Currency Reform

At ten o'clock on the night of June 9, 1962, a grave announcement from the revolutionary government came over the radio. Effective June 10, a currency reform would be put into force. The government declared that the existing hwan would be replaced by the won, at an exchange of ten to one. The aims, it said, were to choke off inflation and to answer the public's demand for a new currency. Kijo held his breath and waited, afraid the deposit freeze he remembered from the old history might be announced along with it.

The announcement matched the policy he already knew. So did the pledge to exchange no more than five thousand hwan per person per day.

That, too, was the same: a measure to shield the financial houses that the securities crisis had driven into a corner.

It's changed!

Kijo clenched his fist. The indiscriminate freeze on the whole nation's deposits, and the forced conversion of those deposits into stock, had been scrapped. In their place came something akin to a real-name financial transaction system. Desperate to scrape together capital for industrial development by any means they could, they had settled on a partial real-name regime as a last resort. Kijo felt a wash of relief at Chairman Park's decision to pull back the radical policy and retreat several steps. The shock that might have hammered the Korean economy looked likely, now, to blow itself out as a tempest in a teacup.

The next morning the papers were plastered with stories of the currency reform. Kijo, in early, called an emergency meeting of the executives. Among those present, Seogwang stood out at once. Kim Seogwang sat with his head bowed, heaving sigh after heavy sigh. Hansu, beside him, fought down a grin.

"Hyung, didn't you say you weren't henpecked? You told us you had the household purse in a death grip."

"Keep it down. You try a ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠few more years of married life. Ah—you'll learn. A man needs a slush ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠fund."

"Explain to the government that it was a slush fund essential to married life. They'll unfreeze the deposit for you."

The department heads snickered. Kijo, swallowing a laugh of his own, turned to Seogwang.

"Director Kim. Whose name did you put it under, and how much?"

"Ah... well, I tucked away about forty thousand hwan in Yeongbae's name."

"That's perfect. The government says it will pay a fifteen percent dividend every year, so you can draw six thousand hwan a year. Oh—now that the currency has changed, that's six hundred won you can spend."

Everyone laughed.

"What were you squirreling away that kind of money for?"

Ma-ryang asked.

"I was saving up to buy a motor-buggy. The motor-buggy Kia makes is something else."

"The motorcycle's a wash now, so buy one of those handcarts Kia turns out. Sturdy as anything, and they make them well. Load the family on and take a lap around Seoul. Won't they love that?"

Ma-ryang's needling set the whole room off. Fortunately, Seogwang seemed to be the only one who had taken the currency reform's direct hit. No one else looked to have been hurt.

Once the laughter had run its course, Kijo spoke to pull the meeting back to order.

"Because of the currency reform, company sales may fall for a time. Only five hundred won can be exchanged in a day, so consumer sentiment will freeze for a little while. Directors, look carefully through the ledgers your staff are keeping, and see that there are no mistakes. Out of habit, it will be all too easy to tack on an extra zero."

He also ordered that the price tags posted at every Cheongsan Store in the country be replaced without fail.

When the meeting ended, Kijo paid a visit—his first in some while—to the Supreme Council building. He had come to see Park Tae-joon, lately returned from an inspection tour of the United States. In his office, Park Tae-joon had forgotten the fatigue of the overseas trip and was buried in work. After they had exchanged greetings, Kijo asked how the trip had gone.

"Did you look over the firms KISA recommended?"

"Yes. I went to see U.S. Steel. The result was not good."

"What happened?"

At the question, Park Tae-joon's face filled with indignation.

"Those American bastards are nothing but daylight robbers. I looked at the equipment U.S. Steel said it could provide, and it was hopelessly obsolete. So old they were ready to tear the whole mill down and build anew—and they told us to take the entire thing off their hands. At the price of building a new steelworks, no less."

He forced the anger down and went on.

"KISA cannot be run this way. America is already rich, and the rich only get richer—does that mean it should fleece a poor country like Korea because it has run out of places to skin? These so-called allies carry on like common thugs!"

Kijo knew that this was how KISA ordinarily worked, and that American firms had no sincere intention of joining the venture, so he did not rise to the heat. He offered an alternative.

"What if you looked at Japanese firms?"

