WWII ALLIED PROPAGANDA
BANKNOTES

SGM HERBERT A. FRIEDMAN (Ret.)

The field of psychological operations (PSYOP) and aerial propaganda leaflets is vast. Billions of leaflets were dropped during WWII, with thousands of different themes. One of my favorite categories is the leaflet in the form of a banknote. It is a very strong psychological tool. Few people will fail to pick up a banknote on the ground. For this reason they have always been popular as a medium of propaganda. In this article we will discuss and illustrate the banknote leaflets prepared by the Allies for use against the Axis powers and their collaborators. Portions of this article have appeared previously in the International Bank Note Society Journal, Volume 23, No. 3, 1984, Volume 24, No.2, 1985, and Volume 24 No. 3, 1985.

During World War II almost 100 different propaganda leaflets in the form of banknotes were prepared and disseminated by the Allied and Axis combatants. In the first section of this article we illustrate and translate those notes that were produced by the United States of America. There are not a great number of these, but they are extremely interesting. In the second section I will depict the various propaganda banknotes prepared by the allies of the United States.

The United States

We start our story in the jungles of Burma. The Japanese had advanced through that country in the early years of the war, cut off the Burma Road and appeared to have a stranglehold on the supply routes to China. They conquered Mandalay on 21 May 1942 forcing the British to retreat into India.

American military forces needed some way to harass the Japanese troops and slow their consolidation of the country until sufficient forces could be sent in for a military confrontation. Planners in Washington considered parachuting rangers into the jungle to lead native forces, but where should these troops be dropped? A historian pointed out that in 1878 an American missionary named William Henry Roberts had entered Burma and made his way among the violent, warlike tribes known to the Burmese as “Kachins” (“Robbers”). The Kachins called themselves "Jingpaws" ("men of the hills") and that is why the US leaflet starts "Jingpaw Ni!"

Roberts lived among the Kachins for many years. He gave them a written language, based on the western alphabet. He so impressed these people that they adopted him and his native country. They were known to be exceptionally friendly to America. As a direct result of this great missionary's work, this tribe was chosen by the Rangers for training. They were firmly loyal and took part in many victories against the occupying Japanese forces. The American Rangers considered them among the finest jungle fighters in the world.

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The American Propaganda Parody in the Kachin Language

The United States prepared a parody of the 5 rupee Japanese invasion money (JIM) banknote issued for use in Burma from 1942 to 1944. The original note is dark purple with a yellow background. There are a coconut palm at the left and a pawpaw tree and temples at the right. The genuine note bears the red code letters “BA” or “BB.” The American parody is similar on the front, even bearing the “BB” inscription.   The back bears two propaganda messages in the Kachin language. I had Zan Yaw, a Burmese friend translate the note in 1967. In the box at left

The Japanese Military Government commanded their troops in Burma to keep the following directives secret.

The Military Government is issuing currency notes for your [the Japanese] use in Burma. Spend as much as you like for food and other things, but don't tell the (Kachin) people the secret of the money.

The text at the right of the box is:

Kachin!

The Japanese are making these valueless notes for your use.

It is easy to get these notes but very hard to buy food or other things.

Avoid these notes or you will be cheated!

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The American Propaganda Parody in the Burmese Language

For many years, the Kachin 5 rupee parody was believed to have been the only one used in Burma. In fact, the United States produced a similar leaflet in the Burmese language. I had Zan Yaw, a Burmese friend translate the note in 1980. In the box at left:

The wicked Japanese authorities have secretly issued orders to all Japanese forces stationed in Burma to spend this money freely since it is being produced in great numbers to buy rations and to hire workers during the war.

Citizens of Burma…beware of the ulterior motives of the Japanese!

The text at the right of the box is:

To the citizens of Burma!

The paper notes, which you are being forced to accept and use are mere valueless scraps of paper printed by the Japanese.

It is easy for the Japanese to print this money, but it shall not be so for the Japanese to make you accept these notes in exchange for your foodstuffs or your labor. Friends! Do not be cheated.

Don't accept or recognize the Japanese currency notes.

Since the end of WWII I never saw a single one of these propaganda banknote leaflets offered for sale until 2011 when two lots were offered. One lot bearing a single 5 rupee banknote leaflet sold for $197.50; the second lot bearing three such banknote leaflets sold for $372.57. Leaflets to Burma normally sell for about $25-35, so this shows the power of the numismatic collectors who saw these items as currency propaganda and not just as propaganda leaflets.

We should mention that besides these propaganda parodies, the United States Office of Strategic Services counterfeited Burmese 10 Rupee notes and the British Special Operations Executive counterfeited Burmese 1 and 10 Rupee notes.

The Philippines

The American propaganda currency used in the Philippine Islands would appear to be an easy topic to discuss. To put it simply, we overprinted some Japanese occupation banknotes in an attempt to discredit the Japanese. The problem occurs when an attempt is made to discover the origin of this operation. A number of contradictory statements have been published. I will mention some of these opinions and let you choose that scenario you find to be most creditable.

The story begins on 8 December 1941 Far East time, when Japanese military aircraft attacked airfields in the Philippine Islands. Successive attacks the following day virtually wiped out the American Air Force. On 10 December the Japanese landed troops on Northern Luzon. On 22 December the main Japanese invasion forces landed at Lingayen Gulf. The Japanese occupied Manila on 2 January 1942 after General MacArthur order the U.S. and Philippine Army forces to withdraw to the Bataan Peninsula. On 9 April 1942 Bataan fell. On 6 May 1942, General Wainwright surrendered Corregidor and all United States forces in the entire Philippines.

The Japanese masked their imperialistic designs behind “The Greater East Asia Co-Prosperity Sphere.” This was an economic and political program meant to convince enslaved nations that they had been freed from colonial power. In reality, the program eliminated Western authority and substituted Japanese racial and spiritual superiority.

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Overprinted Philippines 10-pesos Co-Prosperity Sphere

Vast sums of occupation currency were issued for use in the Philippines. As the war neared an end, huge stocks of these notes were found by advancing American liberation forces. A propaganda campaign to attack the Japanese political concept was launched by overprinting the captured occupation notes on the back with: “The Co-Prosperity Sphere: What is it worth?” These overprinted notes were air dropped over areas still occupied by the Japanese to ridicule their concept of a “Greater East Asia” by showing that Japanese-issued currency was worthless.

