89. Memorandum From William J. Jorden of the National Security Council Staff to President Johnson1
SUBJECT
- $12 Million Loan to Korean Reconstruction Bank
Dave Bell asks authority to go ahead with a $12 million AID loan to the Korean Reconstruction Bank (KRB) (see Tab A for Bell’s proposal).2
This loan partially fulfills your $150 million commitment to President Park made in May 1965.
The loan will enable the KRB to expand its financing of medium-size industrial firms. It is part of a carefully developed industrial promotion program.
We share the financing load of the KRB with the Korean Government and the Germans, and we expect the Japanese to be involved soon. As conditions of the proposed loan, AID is requiring the KRB to make some internal organizational changes, to improve its financial analysis branch, and to use better accounting procedures.
Our loan would be used solely to finance U.S. capital goods and services. It will encourage the use of U.S. industrial equipment by Korean medium industry.
Secretary Fowler agrees that the balance-of-payments effects of this loan will be minimal.
[Page 187]State and Treasury concur in the AID recommendation. The Bureau of the Budget also recommends approval (see letter from BOB Director Schultze (Tab B).
I recommend that the loan be approved.3
- Source: Johnson Library, National Security File, Country File, Korea, Memos, Vol. III, November 1965 to December 1966. Confidential.↩
- Neither tab is printed.↩
- President Johnson approved the proposal, and noted “See that Fowler conditions are met.” Fowler added a note to Schultze’s letter recommending that AID “seek priority consideration for worthy sub-borrowers who would use the dollars for goods which would promote future U.S. commercial exports now ordinarily purchased commercially elsewhere.” He also stressed “the need for some highly competent U.S. trade-oriented people on our AID mission in Korea.”↩
- Smith signed under Jorden’s typed signature.↩