64. Telegram From the Department of State to the Embassy in Korea1
23. Seoul pass OEC. Tokyo pass CINCUNC. Following written proposal presented ROK mission July 11:
“Effective August 1 paragraph 1 Appendix Agreed Minute between Government United States and Republic Korea signed November 17 amended read as follows:
1. U.S. aid furnished Republic Korea for importation goods and services into Korea (except coal U.S. origin, which will continue be priced CEB, commodities for non-revenue producing projects and relief supplies) will as of date this amendment be priced into Korean economy at exchange rate 700 hwan to 1 U.S. dollar. Special temporary pricing arrangements may be necessary in case fertilizer. Purchases hwan by United Nations Command will be effected at rate applicable such goods and services. This rate 700 hwan to 1 U.S. dollar shall remain in effect unless at any time after September 1 Seoul wholesale price index as presently constituted shall have changed 25% or more as compared with level that date. In event such change in above-mentioned index and as soon as practicable but no case later one week after such change occurred exchange rate referred to above shall be changed same percentage and direction as change price index. Following such adjustment exchange rate adjusted rate shall remain in effect unless additional adjustments should become necessary because further changes in Seoul wholesale price index at least 25% compared level effective date last preceding exchange rate adjustment. In this case such further adjustments shall be made same manner as case initial adjustment referred above. All other foreign exchange transactions Government Korea and its agencies shall be conducted at rate referred to above. Operation existing agreements with respect hwan drawings by United States will be suspended long as foregoing arrangements work out in practice to mutual satisfaction both Governments.”
Paik expressed astonishment and shock at proposal. Stressed need for secrecy U.S. proposal in view “disorder” it would produce in Korea if known. Finally Paik suggested subcommittee experts discuss day or two facts relevant realistic rate.
Hope strongly avoid any press leaks this question.
- Source: Department of State, Central Files, 795B.5–MSP/7–1155. Secret. Drafted by Smith, approved by McClurkin, and cleared with ICA and the Department of Defense. Repeated to Tokyo.↩