As disastrous in its effects on Korean economy as the division of Korea’s people and resources by the 38° North parallel, was the evacuation of all Japanese personnel, except 500 retained in North Korea, after VJ-Day. The 700,000 Japanese formerly resident in Korea dominated all elements of the economy and supplied management and technical personnel even to the mechanic class. Koreans were denied opportunities or positions of consequence in all phases of political and economic life. It is no reflection on the individuals concerned to note that a former Korean stationmaster at Pusan is now head of the railways, or that a vocational school graduate is in responsible charge of a large hydroelectric plant not far from Seoul. It is however, an indication of an almost fatal deficiency in South Korean economy. The ultimate solution is not readily apparent. _Disinvestment_ The process of disinvestment probably began in South Korea during the late thirties when the Japanese decided to put all new capital into war production and permit nonwar facilities to depreciate. Capital goods provided by the Japanese for maintenance and development in South Korea went with few exceptions to war plants such as the submarine shop at Pusan, and to the strategic transport services linking Japan with the Manchuria-North Korea industrial complex. This meant that facilities such as the north-south railroad from Pusan to Antung on the Manchurian border received the main portion of construction materials available. Other industrial establishments in South Korea were converted to war production or allowed to deteriorate. The supply of fertilizer, essential to rice culture in the exhausted paddies of South Korea, was drastically reduced in the early forties as a result of the conversion of North Korean nitrogen fixation plants to the manufacture of explosives. Exploitation of South Korea’s meager forest resources resulted in severe erosion and the destruction of crops and utilities through flooding The Japanese also depleted Korean stock-piles and withdrew skilled labor for Army service, or for the mines and factories of Manchuria and the Japanese islands. During two years of military government, the process of disinvestment has continued.