Dreaming of a Laissez-Faire Korea: Protestant ‘Self-Reconstruction’ Capitalists, 1910s-1990s by Brian Robert Gold A thesis submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in History Department of History and Classics University of Alberta © Brian Robert Gold, 2014 ii Abstract This dissertation traces the evolution, survival and re-emergence of a Korean ‘self- reconstruction’ capitalism from the 1910s to the 1990s. Self-reconstruction capitalist thought and practice kept alive in the ‘margins’ the only tradition of classical economic liberalism in modern Korean history, one inextricably mixed with Korean and American Protestant ethical thinking. It provided a laissez-faire capitalist model that stood in contrast to the developmental state-led capitalism used first by the Japanese colonial government and then the South Korean state to enact the ‘economic miracle.’ Because of its Protestant background it overlapped with but differed significantly from the neoliberalism that has prevailed in South Korea since the 1997 Asian Crisis. Following a laissez-faire capitalist model, self-reconstruction capitalists consciously diverged from developmental state business and social practices. These divergences included seeking profitability, business focus, independence from government loans, and allowing their offspring to marry outside the elite. In contrast the developmental state encouraged maximizing revenue, business diversification, reliance on government-backed loans, and, socially, intermarriage within the business and political elite. Self-reconstruction capitalists were the first Korean capitalists to implement employee stock sharing plans, and corporate philanthropy. They were also the first to advocate export-led growth, and the value of societal ‘trust’ as essential to economic development. Using archived materials and interviews with their peers conducted in both Korea and the U.S., Chapters Two and Three covers the lives and careers of the two first generation self- reconstruction capitalists. Chapter Two focuses on Ilhan New, the Korean-American founder of iii Yuhan Corporation. New was one of the first major capitalists in Korean history, and the protégé of the early major nationalist Sŏ Chae-p’il. Chapter Three focuses on Chŏn T’aek-bo, the ‘forgotten father’ of South Korean export-led growth who won the first national awards for top exporter in the 1960s five years in a row. Despite this, as an impediment to the developmental state, he was the first capitalist divested of his business empire by military dictator Park Chung Hee. Using archived materials and interviews with their peers and children conducted in both Korea and the U.S., Chapter Four traces the ties and interactions among a sub-section of the business elite in South Korea through the 1960s to the early 1980s. This sub-section was the second and third generation of self-reconstruction capitalists, who founded and sustained some of the largest and most influential business groups in the country, such as Daesong, Byucksan, and HanGlas. It describes the differing fates of their enterprises in the face of the 1997 Asian Economic Crisis as tied to their pursuit of self-reconstruction capitalist business practices. This chapter also examines the important role played by the Korean Christian Businessmen’s Committee (KCBMC), which reached its zenith of influence in the 1970s. The KCBMC and its American parent organization argued that laissez-faire Protestant businessmen were the most ethical humans alive, and therefore the ‘natural’ leaders of Korea. Joining the KCBMC in the 1970s as a rising ‘star’ in the Hyundai group, Lee Myung-bak took this lesson to heart. As South Korean President from 2008 to 2013, Lee pursued the ‘dream’ of a laissez-faire, classical liberal Korean economy. Although his attempt ran up against the realities of a now neoliberalist South Korea, Lee’s administration provides a fitting epilogue for this study, by pointing to the re-emergence of self-reconstruction capitalism, an alternative strain iv of economic thinking and business practice that was little-noticed during the decades of developmentalist supremacy, yet persisted from the 1910s into the twenty-first century. v Preface This thesis is an original work by Brian Robert Gold. No part of this thesis has been previously published. The research project, of which this thesis is a part, received research ethics approval from the University of Alberta Research Ethics Board, Ethics Board of Record: Arts Science Law, Project Name “Protestantism and the first Korean conglomerate founders,” No. 1659, 05/12/2007. vi Dedication To Dorie, Emma, and Ava – Three remarkable Protestant women. vii Acknowledgments I would like to thank my supervisory committee: Dr. Ryan Dunch, Dr. Donald Baker (University of British Columbia), and Dr. Jennifer Jay. I am grateful for funding from the Korea Foundation, the Province of Alberta, and the University of Alberta. I thank all of my interviewees and correspondents for providing me with invaluable