The Securities Crisis
While the stocks were still climbing, all of Myeongdong glittered.
Polished luxury sedans stood parked in front of the brokerages, and the streets were thick with gentlemen turned out in expensive Western suits. The teahouses, restaurants, and bars did a roaring trade, overflowing with customers who tipped in extravagant sums. A man who had merely doubled or tripled his money could hardly produce a business card anywhere, for people who had made ten times their stake or more were everywhere.
Low margin requirements had a great deal to do with it. Brokerages let a customer buy shares with five times the cash he actually held, and a great many men made fortunes that way. There was no limit on how far a price might rise or fall. A stock could double in a single day, so a lucky man might walk into a brokerage in the morning, sell in the afternoon, and leave with several times what he had brought.
Awash in overnight millionaires, Myeongdong was enjoying the greatest boom the Republic had known since its founding. Even people who never touched a stock found their fortunes rewritten. A pretty bar hostess might meet a big spender, clear her debts, be given a house, and become someone's concubine.
After the crash in Daejeung shares, the look of the street changed completely.
The expensive imports vanished, and the once-glossy faces of those gentlemen turned black. Shops kept their neon burning late into the night to lure customers in, but the customers' footsteps had stopped cold.
Public opinion on the crash, taken as a whole, ran mostly to mockery of the investors who had flung themselves at the speculation like moths at a flame. There were reports of men who swallowed poison and killed themselves in despair over a failed bet, but no one pitied them. In those days many people regarded a stock investor as a gambler, and the exchange as a casino for idle men with money to burn.
Through Sung Dae-ik, Ki-jo gathered the rumors drifting through Myeongdong, and he weighed what the Hankook Ilbo reporters brought back from their rounds, watching how the crisis unfolded. No one, it seemed, imagined that Kim Jong-pil of the Central Intelligence Agency had joined hands with Yun Eung-sang to set the whole thing in motion.
The reports of the reporters returning from Myeongdong grew more pessimistic by the day.
"Sir, it looks as if the market is sliding from a shortage of settlement funds into a state where settlement is simply impossible."
Settlement: the exchange of securities and cash between seller and buyer on the day they had promised.
"They're saying the brokerages' unsettled money may run as high as thirty billion hwan."
Every time the reporters brought grim news, Ki-jo felt his chest tighten. Thirty billion hwan was roughly half the nation's budget for a year. A vast sum that might have gone to developing the country's economy had been wiped clean away in the securities crisis.
He resented Kim Jong-pil for having set so enormous a thing in motion. But what was he to do? What had happened had happened, and it was not something Ki-jo could have stopped. The one mercy was that the money his sister-in-law Soon-young had made in the market could now be put to good use.
Even so, he knew that good fortune often draws trouble after it, and he was careful about spending what Soon-young had given him. The first thing he did was to put the four hundred million hwan into proper papers and see that it was handled cleanly.
Of that sum, the one hundred million meant for helping the unfortunate was passed to Cheongsan Foods through the Hankook Ilbo, written up in the paper, with both the purpose of the gift and the use of the money set down in documents. The other three hundred million went into the account for investment in the steel mill, and the investment papers were drawn up in full.
To Soon-young, who wanted to found an orphanage, he offered careful advice.
"Soon-young, rather than running an orphanage out of your own pocket, what if you set up a foundation to do it?"
"Oh, brother-in-law, do we really have to go that far?"
"If you mean to keep an orphanage going over the long haul, I think it's the better way. You said you wanted to run a school, too. To build one and hire teachers, a foundation is essential."
"All right. I'll do as you say. When are you coming with me to look at land?"
"Whenever you like."
Ki-jo was glad to go out with Soon-young and Ma-ryang, scouting ground on which to build. True to her large spirit, Soon-young meant to build on a grand scale, with a school beside the orphanage as well. Land north of the river, expensive as it was, quickly fell out of her favor.
"Ugh, why is land in Seoul so expensive!"
Soon-young grumbled. Ki-jo trusted her choice and simply watched.
As if to prove she had been born under a great star, she turned her steps south of the river. The plot that caught her eye lay in Gwangju-gun, Gyeonggi Province.
