It is now clear that whether military proposed martial law or whether Nhu tricked them into it, Nhu took advantage of its imposition to smash pagodas with police and Tung's Special Forces loyal to him, thus placing onus on military in eyes of world and Vietnamese people. Also clear that Nhu has maneuvered himself into commanding position.
US Government cannot tolerate situation in which power lies in Nhu's hands. Diem must be given chance to rid himself of Nhu and his coterie and replace them with best military and political personalities available.
If, in spite of all your efforts, Diem remains obdurate and refuses, then we must face the possibility that Diem himself cannot be preserved.
[The] US would find it impossible to continue support GVN militarily and economically unless [the] above steps are taken immediately which we recognize requires [the] removal of [the] Nhus from the scene. We wish [to] give Diem reasonable opportunity to remove [the] Nhus, but if he remains obdurate, then we are prepared to accept the obvious implication that we can no longer support Diem. You may also tell [the] appropriate military commanders [that] we will give them direct support in any interim period of breakdown [of the] central government mechanism.
Believe that [the] chances of Diem's meeting our demands are virtually nil. At the same time, by making them we give Nhu [a] chance to forestall or block action by [the] military. [The] Risk, we believe, is not worth taking, with Nhu in control [of] combat forces Saigon. Therefore, [we] propose we go straight to [the] Generals with our demands, without informing Diem. [We] Would tell them [that] we [are] prepared have Diem without [the] Nhus but it is in effect up to them whether to keep him.