Park Chung Hee Era

by Byung-kook Kim

  As Park openly declared the need to rejuvenate the country with genera-

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  tional change, the purge aimed to change the leadership in the state bureaucracy. The younger generation was presumably more loyal to the military junta, because their promotion had been made possible by the purges.

  Kim Chong-p’il’s modus operandi ultimately led to the remodeling of the state bureaucracy into a military-style organization. Less than two weeks after the coup, Lieutenant General Han Sin, as the home affairs minister, publicly issued guidelines to all civil servants to “obey unconditionally” all official orders and to complete their assigned tasks within designated timelines. The eight-point guidelines also prohibited public servants from smoking foreign cigarettes as well as from frequenting “drinking bars.”22

  The same shock therapy of purges and arrests was applied to societal groups. Only a week after the coup, the KCIA led the SCNR’s comprehensive “clean-up campaign” by arresting 51 “illicit profiteers” and “tax evaders,” 4,200 “hoodlums,” and 2,100 “communist sympathizers.”23

  Around the same time, the SCNR dissolved all political parties and social organizations (Decree no. 6) and banned indoor and outdoor political assemblies. The subsequently held courts martial even meted out sentences ranging from three to twelve months in prison for dancing in unlicensed dance halls (Decree no. 1).24 In its day-to-day enforcement of these measures, the MHA mobilized the police as its official watchdog, the effect of which was to strengthen police powers and functions, especially as tools to weed out the opposition and to back the implementation of the military government’s reform program. The MHA was able to do so because the KCIA stood in the background as its supporter. The KCIA was able to project power because its initiatives were endorsed by the Park–Kim Chong-p’il churyu (mainstream faction) in control of the armed forces.

  The KCIA also performed the role of recruiting some of the best talent in and outside of the state apparatus for the mainstream faction’s task of state building and economic modernization. Kim Chông-ryôm,25 O Wôn-ch’ôl,26 and Kim Hak-ryôl27 were the stars among the civilian experts recruited in 1961. Like most other civilian recruits, they were in their early thirties with promising career experience in their chosen fields. Except for Kim Hak-ryôl, a career bureaucrat, Kim Chông-ryôm and O Wôn-ch’ôl were appointed to posts in the state bureaucracy through the t¤kch’ae (special appointment) system that operated outside the haengsi (administrative entrance examination) system. Newly recruited from outside the bureaucracy, both Kim and O were bound to their political master, SCNR

  chairman Park.

  To be sure, the junta also sought to rejuvenate the haengsi system in 1961 by dramatically increasing the number of successful examinees with

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  an eye to recruiting the best of the younger generation in their early twenties, with college and graduate degrees, into the state bureaucracy at the mid-level, and through the establishment of a new Ministry of Government Affairs (MGA) to promote on the basis of merit rather than on the existing tradition of seniority.28 However, because it took time for the young haengsi bureaucrats to climb up the ladder of hierarchy, it was the

  “specially appointed” t’¤kch’ae from the Bank of Korea, private firms, and academia, coupled with a handful of career bureaucrats like Kim Hak-ryôl, who were to make up the core of the new technocracy for much of the 1960s. These professional managers moved freely from one economic ministry to another, each time increasing their rank until they were appointed as a senior presidential staff member or a minister. Kim Chông-ryôm, a brilliant fiscal manager, was the star among the stars, serving as the MoF vice minister and the MCI minister during much of the 1962–

  1968 period.29 He was to become the longest-serving chief of staff (1968–

  1978) under Park.

