Author Topic: The 1962 currency reform in S. Korea that gave us the "won" currency  (Read 429 times)

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Offline Verify-12

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Here's a video that I uploaded to add to my webpage about South Korea's hwan coins. 
Both the 50-Hwan and the 10-Hwan stayed in circulation after the reform failed, since the country needed small-denomination currency.
They just called the 50-Hwan "5 Won" and the 10-Hwan "1 Won" and kept them in common circulation until the late 1960s.
You might have to turn on the English subtitles if you don't see them right away.



The video is a  Public Service Announcement released in the days of the June 1962  currency action undertaken by the Junta Government of Major General (later President) Park Chung-hee and planned by General Yu Won-sik (유원식).   The currency reform plan was meant to expropriate "exorbitant," "illegal," or "idle" funds (above a certain amount) from private citizens' holdings and put this money into shares that would be invested in "national reconstruction."    Dividends would supposedly be paid back to citizens.  The reform plan failed since very few people in South Korea had much money in South Korean "hwan" currency in amounts that qualified under the reform plan for government appropriation and investment into national reconstruction.  If Korean people had significant amounts of wealth in 1962, they probably held it in Japanese Yen, U.S. Dollars, or hard assets.   The only lasting result of the 1962 currency reform was the changing of South Korea's currency, the "hwan" to a new "won" currency, which the country still uses to this day.

Online Figleaf

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Re: The 1962 currency reform in S. Korea that gave us the "won" currency
« Reply #1 on: June 16, 2018, 10:21:29 AM »
I found some interesting elements in that video. The most important is that the government considered the curb market to be "unproductive". The curb market is an informal, private market for relatively small, short term loans. Today, such loans are called micro-financing and it's fashionable and considered good for development. This betrays the true nature of the operation: the military suffered from control-freakism. Whatever escaped their control was by definition bad.

The whole thing breathes "ministry of propaganda". There is no attempt to explain the operation, give information or show how the mechanism will achieve its stated purpose. The graphics do not give information either. They are just a dance of coins. The message is paternalistic. "Now be calm and stand in line for hours. We have decided what is good for you."

I am also left with a question. Today, the character for won is the same as that used in Japan for yen and in China for yuan. That looks logical. So why was there a less logical situation before, where the character for hwan was different from the character for yen and yuan? What created and motivated that situation?

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline Verify-12

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Re: The 1962 currency reform in S. Korea that gave us the "won" currency
« Reply #2 on: June 18, 2018, 03:04:15 AM »
Peter, I knew YOU wouldn't be buying the message in the video!

While it may seem very non-plussing to non-Koreans, such explanations (the film) by the Korean government, as long as the leader(s) showed that they were most definitely in charge of the country and that the policy was supposed to be to help the country, Korean people by and large went along with it.  A cynical or sophisticated view of such a policy atrocity was not to be had at that time (at least out loud).  But these military guys knew that they were running out of time and better start producing results fast, as they knew the citizenry would wise up soon enough, as they eventually did in the 1980s.    Not to get too much into it, but I really don't think Koreans (especially in that era) really understood or believed in market capitalism.   A financial transaction for Koreans was (and still is for some Koreans, in my opinion) a "I win 100%, you lose 100%" proposition, or as close to that equation as possible.   The supposed American ideal "holy enterprise" of the "50/50" deal that one of our politicians, Newt Gingrich, once called it, just did NOT exist in Korea.  In fact, the Korean military government of that time sold the currency reform as a way to "get back at" business leaders who produced profits for their companies, labeling them "elicit profiteers."  This tapped into popular sentiments in Korea that held that if someone made money, it was only because they screwed somebody else.  So it does not surprise me that the citizens' reaction to the S. Korean currency reform of 1962 was not one of outrage, but acquiescence.   Also, while certainly not everybody is, I've seen Korean people at times to be VERY good rule followers.

The Chinese characters used for Korean currency are just "labels" that change with every currency reform.   Sometimes the name "Won" sounds the same, but they used a slightly different Chinese character to denote the change in currency.  The "hwan" was used probably because they ran out of chinese characters that sounded like "won"!  And notice that the latest "Won" currency since 1962 doesn't even have a Chinese character equivalent.   So I wonder what they'll call the currency when they next have a reform?

Online Figleaf

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Re: The 1962 currency reform in S. Korea that gave us the "won" currency
« Reply #3 on: June 18, 2018, 10:06:59 AM »
Don't get me wrong, I am neutral in this. I reacted from my knowledge of economics and "communication". The move was bad economics and the film sloppy communication.

It is quite possible to undertake a currency reform to expropriate money from certain people. It is not necessary to reform the currency (such as deleting zeroes or changing the name) to achieve that. All you need is newly patterned banknotes and banks for the exchange. The long lines indicate a lack of exchange points and/or an exchange period that is too short.

I already commented on the non-communication of the film. I can only add that showing the lines is just another blunder.

I subscribe to your comments about the zero-sum game economic approach of Koreans in the fifties. It is not restricted to Korea. To a large degree, even the French revolution and the US war of independence were based on it.

It may be my imagination, but it looks like the zero-sum approach is connected to absolute monarchism, (military) dictatorships and theocracies. The underlying idea is that your fate is determined at birth and you cannot change it (pre-destination). The liberating ideas are popular sovereignty, democracy and humanism. Korea is a case study on how fast people's outlook can change if the nature of the government changes. Its success is part of the evidence for the power of popular sovereignty, democracy and humanism. Its history speaks volumes against modern populism.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline Verify-12

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Re: The 1962 currency reform in S. Korea that gave us the "won" currency
« Reply #4 on: June 18, 2018, 11:50:18 PM »
It may be my imagination, but it looks like the zero-sum approach is connected to absolute monarchism, (military) dictatorships and theocracies. The underlying idea is that your fate is determined at birth and you cannot change it (pre-destination).
It's not your imagination.   Zero-sum IS connected to those forces of absolutism.   

The liberating ideas are popular sovereignty, democracy and humanism. Korea is a case study on how fast people's outlook can change if the nature of the government changes. Its success is part of the evidence for the power of popular sovereignty, democracy and humanism. Its history speaks volumes against modern populism.
HEAR, HEAR! 
I wish more people who belong to the central asylum known as the "trump cult of personality" here in the USA would understand this.
...but they won't.     Yeah, humanism.   That's a big one.