 Children gather in a back alley in a community of temporary homes for war refugees in the 1950s — a time of sheer struggle to survive. / Korea Times file |
By Michael BreenIn the late 1940s, when South Korea was established as a separate country, it was described by one foreign official as a “bullock-cart economy” going nowhere. Not only was it poor ― per capita income was $86 ― but it was going to remain so. The potential workforce, it seemed, sat on its haunches by the roadside watching the bullocks trundle by.
Then came the war and things got even worse. The toll from the 1950-53 conflict for South Korea was staggering: 500,000 dead and 284,000 kidnapped, defected or press-ganged into the communist army; about five million homeless, 300,000 widows, 100,000 orphans, millions of families separated, tens of thousands of schools and other buildings destroyed, 43 percent of manufacturing facilities and 50 percent of mines destroyed or damaged. Some three quarters of the industry built up by the Japanese in the first half of the 20th century was in North Korea. Further, half of the South’s energy had come from the North and was no longer available.
Even before the war, the population had swelled by 25 percent with returnees from Japan and elsewhere and with refugees from the North. Now hundreds of thousands of additional refugees had joined those looking to survive and fit in South Korean society. With 1947 as the base of 100, the wholesale price index had gone from 334 at the start of the war in 1950 to 5,951 by the end in 1953. The retail price index had similarly soared from 331 in 1950 to 4,329 in 1953.
Managing such a state was too much for Syngman Rhee, the first president. An elderly nationalist who had lived in America for decades, Rhee had no experience of administration or even of really working for a living. He was notorious in the overseas pro-independence community for living off handouts, for borrowing money and never paying back. Not surprisingly, as president he lacked any vision of economic growth.
The one positive factor was that Koreans placed importance on education. Even during the war, the government had set up a Wartime Union College in Busan, and opened state-funded universities in provincial capitals after they were freed from North Korean control. Teachers and children huddled in overcoats, often in war-damaged buildings. They were short of textbooks, paper and pencils.
This focus bore fruit longer term. But the 1950s were a time of sheer struggle to survive. The opportunities that arose were taken by the forceful and the enterprising, not the educated. For example, the founder of the Hyundai group, Chung Ju-yung, was a barrow boy and car mechanic who did just a few years in primary school. But Chung and other such entrepreneurs who knew what it meant to go hungry went on to surround themselves with better-educated assistants, the boys who during the war had broken the ice in their inkwells on winter mornings and shivered through their lessons, and then gone on to get their Ph.D.s from Harvard and Yale.
The struggle for most focused on food. Hungry beggars squatted on street corners. In the countryside villagers boiled grass and tree bark to make it through the spring after the rice ran out and the barley crop was harvested. Each year, people died. Today older Koreans still remember how they were constantly hungry. The common greeting of “Hello, did you sleep well last night?” changed to “Have you eaten rice today?”
The parliament was hopeless in addressing these problems as the energies of politicians went into securing and maintaining their own positions. The government too was useless. Salaries were so low that government officials were themselves engrossed in the daily struggle to leverage their positions and gave little thought to economic management in the national interest.
From the president to the streets, a mentality of mendicancy pervaded all levels. Half of the government budget derived from foreign aid. In the three years after the war, the U.S. gave Korea $1.6 billion in aid, small by today’s standards but, to put in perspective, equal to half the estimated total damage to industry from the war.
“U.S. economic assistance played the role of a life support system,” said Lee Kie-hong, an economic planning official in the 1950s and 60s. “Over two million tons of wheat and barley helped save Koreans from starvation and raw materials such as cotton, sugar, and wool, boosted Korea’s manufacturing industries to supply consumer goods, laying a foundation for the rapid industrialization throughout the 1970s.”
The one exception to government indolence was the newly created Ministry of Reconstruction. Staffed in some departments by men from wealthy families, some with overseas education, who did not need to worry about supplementing their salaries, it was considerably less contaminated than other agencies by traditional corruption. This agency played the key role in administering U.S. aid.
By the late 1950s, the ministry decided to draft a Five Year Economic Plan. Other bureaucrats laughed at them for their airy-fairy notions of anything long-term. But the planners had been advised by U.S. officials that the U.S. Congress was becoming increasingly upset by President Syngman Rhee and was likely to vote for phased reductions in aid if there was no evidence of long-term economic policy-making.
But when the plan was presented to Rhee, he dismissed it on the basis of its title. A Five-Year Plan, he said, sounded like something Stalin would come up with.
By the turn of the decade, per capita income was $80, and Rhee’s incompetent stewardship of the economy would soon come to an end.
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