Military payment certificates, or MPC, were a form of currency used to pay U.S. military personnel in certain foreign countries. They were used in one area or another from a few months after the end of World War II until a few months after the end of U.S. participation in the Vietnam War – from 1946 until 1973. MPC utilized layers of line lithography to create colorful banknotes that could be produced cheaply. Fifteen series of MPCs 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.
History of MPCs
MPCs evolved from Allied Military Currency as a response to the large amounts of US Dollars circulated by American servicemen in post-World War II Europe. 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 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, the U.S. military devised the MPC program. MPCs were 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. Unlike US currency, these certificates were issued under the authority of the Department of War (later Department of Defense) rather than the Department of the Treasury. Consequently they do not bear the US Treasury seal found on virtually every example of US currency. 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). Because they were and are not obligations of the US Treasury, they are (unlike all US currency) no longer redeemable. 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 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. A “conversion day” or “C-day” was the soldiers’ only chance to trade in their old MPC for the new issue, after which the old MPC became worthless.
C-days in Vietnam were always classified, never pre-announced. On a C-day, soldiers would be restricted to base, preventing them 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 MPC that lost all value after the C-day was completed. 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 soldier could have a friend in the United States mail him a standard $100 bill, take if off-base and convert it to $180 in MPC, then change the MPC to South Vietnamese piastres at more than the legal rate. The soldier could then spend freely, paying in low-cost local currency, and end the day with a sizable profit. If the $100 bill found its way into the hands of a high-level Vietnamese government official, it could be taken out of the country and deposited in a bank account abroad, where U.S. currency could be more safely hoarded, and/or transferred into a North Vietnamese European exchange account.
Thirteen series of MPC were issued between 1946 and 1973, with varied designs often compared to Monopoly money due to their colors. After the official end of U.S. participation in the Vietnam War in early 1973, the only place where MPC remained in use was South Korea. In autumn of 1973, a surprise C-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 the Eagle Cash stored value card system, used by U.S. armed forces in Bosnia, Kosovo, Djibouti, Iraq, and Afghanistan, as well as other non-combat zones on a limited basis.
MPC in popular culture
A Korean War C-day is a key plot element of “Change Day,” an episode from the sixth season of the television series M*A*S*H. Major Charles Emerson Winchester III schemes to purchase soon-to-be-worthless MPC from local farmers and merchants for cash at 10% of face value, then trade it in and pocket a 900% profit.
In the Vietnam War novel The Short-Timers by Gustav Hasford, Marine Sergeant James T. “Joker” Davis encounters an officer who habitually plays Monopoly with one of his subordinates. The two use MPC in place of the game’s standard play money and divide all listed rents and prices by 10 (e.g. paying $35 rent instead of $350 for landing on Oriental Avenue with a hotel).
- ^Military Payment Certificate (series 691 & 701)
- Fred Schwan (1997) Military Payment Certificates. ISBN 0-931960-54-1
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.