The Chaebol Returns To The Presidency 1967 [EN]: Chapter 23

The Return of the Conglomerate CEO as President 1967- Episode 23 (23/225)

For a while, the lawmakers vehemently criticized the Blue House [the executive office and official residence of the South Korean president].

Kim Young-wook, who had been listening quietly, stepped forward.

“Alright, this isn’t the time for mere complaints. Let’s figure out a response!”

“Let’s plan a second revolution!”

“That’s right. We have allies positioned within the military.”

Kim Young-wook elaborated.

“Lee Woo-rak is in Japan, Kim Jung-kyu is living at the Athletes’ Village, and I’m overseeing the Gyeongbu Expressway [major highway connecting Seoul and Busan] construction at the Ministry of Construction. Kim Jong-pil is in the cabinet, acting according to the President’s orders. The President meticulously planned this dispersal of us beforehand.”

“…….”

The atmosphere, previously charged by Kim Young-wook’s analysis, quickly deflated.

“We’ve been betrayed. We need preparations just as thorough, even now.”

Cha Jin-chul added, as if recalling a forgotten point, “President Kim Jong-pil said the same thing: that we need to be thorough.”

Kim Young-wook countered.

“Let’s say we take up arms and storm the Blue House, occupying it. Do you think the people would accept that?”

“…….”

“It’s not just about guns and swords. We need justification, a cause. The social chaos is what made the military revolution successful. The people endorsed the revolution. But what would happen if election law offenders seized power?”

“…….”

The lawmakers cleared their throats, feeling uneasy.

“So, Minister Kim, what are you suggesting we do?”

“Politics is about justification. With the right justification, you can even start a war. We need to secure that justification first.”

Cha Jin-chul interjected.

“Once we lose our assembly seats, whatever justification we come up with will be irrelevant. Speed is crucial.”

“That’s right. What good is medicine after death?”

Assemblyman Seo from Busan emphasized.

“Justification is important, and so is speed. Let’s think about justification while moving forward,” Assemblyman Nam suggested.

“Let’s start by reorganizing the military. We need to establish our chain of command.”

“That’s right! Let’s start with the Korea Military Academy.”

“Minister Kim, you’re classmates with President Kim Jong-pil at the Academy. Even though you’re in the cabinet, working with President Kim will increase our chances of success.”

Kim Young-wook and Kim Jong-pil were both members of the 8th graduating class of the Korea Military Academy.

Initially, Kim Young-wook was closer to Kim Jong-pil, his classmate, than to Park Jung-woong, but he refused to align himself with a specific faction during his military service and ultimately switched his allegiance to Park Jung-woong.

In May 1960, he participated in a plan with Kim Jong-pil and eight other lieutenant colonels from the Academy’s 8th class, along with senior officers, to overthrow their superiors. The plan was discovered in advance, placing him in a precarious situation, but he narrowly avoided the consequences and began planning a military coup with Park Jung-woong from 1961.

In short, Kim Young-wook’s life was a history of rebellion.

Cha Jin-chul remarked.

“President Kim has changed too. Since joining the cabinet, he’s acting like it’s someone else’s problem.”

Kim Young-wook responded.

“That’s probably because there’s no ‘gift’.”

“‘Gift’? What’s that supposed to mean?”

“Let’s say we succeed in the revolution. Who will be the figurehead?”

“…….”

“Will an election law offender do it?”

“Ah, so you’re suggesting we should put Kim Jong-pil forward?”

“That’s right. The ruling party is considering President Kim as the next candidate. It’s perfect for providing justification. Minister Kim, please take the lead in recruiting President Kim to our side.”

“Alright. Let’s give it a try.”

* * *

The Prime Minister’s official residence.

Kim Jong-pil and Kim Young-wook sat facing each other on a sofa in a classic reception room, beneath a calligraphy scroll by Kim Jeong-hee [a famous Joseon-era calligrapher and scholar].

Kim Jong-pil sipped his ssanghwa tea [a traditional Korean herbal tea] and said, “A second revolution….”

“That’s right, the world needs to be turned upside down once more. Let’s have our 8th class try it.”

“What’s the justification?”

