795B.5 MSP/2–1253

Memorandum by the Assistant Secretary of State for Far Eastern Affairs (Allison) to the Secretary of State 1



  • Settlement for Won Advances from the Republic of Korea

At your direction I met on February 12 in the Cabinet Room with the subcommittee appointed by the National Security Council2 to consider the question of settlement for the won advances made to the United Nations forces in Korea by the Republic of Korea. Mr. Humphrey served as Chairman, and the others present were Mr. Stassen, Mr. McNeil, Mr. Anderson, Mr. Dodge and I. Although Mr. Dodge and I argued the case for an immediate settlement with the Republic of Korea on the terms which, except for the precise amount, have already been negotiated, the others present concluded that this dollar settlement represents the best bargaining weapon which we have in trying to get a satisfactory economic arrangement with the Republic of Korea. Therefore, the sense of the meeting was that the following actions should be taken:

A civilian with adequate authority should be appointed at once to be responsible for the United States interest in getting the Korean economy on a satisfactory footing. He should be sent by the President, representing the Unified Command, but should also be responsible to General Clark as the United Nations Commander. His position would thus be somewhat comparable to that formerly held by Mr. Dodge in Japan. It was clearly understood that this requires a complete change in the present arrangements in the Command in both Japan and Korea for handling economic matters, and that the new man should be given adequate authority. It was also agreed that the headquarters of the man appointed would be in Korea. Defense and Treasury are to agree on [Page 773] the person. The first choice of those present is Clarence Meyer, who negotiated the Economic Agreement last May, if he is satisfactory to General Clark and the Koreans. The second choice is Mr. Szymczak, a member of the Federal Reserve Board.
The individual selected should go to the field as soon as possible and conclude satisfactory arrangements with the Republic of Korea, using the dollar settlement as bargaining leverage. The meeting was not clear as to what these “satisfactory arrangements” would be.
Mr. Stassen will under present authority, after consultation with the appropriate committees of Congress, make available additional funds for assistance to the Republic of Korea if the civilian appointed determines that they are necessary. Mr. Stassen also expressed willingness to request appropriations for the next fiscal year if it is considered necessary.
UNKRA should be relieved of all responsibility except for long-range planning, and the Department of State, perhaps through Mr. Lodge, should secure the agreement of other interested governments to this arrangement.

The portion of the decision which affected UNKRA received very little discussion, and I am somewhat concerned about the effects of this sudden shift of policy. I will see what can be done in working out the details of the foregoing arrangement to get an appropriate modification with respect to UNKRA.

  1. A marginal notation on the source text indicated that the Secretary of State saw this memorandum, which was drafted by McClurkin.
  2. For a report of the NSC meeting of Feb. 11, in which the subcommittee was set up, see supra .