conversion day

During World War II, and through the Vietnam War, the United States government was facing a situation with the US dollar that was different from prior years. It’s not something we really think about much, but it had to do with the fact that the countries the US Military was in were unsure of how their money was going to play out if they were one of the countries that fell. The dollar was stable, so they were happy to take payment in the US dollar over their own currency. In fact, the local civilians often accepted payment in dollars for less than the accepted conversion rates, meaning that they lost money in the deal. Dollars became more favorable to hold, which further inflated the local currencies, defeating plans to stabilize local economies. On top of 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 than the government fixed conversion rate. It was rather a great money-making proposition, but really wasn’t ethical. This conversion rate imbalance allowed the servicemen to profit from the more favorable exchange rate.

While anyone could understand how people would want to make money if they can, it was really going to be damaging to the local economy in the end. The MPCs were designed to stop the unfair conversion rate of currency. The scrip (MOCs) was changed out periodically, to avoid hoarding. Once they came out with a new version of scrip, the prior version became worthless. Another way they were supposed to eliminate the problem was that MPCs were only allowed to be used by military personnel in military facilities and approved locations. As a safeguard, if the MPCs were converted to local currency, they were not allowed to be reconverted to MPCs, so the plan was useless. US MPCs were in use from 1946-1973 and were used in all overseas military locations.

I was actually watching an episode of MASH this morning about this very thing. The men were buying up the old scrip from people who couldn’t get to the exchange. Of course, they bought it for less than its value, planning to cash in when they turned it in for its face value. The solution for that problem was that the military personnel were restricted to the base on C-Days…currency exchange days. I don’t know how much of the fraudulent exchanges were stopped in this way, but it might have stopped some.

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