740.00119 Control (Korea)/2–946: Telegram

The Political Adviser in Korea ( Benninghoff ) to the Secretary of State

secret

23. From CG USAFIK to SCAP cite Tfgcg 263. Info Bishop, PolAd, Tokyo. US Government, for numerous reasons, should decide soon what financial assistance to the newly organized Korean Government it is willing to give. Avoidance of such assistance, in lieu of our statements and commitments with respect to Korea in the past several years, might engender accusations of breach of faith resulting in repercussions not only domestically but in the Far East.

Action necessary to create available credits in Korea is not known, but presume that the Export-Import Bank is the agency concerned. [Page 631] For purposes of increasing the Koreans’ own production, the credits, established would be used for purchase to US of capital goods such as heavy machinery, transportation equipment, and the like. It appears that a decision on this problem should be reached in Washington and when the propitious moment arrives announce same.

Within a short time, suggest that the Government reach a decision, even if only in principle, so that a simultaneous announcement can be made with the opening session of the United States-Soviet Joint Commission first week of March as now scheduled. Immeasurable value in our relations with Koreans and negotiations with Russians would accrue through a press release made in Washington and Seoul stating that US Government was prepared to consider a credit extension to the Korean Provisional Democratic Government, when said government is organized under provisions of the Moscow Agreement.

Statement of principle is more important and stipulation of specific amount, although 50 million is the amount I have in mind.

South Korea needs the support of above requested announcement to augment our efforts. The meager results of the conference just concluded will undoubtedly disappoint the Koreans, and the inherent anti-foreignism, increased by realization that trusteeship may be imminent, could readily crystallize into a situation difficult to combat. The Koreans will be at the mercy of the Soviets’ highly organized steam-roller technique should they reach the conclusion that the US talks big but acts little and are [is] not prepared to live up to its promises.

The movement for Korean political unity fostered by US would assist a newly established government by an announcement that credits would be forthcoming.

Progress is being made in this movement and may in a few days be made public. A coalition group of all important parties now being formed in south Korea, other than Soviet (who have refused to cooperate) controlled Communist. Soviet schemes, promises, and blandishments are less likely to succeed if such a group could present to the country, and more particularly to the Russian sponsored group, that from our standpoint the chances of success are greatly increased, American popularity and prestige should improve.

With a view to making an early date announcement, possibly next month when the Joint Commission meets, prompts me to suggest in lieu of these considerations that Washington be asked to reach a decision, in principle at least, regarding financial assistance to Korea.

Mr. Harriman concurred in discussions on this matter. The general idea was approved by him and pledges support in Washington on an [Page 632] informal and personal basis should SCAP send an official request.48 Concurrence by Casaday49 and Benninghoff.… [Hodge.]

[
Benninghoff
]
  1. A telegram from Tokyo received February 26 concurred in the need for large-scale financial assistance for rehabilitation purposes and in the desirability of an early announcement that such was contemplated and suggested early action to supply Korea’s urgent needs. (740.00119 Control (Korea)/2–2646)
  2. Lauren W. Casaday, a representative of the Treasury.