"This'll do! Honey, what do you think? Isn't it wide and open?"
She was pointing at a stretch of flat ground on the eastern slope beneath Maebongsan.
"They say the water comes up bad on this side in summer. You gonna put an orphanage on land like that? Better we build it in Yeoncheon or Yangju."
Ma-ryang, plainly unimpressed, laid out his objections. Ki-jo sidled up to him, gave him a discreet poke in the ribs, and murmured.
"Let her do it her way."
Ma-ryang cleared his throat once.
"Hmph. Do as you please, Soon-young. You do what you want anyway, don't you?"
"So you're for it too? Good! I'm buying all that land over there! I can get several times as much as I could in Seoul!"
Soon-young laughed, delighted. Ki-jo looked over the ground she had chosen with quiet satisfaction. Judging by where Maebongsan and Yangjaecheon lay, the place would one day be Dogok-dong, or else Daechi-dong. Once again he could only click his tongue at Soon-young's luck.
A few days later, a crisply turned-out officer came to the Hankook Ilbo.
The reporters assumed some soldier had arrived with yet another complaint, but he had come to see Ki-jo. Shown into the president's office, the officer identified himself as a man from the Counterintelligence Corps and made a courteous request.
"The commander wishes to see you, sir. If you could spare him a little time."
He put Ki-jo in a jeep and took him to the 506th Counterintelligence Unit, across from the Chosun Hotel. When they entered the commander's office, Kim Jae-chun, head of the Corps, was waiting.
"A pleasure, President Lee."
Kim Jae-chun offered his hand, and the two of them sat facing each other on the sofa.
There was an irony in meeting him here, at the 506th, where men had once done everything they could to stop the May 16 coup. Kim Jae-chun was the revolution's foremost man of merit—the one who had deceived and talked around the military police dispatched to the 6th District Command, and so kept Major General Park Chung-hee from being arrested. Had it not been for him, the general, crossing the Han River bridge on his way to the 6th District Command, would have been taken by the MPs and vanished down the back alleys of history.
Ki-jo wondered what the man meant to say to him.
Seated across from him, Kim Jae-chun began.
"I wanted to bring you here so we could speak quietly. May I ask you to keep what we discuss today a secret?"
Ki-jo said that he would.
"I'll begin with the part that's hard to bring up."
Kim Jae-chun asked his indulgence.
"The Corps regards this stock-market crash as a grave matter threatening the security of the state. Do you agree, sir?"
"I believe it will have a serious effect on the economy."
At that, Kim Jae-chun nodded.
"In the midst of the crash, we looked into the people who had made large profits. Among them we found a member of your family. Yang Soon-young of Cheongsan Confectionery—she is your sister-in-law, is she not?"
"She is."
"May I ask how Miss Yang came to invest in Daejeung shares, and how she managed to pull out at so fortunate a moment and make so large a sum?"
Kim Jae-chun's gaze was sharp. He seemed to suspect that Cheongsan was tied to the operators who had driven the market up and then brought it crashing down.
Ki-jo answered calmly.
"I imagine she was lucky. My sister-in-law has always been a lucky woman."
Kim Jae-chun gave a dry little laugh. Ki-jo knew the man would not believe him easily, and decided to offer proof.
"My sister-in-law made about eight hundred million hwan in the market. Of that, she spent one hundred million donating ramen to the poor, and three hundred million went into the steel-mill investment. After taxes, she means to use what remains to build an orphanage and fund education. She established a foundation not long ago. If you examine the accounts at Korea First Bank, the flow of money between us will be plain enough."
Spoken in that even tone, the explanation took the edge off Kim Jae-chun's sharpness. His eyes softened, almost apologetic.
"Would you permit us to look into your account, and your sister-in-law's?"
"By all means."
Ki-jo had nothing to hide, and he said it calmly, without flinching.
"Thank you for your cooperation. I thought it better to ask your leave in person before we began, which is why I had you brought here. Other people's accounts we examine without notice. But you are on good terms with the government, Chairman, and I wanted to meet you once myself, so I arranged this."
Kim Jae-chun spoke as if offering an excuse. Ki-jo understood that the man was being careful because he knew of Ki-jo's friendship with Chairman Park and with Kim Jong-pil.