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Overprinted Philippines 5-pesos Co-Prosperity Sphere

Who did the overprinting? The answer depends on what book you read and who you believe. One former member of a “Psychological Warfare Branch” attached to the 8th Army in the Philippines stated that in Hollandia he “liberated” a bank that was filled with Japanese occupation currency. He claimed to have been involved with dropping roughly a million dollars in overprinted money over Manila to upset the Japanese economy. These notes were dropped by B-25 bombers drawn from the 32nd Bomber Group of the 13th Air Force. He claimed that his unit often punched holes in the propaganda notes so that they could not be used by the Japanese in areas they still controlled.

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An Example of a “Hole-Punched” banknote

This scenario was bitterly contested by an expert on Philippine currency who stated:

As for the notes coming from the Hollandia bank vault, frankly, I'm dubious. It is not impossible, but extremely unlikely. This punching of holes is even more farfetched. If we captured so much occupation money, why not use it to supply the Philippine guerrillas? They would have appreciated some of the genuine stuff. The counterfeits we were sending them from Australia were so bad that they were afraid to use much of it. Plenty of Jap pesos were found in Leyte and Manila. Some 15 million in the Malacanang Palace safe alone. Some quantity was turned over to the Red Cross as souvenirs and these were punched with two holes to protect green American recruits who would sometimes accept this invalid currency as genuine. The only place that these banknotes are confirmed to have been dropped are Northern Luzon. If we had them earlier, why weren't they dropped on Leyte, etc?

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The Early "7 March" Seabee Punched Banknote

The story got even more confused when I heard from collector Stephen Gill who came into possession of a letter with a certificate of clearance signed by his unit commander dated 7 March 1944 allowing the sender to send five banknotes home. Among them was a Japanese ten pesos note overprinted on the back “The Co-Prosperity Sphere: What Is It Worth?” The note has the prefix “PD” and two punched holes at the top edge. This indicates once again that some punched notes definitely did exist. The date adds another problem though. The certificate is dated 7 March and that is before the notes should have been available. Of course, this might have been a blank form and the notes could have been added and mailed much later. Also, the overprint doesn’t seem just right. It is cruder and the letters “O” and “R” actually touch. Gill adds:

I agree that the Overprint is different. I definitely think it was done by hand, a rubber stamp perhaps. When you zoom in on the scan you can see the pattern in the ink and areas where there has been too much ink applied to the stamp, hence the two letters touching.

This note could have been prepared before the Philippine invasion from banknotes in stock elsewhere. Perhaps a test run? Very curious. Another major problem. The certificate is from the 98th CB Detachment. I had assumed because the owner was in Australia, the letter was from an Australian. The 98th CB is an American Naval Construction Unit. I checked their history and found that they left Hawaii on 20 October 1943. They were at Tarawa 23 November 1943. They later returned to Oahu and Maui, Hawaii. No deployment to the Philippines at all. In October, 1945, they were sent to Kyushu, Japan. By December 1945, they were disbanded. I have no idea exactly where or when the Seabee found the overprinted note. It is a mystery.

A former Office of Strategic Services (OSS) agent said, “I met an Army Colonel who was in the Philippines and all of his Japanese currency is punched. This colonel claims he got these notes from MacArthur's GHQ in Manila.” The agent, who made the transition from OSS to CIA agent after the war, went on to say, “I understand from very good sources that the currency was flown out to Australia for overprinting, then brought back to the Philippines and given to the ‘Black Squadrons’ for air dropping.”

This last comment is probably in error. The notes he claims were shipped from Australia are most likely counterfeits meant to be used by guerrillas, and not the propaganda parodies we are discussing. The United States counterfeited a number of Philippine banknotes. For example, 15,000 100-peso notes of 1936 were counterfeited in one operation. These notes were to be used by the partisans. In another operation, 120,000 5 peso notes were counterfeited to be placed in aviator’s kits to help them survive if shot down over the Philippine Islands.  

The Australian Numismatic Journal, Volume 3, No. 3, July 1960, comments:

When General MacArthur’s forces returned to the Philippines in October 1944, they captured large stocks of Japanese occupation paper money. At that time Mr. Colin Kerr of Adelaide was working with the American Psychological Warfare Branch on Leyte Island. It was at his suggestion that the captured paper money was overprinted with the slogan “The Co-Prosperity Sphere: What is it Worth?” This was done by a hand stamp and later by portable presses. Some tens of thousands of these notes were dropped over Manila and other parts of the Philippines still in Japanese hands.

This is an interesting story although unverified. I have never seen it reported anywhere else. However, it could be true. When MacArthur reached Australia he wanted nothing to do with the American Office of Strategic Services and simply absorbed the Australian propaganda service. He had the experienced Australians teach his U.S. Army Psychological Warfare Branch members how to prepare and disseminate propaganda and added many Australians to the American units. The concept of the overprint could well be from an Australian, though the overprints themselves were definitely American-made.

Schwan and Boling say in World War Two Military Currency, BNR Press, 1978:

Soon after the liberation of the Philippines by the Allies a quantity of the Rizal Monument notes was discovered. A propaganda message was overprinted on the backs of these notes for distribution in other areas. The message “The Co-Prosperity Sphere: What is it Worth?” was intended to undermine Japan's claim to have united the Asian peoples.

These propaganda leaflets have been quite popular among collectors. Unfortunately a number of new varieties of these overprints have become available over the years. It seems certain that some of them have been produced to bilk collectors.

Beware of Co-Prosperity Sphere notes overprinted with thick, bright ink that has a silk-screened appearance. Original notes have well-printed overprints in dark red which is flat on the paper, just as the original lithographed inks used to print the backs are. No rubber stamps were used for original overprints.

If I may put it more strongly, a word to the wise. Frauds abound! It is likely that any such propaganda banknote offered today without an impeccable pedigree is bogus.

I should also point out that about once a month I get a letter from some veteran or child of a veteran who has found a piece of Japanese occupation currency in a drawer or old trunk. They always ask about the value of such a note. The answer is almost always the same. Your note has no real value. The Japanese printed and dumped them into the occupied countries in the millions. They were worth nothing when brand new and they are worth about the same 60 years later. In general, these old occupation banknotes are worth from about five cents to twenty-five cents. It is a nice souvenir of the war, nothing more.

