankruptcy petition may have
a bulk sale an act of bankruptcy. This
would permit creditors faced with a ques-
tionable bulk sale to invoke the provisions
of the bankruptcy law.
In 1898, when the current Bankruptcy Act
was enacted, very little attention was given
to the salaried employee or wage earner.
Now we are confronted with the rising tide
of "consumer credit." During the depres-
sion only straight or ordinary bankruptcy
was available to individuals or nonbusiness
debtors to extricate themselves from their
accumulated debts. So, in 1938, the Bank-
ruptcy Act was amended by adding chapter
XIII. This enables the wage earner to ex-
tend or settle his indebtedness and to make
payments in the form of installments under
the jurisdiction of the Bankruptcy Court,
without the necessity of becoming a bank-
rupt. Chapter XIII should assist both cred-
itors and debtors. Employers should also
find it beneficial because it should lessen
the number of garnishments. So far as the
debtor is concerned, it removes the stigma
of actual bankruptcy.
Much is being said by leaders in religion,
education, and public affairs about the de-
terioration of the moral climate of American
life. The business community is a prime
target of such criticism. Whether our false
set of business values is attributable to envy,
greed, a driving ambition for power, or in-
adequate leadership, the provisions of our
bankruptcy law appear to afford an avenue
to a "way of life" for those who would abuse
it. A layman considers this sufficient basis
for a reappraisal of our Bankruptcy Act. An
improved law, however, is not enough. If
the risk in the extension of credit is to be
lessened, it will be incumbent upon our
lawyers, accountants, credit associations,
government officials, and the collection in-
dustry to cooperate with businessmen in a
grand venture devoted to the elevation of
the moral and ethical standards under which
our business affairs are conducted.
A VBlundering Vietnam Policy
EXTENSION OF REMARKS
OF
HON. STEVEN B. DEROUNIAN
. OF NEW YORK
IN THE HOUSE OF REPRESENTATIVES
Thursday, September 3, 1964
Mr. DEROUNIAN. Mr. Speaker, the
General Accounting Office, in its factual
report, sets forth the shocking attitude
taken by this administration in its han-
dling of aid to Vietnam. The lives of
our military men, which have been given
for the cause of democracy and freedom,
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CONGRESSIONAL RECORD -- APPENDIX September 3
are wasted when our foreign policy is
permitted to take the course indicated
by the GAO report.
John McMullin outlines some of the
facts in his article which appears in the
Long Island Press on August 26:
WASTE in AID TO VIETNAM COMPILED IN
119-PAGE REPORT
(By John McMullan)
WASHINGTON.-The blunderings of U.B. aid
policy in South Vietnam are detailed with
embarrassing precision in a little-published
report by the Government's General Ac-
counting Office.
From expensive perfume and scotch
whisky to cars and fertilizer, U.S. aid too
often has eased the life of Saigon's rich in-
stead of the country's poor, the GAO found.
GAO barks so often at waste and misman-
agement in U.S. Government that its voice
often is muffled into the nearest filing
cabinet.
Its 119-page, two-booklet indictment of
U.S. Vietnam policy met the usual fate
despite these findings:
Kerosene, used almost entirely by low-in-
come groups in rural areas for illumination,
was taxed at the excessively high rate of
40 percent of the retail price by the Saigon
Government.
"On the other hand, alcoholic beverages,
traditionally considered a luxury, were rela-
tively undersaaed." Imports of Scotch
whiskey rose, from 9,000 gallons in 1958 to
19,000 gallons in 1962.
Gasoline, used mostly by the wealthy resi-
dents in the capital of Saigon was kept at
a retail price far below that in other south-
east Asian countries because imports were
financed by the U.S. Agency for International
Development.
One thousand care were Imported Into
South Vietnam in 1980 and again in 1981,
which "further accentuated the disparity
between the low living standard In the coun-
tryside and the opulence in the cities.
While the Vietnamese Government's for-
eign exchange was being "used to finance
the importation of passenger cars," the GAO
auditors added, "AID was meeting the coun-
try's more essential transportation require-
ments by providing funds for the importa-
tion of buses, trucks, and repair parts.""
Expensive perfume, affordable only by the
rich, was taxed at 10 percent. But the cheap
brands often were taxed as high as 35 percent.
Fertilizer was Imported "during the de-
mand season when prices are highest." GAO
estimated that $240,000 could have been saved
by bringing it in during the off-season end
storing it.
Providing electricity in small cities and
rural areas was recognized as important in
winning the loyalty of the people for the
South Vietnamese Government. Yet 3 years
after one set of 50 diesel generators was
imported in 1959, 6 of them were still in a
Government warehouse.
Many cities had no drinkable water, so
drilling 5,000 wells by 1985 became a top-
priority project. "As of June 30, 1g62, only
1,108 wells had been drilled," SIAO noted.
Rat infestations were causing low morale
among farmers in June 1961, and an emer-
gency appeal was sent to AID headquarters
in Washington. Thirteen months later the
shipment came in by air, after the crops
were ruined. (Extra cost of the air trans-
portation was estimated by GAO at $20.000).
GAO's scrutiny of United States-Vietnam
foulups cover 1958-62, through both Repub-
lican and Democratic administrations.
The report is a compilation, and at the
same time an authentication, of piecemeal
revelations of corruption and mismanage-
ment within the South Vietnamese Govern-
ment--and of weaknesses in U.S. policy and
direction that permitted the abuses.
South Vietnam's tax structure and collec-
tion system were criticized by G40. which
found that "little action resulted" from
recommendations made by U.S. advisers.
'"The unsound and complicated system of
a basic exchange rate, intertwined with a
series of varying taxes, has continued as a
burdensome drag on the country's progress
toward economic development," the report
stated.