Suggesting a trip to Japan, he recommended that Park Tae-joon meet President Nishiyama of Kawasaki Steel. The man was highly favorable to the building of a steelworks in Korea.

"I'll have to try that. If America offered a fair price and real technology, we would want to buy American too. But if they come at us like this, there's nothing to be done. I'll look into the Japanese side as well."

Kijo wrapped up the talk with Tae-joon and went straight to the USOM building next door. Meeting Director Killen, he passed along Park Tae-joon's complaints. Director Killen answered him.

"Old equipment is not necessarily a bad thing. It is plant that has already produced steel for decades, and been proven by it. If you bring in new equipment and something goes wrong, what do you intend to do then?"

It was the sort of talk that was not worth hearing. America had no intention of giving Korea new plant. The plan was to dump clearance goods on naive Korea at a fat price. Under the Syngman Rhee government of the fifties, that might have been managed by slipping a suitable kickback to the right official. Not now.

When Kijo showed his reluctance, Director Killen recommended another firm.

"Among the American companies that have expressed interest in joining KISA, there is one called Koppers. It is in Pittsburgh, and it is exceptionally strong in steel-mill design and in building out the equipment."

Koppers was based in Pittsburgh, the heart of American steel, but it was not a steel specialist. It ran businesses across aluminum, railroads, specialty chemicals, utilities, rubber, steel, and residential lumber, and it had gone early into Latin America, Australia, and Europe, operating on a global scale. Kijo did not like it, but he accepted Killen's proposal. For the moment, what mattered was getting as many firms as possible into KISA. He closed the conversation with Director Killen reasonably ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠satisfied.

In the history he remembered, Killen would on this very day fly into a rage over Korea's currency reform and issue a statement threatening to cut off aid. He would work himself up until he was invoking ideology itself, declaring that the Korean government's policy damaged capitalism. It was a pleasure to see that same Killen sitting tame.

Kijo left Killen's office and went to Frank. As he stepped in, Frank glanced at his face and asked,

"Something good happen? You look awfully bright."

He had come through the currency reform unscathed. Of course his face was bright.

"Hard to say. Maybe it's just that the day is fine."

"On a day this fine, you're not going golfing with Mr. Hausman? Advisor Hausman has been saying how hurt he is that you hardly come around these days."

"Play golf these days and the government takes a dislike to you. I'm lying low."

He laughed it off with a vague excuse. Lately he had been keeping his distance from Hausman on purpose, because of the temper of the revolutionary core. They were not anti-American, exactly, but they were wary of anyone who stood too close to America. Chairman Park himself was a man who kept well clear of the U.S. military. The young officers who had joined the revolution were outsiders too, not friendly with the Americans. They shared a contempt for the incompetent, corrupt generals who had climbed the ranks on the strength of their sociability with the U.S. Army. Fiercely independent, the revolutionary core answered every American interference with the implication that Korea was not their colony. That resentment had even broken the surface in an incident in which someone seized Director Killen by the collar and thrashed him. Kijo reckoned the Americans had plenty of complaints of their own ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠about that streak.

"Those anti-American demonstrations by the university students, not long ago."

Frank opened with that. On June 6, two thousand students from Korea University had staged an anti-American demonstration. The spark had been a Chosun Ilbo report from February of '62. Early in the new year, a woodcutter in the Paju area had gone into a zone barred to entry by a U.S. unit to cut wood, and had been shot dead by American fire. Such things had happened often enough since the fifties that they rarely became a sensation. What came out later, though, drove Koreans to fury. When the dead man's wife looked over her husband's clothes, she found not a drop of blood on the trousers or the jacket he had been wearing. Blood stained only his underwear and his drawers—proof that the Americans had not shot a woodcutter as he fled, but had caught him, stripped him in the dead of winter, and executed him. The autopsy was just as shocking. The weapon had not been the carbine or the M1 rifle the U.S. Army used, but a hunting shotgun. It left people with the bitter conviction that a Korean had been hunted like an animal.

