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Vietnam Studies Law at War in Vietnam 1964-1973

Vietnam Studies Law at War in Vietnam 1964-1973

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Published by Bob Andrepont

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Published by: Bob Andrepont on Feb 10, 2011
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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, 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 $1.00 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were withdrawn from the economy.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 cer
tificates. 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

105

DISCIPLINE AND CRIMINAL LAW

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 manipu
lation, and removing some of the inflationary pressure on the Viet
namese economy. The issue of Military Pay Certificates in the
American community made illegal currency transactions more diffi
cult 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 activi
ties, 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 pur
chasers and payees were recorded, and purchases which were con
sidered 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 violaters (including 12 civilians) and 239
currency violaters (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 cer
tificates were required to turn over all certificates in their possession
to specially appointed finance agents stationed at each military instal
lation. 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 posses
sion of certificates. A record was kept of the amount turned in by each
individual, and an equal amount of money printed in the new cer
tificate 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.

106

LAW AT WAR

Thus, the old series of Military Payment Certificates became worth
less, 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 com
bat black market commodity and currency violations. A second cur
rency conversion was accomplished on 11 August 1969. On 2 No
vember 1969 the Military Assistance Command promulgated new
regulations specifying activities prohibited for U.S. military person
nel; U.S. nationals employed by, serving with, or accompanying the
armed forces; other nationals employed by the United States; con
tractors 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.

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