320/11–650: Telegram
The United States Representative at the United Nations (Austin) to the Secretary of State
[Received November 6—11:11 p. m.]
Delga 240. No distribution outside Department. Re Gadel 84.1 Currency to be used North Korea discussed with IC today. Committee informed of CINCUNC’s recommendation use UN script and US view preferable use ROK currency. Only member having definite views Australian, who favored UN scrip, suggesting that if delay serious ROK currency might be used in meantime. He assumed would be one for one with ROK currency, but this question not discussed.
Committee requested matter be put over to next meeting 2 p. m. Tuesday2 to give time for consideration, and requested factual statement. Following is text, which corresponds closely to oral statement, of statement circulated confidentially to committee members:
- “1. The United Nations Commander has directed commanders of the United Nations forces in Korea to use only North Korean currency in the area north of the thirty-eighth parallel. While this order has been obeyed by the commands, troops have carried with them substantial amounts of ROK currency, which is generally accepted by North Koreans.
- 2. The people of North Korea do not have confidence in the North Korean currency and it is depreciating rapidly.
- 3. The communist authorities of North Korea have destroyed or carried away the major stocks of North Korean currency, together with all plates and means of printing it.
- 4. It is urgent that the United Nations Commander authorize
promptly the use of some currency in North Korea
- a.
- In order that the United Nations forces may use it to pay requisitions and meet other military needs, and
- b.
- In order that a rate may be fixed between the currency authorized by the United Nations Commander and the North Korean currency, to protect the holders of North Korean currency against further depreciation through lack of confidence.
- 5. In this situation General MacArthur has expressed readiness to print in Japan and issue a new “United Nations scrip”, principally [Page 1072] because he believes this would be in accord with the political recommendations of the Interim Committee. He has estimated that it would take three weeks to print this scrip, which according to his recommendation would bear the United Nations emblem, the denomination, and the word “whan” in Korean, English and French. This scrip would be redeemed by the United Korean Government when established. No financial obligations would accrue to the United Nations since United Nations forces would settle with the United Korean Government for whatever amount they use, and the proceeds of the relief and rehabilitation supplies to be brought into Korea would more than equal the amount of scrip issued.
- 6. It is suggested that there are certain advantages in the use of
ROK currency by the United
Nations forces:
- a.
- The delay resulting from printing and distribution of the new scrip would create difficulties in respect to military operations and with respect to the fixing of an exchange rate between ROK currency and North Korean currency, thus injuring the holders of the North Korean currency by reason of the further depreciation of that currency in relation to ROK currency.
- b.
- While it is technically feasible to issue a military scrip in the name of the United Nations redeemable by the Government of United Korea, the issuance of currency bearing the name or seal of the United Nations would be a serious precedent, all implications of which should be carefully considered. For instance, if the impression were created that the United Nations was responsible for the redemption of the currency, it might circulate at a premium above the ROK currency; if, on the other hand, it were made clear that the United Nations is not responsible for its redemption, its acceptability would be impaired.
- c.
- The issuance of still another currency in Korea would be confusing and would unnecessarily complicate the financial problems of the Government of a United Korea. There are already three currencies in circulation: the old Bank of Chosen notes of the ROK, the New Bank of Korea notes, and the North Korean currency. Whatever Government of United Korea may hereafter be formed will have to recognize the currency in circulation, and a single currency will facilitate its task of creating economic order in a unified country.
- 7. The use of ROK currency by the United Nations forces would not be a recognition of ROK sovereignty in North Korea. Such currency can be used without any declaration that it is legal tender, and by authority of the United Nations Commander, not of the ROK. It would be necessary, however, soon to convert the existing North Korean currency by reason of the possession of stocks and plates by former North Korean authorities.
- 8. For the reasons which have been indicated above, it is necessary that guidance on this subject be given promptly to the United Nations Commander, and the views of the Interim Committee are accordingly requested as a matter of urgency.”