  The KCIA’s effort to take control of the business community, however, was harder and took longer because that community had the resources to deliver the economic growth that the Park–Kim Chong-p’il team coveted. Moreover, getting the business community to move in the direction desired by the junta required complex legal measures and technically precise policy actions. The attempt at control began with the SCNR’s establishment of a seven-member Committee for the Prosecution of Illicit Profiteering, with Major General Yi Chu-il as its chairman, on May 28, 1961. Park, like many other coup leaders, initially regarded the chaebol (large family-owned business conglomerates) as being nothing more than

  “rapacious wolves” who deserved to be “punished severely . . . in the name of our nation,”30 for their exploitation of monopolistic market powers to win licenses, bank loans, and U.S. aid under the Rhee government.31

  After the enactment of the Special Measure for the Control of Illicit Profiteering, more than a dozen leading businessmen, including Chông Chae-ho, Yi Chông-lim, and Namgung Ryôn, were arrested by the KCIA as “illicit profiteers and tax evaders,” and were subsequently ordered to relinquish their illegal profits and to pay all outstanding taxes in arrears plus fines within six months.32 By setting a demanding schedule for the payments, which, if implemented, would have driven many of the chaebol into de facto bankruptcy and led to the confiscation of their entire assets, the SCNR hoped to get an upper hand in the upcoming negotiations with the chaebol on the political and economic terms of their participation in economic development.

  It was Yi Pyông-ch’ôl, the owner-manager of South Korea’s largest

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  chaebol, Samsung, who put into motion the negotiations. Yi had escaped arrest because he was in Tokyo at the time of the coup. The day before his return to Seoul, Yi Pyông-ch’ôl “volunteered” to donate his entire fortune to the SCNR’s national reconstruction program. As he recollected, he expected to go to jail, like all the other arrested illicit profiteers and tax evaders, upon his arrival at Kimpo Airport.33 He was indeed arrested, but was put under only house arrest. On July 14 he and other chaebol owner-managers were released after signing a pledge to “voluntarily donate” their entire assets to the SCNR when required for “national construction.”34 Once they were released, however, the business leaders backtracked, wavered, pleaded, and even resisted. Their central issue was the terms of their tax assessments and fines. The business community argued that they had “few liquid assets and therefore [were] in no position to pay

  [fines] in so short a time.”35 Many complained that they did not even have enough money to run their businesses and cover the operational costs of manufacturing goods. U.S. ambassador Berger wryly observed that the chaebol were “on strike,” holding the sluggish domestic economy hostage in their attempt to negotiate more favorable terms for their fines and tax assessments. Outraged by the business community’s resistance, some members of the SCNR, especially the young colonels of the eighth KMA graduating class, even suggested the execution of the “illicit profiteers.”36 Park loathed the chaebol as well. In talking with Berger, he stated that “Govt

  [ sic] had gone more than half way to compromise [on the] original [tax]

  assessments and still they were not satisfied. When they were in jail, [the]

  businessmen recognized that revolution saved [South] Korea from chaos and communism and had promised to fight, bleed and die for [South] Korea and the revolution, and even turn over their whole fortunes. Once they were out of jail it was [the] same old story: they were using every dodge to evade repayment of illegal gains and they [are] now using [the] American Embassy to bail them out.”37

  Berger seems to have been at pains to explain to Park the disastrous consequences of what he termed “unsatisfactory relations between [the South Korean government] and several dozen key industrialists who dominate Korean industry and were [the] only ones with present capacity to manage and revive these industries.” Berger insisted that Park alter his strategy, because “if [the business] strike goes on for only
a few months, it is going to cost [the] country many times [the] $35 million dollars” that the military junta assessed as the total amount of the tax to be paid by the chaebol. The potential cost in lost production and wages required that Park reach an agreement with big business. At the same time, Berger warned the business community “not to press their monopolistic position too far” and to work

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  out a compromise with the junta. Otherwise, Berger concluded, the stand-off “might well end in nationalization.”38