Kim Jong-pil was adept at grasping the core of political issues without being swayed by emotions.

“Justification is like an earring; you can hang it on your ear or your nose. Who isn’t caught up in illegal wealth accumulation?”

“That’s why the three key figures in the Blue House were all replaced.”

“Even so, who can claim to be completely clean if you dig deep enough?”

“You haven’t heard the news yet.”

“…….”

“Remember when they invited business leaders and returned all the money-filled briefcases on the spot?”

“What? They returned the money-filled briefcases?”

In Kim Young-wook’s time, they were busy collecting the ‘presidential audience fee’ that everyone who visited the Blue House brought. He couldn’t fathom why they would return all that lucrative slush fund; it defied his understanding.

“The current three key figures in the Blue House are unyielding. They’re so incorruptible that they wouldn’t beg for money even if they were starving.”

“Huh, really! How can they do politics without money?”

“If the justification is weak, don’t even dream about it.”

Kim Young-wook unwrapped his carefully prepared ‘gift’ [bribe].

“You’re supposed to be next in line, aren’t you?”

“…….”

“But His Excellency doesn’t seem to think so.”

“Based on what?”

“After the general election, once he confirmed that they would win more than 2/3 of the seats, he said this in Gungjeong-dong [a district in Seoul known for its political significance]: ‘Eight years is too short. We need at least 15 years to complete the economic development plan.’ What does that imply?”

“…….”

“He’s considering changing the constitution to allow for a second consecutive term.”

“Hmm….”

“Why else would he suddenly act like a benevolent ruler like Emperors Yao and Shun [legendary Chinese sage-emperors known for their virtue and selflessness]?”

“Are you suggesting he’s trying to win the people’s favor by sacrificing the revolutionary forces to extend his term?”

“Why else would a person suddenly transform into someone else?”

If Kim Jong-pil was being deprived of his chance at the next term, that was sufficient motivation for him to revolt.

He remained cautious.

“But even so, we can only act if the attempt to amend the constitution is revealed; we can’t make the first move.”

“Hmm, that’s true, but you’ll lose power if you lose your assembly seat.”

“A revolution to prevent the invalidation of a fraudulent election lacks justification. Which citizen would support that?”

“…….”

“Only a justification to resist a dictator trying to extend his rule will resonate now. Now is the time to move discreetly. Keep nurturing your connections in the military in preparation for any eventuality.”

“Hmm, it’s too early… so you’re suggesting we can only watch the prosecutors and police wield their swords.”

Kim Jong-pil, advocating caution, was carefully safeguarding his own interests.

He understood that he held the deciding vote between the President and the rebels.

He planned to continue playing both sides until he could determine the likely victor and secure their support for him.

* * *

Chungmuro [a district in Seoul, known for its film industry and historical significance].

The President, on a secret visit, noticed Myeongdong Cathedral [a prominent Catholic church in Seoul] as he walked.

Now, as in the past, the Myeongdong intersection was teeming with people.

Signs for tea rooms and loan sharks were ubiquitous.

The President, observing a gentleman in a suit emerge from a loan shark’s office and hurry away, was reminded of Chairman Wang’s past struggles.

They had received orders but lacked the funds to purchase raw materials, leaving them desperate. Ultimately, they would resort to the loan shark market, where interest rates soared above 30% to 50%.

Banks offered interest rates of 15%, but they demanded substantial collateral or served as the private coffers of local power brokers, creating an insurmountable barrier for businesses.

At the time, the loan shark market resembled the stock market of the 21st century.

It was a system where individuals lent money to loan sharks instead of depositing it in bank savings, and the loan sharks would circulate the money and distribute the promised interest dividends.

Since people were taking out low-interest loans from banks and entrusting them to loan sharks, bank money couldn’t reach businesses.

Even if businesses worked diligently to produce and sell goods, they were left with meager profits after settling their loan shark debts.

“Why bother building a factory? Use that money to participate in the loan shark game.”

That was the advice I frequently heard in those days.

The loan shark market, which had evolved into a game of ‘money lending and making money,’ expanded exponentially, and the wealth of the loan sharks ballooned, while the businesses and individuals responsible for national production were forced into increasing impoverishment.

