68. Letter From President Rhee to the Assistant Secretary of State for Far Eastern Affairs (Robertson)1
My Dear Friend, Mr. Robertson : Ambassador Yang has informed me of your discussions, concerning certain editorials in the Korean Republic regarding the dollar exchange rate. To tell you the truth, I have no time to read that paper or any other newspaper personally, but someone reads me a daily summary of important items of the press, some editorials and general information.
Now that this has been brought to my attention, I have requested the Korean Republic’s editors to refrain from using such language and expression and to remember our friendship with the US Government. The truth may be told without hurting friendly feelings, in a constructive and amicable way.
Public sentiment regarding the problem of the spiral rates of exchange has been boiling because everyone knows that they have been the main cause of our nation’s economic suffering during the past eight years. It seems quite clear to me that the high authorities in Washington do not realize how seriously the constant raising of the dollar exchange, since, and even before the operation of ECA, has affected the Government and people of this country. Beginning with a rate of 15 Won to a dollar in the American Military Government days, the ECA officials raised it constantly every 2 or 3 months, doubling a doubled rate and so on, until in 1953 it went as high as 600–1 and they demanded it be raised to 23,000. Each time the dollar price doubled, the market prices doubled also. In Korea the market price of all items goes up, according to the price of the US dollar.
[Page 132]The Government has to set a budget for twelve fiscal months, but each time the dollar price increases the Government is unable to meet its expenditures. Furthermore, how can the people make a living with their earnings, while the prices keep on rising. Naturally, they ask why the United States Government forces us to raise the dollar price, when the rate in Japan and other countries is fixed.
They presume it is because the United States Government wishes to build up Japan’s economy with the funds given to Korea for reconstruction of Korea’s economy. Our Government has no answer to that. Each time we have asked that the price be pegged as in other countries, the answer has been that we must have a realistic rate, otherwise we may not receive the aid funds.
I do not wish to undertake to explain how the Korea aid funds earmarked for Korean economy have been handled, so as to use as many dollars as possible for Japan. Enough to say that the State Department announced more than once that Korea’s aid funds are to be used twice over. This means simply that with the money and materials given for the reconstruction and rehabilitation of Korean economy, Japanese products are imported for the immediate relief of the suffering Korean people, thereby helping Japan’s economy. Why then do Korea’s aid fund administrators not tell us that the United States aid funds are solely for the immediate relief of the Korean people and not for the reconstruction and rehabilitation of the Korean economy. How can Korea answer later when the American people ask us what we have done with the aid they have given to make Korea a self-supporting nation?
We would like to invite all fair-minded people to come and see what industries we have reconstructed with all the aid funds and materials we have received. We want to show them the demolished factories and plants of which only parts of walls and broken chimneys remain, having stood all these years since the Communist invasion of 1950. No aid funds have renovated any of them.
In answer to our requests to rebuild some as a basis for reconstructing Korean economy we were told to buy from Japan some of the supplies we needed, such as fertilizer, cement, coal and other items, for that would be cheaper than producing them ourselves. If that is true, how can we ever expect to make Korea a self-supporting nation?
If, by building up Japan, the United States might win her as a permanent loyal ally, it could be different. But can any thinking persons in America or anywhere else believe for one moment that Japan will be a dependable friend and ally? Has she not already shown herself to be lining up with the Soviets, Red China and North Korea?
Since 1953, we have started on a small scale to reconstruct some of our basic industries, such as fertilizer, cement and power plants. [Page 133] We are hoping that by continuing to reconstruct many other essential industries, we may once again be a self-supporting nation, with our people reaping the benefit of the generous contributions given Korea for its economic independence.
We believe that to build up our economy, the most important and urgent problem is to stabilize our currency, otherwise economic disaster cannot be avoided. I know you will do all you can to save this situation, as you know that this United States policy of continual “doubling up” of the dollar rate leads to disaster. If a change of policy is not possible we see no alternative but to ask our delegates to return home.
Mr. Paik Too Chin has been instructed to present our final request and I earnestly beseech you to look it over.
Now that our best hope, the United States, is turning towards Russia, Red China, India and Japan for co-existence, which we cannot support, we have to depend upon ourselves for better or worse. We feel forced to take this sad stand and disappointed, but will try to remain grateful to the United States for all the sacrifice it has made in defense of our common cause, the defense of democracy.2
With my personal regards.
Sincerely,
- Source: Department of State, Central Files, 795B.5–MSP/8–155. No classification marking.↩
- Robertson replied to Rhee on August 13 in a letter in which he expressed confidence that the economic conference in Washington had been “productive not only of a definite agreement but also of a better understanding of our respective views on the methods and courses of action necessary to accomplish our common economic objective.” He went on, however, to express concern over the demonstrations which had begun in South Korea against the Neutral Nations Inspection Teams. Mob action, Robertson argued, “only serves the interests of our common foe, and makes a satisfactory solution of the problem all the more difficult.” (Ibid.) For the first report on the demonstrations that began on August 6, see Document 71.↩