Colonies were considered essential to supply natural resources and other essential goods. Like other Western nations, France also thought it was the mission of the ‘advanced’ European countries to bring the benefits of civilization to backward peoples. The French began by building canals and draining lands in the Mekong delta to increase cultivation.
The vast system of irrigation works – canals and earthworks – was built mainly with forced labor, increased rice production, and allowed the export of rice to the international market. The area under rice cultivation went up from 274,000 hectares in 1873 to 1.1 million hectares in 1900 and 2.2 million in 1930.
Vietnam exported two-thirds of its rice production and by 1931 had become the third-largest exporter of rice in the world. This was followed by infrastructure projects to help transport goods for trade, move military garrisons and control the entire region.
Construction of a trans-Indo-China rail network that would link the northern and southern parts of Vietnam and China was begun. This final link with Yunan in China was completed by 1910. The second line was also built, linking Vietnam to Siam (as Thailand was then called), via the Cambodian capital of Phnom Penh.
By the 1920s, to ensure higher levels of profit for their businesses, French business interests were pressurizing the government in Vietnam to develop the infrastructure further. Should Colonies be Developed? Everyone agreed that colonies had to serve the interests of the mother country. But the question was – how? Some like Paul Bernard, an influential writer, and policy-maker, strongly believed that the economy of the colonies needed to be developed. He argued that the purpose of acquiring colonies was to make profits. If the economy was developed and the standard of living of the people improved, they would buy more goods.
The market would consequently expand, leading to better profits for French businesses. Bernard suggested that there were several barriers to economic growth in Vietnam: high population levels, low agricultural productivity, and extensive indebtedness amongst the peasants. To reduce rural poverty and increase agricultural productivity it was necessary to carry out land reforms as the Japanese had done in the 1890s.
However, this could not ensure sufficient employment. As the experience of Japan showed, industrialization would be essential to create more jobs. The colonial economy in Vietnam was, however, primarily based on rice cultivation and rubber plantations owned by the French and a small Vietnamese elite. Rail and port facilities were set up to service this sector.
Indentured Vietnamese labor was widely used in rubber plantations. The French, contrary to what Bernard would have liked, did little to industrialize the economy. In the rural areas landlordism, spread and the standard of living declined.