The Five Millennia History of Korea Gold and Silver Commemorative Coins of 1970

By Mark Lovmo….
In the early 1970s, coin enthusiasts around the world were introduced to the first legal tender gold and silver commemorative coins to be issued by a government on the Korean peninsula. The Republic of Korea (South Korea) was responsible for this “first” when it released 12 commemoratives – six gold proofs and six silver proofs. Collectors could purchase the coins individually, they could purchase a six-coin silver set, and they could even buy an all-inclusive 12-coin set–of which only 350 were made. Known as “The Five Millennia History of Korea Commemorative Coins” (대한민국 반만년역사 기념주화), the story of these coins is representative of the times from which they emerged.

It all began with a former Korean diplomat´s trip to Europe in 1969.

As Seoul´s former ambassador to the United States in the Korean War era, and as a Washington, D.C. resident, Yang Yu-chan had key contacts among foreign diplomats, the Washington-based Korean embassy and intelligence staff, and other influential Koreans living in the United States. As you’ll see, the two latter groups would finagle their way into the deal that produced Korea´s first commemorative coins.

It was in his capacity as South Korea´s unofficial ambassador-at-large that Yang Yu-chan made his trip to Europe in the Spring of 1969. There, a friend tipped him off to a rumor that the North Koreans were making plans to introduce a set of gold and silver commemorative coins onto the world numismatic market. Yang dutifully notified the government in Seoul, which at the highest levels quickly set in motion the actions that would allow South Korea to get a set of their own coins onto the market first.

Like with many other decisions he made during his tenure, South Korean President Park Chung-hee paid attention not to the rationality or efficiency of his government being the first to issue these coins, but to the national and, in this case, political efficacy of doing so. Park undoubtedly considered it abhorrent the possibility that foreign buyers of North Korean commemorative coins would start associating the country “Korea” with the North´s version of history and politics, particularly the chubby face of its leader, Kim Il-sung (whose image would undoubtedly be prominent on any North Korean coin set). Park and his government were determined to get their preferred political and historical themes (and Park´s face) on a set of commemorative coins before the North Koreans could manufacture theirs. But to get the jump on their adversaries, the South would need to attend to a few issues.

In the late 1960s, coin-manufacturing capabilities in South Korea were a far cry from those that their Mint, KOMSCO, would possess four decades later. Barely three years old in 1969, the coin mint near Busan simply did not have the capability to produce high-quality gold and silver proofs in quantity. In order to get their commemoratives on the market first, the Seoul government wanted to order the coins from a preeminent foreign mint. However, doing this posed domestic legal complications. Although the gold and silver coins were to be non-circulating commemoratives, they would also be legal tender. According to South Korean law, only the Bank of Korea had the authority to manufacture and issue currency. To overcome this legal hurdle, the Korean government quickly amended its bank law with a series of seven additional articles that stipulated approval, reporting, and oversight procedures that would allow for the overseas minting and sale of the commemoratives.

Soon after the government began this legal push to produce the commemoratives, the South Korean Mint´s design team had its first look at the selected design requirements and specifications. Sometime in August 1969, the government handed the design team a group of black-and-white pastel idea sketches that the designers were to work from and improve. Mint officials did not ask the team to draw up any tentative designs of their own, which was unusual. The idea sketches were rumored to have been sketched by Korean students studying overseas, but no one knew for sure. On top of this, the team was given only one month to modify the design ideas to meet specified requirements before being submitted for approval.

Together with the design team´s resulting rough pencil sketches of the final obverse and reverse designs, the Bank of Korea submitted an approval application to the Ministry of Finance on September 25, 1969. The application detailed the proposed weight, diameter, denomination, and design for each coin.

Soon after, the Ministry of Finance approved the application, but with modifications to some of the designs on October 20th (see table below).

The approval ordered the Bank of Korea to abide by a few other stipulations:

First, the Bank should proceed by eliciting bids from different private mints for the work of manufacturing the coins.

Second, all profits from the sale of the commemoratives would go directly to the Washington-based Korean Cultural & Freedom Foundation (of which ambassador-at-large Yang Yu-chan was the Executive Vice-President) for the purpose of supporting “anti-communism.”

Third, once the terms of a contract with a foreign mint have been drawn up, the Bank should report to the Ministry of Finance on the progress of the coins´ manufacture, and the quantities being minted.

