Foreign Relations of the United States, 1961–1963, Volume XXII, Northeast Asia

202. Report by Hugh D. Farley of the International Cooperation Administration to the President’s Deputy Special Assistant for National Security Affairs (Rostow)⁰

Washington, March 6, 1961.

THE SITUATION IN KOREA, FEBRUARY 1961

Summary

There are three basic circumstances prevailing in Korea today, the conjunction of which makes it imperative that the U.S. Government recognize the gravity of the situation and act promptly to remedy it. The existence of any one or two of these elements without the third would be serious, to be sure, but not such as to warrant emergency consideration and immediate action. The three together, however, are compelling reasons for alarm, for they seriously endanger the whole U.S. position in Korea, and threaten to discredit, not only the aid program in Korea, but the Mutual Security program as a whole.

The three elements are these:

A. The extent and depth of graft, corruption and fraud in the major institutions of Korean society today and the consequent lack of confidence on the part of Koreans, high and low, in these institutions, in themselves, in their own future, and—because of the absence of a U.S. posture on integrity—an increasing loss of confidence in the U.S. The receptivity of a people in such a frame of mind to Communist and other extremist influence, after 15 years of American presence, is natural.

B. The dangerously deteriorating direction of the dynamics of the situation in South Korea, particularly over the next several months—with the economic and social phase of the April 1960 unfinished revolution still to be initiated, with the Government increasingly powerless to take the necessary actions because of its involvement in corruption, and with the probability, in the light of the current U.S. posture, that reaction against the Government, possibly even revolution, will be strongly anti-American.

C. The indecisive and inadequate leadership of the USOM in Korea, its critical role at this time, and the lack of a rapport between the USOM and the decision-makers in the ROK Government.

Following an exposition of these elements, a strategy is outlined for U.S. moves to change radically the present direction of events in Korea, and thus to serve basic Korean and U.S. security interests.¹

[Here follows an 18-page report, which included four sections: “Integrity,” in which Farley stated that the whole fabric of Korean life was “shot through with graft, corruption, and fraud”; “Dynamics,” in which Farley predicted an explosion of popular discontent on April 19, the anniversary of the Rhee overthrow; “The U.S. Responsibility,” in which Farley criticized USOM operations in Korea; and “Action,” in which Farley recommended a “crash program” that would include a Presidential letter, a special envoy with a staff, authority over USOM and economic reporting, instructions to work with Prime Minister Chang and the rest of Korean society, and follow-up visits to the ROK by U.S. Cabinet heads and high officials. See the Supplement.]

0. Source: Kennedy Library, President’s Office Files, Countries Series, Korea, Security 1961-1963. No classification marking. In a covering letter to Rostow, Farley explained that he was submitting this report at the request of Arthur Schlesinger after a discussion with McGeorge Bundy. No other record of that discussion has been found. Farley told Rostow that the following read, contributed to, and supported his conclusions: Donald MacDonald, Department of State Officer in Charge of Korean Affairs; Major General Charles E. Bonesteel, Secretary of the General Staff; Robert Kinney, Korean Civilian Intelligence Officer, Department of Defense; Robert M. Macy, Chief of the International Division, Bureau of the Budget; William J. Sheppard, Regional Director for Far Eastern Operations, International Cooperation Administration; and James Cooley, Special Assistant to the Director of ICA. Farley stated that JCS Chairman General Lemnitzer would strongly support his conclusions, and that the CIA was concerned about Korea. According to Farley, the new ICA Director, Henry R. Labouisse, had heard an oral briefing, but was not prepared to support the report until further study.
1. Hugh D. Farley was Assistant Director of USOM in Korea until February 24, when his stand on corruption in Korea and his criticism of USOM operations convinced him to submit his resignation. Farley returned to Washington where ICA did not immediately accept his resignation. Instead it asked him to put his criticisms on paper and discuss them with ICA and Department officials. (Memorandum from Parsons to Hare, February 28; Kennedy Library, President’s Office Files, Countries Series, Korea, Security 1961-1963)