Park, in his memoir, wrote of the Meiji Reform in Japan as his influence: “Millionaires who promoted the reform were allowed to enter the central stage, thus promoting national capitalism.” 5 These were not sectors where South Korea enjoyed comparative advantage or even much expertise, but that was exactly Park’s point he believed they were vital to creating a rich nation and strong army.īy arresting the millionaires and then releasing them, Park established the ground rules for a state-business partnership directed toward the goal of industrialization, with the state firmly in charge. The last was nationalized, as was the banking system.

The key sectors targeted by Park and his military government for industrialization were cement, electricity, synthetic fiber, iron, and oil refining. The thirteen business leaders also received further dispensations if they met export targets. In effect they were offered a compromise where they could avoid further jail time if they built factories, though they would still have to pay fines by donating company shares. The most important thirteen were given the task of industrializing the country. After two months in detention, the “illicit profiteers” were released after signing an agreement stating that they would donate all their property when required for national construction. In addition to jailing them, Park threatened to confiscate their properties and levy immense fines. 3 Given that this broad definition could apply to virtually every Korean chaebol owner at the time, all were vulnerable. The specifics of the charge of “illicit profiteering” included unfair bidding for government contracts, monopolistic sales and foreign exchange practices, and generally living off of government licenses. In his memoir, The Country, The Revolution and I, Park wrote, “we want a piece of brick rather than a lump of sugar.” 2 Park and his military government felt that South Korea desperately needed to industrialize, but American aid, which mostly consisted of consumer goods, wasn’t helping on this front. The security situation confronting South Korea remained grave and existential. The North Korean invasion of South Korea a decade before had led to nearly a million civilian casualties. They all faced the threat posed by the Asian Communist countries of China, the USSR, and North Korea. regional security strategy of capitalist states which included Japan and Taiwan. 1) And yet, what was also true in 1961 was that South Korea was poorer than North Korea, whose per capita GDP was nearly a third higher.Īdditionally, South Korea stood on the front line of the Cold War, and was part of a U.S. (Some of these capabilities have a dark history. The country had a modernized military, mass literacy, large trading firms, some industrialization, and substantial U.S. This low number, however, did not truly reflect South Korea’s actual level of development. South Korea’s per capita GDP in 1961 was less than $100, lower than that of Guatemala, Cameroon, or Chad. Park and his military junta ruled over a desperately poor country. The charge in all cases was “illicit profiteering.”

The head of Samsung, the largest chaebol (family-owned conglomerate), who had been travelling in Japan, was immediately placed under house arrest when he returned to Korea. Within days after he seized power in the 1961 military coup d’état in South Korea, Major General Park Chung-hee ordered the arrest of fifty-one of the country’s leading businessmen.

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