Prof. Kathryn Weathersby
As we saw in the last post, on 2 April 1948 President Truman approved a new policy regarding the soon-to-be-created government in South Korea. Since the new state would be clearly threatened by its Soviet-backed rival in the north, National Security Council No. 8 (NSC-8) committed the US to strengthen South Korea through economic aid and the creation of a constabulary army. Japanese rule and the postwar dismemberment of the Japanese empire had left the southern half of Korea in serious economic distress, and until that was remedied there was little hope that it would be able to defend itself.
Given the urgency of the situation, the US government moved quickly to carry out NSC-8. Within weeks, American economic specialists traveled to Korea to collect the necessary information to draw up an assistance program. They consulted with businessmen and political leaders and concluded that despite their difficult circumstances, Koreans in the south were eager to control their own affairs. Nonetheless, “for a time after withdrawal…the new independent Korean Government will require continuing American aid, advice, food and raw materials in order to maintain at least the present ration level and to achieve necessary rehabilitation and governmental effectiveness.”
The Army’s report was optimistic about the prospects for rapid economic development in South Korea. It argued that US assistance “should be provided for an interim period” because the new Korean state would soon become self-sufficient through trade. The report forecast that “firm support by the United States and the United Nations…will inestimably help to develop participation in future Far Eastern trade on a basis valuable to the Korean people and to their neighbors.”
To carry out the second directive of NSC-8, the Department of the Army agreed to expand South Korea’s security forces to fifty thousand troops, to form an American advisory team, and to transfer all necessary military equipment before US occupation forces withdraw. The goal was to create a constabulary army strong enough to meet anticipated security challenges from within or without. It must therefore be able to “impose martial law, to combat military or guerilla forces…, or to repel minor invasions from the north.”
Regardless of American optimism about South Korea’s economic prospects, however, in early 1948, the situation was critical. Industrial productivity was 80% below wartime levels. The north had stopped shipments of coal, forcing the south to import it from Japan and the US at prices that nearly doubled between 1947 and 1948. The greatest immediate concern was the shortfall in agricultural production after a drought in 1947 reduced the harvest to half of pre-1945 levels. To provide for the needs of city dwellers, the interim government forced farmers to sell it a quota of their grain yields. This caused serious friction between rural areas and the government, which intensified the already volatile political conflicts.
Moreover, the scarcity of goods of all kinds and the government’s efforts to control rampant inflation produced a thriving black market. As usually happens, this situation benefitted all subversive organizations. The Communists especially benefitted, however, because their comrades in Japan were eager to further the cause by providing communist groups in South Korea with a steady supply of valuable commodities. The south also suffered from high unemployment, exacerbated by the steady influx of people fleeing communist rule in the north.
The next post will examine how authorities in the north took advantage of the economic distress in the south to advance their position politically. It will also look at how the south attempted to solve its pressing economic problems by working out a way to dispose of Japanese-owned property.
[Sources: This post relies on James I. Matray, The Reluctant Crusade: American Foreign Policy in Korea, 1941-1950 (University of Hawaii Press, 1985); and Allan R. Millett, The War for Korea, 1945-1950, A House Burning (University Press of Kansas, 2005).]
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