Found on the Internet and Submitted by Dave Klinger.
Illegal currency transactions were often tied to black market commodity sales, and produced many of the
same harmful effects. The war had brought rampant inflation to Vietnam, with the result that the
Vietnamese national currency, the piaster [actually dong], had constantly shrunk in value in terms of the
U.S. dollar. Even though the piaster was devalued several times during the war, the going rate for U.S.
currency in terms of piasters in the Vietnamese market place was considerably higher than was the official
rate of exchange agreed upon by the two governments. Thus, someone with access to both U.S. and Vietnamese
currency who had currency exchange privileges could take X number of piasters and purchase 51.00 U.S.
currency (X being the official rate of exchange at a U.S. installation). He could then take the U.S.
dollar, go into the Vietnamese market, and purchase X+Y piasters for his dollar, Y being the difference
between the official rate and the black market exchange rate. The Y number of piasters
was the profit on each transaction. Because this kind of manipulation allowed an individual to recirculate
his money constantly, a relatively small initial capital investment could quickly be turned into a
Until 1 September 1965, U.S. dollars were used as an authorized medium of exchange in Vietnam. After that
date, U.S. troops were paid only in Military Payment Certificates, and generally all U.S. civilian
firms dealt only in certificates or piasters. The certificates were scrip money, printed by the
United States and freely negotiable as money at all U.S. facilities. The only use for which certificates
were not negotiable was conversion into U.S. green dollars, which were withdrawn from the economy.
Soldiers and U.S. civilian employees who received pay in Vietnam were paid in military certificates. If
they wished to send money home, they could take out an allotment payable to an individual or a bank account,
or buy money orders, or open a checking account at a military banking facility in Vietnam. Checks or
money orders cashed within Vietnam were payable only in certificates. U.S. personnel who needed piasters
for authorized purchases of Vietnamese goods or services could exchange certificates for piasters at
The purpose of withdrawing all U.S. dollars from circulation in Vietnam was to keep separate the U.S.
and Vietnamese monetary systems, thus deterring black market operations and currency manipulation, and
removing some of the inflationary pressure on the Vietnamese economy. The issue of Military Pay
Certificates in the American community made illegal currency transactions more difficult but did not
eradicate them, since certificates soon began to pass for dollars in the black market as well as in U.S.
facilities. This was possible because, while certificates could not be negotiated for dollars in
Vietnam, they could be used to purchase money orders or to write checks that could be sent outside of
Vietnam and then cashed in dollars or other currency. In order to counter such activities, the U.S. command
in 1966 put controls on the use of U.S. postal money orders. No individual was allowed to purchase a money
order for any amount in excess of the pay drawn by him that month (pay vouchers had to be shown); the names
and addresses of purchasers and payees were recorded, and purchases which were considered to be excessive
The court-martial statistics reflect the growth of black market activity in Vietnam. In 1967 there were
64 courts-martial for currency and commodity violations on the black market, while in 1968 there
were 232 commodity violators (including 12 civilians) and 239 currency violators (of whom 105 were
civilians). Because of the growing number of currency violations, a change of Military Payment Certificates,
called a conversion, was called for. The first series of certificates, issued in 1965, was still in use in 1968, by which time it was recognized that a substantial amount in certificates had fallen into the hands of unauthorized persons, such as black market money changers.
On conversion day, which was predetermined and held a close secret (28 October 1968), all individuals
authorized to possess certificates were required to turn over all certificates in their possession to
specially appointed finance agents stationed at each military installation. No one was allowed to leave the
installation until he had turned in his certificates, and certificates were accepted only from individuals
who held the required identification authorizing possession of certificates. A record was kept of the
amount turned in by each individual, and an equal amount of money printed in the new certificate series
was returned to each individual. Once the conversion was complete, no certificates from the old series were
accepted for conversion, nor were old certificates any longer negotiable as cash.
Thus, the old series of Military Payment Certificates became worthless, and anyone holding such
notes suffered loss directly proportional to the value of the notes he held. On this first conversion date,
$276,931,802.50 in certificates were converted. The amount of $6,228,597.50 in old certificates was
not accounted for, and presumed to be in the hands of unauthorized persons.
As troop strength peaked in 1969, further steps were taken to combat black market commodity and currency
violations. A second currency conversion was accomplished on 11 August 1969. On 2 November 1969 the
Military Assistance Command promulgated new regulations specifying activities prohibited for U.S.
military personnel; U.S. nationals employed by, serving with, or accompanying the armed forces; other
nationals employed by the United States; contractors invited by the United States and doing business in
Vietnam; all nonappropriated fund activities and their concessionaires; and all persons authorized to use
exchanges, clubs, post offices, and other U.S. military facilities. The regulations specifically
prohibited more than two dozen activities, most of them involving the unauthorized possession,
acquisition, or transfer of exchange merchandise, Military Payment Certificates, dollars, identification
cards, or ration cards.
As noted in the introductory paragraph, Military Payment Certificates (MPC) were supposed to control the illicit underground market in U.S. currency. To that end, I suppose they were somewhat effective, although I never saw an Indian money changer who didn't have an ample supply of U.S. bills. Further, MPC supposedly could only be used by authorized U.S. personnel, although those same Indian money changers would readily exchange almost any other form of currency for it. One of the ways in which they could use it was to buy merchandise (primarily cigarettes and liquor) from U.S. servicemen with it. Although supplies of tobacco and alcohol were strictly rationed, there were certainly many people who didn't use one or the other or both. Nonetheless, they got the same ration chits as everyone else. On-base prices for these commodities were extremely low; cigarettes were $1.00 per carton, hard liquor was $1.00 to $1.10 per quart, and beer was the same price as soft drinks -- 10 cents per 12 ounce can. An enterprising person could (illegally) sell these commodities to a civilian in exchange for MPC at a reasonable markup. The purchaser, in turn, could add his markup and sell the merchandise at well below the normal market price. Needless to say, that whenever the opportunity for a profit like this shows up, someone will take advantage of it. In order to discourage this activity, the MPC was changed from time to time. This was done on very short notice and you had a very limited time to convert any you had to the new series (if I remember correctly, it was about 24 hours). The only problem was that the Indian money changers knew about the impending changes before even the finance people on the base did and they rarely got caught holding worthless MPC. Sorry about the slow page load time -- I really shouldn't put this many images on one page.