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19. In discussions on all levels my party and I strongly urged the French to utilize their present school and training center plant facility to capacity for the training of indigenous personnel and establish additional facilities where necessary in order to expedite the development of the indigenous armies. The French accepted this concept with the reservation that inasmuch as no additional qualified students may be available, following utilization of the present large training plant facility to capacity, the need for further expansion may be eliminated. Furthermore, I strongly believe that U. S. schools should be utilized, not only to train Vietnamese instructors, but also to acquaint the Vietnamese with U, S. training methods.

20. : Manpower resources available in the Associated States are capable of supporting considerable expansion beyond currently programmed increases in the Armies of the Associated States. Bao Dai stated that Vietnamese forces alone are capable of expansion to 500,000 men. Other Vietnamese officials reiterated that their army could and should be expanded to at least double current plans. This is a commendable attitude but pay, equipment and training are the limiting factors.

21. Although a considerable increase in Vietnamese support of the war has been made during the past year (Vietnam has reportedly increased its defense budget by 300% since President Tam took office), Vietnam remains capable of increased financial support of the war effort, as does Cambodia. This does not hold true for Laos, with its primitive economy and present complete dependence on France for budgetary support. It is the opinion of Ambassador Heath and his staff that the Associated States

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