At the time of GAO's review "one-quarter
of the properties in the Saigon-Cholon area
were not on the tax roll and only about 80
percent of the property taxes actually as-
sessed were collected.
"The large Chinese bu6iness community in
Oholon paid little or no taxes" Asked why,
a top Vietnamese official explained that the
tax collectors did not understand the
records.
Only 15.000 individuals in a country of 1$
million population paid income taxes.
GAO auditors complained that "certain
policies and practices applied by aid In the
administration of nonproject assistance and
of local currency increased the cost of U.S.
aid substantially."
As a result, South Vietnam's foreign ex-
change reserves grew considerably. "Higher
levels of consumption were encouraged than
were warranted by the state of Vietnam econ-
omy, and positive incentive for the Govern-
ment of Vietnam to mobilize Its own re-
sources was weakened," the Government
watchdogs said.
U.S. aid officials thought that it might help
the poor Vietnamese to see what wonders
had been wrought in the outside world.
They agreeably went along with some of the
imports that GAO critiicized in Its report.
So GAO Inspectors found Vietnamese who
formerly had worn cotton socks, delighted
with AID-financed nylons. GAO pointed
out that nylon "cost nearly 63 a pound
against a cost of only about 46 cents a pound
for rayon and cotton yarn.
"It seems to us," GAO said, "so long as
outside assistance on a large scale is required
by Vietnam, the import beyond token
amounts of commodities not required or of
marginal necessity to that country's eco-
nomic survival or development adds an un-
justified burden on the United States"
Between fiscal years 1955 and 1982, AID
obligated $1.5 billion for the economic and
technical assistance program in Vietnam.
Some Vietnamese businessmen apparently
knew when they had a good thing, GAO said,
in effect.
This led to imported pharmaceuticals being
priced higher than necessary "because of
commissions and promotional allowances
paid to Vietnamese importers by pharma-
ceutical suppliers"
Twenty-one drug suppliers have had
claims amounting to $806,000 filed against
them by AID, of which $414,000 has been
collected.
Is the situation in South Vietnam better
today under a new regime?
Government auditors concede that certain
corrections were promised at the conclusion
of their field work, but they are continuing
to review the South Vietnam procedures.
"We are by no means convinced," the GAO
report concluded, "that measures such as
p
,
dies disclosed by our review, at least not with- for Vice President, has his political roots in
out top agency management exercising close n11nois, is a bona fide resident of Illinois,
control and supervision" and will doubtless be heard from one of
Kennedy-Johnson Rivalry
EXTENSION OF REMARKS
or
HON. ROBERT H. MICHEL
Or U,LZNOIS
IN THE HOUSE OF REPRESENTATIVES
Thursday, September 3, 1964
Mr. MICHEL. Mr. Speaker, the fol-
lowing editorial In the August ;6, 1964,
issue of the Peoria Journal Star points
up the growing friction between the Ken-
nedy clan and the Johnson camp as
both attempt to build their authority,
based on illegitimate power.
Under unanimous consent, the edi-
torial follows: _
BOBBY'S CLAN
Bobby Kennedy's appearance at the John-
son convention, dragging a reluctant Mayor
Wagner with him, has nothing to do with
the work of the convention-boosting Lyn-
don Johnson's "image" and political stock.
Bobby is there to boost Bobby.
He resigned as a delegate in favor of mak-
ing an entrance as a candidate for Senator
in the State of New York. Meanwhile, Jac-
queline Kennedy declined to be a part of
the Johnson convention because of "painful
memories."
The Kennedya are in this convention, in
their own way, and in there punching-but
fighting their own fight, not Lyndon John-
son's.
While Bobby is a reject for Vice President,
he has, in effect, overruled the President by
running for the Senate from New York.
After all, President Johnson said that he
wasn't considering Bobby for Vice President
because Bobby was "so important" as At-
torney General that he'd be needed on that
job and wouldn't have time to campaign.
He might not have time to campaign for
Vice President in Johnson's estimation, but
he has made it clear he'll find time to cam-
paign for Senator.
(Meanwhile, Johnson also finds plenty of
time from his duties as President for cam-
paigning.)
This election will decide a lot of things
concerning the Kennedy future as well as
Johnson's, whether the President likes it
or not.
If Pima SALINOER wins In California,
there's not much doubt who will take over
the California organization, nor to whom
that organization will be loyal. It is to be
remembered that PIERRE SALINGER worked
for Robert Kennedy before he was known
to John F. Kennedy, and was recommended
to the job of press secretary by his friend.
Bobby.
If Bobby, himself, wins in New York, after
riding straight over Mayor Wagner, already,
who is going to emerge as the real power
in the New York delegation, do you think?
TED KENNEDY, of course, is already the
Senator from Massachusetts and a political
power in the party In that State, after beat-
ing the McCormacks in an election that sees
the party there firmly in hand.
New York and California combines the
east and west coasts and the two biggest
single political power centers in the United
States.
The third largest In many ways, and the
geographical balance certainly, Is the State
of Illinois.
And there is a string in the bow of the
family for Illinois as well, for Sargent
Shriver, personable head of the successful
the most famous Kennedy
Peace Cor
s
these days In local politics.
What seems to be building behind the
scenes of the Atlantic City convention, and
in spite of the obvious disapproval of Presi-
dent Johnson, is one of the most unique
political power structures in American his-
tory-if it succeeds.
And at its head, undoubtedly. Is the man
who was the real campaign manager for
his famous brother in 1960, one of the can-
niest and hardest-driving political organizers
this land has known-Robert Kennedy.
And look where he sits. If Johnson should
be beaten (and Kerner beaten in Illinois),
where do you think the party leadership
would instantly go? And If Johnson wins,
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