  In July 1961, under an SCNR directive, the thirteen leading businessmen, including Yi Pyông-ch’ôl, established the Federation of Korean Business Leaders (Han’guk kyôngjein hyôphoe).39 The first act of FKI was to agree with the SCNR that they build their SCNR-planned and -assigned factories first, and then pay their fines and arrears in taxes by donating parts of the shares in their newly built companies to the SCNR.40 Apparently Berger’s advice to Park had been effective. The junta both lengthened the timeline for the payments and opted to receive the taxes in shares. By doing so, the SCNR got the chaebol commitment to invest in the military junta’s pet industrial projects. Six industries—cement, synthetic fiber, electricity, fertilizer, iron, and oil—were targeted as the engines of economic growth in the first Five-Year Economic Development Plan (FYEDP). Except for oil refining, which was to be managed directly by the state, the responsibility for building the other five industries was divided among the thirteen FKI members. For the chaebol, the compromise provided new opportunities for corporate growth as the executor of the military junta’s industrial projects. The issue of illicit profiteering and tax evasion thus occasioned the forging of a new military- chaebol coalition for economic growth and corporate expansion.

  The relationship between the military junta and chaebol quickly deteriorated, however, when the KCIA arrested many members of the SCNR

  Committee for the Prosecution of Illicit Profiteering, on the charge of giving favorable treatment to certain chaebol owner-managers from the northern provinces. The arrest of the subcommittee members was part of Kim Chong-p’il’s move to cut off the channels of political funding for the northern faction of the same regional origin within the SCNR. The northern faction dominated the subcommittee, supplying three of its six members. Its chairman, Major General Yi Chu-il, was also from the Hamgyông region and served concurrently as the SCNR vice chairman.

  The incident revealed not only the emerging political cleavage between the Park–Kim Chong-p’il mainstream faction of the Kyôngsang and Ch’ungch’ông provinces, on the one hand, and the generals of the northern provinces, on the other, but also the rivalry of chaebol owner-managers along the same north-south regional divide. The ensuing military trial tipped the balance of power further toward the Park-Kim mainstream. The chaebol owners from the Hamgyông region, such as Sôl Kyông-dong, Yi Yang-gu, and Kim Yôn-jun, were found guilty of bribing the investigators and as a result were denied government support for their industrial projects. By contrast, the chaebol owners from the south, includ-

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  ing Yi Pyông-ch’ôl and Chông Chae-ho, received a huge reduction in their original fines.41 As the process wore on, Colonel Yu Wôn-sik, a member of the Committee for the Prosecution of Illicit Profiteering and also a central player in the SCNR Subcommittee on Commerce and Industry, became the spokesman for the mainstream faction. Although Kim Chong-p’il failed in his attempt to remove Yi Chu-il because of Park’s unswerving trust in the general,42 Kim succeeded in demoralizing and weakening the northern faction and filled in the power vacuum that resulted with even more of his KMA classmates. At a minimum, the crackdown made every member of the SCNR fear the KCIA, thus getting Kim Chong-p’il closer to his goal of becoming Park’s heir.43

  A by-product of the consolidation of power around the KCIA at the expense of the SCNR was policy disarray. The authority of the cabinet ministers had been undermined by the SCNR’s claim of executive, legislative, and judicial powers, and now there developed a tension among SCNR members as the KCIA took control of many of the SCNR’s reform programs. Even the recruitment of civilian and academic advisors to the SCNR for the task of assisting with its 1961–1962 National Reconstruction Movement was dominated by the KCIA. Moreover, the intelligence agency frequently excluded the SCNR from important reform programs.

  The KCIA was able to seize ever-larger policy roles because it had its own brain trust known as the Policy Research Institute, almost identical to the SCNR’s Planning Committee, to advise Kim Chong-p’il on the issues of politics, economics, society and culture, law, and reconstruction. Whereas the SCNR Planning Committee recruited a large number of prominent university professors, including Yu Chin-o, Ch’oe Ho-jin, Pak Chong-hong, and Yi Man-gap, the KCIA Policy Research Institute drafted mid-career and even younger professionals and academics, including Kim Chông-ryôm, Pak Kwan-suk, Yun Ch’ôn-ju, Kim Sông-h¤i, and Yi Chongg¤k, in addition to an even larger group of prominent figures such as Ch’oe Kyu-ha, a career diplomat.44 The KCIA, given Park’s trust in it, the cohesiveness of the eighth KMA graduating class who worked for it, its colossal internal resources, and its strategically minded leader, Kim Chong-p’il, quickly squeezed out the SCNR Planning Committee and took control of the military junta’s policy planning. The SCNR Planning Committee came to be seen as a redundant agency and was soon dismantled.45

