MPC Use in RVN Found on the Internet and Submitted by Dave Klinger. author unknown 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 sizable fortune. 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 The only use for which certificates were not negotiable was conversion into U.S. green dollars, which were withdrawn from the economy.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 official exchange facilities. 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 were reported to the U.S. Internal Revenue Service for investigation. 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. THE MPC BELOW IS NOT SHOWN ACTUAL SIZE