The Ambassador at Saigon (Heath) to the Department of State
218. Repeated information Paris 85, Geneva 46. Reference: Secto 601, repeated Paris 52, Saigon 31, July 14.1 Free exchange of goods between regrouping zones would certainly be of importance to Viet Minh. Practically all of surplus economic areas will be in free zone. Even if Viet Minh get control of coal mines and cement mill north Vietnam, in addition to cotton mills, Viet Minh would still have trouble making their zone self-sustaining due to problems of supply of machinery and raw materials and transportation and marketing difficulties. All of surplus rice and rubber areas would be in free zone. [Page 1424] Most of mineral resources would be in Viet Minh zone, but are relatively undeveloped. Viet Minh zone would be deficient in rice.
In summary, after certain amount of reconstruction free zone could be made self-sustaining over longer period of time and with more difficulty.
Free exchange of goods between zones would enormously complicate problem of giving US economic aid to free Vietnam. Free exchange would in effect mean we giving economic aid Viet Minh as pointed out in our telegram 194, sent Geneva 38, Paris 74.2 Difficulties preventing smuggling between zones, which goes on even under war conditions, would be increased under armistice. However, this should not prevent free world from attempting to put economic pressure on Viet Minh and Communist China.