About Paper Money

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Military payment certificates

Military payment certificates (MPCs) were used from 1946 to 1973. Prior to that time U.S. military personnel stationed overseas were paid in Allied military currency, produced by the major Allied countries, or in the currency of the country in which they were stationed.

The need for this system arose because of the necessity to transact business with the locals without risking the loss of large amounts of U.S. currency, which could be used anywhere in the world.

Another reason for the creation of Allied military currency was the possibility that the enemy might flood an occupied territory's economy with currency to induce high inflation, or ordering local banks to burn their money when Allied attack was imminent. Allied military currency was used in countries being liberated from the Axis powers and the notes were denominated in the liberated country's currency. The local government was required to redeem it later.

Personnel were allowed to convert that foreign currency into U.S. currency as individual needs or wishes required. However, it wasn't long before the services accumulated foreign currencies far in excess of pay requirements and the MPC system was developed to protect the services from those surpluses of foreign currencies.

After the MPC system was developed in 1946, all U.S. servicemen, U.S. government civilian employees and U.S. citizens employed by U.S. firms abroad doing business under government contracts were paid in MPCs and were prohibited from holding U.S. currency of any type.

U.S. citizens in the employ of a company of the host country were paid in the local currency. The local population was prohibited from holding any MPCs, which could be used only at U.S. facilities such as post exchanges or ship's stores. The local population was thus effectively restrained from purchasing items at the discounted PX prices, a form of black marketeering control.

If a U.S. serviceman or citizen wanted to buy something in the local civilian market, he was required to convert his MPCs into the local currency. Regulations restricted both the amount and frequency of MPC conversions.

Many of the servicemen supplemented their supply of convertible currency by doing a brisk business in cigarettes, silk or nylon stockings and candy. It was inevitable that many of the MPCs would then be found in the local economy in spite of strict controls. The usual route was through the black market established both by servicemen and by the local population. Servicemen sold items they had purchased at government-operated stores while local businessmen sold watches and jewelry to servicemen who were returning stateside.

When it was determined that an excessive amount of MPCs were in the local economy via the black market, the old series would be withdrawn and a new series issued. The conversion days (popularly known as "C-days") were unannounced and strictly controlled. All personnel would be restricted to station and only designated persons were allowed to make the exchange of new for old notes. After C-day the old series was invalid and worthless.

The only supply of MPCs available to collectors today are those MPCs that were inadvertently unredeemed by authorized holders or those illegally held by black marketers who were unable to convert their holdings.

In the 28-year history of military payment certificates 13 series were used in 21 foreign places in 17 countries. Denominations ranged from five cents to $20. The $20 MPC was issued only in Series 661, 681 and 692.

The first seven series were printed by private contractors in the United States and overprinted by the Bureau of Engraving and Printing. The overprint consisted of adding the series, serial and control numbers to the pre-printed notes. The last six series were completely printed and separated by the BEP.

The first issue, series 461, was released on Sept. 16, 1946. It was followed in order by series 471, 472, 481, 521, 541, 591, 611, 641, 651, 661, 681 and 692. Series 692, was released on Oct. 7, 1970, and was withdrawn from use in South Vietnam on March 15, 1973. Series 651 was released in South Korea on Nov. 19, 1973, ending a short but interesting and colorful era in another currency system.