Foreign Relations of the United States, 1952–1954, Korea, Volume XV, Part 2

611.95B/12–654: Telegram

The Secretary of State to the Embassy in Korea¹

secret
priority

Washington, December 6, 1954—6:06 p.m.

373. Seoul’s 644² and 646³ repeated Tokyo 444 and 446. Since Wood told Rhee in record conference (Tofoa 699⁴) U.S. proposed hold second auction believe essential do so.

Request you inform Rhee on instruction your government substantially as follows:

1. U.S. regards sale procedures set forth in Minute which were product elaborate and extended consultations as most conducive satisfactory solution needs of U.S. forces for ROK currency and does not desire adopt temporary arrangement or revert to procedure for direct acquisition at rate which must be agreed from time to time in view unsatisfactory nature this arrangement in past.

2. U.S. has considered President’s proposal re 180–1 rate but cannot agree that it is possible to fix and enforce such rate for transactions generally. Would regard such effort as economically most unwise and as contrary to understanding on pricing of aid goods set forth in Minute.

3. In view President’s assurances no intention by ROK interfere with free auction U.S. proposes hold second auction near future.

4. U.S. considers ROK obligated by Minute use its full powers to assure genuinely free sale of dollars as stipulated. If bids received from second auction differ markedly and inexplicably from bids received by Korean Government U.S. would be forced conclude ROK not abiding by terms Minute and would regard itself as no longer committed thereto.⁵

FYI, if you received bids for a substantial amount of dollars within exchange rate acceptable range you are authorized at your discretion to accept and subsequently hold other auctions to obtain balance hwan needed.

Issuing no release here but will answer press inquiries stating serious problem developed implementation Minute re hwan requirements UN forces and hope ROK will shortly make arrangements satisfactorily implement.

Dulles

1. This telegram was drafted by Hemmendinger and cleared with Defense, Treasury, and FOA, as well as Robertson.
2. Not printed, but see footnote 1, supra.
3. Supra.
4. Not printed. (FOA files, lot 55 A 374, box 12)
5. Pursuant to these instructions, Briggs and Wood delivered a memorandum to Rhee to this effect, the text of which was transmitted in telegram 658, Dec. 7, 1954. (611.95B/12–754)