/specialCollection/BerlinWall/1961-Summer/1961-07-12c.pdf

Read from the scan by GLM-OCR; expect the odd misread word.

## SECRET

## Appendix A

The success of the Korean program of direct controls, once it was instituted, may make it easier to stabilize the price level if another mobilization becomes necessary. Because shortages did not arise to any significant extent and prices did not climb much above their levels of late 1950, consumers did not profit from their buying sprees. They may be less likely to swarm into hard-goods dealers in the event of a repetition of such a situation.

The relative ease of administering direct controls in 1951-53 owed much to the tightness of fiscal and monetary policy. Aggregate demand was kept in check by higher taxes and interest rates. The painlessness of controls then may make them more acceptable now. On the other hand, some groups would point to the fact that few prices were pressing against their ceilings after mid-1951, and would infer from this evidence that direct controls were unnecessary. They would argue that inflationary pressures had spent themselves by the time controls were imposed. The alternative argument is that the mere existence of price ceilings prevented speculative purchasing and that controls appeared unnecessary only because they were present.

The chronology of policy actions which follows gives the date and substance of each major stabilization step taken during the Korean period. It covers the monetary, fiscal and direct-control area separately.