Even after the story was reported, the killing and beating of Koreans by American troops went on. In February a U.S. sentry shot another Korean dead. A pregnant woman miscarried after being beaten by American soldiers. A camp-town prostitute was gang-raped and had her head shaved to the scalp. When a theft occurred inside a unit, an American officer had the Koreans on the post strung upside down from utility poles and beaten. Incidents of American crime kept breaking, one after another. A few days ago it was reported that soldiers had seized a middle-aged man loitering near a base, dragged him inside, stripped him, hung him upside down, and beaten him.

On June 8, a thousand students from Seoul National University came out into the streets and marched behind a placard.

They demanded that the government keep Korean sovereignty from being infringed by the United States. It was an outburst of anger at a government that, since the fifties, had answered American crimes with lukewarm measures. The revolutionary government replied that it understood how the students felt, but warned that it would respond sternly if they expressed their views by unlawful means. In practice it did not respond so sternly. It took some of the demonstrators in, but it did not put them down by force. The line was drawn at a wall of jeeps, shielding the American embassy from the students, and there it ended.

Frank, it seemed, would have to report both the anti-American lean of the revolutionary faction and the anti-American stirring among the students.

"The students, I'll set aside. What I don't like is the Chosun Ilbo wobbling all over the place. I'm curious about the publisher's leanings. You've met him yourself, haven't you?"

Kijo could see why Frank would be confused. The Chosun Ilbo, which at the start of 1962 had been the first to run in-depth coverage of American crimes and stir anti-American feeling, abruptly changed its tone after the Korea University demonstration.

Having said that, the Chosun Ilbo went on:

Kijo expected the paper's shift to continue. There would, however, be a consistency to it. The Chosun Ilbo would keep moving in whatever direction brought it closer to those who held power. Its publisher would grow friendly with Chairman Park and multiply the editorials and articles favorable to him, and little by little the paper would take on a pro-American cast. In Kijo's memory, the sharp turn had come with the Fifth Republic. Even through the 1970s the Chosun Ilbo had still run pieces on the union movement and sometimes stood with the workers; after 1980 it changed by a hundred and eighty degrees. Drawing on that experience, he told Frank,

"The publisher of the Chosun Ilbo is quite pro-American. And very much a capitalist, too. You needn't worry."

Frank laughed at the assurance.

"I seem to have chosen my friends well. When did you turn into such a big man? Weren't you a small businessman from the countryside? Now you're advising newspaper publishers. You've come up in the world something dazzling."

Kijo answered the man who was so pleased with the information he had been given.

"Korea will grow the way I have. Believe in Korea. If you had invested in the Korean stock market, you'd be a rich man."

At the joke, Frank laughed, thinking of the Korean market whose bubble had burst not long ago.

"If I'd put money in Korean stocks, I'd be a pauper. I probably wouldn't have been satisfied even with a hundredfold return—I'd still be holding the shares. I've got a quiet greedy streak, you know."

He laughed out loud, then clicked his tongue.

"Still, it's a shame. If I'd put in just one month's salary, and if I'd played it right, that would have been a hundred months' pay.... How much is a hundred months? About eight years' salary?"

Kijo smiled and nodded.

"All the same, this currency reform makes me feel suddenly poor. Changing dollars into hwan, I used to feel pretty rich. Change them into won now, and I'm down to a tenth."

"You'll get used to it soon enough, Frank."

Kijo smiled and comforted him—the man who had failed to climb aboard the greatest bubble in the history of the Korean market, and whose exchange, by the feel of it, had just been slashed by the reform.

Kijo was happy. That they could trade jokes like this on the first day of the currency reform seemed no small thing. In his previous life, the month right after the reform had been a cauldron of confusion. He had been too poor to suffer much from it himself, but the terror of those whose deposits had been taken was enormous. Some said this was how it started, the state seizing everything you owned, the way the North had done. Many swore they would never put money in a bank again. Most raged that they would never see the government's haul returned, and cursed the government for a pack of thieves. This reform, though, had been moderate, and the streets were calm.

Leaving USOM, Kijo passed the front of a bank and saw the long line standing under a biting sun. People looked annoyed, and bored, but none of them looked afraid. Those coming out, by contrast, having changed their money into the new currency, had bright faces. They held the crisp new notes up to the sunlight, marveling with satisfaction at bills from which Syngman Rhee's face had vanished.