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795.00/4–2750

Memorandum by Mr. W. G. Hackler of the Bureau of Far Eastern Affairs

top secret

Interdepartmental Meeting on the Far East 1 11:30 a. m., Room 5106

Mr. Merchant opened the meeting and reminded those present that the material presented at these meetings was classified as top secret.

Ambassador Muccio reviewed the history of military government in Korea and the assumption by the Koreans of responsibility for their own government in 1948. He says that the Koreans, although jittery over their security in 1949, had not been willing to accept U.S. advice on economic matters. The aide-mémoire and the strong letter from [Page 49]Washington, which resulted from Ambassador Muccio’s suggestion, had jolted the Koreans and recently every recommendation of the Joint Commission on Economic Stabilization has been accepted. Mr. Muccio believes that the balancing of the budget, the raising of taxes and the regulation of foreign exchange presaged an improvement in the economic situation.

He stated that 95% of Korean industries had been owned by the Japanese; the problem now facing the Korean government is one of denationalization. 500,000 Korean families have been given property which previously belonged to the Japanese. 80% of the Korean people live on the land and since they are much better off than they ever were before, they constitute a strong element of stability.

The Korean government is only 21 months old and follows 40 years of Japanese control and 3 years of U. S. military government. The important question in everyone’s mind in 1948 was the ability of the Koreans, who had no experience in government, to handle their own affairs. Recent actions of the National Assembly indicate, Mr. Muccio said, a growing sense of responsibility and freedom of action not stifled by the President. Recent favorable developments are the Prime Minister’s statement concerning free elections2 and the request for UNCOK observation of these elections.3

Also heartening, Ambassador Muccio reported, is the effective training of the Army. The Korean Army has kept pace with the aggressive actions from the north and has been successful in controlling the constant flow of saboteurs and special agents from North Korea.

Ambassador Muccio said that the Koreans need help in the economic and military fields and since they have the will and the ability to defend themselves, the U.S. should provide the “missing component” which will enable them to hold on to the area. He said that the U.S. had made heavy investments in Korea during the days of military government and only small additional amounts are required to keep Korea on its feet. Korea is a symbol of U.S. interest in Asia, Ambassador Muccio said, and it is important to help the Koreans keep their freedom and independence.

In response to a question from Mr. Merchant, Ambassador Muccio stated that there are too many intangibles involved to make possible an estimate of the length of time that U.S. economic and military aid would be needed. If Korea were unified, South Korea would not require the imports which it does now nor would the military establishment need to be as large. Ambassador Muccio suggested that too many Americans (particularly those in ECA missions) had never lived [Page 50]abroad before. They went to the Far East and over estimated the needs of the area because they were unfamiliar with Far Eastern standards. Spiritual and mental uplift resulting from confidence in U.S. interest is most important to the Koreans, Mr. Muccio said, and he thought that a Point IV program for Korea would be a tremendous help.

In response to a question from Mr. Zempel, Mr. Muccio said that there were no labor unions in Korea as we understand the term. The SK [LP], or Labor Party, is a political instrument and not a trade union.

In response to a question from Mr. Ogburn, Mr. Muccio said that 2,000,000 Koreans had moved south, whereas none had moved north. The Soviets have moved out of North Korea those persons and groups who had expressed opposition to a police state. As a consequence, rigid police controls and the absence of disaffected persons had kept North Korea quiet, thus making it difficult to estimate the attraction of the present Korean government for the North Koreans. After 40 years of Japanese control the Koreans are determined to resist further interference from outsiders. Mr. Muccio estimated that $75 million worth of goods have been taken out of North Korea by the Soviets in the form of coal, fertilizer and power.

In response to questions by Mr. Rossiter, Mr. Muccio said that there were not enough textiles for the people but that the supply was steadily increasing. Trade was just getting under way with Japan in the form of exports of rice and imports of spare parts for the Japanese-make machinery which is in use in all of the Korean industries. The Koreans seem to be anxious to trade with Japan but fear the Japanese as being more of an immediate threat than the Soviets and are apprehensive concerning economic engulfment by the Japanese.