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American B-25 medium Bomber dropping overprinted banknotes

According to Brigadier General Bonner F. Fellers, then in charge of the Psychological Warfare Branch of MacArthur’s headquarters, some notes were overprinted in Tacloban, Leyte, by the Sixth U. S. Army and dropped by 5th Air Force planes over Manila and Central Luzon. A 7 December 1944 Psychological Warfare Detachment document from a microfilm of U. S. Army propaganda leaflets aimed at the Japanese depicts a 1-peso note with the “Co-prosperity” overprint and states that it was:

Leaflet: Overprinted Occupational Money.

Designation: 10 F 6

Target: Widespread throughout populated areas of Philippines.

Remarks: To impress on the Filipino people the worthlessness of Jap occupation currency.

Text: "The Co-Prosperity Sphere: what is it Worth?” 

Most of the U.S. Army leaflets to the Japanese had the alpha “J.” This leaflet has the alpha “F” which stands for “Filipino.” The code shows that this was the 10th leaflet in the series prepared for the use of the 6th United States Army. Some other leaflets from this series are 3F6 (American forces poised for next assault), 4F6 (Landing instructions), 5F6 (General Krueger’s bomb warning) and 7F6 (Another strike in the battle for freedom).

The Fellers' comment has the ring of truth. We did capture a large stock of currency in Tacloban. There is a message known to have been made from partisan commander Colonel Fertig in Mindanao to MacArthur, in which the location of the currency was reported, along with a request that some of the paper money be forwarded for use by Fertig’s intelligence agents.

The Feller theory is supported by stamp and coin dealer Bob Miller of Lyn-Co Stamp & Coin of Lincoln, Nebraska who told me that he had business dealings with J. Robert Sandberg, one of the officers that actually overprinted the notes. In 1983 Sandberg donated his wartime papers to the Love Library at Nebraska University. The University says about Sandberg:

Some eight years ago, Robert Sandberg, then Vice-President of the University of Nebraska Foundation, and Frank Hallgren, UNL Director of Placement, donated to the University Library a valuable collection of documents vividly depicting the psychological warfare conducted by the U.S. Forces against the Japanese…

Lieutenant Sandberg and Sergeant Hallgren were selected from among forty members of the newly established force (PWB) to become a two-man team to saturate the Philippine Islands with propaganda. When the United States entered into World War II, both men left Nebraska separately to join the U.S. Army. They ended up at the same replacement pool in New Guinea and both were assigned to the newly created Psychological Warfare Branch in the Pacific Theater. Unfamiliar with this type of operation, the U.S. Army turned Sandberg and Sergeant Hallgren over to the Australians and Dutch for training. The collection contains a variety of items, for the most part of American origin, but including a smaller quantity of Dutch and Australian leaflets and Japanese propaganda. The collection of these truly unique materials has been appraised at $23,000.

The first set of leaflets was designed to encourage the resistance of the Philippine population. The branch created a second series of leaflets in an attempt to weaken the morale of the Japanese troops in the area and urge them to surrender. Hallgren and Sandberg, who accompanied flights over Japanese troops, were able to drop these leaflets themselves. A third propaganda campaign targeted Japanese civilians in Japan.

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The Sandberg Team

From left to right: Bill Wooley, Peter Snow, J. Robert Sandberg, and Frank M. Hallgren in 1944.

Bill Wooley was a member of the Psychological Warfare Branch who started as a U.S. Army Private First Class with the invasion of the Philippines and ended up as a Staff Sergeant by the end of the war. He had been recruited by the PWB about March, 1944, while in the Replacement Depot in Milne Bay, New Guinea. He was sent to Australia where he spent the next three months learning the art and science of psychological operations. He was then assigned to the Army Air Force 308th Bomber Wing in Hollandia, New Guinea, a unit flying the North American Billy Mitchell B-25 twin-engine medium bomber. He was teamed with a friendly Australian Warrant Officer named Peter Snow who treated him as an equal despite their difference in rank. They did more training there and Bill says he read a pile of military field manuals.

When the Americans hit the beaches of the Philippine Islands on 20 October 1944, Bill and Peter were put on an LST and arrived at Leyte the day after the initial landings. He saw the entire battle of the Leyte Gulf and regularly dropped propaganda leaflets using C-47 Skytrain military cargo plane, B-25s and various fighter aircraft. He points out that most fighter pilots did not want to do leaflet missions (they had to fly low and slow and were targets for enemy anti-aircraft), but they did perform their mission. Leaflets were also sent to Tinian Island for dissemination by bombers, and Navy carrier planes dropped them on Manila and other targets. Bill also took part in the night drop of tactical leaflets on Manila in support of the U.S. Army Infantry and Cavalry units. Although he had no part in the printing of leaflets he did have some input into their content. He also took part in some loudspeaker operations, including one occasion in southern Luzon where he rigged an amplifier on the wings of a small two-man Stinson L-5 Sentinel observation spotter aircraft and flew over a tough Japanese unit dug into a deep canyon and broadcast surrender appeals from American Nisei troops. It was while in Luzon that Bill worked with Sandberg and Hallgren.

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A Very Early Attempt at Overprinting using a Rubber Stamp - Type I

Returning to the overprinted banknotes, Bob Miller later wrote a report of his findings and also copied the serial numbers of all the notes in the collection so that there would be a record of their provenance. He says that all of the banknotes he has are overprinted in red except one which seems to be rubber-stamped in violet. He says that they apparently tried some rubber stamps at first to see what the overprint would look like then went ahead and typeset the actual leaflets they hoped to disseminate. Some of the data that Lieutenant Sandberg told Miller is as follows:

In October 1944…I was a Second Lieutenant in the Psychological Warfare Branch, General headquarters, Southwest Pacific Area, attached to the Fifth Air Force. Twenty days after we landed in the Philippine Islands, my four-man PWB team moved to the 308th Bomb Wing (North American B-25 Mitchell medium bombers) that we would use for leaflet missions. The airstrip was located by the provincial capital of Leyte Province, Tacloban.

We soon heard that a large supply of Japanese occupation currency was stored in a local bank in Tacloban. We decided that it might be interesting to place taunting messages on those notes. A crude local press was being used to print the newspaper “Free Philippines,” so we decided to print a number of different overprints in different colors on the banknotes. They generally were some version of “The Co-Prosperity Sphere, what is it worth?” General MacArthur vetoed the idea, concerned that Filipino citizens might try and use the overprinted currency and be severely punished by the Japanese.