  In the course of administrative reforms and policy changes, the KCIA’s dominance brought Park many political problems, including strong pressure from Ambassador Berger to reduce the KCIA’s role, not to mention Kim Chong-p’il’s influence. Yet Park continued to rely heavily on Kim Chong-p’il and his KCIA for sweeping reforms. Park did so because no

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  other coup maker had the vision, strategy, and organizational capabilities of Kim Chong-p’il. Also, a generation younger, Kim Chong-p’il did not pose a threat to Park’s leadership at that time.

  According to Yi Sôk-je, the chairman of the SCNR Subcommittee on Legislation and Justice, the military government’s administrative reform program was initially prepared by a group of young pro–Kim Chong-p’il colonels, including himself. In early 1961, as part of their preparation for the coup, the officers had begun to collect policy ideas to bring about a comprehensive reform of government administration, including the introduction of an emergency constitution, the drafting of the SCNR laws, and the trial of illicit profiteers and tax evaders.46 The objective was to legislate a massive number of reform bills within the first hundred days of military rule at lightning speed in order to differentiate the “efficient” military from the faction-ridden, incompetent Chang Myôn government and to build public support with the image of a “can do” government. In the first hundred days after the coup, the Park-Kim mainstream faction introduced a dozen extraordinary measures, including martial law (May 16), the Press Purification Measure (May 23), the Plan for the Liquidation of Usurious Debts in the Countryside (May 25), the Law Regarding the Extraordinary Measures for National Reconstruction (June 6), the Supreme Council for National Reconstruction Law (June 7), the Act of Establishing the Central Intelligence Agency (June 10), the Act on Disposition of Illicit Fortunes (June 14), the Emergency Economic Measures for Industrial Recovery (July 18), and the Outline of a Five-Year Economic Development Plan, as well as the establishment of the Economic Planning Board (July 22).

  Some of these reform measures, such as martial law, the SCNR law, and the KCIA law, had been prepared by the coup makers before their seizure of power. Others, like the EPB and the currency reform law, were developed in cooperation with reform-minded bureaucrats after the takeover of state power and state institutions. The military junta’s way of “revolution”

  was more one of muddling through, adding to its own desires the attractive ideas and strategies of the state bureaucracy, big business, and the intelligentsia. The junta, not having had a master plan when it overthre
w Chang Myôn, made reforms as its members learned the complexities of governance and development. Equally important, they learned only what they wanted to learn: arts and techniques to take control of the institutions of power. What to do with those mechanisms of control was left vague or, more accurately, was to be decided by power struggles, experiments, and learning, especially in the areas of economic development and administrative efficiency. As Yi Sôk-je recalled in 1995, the history of the military government itself was a “continuation of trial and error,”47 because many

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  reform programs contradicted one another or were ill-conceived, resulting in policy fiascos, although they were motivated by the same interest in power consolidation.

  Eventually, however, lagging policy performance threatened the junta’s credibility as a “can do” political force and jeopardized its performance-based instrumental legitimacy, making learning how to make effective policy a matter of survival for coup leaders. The junta discovered that its programs contradicted each other even during the first three months of reform. For example, the implementation of the first FYEDP required the cooperation of the chaebol, but the campaign of historical rectification caused the arrest of most of the chaebol owners as illicit profiteers and tax evaders. The businessmen’s cooperation in the first FYEDP projects was secured only when the junta backed down and reduced the fines and accepted more flexible and lenient payment conditions. The inner circles of the KCIA did not learn enough, however, because when they were under intense pressure to raise political funds or to demonstrate their “can do”

  spirit through a spectacular showdown with their industrial rivals, as they thought they were in June 1962, they again imposed economically risky policy and drove the South Korean economy to the verge of collapse. Only after this humiliating policy failure did Park make the KCIA withdraw from the economic and fiscal realm and focus on politics.