62. Telegram From the Department of State to the Embassy in Korea1

3. Tokyo pass CINCUNC. Seoul pass OEC. Subject is Economic Subcommittee Talks. In June 30 and July 1 meetings came to grips with rate problem. ROK specific proposal is to increase 180 rate to 270 because wholesale price index increased 51% from December 53 when 180 rate established through December 54. This rate would apply all transactions and ROK desire make it permanent although on latter point Paik little ambiguous since he acknowledged principle that rate should move accordance movements price level.

US proposal laid before ROK as follows: US believes rate flexibility essential since stability not achieved nor in sight. Believe that arrangement contained in Agreed Minute satisfactory but desirable expand auction principle to increase volume aid goods priced in this manner and to reduce multiplicity of rates.

Paik does not appear be pressing his view as vigorously as anticipated and has expressed apparent impatience return Korea. However so far no reconciliation two positions.

Next meeting scheduled July 5.

Dulles
  1. Source: Department of State, Central Files, 795B.5–MSP/7–155. Confidential. Drafted by Howard F. Smith of NA, cleared with ICA and the Department of Defense, and approved by McClurkin. Repeated to Tokyo.