I, and probably others in a position to do so, took samples of the overprinted paper currency as souvenirs. A collection of what I took, along with the psychological warfare material used throughout the Pacific Theater is now in the archives of the University of Nebraska Love Library.

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An experimental “Type 3 ” Overprint.
Notice that the type is so large that they could only print the second line

Miller says that there seems to be four general types of overprint in different sizes with the letters being of different height and width. Sandberg apparently destroyed the bulk of his experimental propaganda banknotes. It is curious that Sandberg says that the notes were not disseminated because of fear of Japanese reprisals. Since we know that the banknotes were disseminated, we might assume that because the Japanese were quickly driven back and in no condition to punish the Filipinos, the "authorized" leaflets were dropped two months later as stated by the PWB document quoted above. It must be remembered that these archived banknotes are trial runs to test the printing and color and were not disseminated. The actual disseminated overprinted banknotes were prepared and dropped two months later by Sixth Army PWB propagandists.

So, in conclusion, what have all of these experts and authors told us? There were some occupation notes in Hollandia, Tacloban or the Philippines; an American or an Australian thought up the idea of using them for propaganda; they were then overprinted in Australia or the Philippines, with or without rubber hand stamps, in two or three versions; punched or not punched with holes; and then they were dropped over Luzon or Luzon and Manila.

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An Overprinted Type 4 Banknote directly from a PWB Product Book

Curiously, one of the Japanese occupation 10 peso “Co-prosperity sphere” overprinted banknotes was found mounted in an official Psychological Warfare Branch General Headquarters product album. The note placed in the book by the actual printers was without punch holes and this would seem to once and forever prove that the notes were officially printed by the U.S. Sixth Army in the Philippines and that they were not punched or holed in any way. What is interesting about this note is that it is also one of the early experimental notes that were not disseminated, probably a type 4. This indicates that although a better quality note was eventually printed and airdropped on the Japanese, some of the earlier test versions were still in stock and available as souvenirs for the troops and examples of what the PWB could produce.

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A Short Snorter 10 Peso Propaganda Banknote

Soldiers often collect banknotes from all the places they have been deployed as souvenirs of their travels. I have a pile of dollars, pesos, pounds, won, yen, MPC, etc., that I collected during my time in service. Because I was also a collector, I kept them protected and pristine. However, many soldiers that are not collectors use the notes as kind of a dairy which they call a short snorter. As they move from post to post they have their friends and comrades sign the banknotes and tape them together to make a roll. The bigger the roll, the more places you have been and the more pals you have.

The 10 peso Philippine propaganda banknote above has “Caroline Nelson of Penna.” written on it. Sometimes these banknotes will have 20 or 30 such names. The roll that contained this banknote belonged to William E Murray, a gunner on a B-25 bomber during WW2 in the Pacific. Clearly, at some point he was stationed in the Philippines. His short snorter was over 150 bills long before being dismantled after his death. There was also a second note in this roll, a 1 peso “Co-Prosperity Sphere” piece with the signature of two individuals. All of the short snorter banknotes are damaged on both ends from the Scotch tape used to hold the roll together. The Short Snorter Project says about this topic:

A short snorter is a banknote which was signed by various persons traveling together or meeting up at different events and records who was met. The tradition was started by bush pilots in Alaska in the 1920's and subsequently spread through the growth of military and commercial aviation. If you signed a short snorter and that person could not produce it upon request, they owed you a dollar or a drink (a “short snort”- aviation and alcohol do not mix!).

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Imitation of the Co-Prosperity Banknote Overprints

The notes known to have been overprinted are the 1, 5, 10, and 100 pesos notes. It is generally agreed that there are two styles of overprint. An enormous number of cheap imitations of the Co-Prosperity propaganda overprinted banknotes have appeared on the market. Most of these notes are uncirculated, the overprints in both black and a bright glossy red. They are still being sold in the Philippines to American tourists.

There are also reports of many other fraudulent overprints. The researcher C. M. Nielsen told me in 1985:

There are at least 40-odd fantasy overprints applied to Philippine Japanese occupation currency by a curio shop in Manila. They are being sold for two or three dollars a set.

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Fake “Banzai” Overprint

The forgeries are very interesting. A number of the 1, 5, 10 and 100 peso notes are overprinted with a triangle with the text inside: “Filipino – American – Chinese Guerillan Movement in the Philippines August 7, 1942.” The overprints are in red and black ink. Another overprint reads “BANZAI,” also found with “BANZAI” and Japanese characters. Some of the notes have the words “The Japanese Government” “X”ed out and the word “PHILIPPINES” under the XXXXXXXX. Some of the notes simply have Japanese characters. Other fake overprints I have seen include “PHILIPPINE AMERICAN GUERRILLA,” “FAC 6 MP,” “PAG,” and “PHILIPPINE AMERICAN GUERRILLA 1943.” In 2009 a new set of fake overprints appeared with such comments as “Soonest POW,” “MacArthur is here,” and “Defeat is near,” etc. Let the buyer beware. In a 2013 auction two new overprints suddenly appeared: “Asia’s Butcher” and “Ruthless.” Apparently, a specialist could build quite a collection of these fake overprints.

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Japanese War Notes Claimants Association  overprinted occupation currency

The Japanese flooded the Philippine Islands with their worthless occupation currency during WWII. At the end of the war many Filipinos had thousands of pesos that were without value. In the hope that the money would be redeemed by the United States or the new Philippine Government, an organization called the Japanese War Notes Claimants Association of the Philippines (JAPWANCAP) began overprinting the notes in purple or black ink in 1953. The organization gathered and held the notes, provided receipts to the owners, and marked the notes with various stampings. There are four major shapes of overprints; a large oval (71 x 56mm), a small oval (59 x 36mm), a small fat oval (55 x 40mm) and a circular overprint (38mm). Within the four shapes, there are generally recognized to be nine texts, some with very minor differences. These are not propaganda overprints and they add no value to the banknotes. They are collectable only as a conversation piece and oddity.

