The Rise And Fall Of The Indochinese Piastre - Page 2

Posted 05/15/2023 06:15 am

Post #11:

The Fall Of The Piastre

or

The Dawn Of The Dông

100 piastres, French Indochina, 1954 (Vietnam issue). 171 x 108 mm.

The Indochinese War lasted until 1954. Then the French were defeated and left Indochina after nearly 100 years. No more coins were minted after 1947 but banknotes were still issued. The last series was issued in 1954 and consisted of 100 piastres and 200 piastres notes. The 100 piastres note was issued with different reverses for Vietnam, Cambodia and Laos. The common obverse shows three women, in traditional dresses from the three countries. The Vietnamese reverse - shown above - features Bao Dai, former emperor and at this time Chief of State of Vietnam. The banknotes are issued by The Issuing Institute of the States of Cambodia, Laos and Vietnam, which had replaced the traditional Indochinese Bank. It is a rather nice banknote. The water mark by the way, is a tiger's head. The Indochinese tiger is today almost extinct.

The piastre traffic

There is one last story about the Indochinese piastre that is worth telling. As briefly mentioned in my previous post, the piastre was revalued to a fixed value of 17 French francs after World War 2. The idea was to strengthen the Indochinese piastre after it had been drawn down with the devalued franc. It turned out to be an artificial strengthening that didn't quite work, because the street price for an Indochinese piastre stayed at around 8.50 francs.

That imbalance led to a speculation wave which became known as the piastre traffic (trafic des piastres). This is how it worked: A large amount of piastres was acquired in Indochina, at 8.50 francs each. They were then transferred to France, where they could be exchanged for 17 francs each. The francs were brought back to Indochina - sometimes via exchange into US dollars or Swiss francs to hide the transaction - and there they were used to buy piastres again, now twice as many as the first time. Back to France again, and - yeah, you get it. In a few weeks a capital could be multiplied many times over, without any actual export or import or anything of real value being performed.

That kind of fake transactions was of course not the intention with the revaluation, and to control the in- and outflow of piastres, export and import permits were required. Permits were provided by Office Indochinois des Changes (OIC) in Saigon. The OIC officials became very popular and were treated with money, liquor, girls and whatever they wanted, and permits flowed out of the office. To launder the money, low valued and useless stuff like outdated school books and unusable cement was imported into Indochina, but invoiced at ridiculously high sums. Outright bogus invoices were also plentiful.

The piastre traffic could of course not be kept secret, and the press began to write about it and how it drained the French treasury of billions. But too many profited, high officials and politicians included, as well as the French forces in Indochina (who had a special permit), so the traffic continued for years. It was not until it became clear that also Viet Minh used the traffic to finance their resistance against the French, that action was taken. The piastre was devalued to 10 francs in 1953.

North Vietnam

1 dông, North Vietnam, 1946. Aluminium, 4.6 g, 33 mm.

In the mean time, Viet Minh established a state in the north - the Democratic Republic of Vietnam, commonly called North Vietnam. Early on, North Vietnam minted its own coins. The currency was (and still is) named dông (see Note 1), which is the Vietnamese translation of piastre (see Note 2). The coin above is the first 1 dông coin, issued in 1946. It is made of aluminium and weighs just around 4.8 g. The text on the obverse means Democratic Republic of Vietnam. Officially, the dông was at par with the piastre. In reality, one piastre cost at least 40-50 dông and inflation was very high.

It is interesting to compare it with the last French Indochinese 1 piastre, issued at the same time (shown in my previous post). Nearly the same size (33 mm vs 35 mm) but much lighter (4.8 g vs 18 g). The compositions are very similar: Profile turned right (Ho Chi Minh vs Marianne) on the obverse, rice stalks and denomination on the reverse. There are also differences: While Marianne is draped in national symbols - Phrygian cap, olive branch, lion brooch - Mr Ho is a completely undecorated profile. A logical choice maybe, for a new state that wants to dispose of all that reminds of colonialism and empire. France and Viet Minh did not share views on much, but on how to use imagery on coins they at least agreed to some extent.

And with that concluding remark, I end my posts in this thread, at least as far as posting coins and banknotes. I am happy to (try to) answer any questions you might have. And, of course, if you have something to show related to this, please go ahead and post!

Notes

Note 1: As seen on the coin and banknote in this post, the word dông has additional diacritics, but they cannot be shown here. That is the case for several Vietnamese words used in this thread.

Note 2: Dông is not a direct translation of piastre (which is derived from Italian piastra, meaning plate). The literal meaning of dông is copper, but it does also refer to currency in general (possibly because the traditional Vietnamese currency was copper cash coins). When the piastre became the Vietnamese/Indochinese currency, it was natural to transfer the indigenous name dông to it ("piastre" doesn't fit well into the Vietnamese sound system). A more specific name for the piastre is dông bac, where bac means silver, but that name has, to my knowledge, not been used on coins or banknotes (although the word bac shows up in other combinations).

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