insight into the times and persons that follow in this account, and particularly the following: Jason Choi, Choi Yong- chung, Chŏn T’aek-bu, Jeanine Dean, Kim Chang Sung, Kim Gyurng-Rae, Kim Kyo-sik, Kong Chae-uk, George Ogle, and Harold Witmer. Two peerless historians of Korean Christianity stand out both in terms of their scholarship and personal help while in Korea, namely Kang In-chŏl, and Park Chung-shin. Sara Dorow, Lydia Dugbazah, Aya Fujiwara, and Del Robinson provided special help for particular challenges in the process for which I am grateful. It has been my privilege to have a network of family, friends, and professional colleagues in Korea going back three decades. Each of the following provided more hospitality, help, and moral/physical support within and without Korea directly in aid of this work than I could ever describe. I wish to thank my longest term friend from Korea, Diane Lee, my sister-in-law Lee Min Ah and her family, my brother Stephen Gold, fellow Monitor Company Seoul alumni Eunhee Kim and Jaewook Yoo, and the entire Choi family of Kangnam, particularly Jason Choi, Sangbin Choi, and Heyryung Choi. I am grateful that the late Dr. Fritz Lehmann and Dr. Edward Wagner both introduced me to the fascinations of Korean history. Dr. Sarah Hammond was a brilliant young scholar and fellow enthusiast of all things CBMC related whose early passing was particularly tragic. I trust that in some way she can still appreciate my reciprocation of her thanks to me in her dissertation. viii Finally, again my thanks and love for the tireless patience of my immediate family, including my wife Dorie and my daughters Emma and Ava. In these three the words ‘bears all things, believes all things, hopes all things, endures all things’ come to life. Table of Contents Abstract ii Preface v Dedication vi Acknowledgments vii Chapter One: Introduction & Prologue - The Dream of a Liberal Protestant Nation 1 Chapter Two: Ilhan New - The Model Self-Reconstruction Nationalist & Capitalist 39 Chapter Three: Chŏn T’aek-bo - Forgotten Private Sector ‘Father’ of South Korean Export-Led Growth 135 Chapter Four: The Post-War Protestant Capitalist Network and its Leaders 207 Chapter Five: Conclusion – The Dream Deferred 312 Bibliography 327 List of Tables & Figures Table 1: Notable Leaders-Korean Christian Businessmen’s Committee…,‘67-’82 213 Table 2: …Ranking…of Byucksan, Daesung, HanGlas, and Chonusa, Late 1950s – 2007 269 Figure 1: 1967 – 1982 KCBMC Business Leaders Capitalist ‘Leanings’ 209 1 Chapter One: Introduction & Prologue - The Dream of a Liberal Protestant Nation "Is there any point to which you would wish to draw my attention?" "To the curious incident of the dog in the night-time." "The dog did nothing in the night-time." "That was the curious incident," remarked Sherlock Holmes. - Arthur Conan Doyle, The Silver Blaze, 1892 Korea is not modern like Japan, she is older than China…The new Korea will be a Christian Korea and that within a comparatively short time…The Far East is to have its innings. The time has come. For masses of humanity she leads the world, and when the president of all the earth is to be elected by popular vote, he will be a man of the yellow skin. She can do anything; once teach her and she can do all that we can do cheaper and easier. 1 - James Scarth Gale, Korea in Transition, 1909 Due in part to a slowly encroaching imperialism, in the late 19th through early 20th century Koreans in unprecedented numbers were exposed to Western ideas, conveyed either through a Chinese or Japanese intermediary, or directly from Western Protestant missionaries. One of the most important of the latter was James Scarth Gale, whose elementary school textbooks were very likely read by Ilhan New (1895-1971), the first major Protestant Korean businessman in Korean history, and the first ‘self-reconstruction capitalist’ analyzed in this study. In the above quotation Gale describes the paradox of Korea. Not as ‘modern’ as the Japan about to colonize it and not even as up-to date as China, yet the one Asian nation to soon ‘transition’ to a ‘Christian nation’. And to Gale, and the Protestant capitalists of this study, there was no quicker route to the most modern Korea possible than through ‘Christianity’, which to both meant Protestantism. Led by the example of Korea, the feminine ‘Far East’ will enter 1 James Scarth Gale, Korea in Transition (N.Y.: Presbyterian Church in the U.S.A., 1909), 131, 229, 248-249. 2 modernity in its fullest in a globalized world unified under liberal democracy and a ‘yellow- skinned’ male President. As will be seen in Gale’s textbooks not only will the ‘modern Protestant’ Korea be globally linked under liberal democracy, but it will be also part of a global, classical liberal free market economy, with the comparative advantage of “cheaper and easier.” This was the economic order that all of the first Korean nationalists, most of whom were Protestant, initially expected for Korea as an inevitable part of a single global process of modernization.