During the occupation of the Philippines, General Douglas MacArthur ordered the circulation of several hundred million counterfeit Japanese war notes to be used by the Allied Forces to support U.S. intelligence agents and by the Filipino resistance movement. Another purpose was to sabotage and wreak havoc on the economy of the Philippines during the Japanese occupation. The JAPWANCAP sought: reimbursement for the counterfeit JIM in its possession; redemption by the U.S. of the non-counterfeit JIM, and payment by the U.S. of its claims against Japan for the loss of human life and physical destruction.

A trivia question sometimes asked in numismatic quizzes is:

How much money did the United States Government pay to holders of the "claimant" banknotes?

The answer is "zero." The U.S. Government never paid the holders of the Japanese occupation currency one cent.   The U.S. courts decreed that the statute of limitations had passed. By using this “loophole,” the courts were able to avoid the difficult issue of determining the validity of the claims.

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Overprinted 10-Peso McArthur Has Returned!

One other banknote was overprinted by U.S. forces for propaganda use in the Philippines. It was not disseminated. A 10 peso Japanese invasion money note was overprinted “MACARTHUR / HAS RETURNED / **** / LEYTE, OCTOBER 19, 1944.” The overprint was applied on MacArthur's flagship, the U.S.S. Nashville.  MacArthur’s famous return to the Philippines did not occur until the 20th, so all the overprints were incorrect and the entire stock of banknotes was ordered destroyed. As always, a few were saved by souvenir collectors.

United States Counterfeits of Philippine Currency

We should also mention that the United States counterfeited the wartime currency of the Philippine Islands to a great extent. The banknotes were needed by the guerrillas in their fight against the occupying Japanese forces. We know from Intelligence Activities in the Philippines during the Japanese Occupation, Military Intelligence Section, Far East Command, Tokyo, Japan, 10 June 1948, that a shipment of gems and genuine banknotes were smuggled into the PI in December 1942. Major Jesús Antonio Villamor made the first Allied secret landing (code name "Planet Party") with 4000 Pesos worth of gems and 350 Pesos in Philippine Commonwealth bills, the total Philippine currency then available in the Commonwealth Bank of Australia.

In January 1943, there was an urgent request for an additional 500,000 Pesos in artificially aged banknotes. That shipment arrived in Australia in February 1943. In August 1943, an additional 1,000,000 Pesos was requested from Washington D. C. Very likely the Japanese occupation notes for the Philippines were counterfeited by Major Willis C. Reddick who once told me that he had established an O.S.S. forgery plant in Washington D. C. at 25th and E Streets, using paper from the Byron Weston Company in Massachusetts. He also established an OSS printing plant in London, England. Reddick became friendly with employees of the Bureau of Engraving and also was able to pick draftees with printing experience from basic training units in the Army. He retired as a Lieutenant Colonel at the end of the war. He added:

With the exception of printing large quantities of Japanese occupation notes, the operation in which I was in charge, we did no currency.

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American Forgery of the Philippine One Peso Note

The United States first reprinted Philippines Commonwealth treasury certificates of 1936 and 1941 for use by Philippine guerillas. The 1, 5, and 10 pesos notes of 1941 were delivered to the United States War Department between January and September 1943. These notes were chemically aged to appear used, using a process developed by the Bureau of Standards in 1943; the process involved tumbling the notes in coffee grounds and floor sweepings. The 5, 10, 20, and 100 pesos notes of 1936 were not aged.

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Notice that the Fourth and Fifth Leave Veins Touch (Inside Box)

The forgeries are so well done that it is hardly worthwhile showing both a genuine and forged banknote. The differences are very minor. For instance, in the case of the 1 Peso bill the fourth and fifth veins in a decorative leaf do not touch on the genuine, but are connected about one-half way down their length in the counterfeit.

A second shipment was requested:

A 15 October 1943 letter from MacArthur’s Headquarters to the Chief of Staff in Washington D.C. says in part:

It is requested that steps be taken to reproduce, for use in the Philippines, 10 million Pesos (P10,000,000) of Japanese occupation currency…

It is requested that the ten million Pesos be prepared in the following denominations, to represent old bills:

a. Ten Peso bills – 5,000,000
b. Five Peso bills – 3,000,000
c. One Peso bills – 1,500,000
d. Fifty Centavo bills – 500,000

It is requested that one million Pesos, approximately the proportion indicated above, be dispatched to this theater by air as soon as possible and that the balance be dispatched by water transport.

The first million Pesos was counterfeited in Washington DC and flown to the Philippines on 21 December 1943. They were distributed to six different guerrilla groups. The known block letter codes known on the American forgeries are:

Fifty Centavo bills – PA, PB, PE, PF, PG, PH, and PI.
One Peso bills – PH
Five Peso bills – PD
Ten Peso bills –  PA, PB, and PC.

The Japanese occupation banknotes may not be the only ones counterfeited by the U.S.

William B. Breuer mentions in MacArthur’s Undercover War, John Wiley and Sons, New York, 1995, that there was a need for currency by the Guerillas as early as March 1943. He adds:

A hurried check with Washington disclosed that a huge shipment of Philippine pesos for the Mindanao operation had been shipped by special air transport. As a security measure to ward of sticky fingers, the small fortune’s container was labeled “Finance Forms.” At the Allied Intelligence Bureau’s headquarters, it required several men fifteen hours to count all the pesos, which totaled the equivalent of a million U.S. dollars.

Since the request for counterfeit Japanese occupation currency was sent late in 1943 we might assume that these were genuine banknotes. However, other declassified documents in my collection show that:

…In January 1943, when plans were being made to send other intelligence parties, an urgent request for $500,000, artificially aged, Philippine currency, was sent to Washington. The request, filled and dispatched by highest air priority, was received in Australia during February.

Since the type of currency is not clearly identified, it is possible that this early forging of Philippine currency was the regular banknotes, issued prior to the Japanese occupation.

Lieutenant Robert Stahl says in: You're No Good to Me Dead: Behind Japanese Lines in the Philippines, Naval Institute Special Warfare:

We also carried thousands of Philippine pesos-real money newly printed in Washington, D.C…loosely packed with water and sand in sealed, five-gallon metal containers. The water - and sand mixture was intended to age the money, since Filipinos would be hard pressed to explain to the Japanese where they got crisp, new paper money. Aging the currency this way was a brilliant idea-until it came time to dry it so that it could be spent. If we had sunlight we would spread it on the ground and hope it wouldn’t blow away while it dried. During the rainy season, which seemed to be all the time, we sat beside fires waving wads of currency over the heat to drive out the moisture. We also had counterfeit Japanese invasion currency (called APA in the islands), American made, to spend freely to inflate the Japanese currency.

