In 1961, Park (1999) states that the foregoing policies were replaced by American initiatives stressing South Korean economic development, social reforms, and long-range U.S. public assistance. During the administration of President John F. Kennedy, and in conjunction with the 1961 establishment of a military junta in South Korea, the opportunity to restructure American policy emerged. This change was further stimulated by political, economic and personnel changes in South Korea in the late 1950s. The key change was the substitution of economic development aid for direct grants, a process that began in the late 1950s under Dwight D. Eisenhower and which continued under Presidents Kennedy and Lyndon B. Johnson (Park, 1999).
Early in the post-Korean War period, the Eisenhower Administration emphasized domestic stability by encouraging a stable economy and reducing inflation. In accord with the prevailing economic thinking behind foreign aid in the 1950s, the U.S. opposed South Korean currency expansion, which was considered the be the cornerstone of stability. After the inauguration of the Republic of Korea (ROK) in 1948, the U.S. worried about a possible challenge to the regime of Sigmund Rhee from external forces as well as domestic economic instability (Park, 1999). With the establishment under Kennedy of U