895B.131/12–2651: Telegram
The Ambassador in Korea (Muccio) to the Secretary of State
608. CINCFE Tokyo Japan, CGEUSAK, CGUNCACK have for info by other means. Ref Embtel 475, Nov 23.1
[Page 1449]At time reftel, Emb expected CINCUNC–ROK aid agreement wld be concluded promptly, and dollar-won exchange rate wld now be under examination as part over-all study Korea’s needs in relation to available aid.
Present sitn aid agrmt not yet concluded due ROK insistence their fon exch be exempted from concurrence and use by CINCUNK. Since Nov Embtel, price index all commodities, Pusan area, has risen 10.7 pet to year’s high of 3240. Daily wages paid by private contractors to skilled labor up 17.2 pet to won 16,000; unskilled daily wages unchanged at won 7,000; wages paid by UN Forces unchanged. Retail price 20 liters cleaned rice up 16 pet to won 36,000. Spurt in price rice believed due temp delay distr new crop stocks Pusan area. Price elsewhere lower. For instance, Seoul Dec 7, 20 liters was won 30,000. Free market rice US dlr still won 10,000 to US dol 1. (Source: Bank of Korea).
Financial statistics:
(Source: note issue—Bank of Korea. UN Forces won drawings—UN funding officer) (in billions of won).
(Four columns item; Oct 31; Nov 30; percentage increase).
Note issue; 495; 520; 5 pct.
UN Forces won drawings 350; 390 …;2 11 pet.
… This figure does not reflect recent partial settlement of this acct by payment of $12,155,174 by US Govt to ROK which amts to 63 billion won.
ROK presently asking concurrence UNCACK for use $7 million their fon exch to import grains (barley and/or rye) to relieve averred small shortage local crop and as future means controlling grain prices.
During Nov, after distr and distr expenses, there was net loss to ROK of 134 million won from proceeds of sales of UNCACK aid supplies. Net loss figure may not reflect actual sitn during Nov since ROK records do not attribute expenses and possibly receipts in all instances to month in which expense took place but to later month when accumulated in or out payments may have been made. This figure also does not reflect proceeds to govt from ECA aid. (Source: ROK Office of Supply).
Emb has consistently advocated sale by aid auths of greater percentage aid goods to contract money supply and have constantly reminded ROK stress should be placed on quickly increasing importation such goods. This Con at ROK,[?] in addition to $7 million planned grain purchase, has plans, after clearance UNCACK extend [spend?] during balance this ROK FY ending March 31, 1952, $14 [Page 1450] million more their fon exch. Possibly unlikely this magnitude of ROK imports can be arranged in limited time indicated. Altho won seems slipping again, feel Koreans making real effort correct trend. Believe UNCACK’s accelerating program of imports of aid goods for sale, together with ROK supplementary import program now getting under way, should have substantial impact upon price level.
Rec rate for Jan remains unchanged won 6,000 to US dol 1.3
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- Ellipsis in the source text.↩
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The Department responded as follows in telegram 496, December 29, to Pusan:
“Urtel 594, Dec 20 [not printed] and 608, Dec 26.
“Understand recommendation made to EUSAK is that releases be made on current basis to encourage ROK expenditure for anti-inflationary objects without necessarily tying to conclusion aid agreement. Dept agrees but US Govt action will be influenced by CINCUNC position.
“Difficult here to evaluate extent to which food imports shld be increased. Integrated CRIK-ROK import program shld be developed designed to have maximum stabilization effect.
“Emb authorized concur in use ROK for exchange including $12 million released from suspense acct for imports which Emb and UNC consider serve relief and stabilization objectives.” (895B.131/12–2651)
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