With government approval in place, Bank of Korea Director Suh Jin-soo and the director of the banknote-issuing authority, Yi Myeon-seok, traveled around Europe in November and December of 1969. Their charge was to meet with the heads of reputable private mints that could fulfill the dual roles of both manufacturer and sales authority for the commemoratives. The two top choices were the De La Rue Company, Ltd in Britain, and the Caracas-based Italcambio.

The Koreans had prior experience in dealing with De La Rue when that company printed an entire series of banknotes for the Bank of Korea after their government´s third currency reform in 1962.   However, De La Rue was not specialized in minting gold and silver proofs in quantity, nor were they associated with a sales network. Italcambio, on the other hand, had a record of performance as a contract mint on over 40 different countries´ commemorative proof sets and they possessed an extensive sales network. At the end of their discussions with Italcambio, officials from the Bank of Korea were still undecided as to whether they should enter into a tentative agreement with the company or keep looking. It was then that the people at Italcambio dropped the ultimate hint: while the Bank of Korea sat on its hands contemplating the deal, nothing necessarily precluded Italcambio from finalizing a contract to mint the North Korean´s commemorative coin set. Considering the imperative from President Park, the Korean representatives conceded to Italcambio´s less-than-subtle incentive.

With Italcambio lined up for the minting contract, President Park gave his approval to the deal. So on January 29, 1970, the Ministry of Finance issued an order for the overseas minting and sale of Korea´s first gold and silver commemorative coins, with an expected issue date on the South Korean holiday Liberation Day: August 15th of that year. On March 19, 1970 the Monetary Administration Committee gave its approval to the previous modifications of the coins, and soon the engraving process of the coin designs commenced at the Korean Mint. The Committee also offered its own opinion on the rationale behind the issuing of the commemorative coins, stating that the coins would “Enhance national prestige, lure tourism to Korea, [and] advance an anti-communist agenda”.

All while beating the North Koreans to the punch.

The Minting Contract

On April 23, 1970 a Korean delegation signed the contract with Italcambio in Italy. The meeting took place at the Korean embassy in Rome and was attended by Yi Myeon-seok (in place of the Director of the Bank of Korea, Suh Jin-soo); Mario Pizzorni, the President and founder of Italcambio; Yu Jae-heung, the Korean ambassador to Italy; and Pak Bo-hee, head of the Korean Cultural & Freedom Foundation (KCFF). The contract that these men entered into that day stipulated an unusual reciprocal scheme between the Bank of Korea, the KCFF, and Italcambio.

The parties agreed that the Bank of Korea was to be the official contracting authority with Italcambio. However, the KCFF was to play the role of the Bank of Korea´s proxy as the “distribution authority,” while Italcambio would fulfill its dual role as the manufacturer and as the “exclusive world agent” for the sale of the commemorative coins. The roles and responsibilities of each party are detailed in the diagram on the right.

The contract with Italcambio further stipulated that:

1)   Twenty percent of all profits from the sales of these commemorative coins were to go directly from Italcambio to the KCFF (and not to the Bank of Korea).

2)   In its capacity as "distribution authority," the KCFF would be responsible for overseeing the manufacture of the coining dies, the handling of the coins, and quality control.

3)   The Bank of Korea would not issue other gold and silver coins during the contract period (at the request of Italcambio).

4)   Italcambio, for its part, would not enter into a minting contract with the North Koreans.

5)   The contract to mint and sell the coins would last four years from the date of signing (April 23, 1970).

The ostensible reasoning behind this three-party arrangement was because the Koreans wanted to sell the gold and silver coins overseas to non-Koreans in an effort to promote South Korea (using the external entities of the KCFF in Washington, and Italcambio with its branches worldwide). Also, selling the coins outside of Korea through Italcambio´s sales network would circumvent some legal issues involving their importation and sale in Korea. Although a full explanation of the KCFF´s involvement (and the performance of its supposed duties) in this sales scheme doesn’t exist in the available literature on this subject, an equally important consideration was the effort to fund the KCFF; a U.S. government investigation uncovered documents that the KCFF called this the “Coin Project.”  Pak Bo-hee and Yang Yu-chan had obviously wrangled their 20-percent cut from the contract after Yang was the first to warn the Korean president of the supposed impending release of the North Korean commemorative coins. The veracity of Yang´s claim about the North Korean coins has never been proven.Permission for the KCFF to skim profits from the coin contract came from the Korean government, and Korean Central Intelligence Agency (KCIA) Director Kim Kye-won (who was later one of the only four witnesses to President Park Chung-hee´s assassination in October 1979).