Later, Stahl mentions a fact that I never heard before. He says:

Workers…accepted our APA currency even though we were passing out higher denomination bills than the Japanese ever printed. Some of the large denomination currency was later known to have been used by the Japanese troops….

That seems very risky to our Philippine Allies. Stahl apparently paid them with banknotes that were patently false since no such denomination existed. A Filipino found with such a note would be severely punished if not shot by the Japanese. Then we hear that some Japanese soldiers used the banknotes. Did they think they were real, or did the pass them knowing they were false? What an interesting concept.

Lucien V. Campeau says in an article entitled: My Air Force Weather Mission from April 1944 Through April 1945 With the American Guerrillas of Mindanao:

The sub was loaded and the next day we boarded the Narwhal. As I was boarding, Chick Parsons handed me a five gallon can with gunny sack sewed around it and soldered shut to water proof it. This was 25,000 real pesos made in the U.S. and soaked in salt water to make them look old and used. I was to use the money as I saw fit for intelligence purposes in case the Filipinos would not accept our emergency money and I needed something done in an emergency… Smith and I each carried a pistol, rifle, machete, jungle hammock, backpack of food, and entrenching shovel-mine for two purposes, for – I still had diarrhea – chronic, bordering on dysentery. We rigged up two small sleds, like miniature carabao sleds, and on them we pulled the three pieces that constituted a 3BZ radio, the two storage batteries required for its operation, a gasoline-powered generator, two five-gallon cans of gasoline, and three cans of real pesos… I moved off in another direction and dug a hole about two feet deep and large enough around to take a five-gallon can. This was difficult digging, for the ground was mucky humus threaded with a thick mat of twisted tree and plant roots. Into it went one of our three cans of pesos. I drove a stake close to its heart and marked it with a piece of cloth. Not far away I buried another can, and, still another short distance away, a third can. I had just put sixty thousand pesos-thirty thousand American dollars-into an earthen safe-deposit box… We had taken thousands and thousands of pesos with us from Australia, all neatly packed in tin cans full of sand and water, cans like those I had buried on Palapag Mesa. When the Narwhal brought men and more supplies to us on Samar, there were more cans of money included in the cargo. And when airdrops were made to me on Luzon, even more money arrived….

American Propaganda Parodies of Japanese Banknotes

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Genuine 10-Yen banknote

For the final American propaganda banknotes, we have to go to the Japanese home islands. The story mentioned in Numismatic News, 17 January 1966, in an article by Alfred J. Swails entitled “United States Propaganda Notes for Japan.”

The Military Intelligence Hawaiian Department under Lt. Colonel Richardson was given the assignment to prepare four facsimile notes with different messages to the Japanese people on the back ... Our planes showered the notes over the countryside, knowing that 50 percent would fall and lay face or money side up and entice the greed of the finders.

Dr. Felix D. Bertalanffy wrote an article on this subject for Numismatics International, April 1980. In his article entitled “The Ten Yen U.S. Propaganda Forgeries of the Pacific War” he wrote:

Postwar interrogations by Col. Bonner F. Fellers of Japanese officials associated with the wartime government singled out four types of propaganda leaflets as the most effective and as exerting the greatest impact of all the great variety dumped on Japan.

In the summer of 1945 Japan was showered almost daily be aerial leaflets in such quantity that the Japanese people developed a kind of apathy against them. A novel approach had therefore to be sought to attract renewed attention. The ingenious idea was to reproduce the face side of the then current 10-yen banknote and replace the back by a propaganda message. For who could resist money falling from the skies?

The note was exquisitely reproduced by lithography to resemble closely the genuine bill. One striking difference is the Okura Kaijin seal, printed in red on genuine bills, appears in the same brown color as part of the body of the phoenix on the counterfeit.

There is one brief mention of wartime dissemination in a letter to the editor of Banknote Reporter, October 1983. John Hopkins, a sailor who served in the Far East during the war said that notes were dropped on Japan by carrier-based aircraft.

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Japanese 10-yen parody front

There are four parodies of the Japanese 10-yen Bank of Japan convertible note of 1930. All of the parodies bear the serial number 450941 and the block number 1124 on the front. On the back, the notes are found with four different propaganda messages and the code numbers 2009, 2016, 2017 and 2034. I obtained copies of all four banknote leaflets when I obtained a copy of the classified "Confidential" booklet entitled United States Pacific Fleet and Pacific Ocean Areas - Psychological Warfare - CINCPAC-CINCPOA Bulletin No. 164-15, 15 August 1945. The data sheets state that “the purpose of the leaflets is to create resentment against the present government in Japan and create fear of inflation...The note conforms to the size of a Japanese banknote which is carefully reproduced on one side.”

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2009

The OWI fact sheet for banknote leaflet 2009 says:

A close reproduction of one side of a Japanese bank note is used to assure that the leaflet will be picked up and to reinforce the text, which hammers on the sore nerve of burdensome taxes and the wasteful expenditures of the war. Resentment against the militarists (Gumbatsu) is encouraged.

On one side a close reproduction of a Japanese 10 yen note, size approximately 5 1/2 by 3-inches. Since about half of the leaflets will land face up, this is an assured attention-getter for the text, which carries a simple economic message.

Code number 2009:

PAY YOUR TAXES WITH THIS MONEY

The Gumbatsu is wasting your tax money. For this war the Gumbatsu has spent the equivalent of 5000 yen for every Japanese. Think what you could have done with that.

Every day the war continues more of your money is being wasted.

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The OWI fact sheet for banknote leaflet 2016 says:

To promote dissatisfaction among workers on the Japanese home front. It is known that the families of soldiers and officers receive special ration privileges in Japan. This fact is used in conjunction with the striking reproduction of a Japanese bank note to arouse dissatisfaction among workers.

Code number 2016:

FACTORY WORKERS

You have made much money up to now, but what good is it? You can buy little more with it than you can with this 10 yen.

Those who devote their total energies to war production are the same as soldiers. You are soldiers of production. But, do you get plenty of beer and rice? Do you received specially distributed goods such as soldiers and their families receive?

