Secretary’s Memoranda of Conversation, lot 64 D 199
Memorandum of Conversation, by the Director of the Office of Northeast Asian Affairs (Young)
Subject:
- Second Meeting Between President Rhee and Secretary Dulles.
Economic Assistance to the Republic of Korea.
Participants:
- ROK
- President Syngman Rhee
- Prime Minister Paik Tu Chin
- Foreign Minister Pyun
- Defense Minister Sohn Won II
- Minister Kim
- United States
- Secretary Dulles
- Secretary Stevens
- Ambassador Lodge, United States Representative to United Nations
- General Maxwell Taylor, Acting CINCUNC
- Assistant Secretary Robertson, Bureau of Far Eastern Affairs
- Assistant Secretary McCardle, Public Affairs
- Mr. Arthur Dean, Consultant
- Mr. Kenneth T. Young, Jr., Director, Office of Northeast Asian Affairs
Secretary Dulles asked Secretary Stevens to explain the United States viewpoint on various matters regarding economic assistance to the Republic of Korea. Secretary Stevens said that President Eisenhower was deeply and personally interested in Korean economic affairs. He had sent Dr. Tasca to Korea to formulate a comprehensive economic report. The distribution of 10,000 tons of food for Korean relief was the President’s own idea. Secretary Stevens also mentioned the fact that the United States Army had already spent between $300 and $400 million on various civil construction projects in Korea. He also mentioned the President’s decision to ask authority for the expenditure of $200 million to get an economic rehabilitation program started. President Rhee remarked that it seemed the economical way to strengthen Korea as the front line of the United States in this part of the world was by using manpower to the benefit of both the United States and Korea. He inquired whether Congress would appropriate the necessary funds at the next session to carry out Tasca’s recommendations. Secretary Stevens explained that early adjournment of Congress following the armistice had created a somewhat difficult situation for obtaining authorization and appropriations to carry out Tasca’s recommendations. Accordingly, authorization had been sought and obtained from Congress to allow the Defense Department to use funds saved as result of cessation of hostilities as an initial installment to implement the Tasca report. The Secretary added, to be sure President Rhee understood the matter exactly, that the $200 million fund would reduce by that much Tasca’s overall recommendation of about one billion dollars, and the balance of around $800 million would be sought from future Congressional appropriations. President Rhee said that there was a good deal of confusion about the duration of the economic assistance program, since some Americans mention 3 years and some 4; some say it will be under the Army and some say it will be carried out according to Tasca’s recommendation. He urged the Secretary to make a statement to clarify the matter. Secretary Stevens replied that Dr. Tasca was now in Tokyo and he and his successor, Mr. Wood, would both be in Seoul in the near future. It [Page 1477] would be important for them to work out the details on any such statement with President Rhee and his advisers.
President Rhee complained that there were so many agencies dealing with Korean economic affairs and interpreting everything in their own way that it was “very confusing to us and we can not make head nor tail our of it”. He said that the ROK Government desired to have every American dollar spent for a good purpose. He expressed his gratitude for past and future economic assistance but felt it his duty to see that the funds were not spent in the same manner as previously, that is, without coordination and each agency “standing in each other’s way”. He referred to his experience with ECA, which he claimed had not accomplished a single thing on the ten or twelve essential projects on which he had requested assistance. On the contrary, President Rhee said, ECA had turned back funds never used in 1949 and 1950. He informed the Secretary that he had told Mr. Jeffries, of UNKRA, that UNKRA was not properly using the money of the United States taxpayers, since it was spending 19 per cent on overhead. President Rhee thought that such a system should be immediately stopped. He also wanted to have an end put to all the surveys and surveyors who “leave us with piles of beautifully bound reports that we don’t know what to do with”. He said he wanted to use the United States taxpayers’ money only for the best purpose, since $200 million is a large sum for which he was more grateful than he could express.
President Rhee stated that he believed the Combined Economic Board should be established as “a supreme planning body” for the coordination of all programs. He said that General Clark had told him he would fully cooperate with this. He assured the Secretary that the Koreans were not insisting on doing everything themselves. He thought that the Combined Economic Board was the proper organization, since it represented both governments. He said that General Clark had indicated that he eventually would turn over responsibility to a civilian. President Rhee did not object to this so long as the United States Government appoints someone to head it all up. He wanted to have a fertilizer plant, instead of always buying fertilizer from Japan. This was an example of the fact, in his opinion, that absolutely nothing had been done so far on the rehabilitation of Korea.
The Secretary stated that the Tasca report contemplated developing the economic program through the Combined Economic Board. He noted that President Eisenhower had approved the Tasca report in principle. However, he told President Rhee that the organization for this program on the United States side had not been finally worked out and that he could not provide President Rhee with any details today, since the President was on the point of talking this whole matter over with General Clark. At the same time, the Secretary told President Rhee that he could be confident the United States would wish to work [Page 1478] out the economic assistance program along the lines of the principles that he had outlined.
President Rhee said that any necessary changes could be made in the Combined Economic Board, but it was essential to establish one supreme economic body and develop the necessary coordination under it. If this could not be done, he said, he would ask the United States just to loan the funds to the ROK, which then would see to it that the money would be well spent. This, of course, would require United States advisers. He then protested against the practice of ECA and UNKRA of buying things for Korea whether they were suitable or not. He said that oftentimes the goods were just not fit for use in Korea, though the warehouses were full of such things. He predicted real troubles unless this point were kept constantly in mind. Mr. Robertson assured him that the Tasca report contemplated accomplishing just what he had in mind in that respect.
The Secretary informed President Rhee that detailed arrangements could be completed next week with Dr. Tasca and Mr. Wood. He was not in a position today to say anything more definitely than that the President and the National Security Council generally had approved Tasca’s recommendations, the $200 million would be spent according to those principles, the United States will do everything possible to have its funds used efficiently, and a place must be found for the use of UNKRA funds which he and General Coulter can work on.
Prime Minister Paik asked if he could meet with Secretary Stevens this afternoon to go over some immediate major problems regarding economic assistance.1 Secretary Stevens replied that he would be very glad to hear whatever the Prime Minister had to say. Finally, President Rhee complained that more than half of the ECA program had been left in Japan. He urgently requested that the United States prevent its funds from going into the hands of people who were building up Japan. He emphasized that he wants Korea to become self-sufficient industrially.
[Here follows discussion on Korean-Japanese relations; for an extract, see volume XIV.]