Military Payment Certificate
Encyclopedia
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
until a few months after the end of U.S. participation in the Vietnam War
Vietnam War
The Vietnam War was a Cold War-era military conflict that occurred in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. This war followed the First Indochina War and was fought between North Vietnam, supported by its communist allies, and the government of...
-- from 1946 until 1973. MPC utilized layers of line lithography
Lithography
Lithography is a method for printing using a stone or a metal plate with a completely smooth surface...
to create colorful banknotes that could be produced cheaply. Fifteen series of MPC were created. However, only 13 series were issued. The remaining two were largely destroyed, although some examples remain. Among the 13 released series a total of 94 notes are recognized. With a few notable exceptions most of them, particularly in circulated condition, can be purchased at low cost.
History of MPC
Military Payment Certificates (MPC) evolved from Allied Military CurrencyAllied Military Currency
Allied Military Currency was a form of currency issued by the Allied powers during World War II, to be issued to troops entering liberated or newly occupied countries, as a form of currency control.-Background:...
as a response to the large amounts of US Dollars
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
circulated by American servicemen in post-World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
. The local citizens might not trust local currencies, as the future of their governments was unclear. Preferring a stable currency like U.S. dollars, local civilians often accepted payment in dollars for less than the accepted conversion rates. Dollars became more favorable to hold, inflating
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
the local currencies and thwarting plans to stabilize local economies. Contributing to this problem was the fact that troops were being paid in dollars, which they could convert in unlimited amounts to the local currency with merchants at the floating (black market) conversion rate, which was much more favorable to the GIs than the government fixed conversion rate. From this conversion rate imbalance, a black market developed where the servicemen could profit from the more favorable exchange rate.
To reduce profiteering from currency arbitrage
Arbitrage
In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices...
, the U.S. military devised the MPC program. MPCs was paper money denominated in amounts of 5 cents, 10 cents, 25 cents, 50 cents, 1 dollar, 5 dollars, 10 dollars, and starting in 1968 20 dollars. MPCs were fully convertible to U.S. dollars upon leaving a designated MPC zone, and convertible to local currencies when going on leave (but not vice versa). It was illegal for unauthorized personnel to possess MPC, and that policy, in theory, eliminated U.S. dollars from local economies. Although actual greenbacks were not circulating, many local merchants accepted MPC on par with US dollars, since they could use them on the black market. This was especially evident during the Vietnam War
Vietnam War
The Vietnam War was a Cold War-era military conflict that occurred in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. This war followed the First Indochina War and was fought between North Vietnam, supported by its communist allies, and the government of...
when the MPC program was at its zenith. To prevent MPC from being used as a primary currency in the host country and destroying the local currency value and economy, MPC banknote styles were frequently changed to deter black marketers and reduce hoarding, as the old style would become worthless. Many veterans can recount a conversion day or C-Day.
C-days in Vietnam were always classified, never pre-announced. On C-day, soldiers would be restricted to base, preventing GIs from helping Vietnamese civilians--especially local bars, brothels, bar girls and other black market people--from converting old MPC to the newer version. Since Vietnamese were not allowed to convert the currency, they frequently lost savings by holding old, worthless MPC. People angry over their MPC loss would sometimes attack the nearest U.S. base the next night in retaliation.
To illustrate the Vietnam War MPC cycle, in mid-1970, a GI could have a friend in the United States mail a $100 bill in standard U.S. currency, take it "downtown" and convert it to $180 MPC, then change the MPC to South Vietnamese piastres at double the legal rate. The soldier could then have a day shopping, bar hopping, or otherwise spending freely, paying in low-cost local currency, and finishing the day with a hefty profit.
To continue the black market cycle, that $100 greenback would find its way to high-level Vietnamese government officials, especially the corrupt ones, who could travel out of country, where the U.S. currency could be deposited safely (Bangkok, Taipei, or Hong Kong). Rumors also suggested that this hard currency (US dollars), would find its way to North Vietnamese European exchange accounts.
Thirteen series of MPC were issued between 1946 and 1973, with varied designs often compared to Monopoly
Monopoly (game)
Marvin Gardens, the leading yellow property on the board shown, is actually a misspelling of the original location name, Marven Gardens. The misspelling was said to be introduced by Charles Todd and passed on when his home-made Monopoly board was copied by Charles Darrow and thence to Parker...
money due to their colors. After the official end of U.S. participation in the Vietnam War
Vietnam War
The Vietnam War was a Cold War-era military conflict that occurred in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. This war followed the First Indochina War and was fought between North Vietnam, supported by its communist allies, and the government of...
in early 1973, the only place where MPC remained in use was South Korea. In autumn of 1973, a surprise conversion day was held there, retiring MPC and substituting greenbacks. MPC was never again issued, and the concept lay dormant until the late 1990s, when it was revived somewhat in the form of a Stored Value Card system, presently used by U.S. armed forces in Iraq.
External links
- Vietnam era MPC
- South Viet Nam: Soul Alley
- MPC Central
- http://militarypaycertificate.blogspot.com/