One of the propaganda banknotes numbered 2016 was sold at auction in 2004 with the following comment:

James Inmon, U.S. Navy Aviation Navigator, was among a crew that flew reconnaissance flights over Japan for such duties as target selection, psychological warfare, maps and aerial photography. Inmon flew a mission when these 10 yen propaganda documents were dropped over Nagasaki prior to being bombed. Inmon saved one note and carried it home in his wallet.

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2017

The OWI fact sheet for banknote leaflet 2017 says:

To disrupt the civilian economy in Japan by encouraging demand for commodities in excess of the supply. Skepticism regarding the worth of Japanese war bonds is known to exist in Japan.

This fact is used to encourage the purchase of supplies and the resulting disruption of the civilian economy.

Code Number 2017:

JAPANESE!

What good is money in the bank or in bonds? Buy articles you need now and buy articles for future use. The remaining supply is low. As a result of the bombing by America, many of your stores will close their doors while others will be open only for limited periods.Buy food, clothing, and other necessities to tide you over these periods.

Money will not satisfy your hunger or clothe you. Bonds will not satisfy a baby’s cry. A wise person would buy now, not save his money. The present is not a time for money. It is a period for goods.

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2034

The OWI fact sheet for banknote leaflet 2034 says:

To create resentment against the present government in Japan and create a fear of inflation. The illustration, reproducing a 10 yen note on one side, in calculated to attract attention. The text suited to the illustration, carries an economic message – namely, the rise in prices and the drop in quality brought about by the war.

Code number 2034:

In 1930, when the Gumbatsu had not yet started the war in China, you could buy the following items for 10 yen:

* 25 sho [about 20 Kg] of good rice.

* Or, material for 8 summer kimonos.

* Or, Four bags [50 Kg. Packages] of charcoal

In 1937, after the start of the China Incident, you could buy the following for about 10 yen.

* 25 sho of low grade rice.

* Or, material for 5 summer kimonos.

* Or, 2 bags of charcoal.

Today, after waging three years of hopeless warfare with the world’s greatest powers, you can buy the following with 10 yen:

* ½ sho of good rice on the black market.

* Or, a small amount of charcoal, if you can get it.

* Cotton material, nothing.

This is what your leaders call co-prosperity.

The messages were aimed at creating discontent with the military leaders. The constant harping on immediate purchase of commodities would lead to a breakdown of the Japanese rationing system. Did the leaflets work? Some of the comments of Japanese leaders interviewed after the war would lead us to believe that the 10-yen notes were successful.

At the end of the war, W. D. Conde of the U. S. Civil Information and Education Section ordered a number of uncooperative Japanese "thought control" officials to the Radio Tokyo Building where they were questioned about the effectiveness of the American OWI leaflets. Many of the individuals had been dismissed from their government job in accordance with the American Supreme Commander's directive. At least fourteen Japanese agencies dealt with Allied psychological warfare material. None of the individuals had notes and all make their comments directly from memory. The individual comments were very similar which indicates either collusion, or that they were telling the truth and were of the same opinion.

Iwatai Sakamoto, Chief of the censorship Bureau of the Tokyo Metropolitan Police Department cited the 10-yen note leaflet as one of the most effective.

Toshikazu Kase, Chief of the First Section of the Third Department of the Cabinet Board of Information added, “The 10 yen note leaflet was the most effective. It was a very powerful leaflet. It evoked great interest and curiosity among the Japanese people.” 

Masjiro Kawaguchi, Chief of the Foreign Affairs Bureau of the Home Ministry forwarded a report that said, “Leaflets of our 10 yen notes most excited the curiosity of our people. The best leaflet was the one that dealt with the cost of living [No. 2034]. In Fukushima, Fukuka, and Aichi Prefectures there were cases where the 10 yen leaflet was used as currency.”

A report of the Foreign Section of the Home Ministry adds, “The 10 yen banknote leaflet aroused the nation's curiosity and gave the financial circles anxiety as they believed that the Americans might drop counterfeit currency at a later date. The banknotes addressed to workers [2016] were unpopular among the working class because they felt insulted by the leaflet. About the 20th of June, a certain Yamazaki in Hiroshima Prefecture used the forged 10 yen note leaflet and was arrested.”

A departmental ordinance decreed that the Japanese people collect and turn in Allied leaflets. Those who disobeyed faced a sentence of up to three months in jail and a fine of up to 100 yen. The government did not fear the American propaganda and expected each citizen to do his duty to his Emperor and his nation. It seems therefore, that there was no great enforcement of the ordinance. There were less than a dozen people actually arrested for carrying and reading leaflets, and all apparently received reprimands with no incarceration.

Time Magazine of 18 June 1945 mentioned the 10-yen propaganda banknotes in an article entitled “Down with the Gumbatsu!” The article tells of the major PSYOP campaigns to induce Japan to surrender. Some of the comments are:

Leaflet bombing of Japan has been stepped up sharply since V-E [Victory in Europe] day. Both B-29 Super-fortresses and carrier-based planes are dropping paper salvos, at the rate of 500,000 to 1,000,000 leaflets daily. Principal target of these broadsides is the Gumbatsu, the military clique that rules the empire.

A small leaflet like a 10-yen note bears on the reverse: "The Gumbatsu is wasting your tax money. For this war, the Gumbatsu has spent the equivalent of 5,000 yen for every Japanese. Think what you could have done with that."

A major theme is the exploitation of Japan's national hypochondria. Says one leaflet: "Water lines and electricity will be destroyed by bombs. Food will become scarce. Thus, you will weaken and become sick. . . . With every bombing, the country becomes more unclean, and it is more difficult to control disease. Put an end to this needless suffering. Demand that the militarists who started this war bring it to an end."

We should point out here that all the items we have discussed are propaganda banknotes. They are in the form of banknotes to make them more desirable to pick up. These propaganda banknotes made no attempt to deceive the finder and were not part of economic warfare. We must also warn the reader to always know the origin of such propaganda notes. They have been reproduced and sold on EBay. One dealer states:

You are purchasing here a REPLICA-COPY of a historic Paper Currency Note made using Quality 32lb paper stock coated very lightly with a thin flexible plastic coating. This coating adds protection to the item, but in no way detracts from the overall beauty of the note.

On the other hand, there are also a great number of espionage counterfeits meant to be used by agents or destroy an enemy’s economy. These include possible forgeries of the banknotes of Japan, Thailand, Malaya, the Philippine Islands, Chinese puppet banks and Burma. That is an entirely different story and one that I have covered in some depth in various issues of The International Banknote Society Journal.