In response to questions by Mr. Sprouse and Mr. Sullivan, Mr. Muccio said that it was encouraging that so much interest had been shown in the elections about to be held, with more than 2,000 candidates filing for the 200 positions. Many independents are running for office which indicates that the National Assembly is considered an important body. No Communist party exists in Korea nor are there any organized political parties. The Koreans are not proud of their police force which being Japanese trained uses only force in its operations and is guilty of restricting civil liberties.

In response to a question by Mr. Barnett, Mr. Muccio stated that President Rhee had been a leading figure in the Korean independence movement for 45 years and has considerable support from most Koreans who consider that he has a genuine desire to do something for the Korean people. Detested by many politicans, Rhee has been able to retain power because he is a shrewd manipulator. In the 1880’s and [Page 51]1890’s almost all of the younger Koreans were in revolt against the brutal Imperial family. When the Japanese took over control of Korea they instituted an effective program of de-Koreanization. Many influential Koreans emigrated to Hawaii, the United States, Manchuria, Shanghai and other places in the Far East. When they returned to Korea at the end of the war, coming as they did from different environments, the big question was whether they would be able to work together since they had no established patterns in Korea to revitalize and since they had become familiar with so many different traditions during their exile. Fortunately, all signs pointed to continuing success by the Korean leaders in cooperating with each other.

Mr. Bunting of ECA admitted that some errors had been made in ECA operations in the past and asked if $120 million for the present year and $100 million for the next year were considered too much. Ambassador Muccio replied that he did not consider that $182 million was too high because of the large investment the U.S. had made previously. Mr. Muccio explained that his word of caution concerning unrealistic standards did not apply to this figure but was a general remark which he thought it desirable to make to counteract unrealistic estimates of future help which would be needed to make the Korean economy viable.

Mr. Bunting said that the ECA program had not been calculated to provide the Koreans with a high standard of living. He suggested that ECA may be too ambitious in trying to promote capital development and investment in Korea but the plan had been to cut down imports and increase exports. Mr. Muccio said that he did not disagree with the basic ECA program.

In answer to a question by Mr. Young, Ambassador Muccio stated that all Koreans wished their country to be unified and the desire for unity permeates all their thinking. At the present time the only public intercourse between North and South Korea is the delivery of mail every two weeks.

In response to a question by Miss Bacon, Mr. Muccio said that UNCOK was now favorably regarded by the Koreans in contrast to its low prestige last year, which had been caused by the Commission’s constant bickering over petty questions of prestige.

In answer to a question by Mr. Hirschtritt, Ambassador Muccio said that the question of disposing of all the property which had belonged to the Japanese was a very difficult one and was not capable of rapid solution because of the huge amount of capital needed.

Mr. Merchant expressed appreciation to Ambassador Muccio for his analysis and again emphasized the Top Secret classification of the discussion.

[Page 52]

(List of persons present is attached)

[Annex]

Name Agency
Kenneth Young Defense
Arthur W. Stuart Treasury
Ralph Hirschtritt Treasury
Fred J. Rossiter Agriculture
W. I. Ladejinski Agriculture
Dr. Quincy Adams Army
Mr. McComb Army
Edwin D. Arnold ECA
Frederick Bunting ECA
Miss Eades Commerce
Arnold Zempel Labor
Leo Wertz Labor
Seymour Weiss Budget
Mr. Lawson Budget
Frank D. Collins SOA State
Mr. Merchant FE Mr. Hackler
Miss Bacon Mr. Wright
Mr. Gay Mr. Sullivan
Mr. Sprouse Mr. Allison
Mr. Connors Mr. Ogburn
Mr. Peake Ambassador Muccio
Mr. Johnson Mr. Barnett
  1. A list of persons present is attached as an annex.
  2. See infra.
  3. The Republic of Korea on April 21 had invited UNCOK to observe the elections, and UNCOK accepted on May 4; see U.N. document A/1350, p. 23.