“We need to normalize finance first!”

* * *

The President’s office.

The President addressed Deputy Prime Minister Kim.

“The National Assembly will soon be functioning normally. Now, let’s focus on the economy.”

“Yes, Your Excellency!”

“Let’s draft an economic democratization plan.”

“Economic democratization, you said?”

The term was unfamiliar to Deputy Prime Minister Kim.

“As you know, the inherent weakness of capitalism is the widening gap between the rich and the poor. To prevent this, we need to ensure transparency and equitable distribution in the flow of money.”

“That’s correct.”

“Therefore, we must address the loan shark market first.”

“The loan shark market?”

“The major loan sharks are hoarding all the money in Korea. Loan sharks are like the ‘ggongji’ [a Korean term for someone who skims money off the top in a gambling game] who take money in a gambling den. Individuals or businesses that rely on loan sharks are destined to fail due to the exorbitant interest rates.”

In fact, a survey conducted in October 1969 classified leading conglomerates such as Cheil Jedang [a food company], Cheil Industries [a textile and chemical company], Hankook Fertilizer, Goldstar [now LG Electronics], Hyundai Construction, Korean Air, and Hyosung Corporation as insolvent due to loan shark debts.

“That’s right.”

“Moreover, loan sharking is an underground financial system that is several times larger than banks, yet they don’t pay a single penny in taxes. The wealth generated through production flows exclusively to the loan sharks. Consequently, no matter how diligently businesses or ordinary people work, they cannot escape poverty.”

The Deputy Prime Minister, an economic expert, was well aware of this reality.

However, in a capitalist society, there was no legitimate way to interfere with individuals’ financial activities.

“To channel money into productive economic activities, low-interest funds must be made available to businesses. We need to integrate loan sharking into the formal system.”

“Into the system….”

“We need to register them as financial businesses and collect taxes. We need to recoup the money they’ve amassed through interest rate exploitation with tax levies.”

“That’s absolutely correct, but I doubt anyone will voluntarily register and report, given that the fundamental nature of loan sharking is its clandestine operation.”

“Hmm, you’re right. So, I’ve been considering something.”

The President outlined the proposed loan sharking freeze.

After listening attentively, Deputy Prime Minister Kim blinked and inquired.

“Capital should naturally flow according to interest rates, but if we enforce it forcibly, there will be strong criticism that it’s an anti-market measure.”

“I’m aware of that. However, to transition to a healthy market, we have no choice but to crack down on malicious financial practices in an anti-market manner. If we simply allow money to flow freely, what’s the purpose of having a country?”

“…….”

“It’s undesirable for the people to become slaves of the state, as in a communist country, but it’s equally undesirable for the government to adopt a completely laissez-faire approach.”

“I understand your perspective.”

“What we need to do in conjunction with the loan sharking freeze is the introduction of value-added tax [VAT].”

However, throughout history, dynasties have often fallen due to mismanagement of taxes.

During Chairman Wang’s time, the introduction of VAT also contributed to the downfall of the Park regime.

It had been under discussion since 1973 as a means to modernize the tax system, reduce tax evasion, and secure government revenue. After a three-year pilot program, it was passed by the National Assembly, despite opposition from the opposition party and the business community, and was implemented nationwide.

However, the market descended into chaos when a 10% tax was imposed.

Two months after the implementation of VAT, merchants in Seoul’s Dongdaemun Market [a large wholesale and retail district] and Namdaemun Market [a traditional market] collectively closed their stores, citing ‘poor business due to the value-added tax.’

The Yushin regime [Park Chung-hee’s authoritarian regime] forcibly suppressed the closure of major wholesale markets and reopened them, but it couldn’t control rising prices.

As merchants increased prices by the 10% tax rate, the cost of living for ordinary people rose sharply overall, and real estate prices soared, with apartments in major areas of Seoul rising by 30% in a month, and apartment prices in the Yeouido area [a major financial district] more than tripling in a year.

The surge in apartment prices, the 30-40% increase in prices, and the resulting sluggish consumption led to a political setback in the 1978 general election, in which the ruling Democratic Republican Party trailed the opposition New Democratic Party by 1.1% in the popular vote.