But why, when the prosecutors had already opened an investigation into the securities crisis, was Kim Jae-chun mobilizing the Counterintelligence Corps as well?
Ki-jo turned it over quietly. Within the revolutionary government, Kim Jae-chun was Kim Jong-pil's rival. Kim Jong-pil, the leading figure of the eighth class of the Korea Military Academy, had swept away a good many of the fifth class alongside Chang Do-young, yet the fifth class remained, and Kim Jae-chun stood at its head. Their lines had diverged, and later they would struggle openly for power. That such a man should quietly summon him and ask about stock investments was no ordinary thing.
Perhaps he suspected the crisis was connected to Kim Jong-pil's Central Intelligence Agency. And because Ki-jo was close to Kim Jong-pil, he might also have suspected that Ki-jo had been tipped off and had traded shares under another name.
Ki-jo had already moved the money Soon-young gave him cleanly through the bank. That would prove the funds that passed through his hands had not gone to Kim Jong-pil.
He drew what he knew of Kim Jae-chun up to the surface of memory. The man was, at that moment, in sharp conflict with Kim Jong-pil over the direction of the revolutionary government, and the cause ran deep into Kim Jong-pil's work of founding a party. It would become plain later, but Kim Jae-chun belonged to the faction opposed to Chairman Park's entry into civilian politics. He held the conviction that once a revolution succeeded, soldiers ought to return to the army. A man of that mind was bound to collide head-on with Kim Jong-pil, who meant to make Chairman Park Chung-hee president. Beyond policy, he nursed a considerable personal dislike of his junior—slippery as an old snake, and formidable at intrigue. The two simply did not suit each other.
While Ki-jo was ordering his thoughts, Kim Jae-chun, a cigarette between his lips, asked,
"Shall I tell you something interesting?"
"Please."
"There's a fellow named Yun Eung-sang who was arrested over this securities crisis. He's in the prosecutors' custody now. When a prosecutor asked him to lay out the whole of the affair, this is how he answered."
"'How far do you wish to know, Prosecutor?' That's what he told them."
Kim Jae-chun blew out smoke and gave a bitter smile, as if he could hardly believe it. Ki-jo nodded as well. Yun Eung-sang had hinted that a man of power stood behind him, yet he never revealed who had walked away with most of the money.
"Investigating this business, I thought to myself: there's a serious bastard crouched in the background. When they manipulated the prices, they even brought in the National Agricultural Cooperatives and the Korea Development Bank. They borrowed the Korea Electric Power shares and the Daejeung shares the cooperatives held, and traded them back and forth. That is not something the president of a single brokerage can do."
Kim Jae-chun wore a look of distaste. He seemed convinced that Kim Jong-pil was the hand behind the crisis. Circumstantial evidence overflowed, but he had no solid proof.
For a few minutes he spoke of the social damage the securities crisis had done, then he asked a favor of Ki-jo.
"I ask you once more. Please say nothing of what we discussed today. I would be grateful."
"Of course. If someone threw the stock market into chaos, he ought to be caught."
With that, Ki-jo finished his first meeting with Kim Jae-chun and left the Counterintelligence Corps. He declined the Corps car and walked toward Myeongdong, hoping to settle a troubled mind.
This crisis was not going to end as an economic shock. In the end the blade of the investigation would turn on Kim Jong-pil, who had raised the funds to found a party by illicit means, and the fire would reach Chairman Park as well.
He arrived in Myeongdong with his thoughts in a knot, and saw a crowd packed along the inner street. A police car, siren wailing, was nosing slowly forward through the press of people. Talk passed between those coming out of the crowd and those pushing in out of curiosity.
"What happened?"
"Aigoo, if your stomach's weak, don't go look."
"Why? What went on?"
"A man fell off a roof and died. Suicide, looks like. Came off the building where the brokerage is, so I'd say he lost his shirt in the stocks."
"Aigoo. Why put your hand to stocks and leave this world. Tsk, tsk."
Someone who had meant to go in for a look turned back. Ki-jo turned away as well.
The end of the securities crisis was wretched, and there was no undoing it.