Safeguards
The thirty-million-dollar contract between Cheongsan and Krupp had reached the point of conclusion. A commercial loan was, at bottom, a transaction between private firms, and it could be sealed the moment the chief executives of Cheongsan and Krupp agreed. Even a deal between companies, though, still had to carry a bank's or a government's guarantee somewhere in the middle.
The chief reason Lee Byung-chull had failed to bring in foreign credit in 1960 was the lack of any government guarantee. Ki-jo took that failure as a cautionary lesson and secured the Republic of Korea's guarantee in advance. In moments like this, Syngman Rhee was an enormous help. He had not the slightest scruple about borrowing money abroad—a man who always regretted that he could not borrow more, never one who lay awake fearing he might be unable to pay it back. Borrow from a rich country and fail to repay, and what of it? A poor country might do as much. He let the thought pass as nothing worth fussing over.
Ki-jo submitted the Korean government's letter of guarantee to Krupp, but he did not sign the final contract. Krupp's chief executive said the Korean guarantee alone was sufficient, yet Ki-jo could not rest content at that. The government standing behind the guarantee would vanish without a trace in 1960. He said he would sign only after he had been to Bonn, and left Essen.
The moment he reached Bonn, he called on Ambassador Sohn Won-yil and reported that the loan negotiations had succeeded. The ambassador was overjoyed.
"This visit to West Germany has been a great success. You have done something truly remarkable."
Ambassador Sohn looked as though he might break into a little dance of pure delight.
"You have shown that a company of our country can take its place in the international community, President Lee. I am genuinely proud."
Even under the praise, Ki-jo answered that it was not finished yet.
"But why?"
"We need the West German government's guarantee as well as Korea's."
The smile left Ambassador Sohn's face. He turned the matter over carefully, then asked.
"President Lee, surely a commercial loan can be concluded on the Republic of Korea's guarantee alone?"
Ki-jo could not bring himself to say it—that within a year the Syngman Rhee government would be smashed, the political world thrown into confusion, and a Korean guarantee alone could not promise the loan would ever be disbursed. He said something else instead.
"I'm only putting a double safeguard in place. And if the German government guarantees this loan, we stand to gain a great deal on the interest, the grace period, and the term of repayment."
"Is that so? Can you bring the rate down by much?"
"Yes. Unlike public loans, commercial loans carry high interest. If the West German government and the Korean government stand guarantee from both sides, we can lower it to the rate on a public loan."
"I see...."
Ambassador Sohn Won-yil nodded.
"Please press the West German Foreign Ministry hard. Even if there is no precedent for such a thing, ask them to grant an exception, if only for Korea."
Ki-jo trusted him. This was the man who, buying decommissioned warships in the United States, had thoroughly outmaneuvered the Jewish brokers—cutting forty percent off the price from dealers of whom it was said a needle would not draw a single drop of blood, and shifting the cost of transport onto them besides. He was certain Sohn could see it through.
"Understood. Keeping even a single cent of foreign exchange from leaving the country—that is patriotism. I will call on both the Foreign Ministry and the Ministry of Economics and make the request."
Ki-jo decided to ask one thing more.
"Ambassador, please do what you can so that a story about Korea appears in the press. I would like an article saying that a nation of thirty million, fighting communism, is struggling in the grip of hunger."
"Hm...."
Sohn Won-yil seemed to hesitate, if only slightly. The Syngman Rhee government loathed, above all things, foreign papers reporting that Korea was starving. It was the rivalry of systems with the North. A story that Koreans went hungry could be taken as proof that Syngman Rhee was inferior to Kim Il-sung, and they were exceedingly sensitive on the point. He considered it a moment longer, then spoke.
"Very well. It is for the sake of the country, so I will step forward."
"Thank you, Ambassador."
Ki-jo had known he would agree. Sohn was a man who set the national interest above political propaganda, and Ki-jo believed that if helping a starving people lay within his power, he would endure whatever disadvantage fell back upon himself.
"Ambassador, if you grant this request of mine...."
He was about to raise the chance that Sohn might be recalled home, but the ambassador spoke first.
"Do not worry on my account. If there is anything I can do to help, do not hesitate. Simply tell me."
Ki-jo could not help but admire him.
"I have nothing further to ask. Ambassador, I am truly grateful."
Ambassador Sohn Won-yil had moved him deeply. The ambassador went himself among the newspapers, the Foreign Ministry, and the Ministry of Economics, pouring the whole of his strength into the work. The day he returned from the Ministry of Economics, he brought good news.
"I have Economics Minister Erhard's consent. He said he would be glad to do it. Ha ha ha."
Ambassador Sohn laughed, showing the papers he had brought back from Erhard. It was the first time that day Ki-jo had seen him smile so brightly.
The next day Ki-jo set out for Essen again, with Baek Young-hoon beside him. He met Krupp's chief executive, laid the West German government's letter of guarantee before him, and reopened the question of interest.
"Please set the interest on the loan at a fixed rate of seven percent."
What he wanted was the rate on a public loan, the kind that passed from government to government. With the West German guarantee in hand, Krupp's chief executive accepted his terms. Even so, Ki-jo was still trying to shave off another percent, and the man, finding him unnervingly sharp, studied him for a long moment before he asked.
"May we announce the contract between our two companies to the press?"