The Korean Cultural & Freedom Foundation in the 1970s

The KCFF was a Washington, D.C.-based tax-exempt organization established by leading figures in the Unification Church under the pretext of promoting Korean-American relations. In addition to the 20% royalty paid directly to the KCFF from the sales of the commemorative coins, the foundation received a much greater amount of funding from generous American donors who supported its cause of “anti-communism,” all the while its connection to the Unification Church was intentionally obscured. In any event, the KCFF´s true raison d’etre was revealed by a U.S. House of Representatives committee, which investigated the KCFF´s role as a funding source for the Unification Church and its efforts in the Korean influence-peddling scandal that erupted in Washington in the mid-1970s. The scandal is commonly referred to as “Koreagate.” So, in addition to enhancing South Korea´s prestige, luring tourists to Korea, and besting the North Koreans, the sale of South Korea´s first commemorative gold and silver coins helped to bribe American congressmen and business leaders for the benefit of both the Park Chung-hee regime and the Unification Church.

Manufacturing the Coins

Italcambio subcontracted the majority of the manufacturing of the coins out to the Gori & Zucchi Mint, based in Arezzo, Italy. A smaller amount were minted at the Staatliche Münze(State Mint) in Karlsruhe, Germany, and an even smaller number of gold proofs were minted by the Monnaie de Paris (Paris Mint). As Germany and France were included in the list of 23 countries where Italcambio planned to sell the commemoratives, the minting of the coins in Germany and France was probably a way to get around importation restrictions in those countries. In their case, the Gori &Zucchi Mint provided the German and French mints with the coin blanks and working dies with which the coins were made. These coins were then sold locally. However, enthusiasts of the rarer Paris Mint gold coins have noticed that they have a deeper, “redder” gold color than the Gori & Zucchi Mint strikes, implying that the Paris Mint may have used different coin blanks. As for quality control, the Koreans had wanted to hire third-party inspectors from Germany to oversee Gori & Zucchi´s operations, but after encountering difficulties with this arrangement, the Koreans simply resorted to local oversight by Gori & Zucchi.

The Bank of Korea had planned the number of pieces to be struck for each denomination, but the actual mintages were to be based on the popularity of the coins and coin sets during the four-year contract and sales period (1970-1974). Sales must have been lower than had been expected, for, as it turned out, the actual number of coins actually made fell far short of what was planned (see table).

In May 1970, the Bank of Korea announced the issuance of the gold and silver commemoratives to 10 major central banks around the world. All of the gold coins were each minted in 90% gold and 10% copper (Au 900/1000, Cu 100/1000), and each of the silver coins were minted in 100% Silver (Ag 1000/1000). Upon release, each six-coin silver set sold for $52 USD in the USA in 1971, and, two years later, for $63 USD. Italcambio sold the coins based on weekly precious-metals market prices, and advertised them in newspapers and numismatic journals. Of the 350 12-coin sets, only 30 were imported to Korea, where 10 of those 30 ended up in the hands of the Presidential Secretary´s staff. The total amount of gold and silver coins released totaled ₩995,000,000 Won, the contemporary equivalent of $3,902,000 USD.

As the end of the contract drew near in 1974, Italcambio suggested to the Korean government that they might want to consider producing another series of commemoratives. Italcambio envisioned a larger-scale minting contract, but for gold and silver coins of a smaller weight and diameter. The Korean government declined the offer, and the contract officially came to a close on April 23, 1974. The Koreans later learned that the Gori & Zucchi Mint had made an additional 300 of the gold commemorative pieces after the end of the contract period, without the Bank of Korea´s knowledge or permission. After having learned this, the Bank ordered the Italians to collect and secure all of the coining dies and bronze plates for the reducing lathes in November 1975. Over two years later, in January 1978, the Bank of Korea´s currency-issuing director traveled to the Italian mint where he made a final tally of the number of coins from the counters on the machine presses, gathered up all of the dies and bronze plates, and disposed of them.

Collecting the First South Korean Commemoratives

In the years since the introduction of these commemorative coins, the popularity and prices for them have steadily increased. As they were initially not meant to be sold in Korea, the rarity of these coins in Korea makes them especially prized among collectors there. The gold coins manufactured by the Paris Mint are the rarest of all South Korean coins. In 2011, the King Sejong the Great [KM#19] gold coin sold for ₩12,000,000 KRW, and the Silla Dynasty gold crown [KM#18] gold coin sold for ₩7,200,00 KRW. Around the same time, the six-coin silver sets commonly sold for about $1,500 USD at online auction sites.
조선, 한국