91. Telegram From the Economic Coordinator in Korea (Wood) to the Department of State1

Toica 716. Subject: Meeting with ROK Officials 8 October 1955.

1.
Hollister,2 Wood and staff held meeting October 8 with Korean Economic Coordinator and Ministers of Reconstruction, Finance, Commerce and Industry and Defense. Paik opened with plea for additional aid to maintain 500–1 exchange rate. He made following points:
a.
Disturbed by Christian Science Monitor article early September quoting statements by American officials that ROK officialdom inefficient, incompetent.
b.
Present volume aid inadequate maintain 500–1 exchange rate.
c.
Mentioned $5 billion war damage and 2 million unemployed examples Korea’s problems.
d.
Only major physical evidence industrial development due to American economic aid to date power plants and fertilizer plant. Korea needs more hydroelectric power plants, fertilizer plants, cement plants, mining and fisheries facilities.
e.
Probably food shortage as result of anticipated poor crops, resulting need for large PL 4803 program on grant basis.
f.
Requested maximum participation in regional fund4 to develop port, transportation and communication facilities.
g.
Minister Reconstruction prepared memo5 on aid program, which pass to Hollister who stated would study later.
2.
Hollister commented as follows: [Page 168]
a.
They should not be disturbed by newspaper statements, but understand they are often irresponsible. Statement attributed President Rhee this morning’s press re technical aid a thoroughly irresponsible example.
b.
Described Congressional and public relation problems of administering aid program.
c.
Pointed out feeling of many Congressmen magnitude general aid program should be reduced rather than increased.
d.
Mentioned competing demands all countries and feeling in each country their aid program could not be reduced.
e.
Covered history of regional fund and tentative position of some that regional fund be used only for projects directly aiding 2 or more countries. Said he would make full statement at Singapore.
f.
Emphasized need for attracting foreign capital and commented on fact that some recent developments were discouraging to foreign capital.
3.
Finance Minister made following comments:
a.
FY 56 budget now shows deficit 50 billion Hwan which requires $100,000,000 additional aid to cover.
b.
Present aid cannot be used this purpose, but must be devoted entirely to reconstruction.
c.
At least 80% counterpart of PL 480 funds should be given Korea and none of any remainder should be used by US forces in Korea.
d.
In contrast to Paik’s remarks stated food shortage due to increased population not poor crop.
e.
Korean Government willing settle taxation issue with American businessmen on basis satisfactory to both sides, currently working with American Embassy. Disturbed by Chamber Commerce cables to Congressmen. Hollister stated he did not wish discuss details of complicated tax situation, but concerned about effect controversy on US public and Congressional opinion and that State and ICA giving full support to Embassy in its efforts promote fair settlement of issue.
4.
Defense Minister made following comment:
a.
Mentioned difficulties maintaining armed strength with present resources and adverse effects of recently reduced pay rates.
b.
Urged more local procurement military items Korea.
5.
Wood emphasized need for ROK take initiative in attracting foreign capital as best long range solution to Korea’s economic problems.
6.
In conclusion Hollister pointed out purpose trip to meet officials and see program in action. Not prepared to make any promises any points covered. Did promise consider all problems carefully light of mutual benefit ROK and US and worldwide program.
Wood
  1. Source: Department of State, Conference Files: Lot 59 D 95, CF 538. Confidential; Priority. Also sent to the USOM in Taipei.
  2. John B. Hollister, Director of the International Cooperation Administration, was visiting Korea with Under Secretary Hoover as part of a tour of several Far Eastern countries during October. Documentation on the HooverHollister trip is ibid., Central Files, 110.12–HO and Conference Files: Lot 59 D 95, CF 534–541.
  3. The Agricultural Trade Development and Assistance Act of 1954, enacted July 10, 1954. (68 Stat. 454)
  4. Apparent reference to the President’s Fund for Asian Economic Development, which was established by Congress in August 1955.
  5. Not found in Department of State files.