Ki-jo saw straight through him. He had put off the contract and changed the terms so often that the man meant to drive in a nail, so it could not happen again. It was exactly what one would expect from the head of a house that had carried an enterprise for a hundred and fifty years. Ki-jo did not refuse. News in the German papers that Krupp had taken the order for a fertilizer plant would serve him as well.
"Before I leave Germany, I want to see a newspaper carrying the story of the contract. I mean to take it back to Korea."
"I will have it in the major dailies tomorrow—and a photograph of the signing with it."
A Krupp employee took several photographs of the two men with the contract.
Back in Bonn, Ki-jo showed the contract to the staff of the Korean embassy, to Oh Yang-soo, and to Hwang Tae-young, and held a modest party. With the dollars he had brought, he bought beer and food enough that everyone could drink German beer to their hearts' content. His companions, who had labored more than a week and held themselves back from so much as a beer, drank as if it were water, determined to be repaid for all they had endured.
Ki-jo only wet his throat and talked with Ambassador Sohn Won-yil. Proud, and a little wonderstruck, that they had secured a thirty-million-dollar commercial loan at a fixed seven percent, the ambassador never left his side.
"Why did you insist on a fixed rate? Interest rates in every country are coming down."
"Because of the spread."
"The spread?"
"Yes. Sign at a floating rate, and you take the British LIBOR as the base rate, with a spread added on top."
"I see."
"And that spread reflects, to a very great degree, the borrowing country's credit standing—its country risk."
Ambassador Sohn turned the meaning of it over, then asked.
"If you settled on a fixed rate out of worry over Korea's country risk, does that mean you take a dark view of Korea's future?"
The question was sharp.
Ki-jo had chosen a fixed rate higher than the floating rate then on offer because he knew that, between the April 19 uprising and the May 16 coup, the Republic of Korea would go some four years without the world's confidence. In foreign eyes, April 19 would look like an unstable riot, and May 16 like a coup raised by a general no one could quite identify. Park Chung-hee, in particular, would promise a transfer to civilian rule and then reverse himself again and again, drawing Kennedy's fury. Matters would worsen until the president of the United States—Korea's greatest patron—threatened to cut off aid, and Korea's credit would fall through the floor. He could not choose a floating rate left exposed to political shock that sharp. Even if it meant a small loss, settling at the fixed rate of a public loan would be the gain over the long run.
He hid all of that and answered Sohn Won-yil.
"It's North Korea. I don't believe the North can choose an all-out invasion of the South. But if they provoke us locally, or keep threatening our security, the spread will rise."
Sohn Won-yil agreed, nodding hard.
"Quite right. North Korea is our greatest risk. You decided well, going with a fixed rate."
He had already praised Ki-jo dozens of times, and he praised him again. Taking the praise, Ki-jo decided that from now on, whenever an awkward question needed an answer or an excuse, the North would do. Damn North Korea. It really was a first-rate excuse.
The drinking ran late into the night. Ki-jo slept, rose early, and before anything else looked through the morning papers delivered to the embassy. The Westdeutsche Allgemeine Zeitung carried the story of the fertilizer-plant contract between Cheongsan and Krupp. At the photograph in the article, he broke into a wide, bright smile.
Ambassador Sohn, up just as early, came downstairs and spoke to him as he beamed over the paper.
"So the commercial-loan story ran. Around here they call the Zeitung the WAZ. It's published in Essen, where Krupp has its works, and it has the largest readership of any newspaper in Germany."
Ki-jo drank the coffee the ambassador made for him, and they talked.
"President Oh Yang-soo was telling me you mean to go to America as well."
"Yes. I'm thinking of calling on the World Bank and applying for a loan there too."
"I hope, with all my heart, that America brings you good results as well."
Ki-jo wanted to offer Sohn Won-yil some small return for wishing him success. Without the ambassador, who had worn himself out on the business as if it were his own, the loan from West Germany would not have come easily. When he said he wished to give him an allowance for his official expenses, Sohn waved it off.
"The West German Foreign Ministry once offered to provide an embassy car free of charge. I feel sorry for the ambassador who succeeds me, but I refused."
Curious about the story he had brought out while turning the money down, Ki-jo asked.
"Why did you refuse?"
"I wanted to win even a little sympathy from the West Germans. If the ambassador of a sovereign nation goes about without so much as a car, I wanted them to think how hard that country must be struggling. Only then, I thought, might our requests for aid actually be heard."
The ambassador's efforts were enough to move a man to tears.
"If a man who had done that began spending money freely in the West German capital, they would grow suspicious. So please—do not give the allowance to me."
Ambassador Sohn smiled, faintly.
"You said you were leaving for America today?"
"Yes."
"Then don't forget to take that newspaper with you. I'll buy an extra copy of the WAZ and keep one myself."
Sohn Won-yil brought him a paper envelope. Ki-jo slipped the newspaper that carried his story carefully inside. He meant to put the article—that he had won a commercial loan from Krupp—to good use in America.
Thirty million dollars would build a fertilizer plant in Korea, but he could not be satisfied with that. Since he was passing through the United States anyway, he intended to stop at the World Bank in Washington and request a loan of five million dollars as well. Korea needed dollars. Even now, the Korean economy had not secured the 3F.
Fund
Force & Fuel
Fertilizer
Of the three, the fertilizer of the future was now in hand, and he wanted to secure the funds for that future as well. Among the three elements of the 3F—the requirements for rooting out absolute poverty—the most important was Fund.