Gold-collecting Campaign

In South Korea, the gold-collecting campaign was a national sacrificial movement in early 1998 to repay its debt to the International Monetary Fund. At the time, South Korea had about $304 billion in foreign-exchange debt. The campaign, involving about 3.51 million people nationwide, collected about 227 tons of gold worth about $2.13 billion.

Background

On July 2, 1997, Thailand changed its 13-year-old fixed exchange-rate system. As the exchange rate changed, the price of Thai baht in the foreign-exchange market fell. This was a cause of the East Asian financial crisis. On May 21 of that year, the IMF was asked to provide liquidity-adjustment funds. At the time, the real cause of the foreign-exchange-liquidity problem was controversial. The domestic foreign-exchange market lacked dollars, the South Korean won exchange rate increased, and some financial institutions were unable to repay their foreign debts. Foreign borrowing by financial institutions was blocked, making it difficult to repay a short-term external debt of $30 billion and a long-term external debt of $45 billion.
The Kim Dae-jung government persuaded the South Korean people to participate in the Gold-collecting campaign to overcome the nation's debt to the International Monetary Fund. The campaign was reminiscent of the previous " Repay debt movement" or "Korean production movement" in 1907. A "one-dollar collection campaign" received little attention. The Korean Broadcasting System proposed a "gold-gathering movement" beginning on January 6, 1998, which received nationwide attention.

Campaign

The nationwide gold-collecting campaign was announced on December 25, 1997, when KBS1 first reported the proposal. On January 5, 1998, KBS1 began the campaign with the Housing Bank. The campaign was developed by a number of media organizations following the KBS report. Gold was received by six banks: Housing Bank, Nonghyup, Kookmin Bank, Korea Exchange Bank, Saemaeul Bank, and Industrial Bank. The campaign had two facets: KBS's "love of nation" and the MBC TV and civic-organization "foreign-debt repayment".

The campaign was conducted from January 5 to April 30, 1998. On January 5, 1998, of gold was received in 44,748 consignments. On January 5 the number of participants exceeded 500,000, doubling (to one million) by January 15. The first KBS campaign ended on January 31, with 1,669,555 participants, and the second campaign was held from February 5 to February 21. A total of 314,515 people participated in the second campaign, contributing . The foreign-debt-repayment campaign led by MBC and consumer and civic groups ran from January 12 to March 14. It had 884,000 participants, and collected .

The gold-collecting campaign was most active in January, with participation slowing in February. The Ministry of Commerce, Industry and Energy estimated the total number of participants at 3.51 million, with 30 percent of the gold collected during the campaign's first 10 days. Participation continued during February, and MBC and the National Agricultural Cooperative Federation led their campaign until March 14. Although the foreign-debt-repayment was extended until April 30, participation decreased significantly after March 14.

Campaign participants were expected to receive a confirmation letter from a professional appraiser for 24-karat gold. After export, its dollar value was determined at the exchange rate and the international gold price and the value later returned in won.

About 225 tons were raised: 165 t in January 1998, 53 t in February, 5 t in March, and 0.8 t in April. An equivalent of $2.17 billion was collected, increasing the amount of gold held by the Bank of Korea by 10 to 20 times.

The press disseminated news about the gold-collecting campaign to all social groups, encouraging them to participate. After March, news reports indicated that the campaign hoped to overcome the foreign-exchange crisis and encouraged conformity. The media reported on the participation of companies such as Samsung and Daewoo and individuals such as Lee Jong-bum, President Kim Dae-jung and Lee Kun-hee. They also encouraged participation in the campaign by the general public; Chung Sung-hwan donated the equivalent of ₩500,000.

After March 1998, when the campaign was completed, its performance was reported. The report noted the fact that country could overcome its economic crisis primarily by collecting gold. The campaign emphasized voluntarism and patriotism, and was developed for convenient participation.

Results

At the end of February 1998 five financial institutions (including the Housing Bank and Kookmin Bank) stopped collecting gold, and the NACF ceased its involvement at the end of April. The amount of gold totaled about $1.82 billion in foreign currency. An average of per household was collected. Twenty-one thousand people contributed of gold, and 1,735 people consigned in the form of government bonds. The Housing Bank ( KBS-Daewoo) collected the most gold (364t), followed by Nonghyup ( MBC-Samsung, 48.23t), Kookmin Bank and Saemaeul Bank ( SBS- LG, 33.68t), Korea Exchange Bank (4.25t) and Industrial Bank of Korea (1.98t). The campaign repaid the $19.5 billion in IMF-backed debt in August 2001, three years ahead of schedule.

Evaluation

The gold-collecting campaign is regarded as a driving force for a people to overcome a foreign-exchange crisis. According to a 2017 survey conducted by the Korea Development Institute to assess the impact of the 1997 financial crisis, 54.4 percent of respondents cited national unity as the driving force behind recovery; 42.4 percent noted the IMF crisis, and 15.2 percent cited restructuring and reform efforts.

Contemporary news articles emphasized voluntary participation to overcome a national crisis and shame associated with not self-sacrificing for the country.{{Cite journal, last=Cheon, first=Hyejung, date=2017-10-31, title=Imf 외환위기 기억의 사회적 구성: 조선일보의 '금 모으기 운동' 기사를 중심으로 (Social Memory of IMF's Bailout in 1997: Recollection of 'Gold-Collection Campaign'), language=en, location=Rochester, NY, ssrn=3135100 Emphasizing the patriotism of the Korean people, it blurred the real reasons for the economic crisis with emotional appeals. After the campaign ended, restructuring became an issue. The collective memory of the campaign was used to justify chaebols, labor flexibility, over-consumption, and nostalgia for the Park Chung-hee regime; critical reflection on the event was ignored.

Gallery

File:금 모으기 운동 3.jpg, alt=Man writing, surrounded by two other men, The gold-collecting campaign
File:금 모으기 운동 2.jpg, alt=Two nuns and an older man at a bank-like window, Korean citizens turning in gold
File:금 모으기 운동.jpg, alt=Video of many photographers, Video of the campaign: Gold-collecting campaign in South Korea to overcome the debt to the IMF.
File:금 모으기 운동 4.jpg, alt=People sitting around a table, surrounded by reporters and photographers, Repayment to IMF, two years early (English Translation about the text on the screen: "Dedicated participation of the people who impressed the world")

References

1998 in South Korea
Economic history of South Korea