A lot of documentation exists of these psychological operations. The OSS kept it a closely guarded secret and it is often difficult to tell what banknotes were being copied because the term used was almost always “merchandise,” and the nations and sometimes the agents were either unnamed or given a code name or number. Some examples are listed below.

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Operation “Toy Horse” - Allied Military Currency for Japan

“Toy Horse” was a classified operation where Japanese occupation banknotes were printed in San Francisco and then shipped to Sacramento for numbering, cutting and wrapping by the State Printing Office hidden in the Governors Hall of the State Fairgrounds. This photograph of Operation “Toy Horse” was from the estate of Norman Jack Rath, a foreman at the State Printing Office during the project. USAF Colonel (Retired) Joe Boling told me:

Both the A-yen and B-yen were printed by Stecher-Traung in San Francisco, and the numbering, cutting, and packing by the California State Printer in Sacramento.

In May 1943, an OSS executive suggests that a good counterfeiter be found in prison and released to do war work.

An August 1943, document implies that the OSS has forged Chinese puppet bank money and says it is decreasing in value so quickly that it is hardly worthwhile. It advises against the forging of Japanese currency because of the risk. It is impossible to say if any such notes were counterfeited or not.

In October 1943, there was a request for 20,000 “of each item.” Burmese currency was the first priority and “dollars and cents” was next. Many of the Japanese occupation notes used dollars and cents, so there is no telling what country this indicates. The letter states that a previous delivery has already been put to use.

Another October 1943 document asks if the 500,000 “named” refers to Burma or Malaya merchandise. That seems to disclose at least two of the nations whose currency was being counterfeited. The document requests additional samples of Malaya goods in the denominations of 10, 5 and 1.

A September 1943 letter mentions secrecy and points out that the British are saying nothing either. It goes on the state that the OSS is not telling the British that they have sent “a certain type of merchandise” overseas already. A second letter mentions “merchandise” and recommends caution.

In November 1943, there is a discussion of “BA merchandise” (probably Thai baht) and there is mention of 90,000 units to be available soon. The same month there is a request for one-half tons of Siamese “botts.” We now know that this request was made by a U.S. Naval Captain Miles who was stationed as an Intelligence Officer and Naval attaché in Chungking, China. The OSS called these counterfeit notes “the Bangkok type.”

In December 1943, the OSS Research and Development Section received Japanese Burma and French Indo-China sample notes from Detachment 101.

In March 1943 the OSS request for Thai counterfeit currency was upped to 3 million baht in denominations of 1, 5 and 10 baht. 

Captain Milton “Mary” Miles, the Navy’s senior intelligence officer in Chungking, asked that the OSS provide 1000 pounds of counterfeit Thai notes. The OSS embarked on a project to forge 3 million baht of the 1, 5, and 10 baht notes. By June 1944 the OSS notes were deemed inadequate because of a lack of high-quality genuine notes, and the project was abandoned.

In June 1944, a document mentions 100,000 Thai baht being counterfeited in London. The British firm of de la Rue apparently counterfeited what they called “the London type” of baht in the denominations of 1, 5 and 10 baht.

On 17 February 1945 an OSS cable discusses the availability of, and the "aging" process necessary for counterfeit Siamese Tical and Japanese Burmese notes.

In May 1945, the OSS states that it is in possession of the country’s best means of “merchandise production.” That seems to indicate that the OSS had a forgery printing plant, but it does no state what country this is in.

The American OSS in Stockholm allegedly produced another propaganda banknote. Sefton Delmer, the British director of black radio operations mentions it is some disgust in a letter to his superiors dated 19 February 1943. He wants to discuss the production of leaflets in Stockholm for distribution to German soldiers in Norway. He says, "I have seen some of this stuff and I think it is so dangerous that I am almost prepared to believe that the organization may have been penetrated by German agents." Delmer identifies one of the items that displeases him, "a 20-mark note marked 1914 and a 2-billion mark note marked 1923, all of it with a large "1918" scrawled over it in white and a typed caption starting with "1918" and ending with "Was nun?" The whole thing is beautifully calculated to back up the German line that they are the alternative to chaos and Bolshevism.

I have never seen this banknote so it is possible that Delmer's complaints were listened to and acted upon.

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XBA-37 - Front

The United States office of War Information produced a "labor appeal" leaflet for the Burmese people coded XBA-37 in November 1944. The leaflet pictured currency and had text in Burmese, Shan, and Kachin:

REAL MONEY AND GOOD RATIONS FOR ALL WHO WORK.

Depicted on the front is a silver rupee and coinage, bags of rice and atta, and boxes of salt and sugar.

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XBA-37 - Back

Text on the back is:

Get wages, raises and bonuses. Friends! Do you wish for the day when you can return to your own home and to the normal ways of peace? You can bring that happy day nearer by working for the Allies now.

The Allies are paying regular wages in real money plus good rations. The rations include atta, rice, sugar, oil, and salt. Plus, they are paying extra bonuses to steady workers. Friends, there is a place for you for the kind of work you do.

Allied soldiers are crushing the Japanese. Civilians help by working. Together we will drive the Japanese invader out of Burma. Together we will end this war sooner. Work for the Allies and help beat the Japanese. Come and get your wages and rations today.

Wages

Coolies: 1 rupee per day
Coolie bosses: 4 rupees per day
Carpenters: 8 rupees per day
Mechanics: 45-90 rupees per month
Men with ox carts: 2 rupees per day

Bonus for working 25 days in a month: 5 rupees
Bonus for working 30 days in a month: 10 rupees
Help beat the Japanese

This concludes the listing of the propaganda banknotes produced by the United States during the last World War. There were millions of counterfeit banknotes produced by the Americans and aimed at the Japanese home islands, their invasion money, Thailand, Burma, Malaya, Indochina, and the Japanese puppet banks in China. That is another story.

Australia

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1/2 Gulden Forgery of Japanese Invasion Currency

On the subject of the counterfeiting of Japanese occupation banknotes, we should mention that the Australians were also very busy. The Japanese took the islands on 9 March 1942 and held them until August 1945. The text on the Japanese occupation banknotes for the Netherlands East Indies is written entirely in Dutch. Values are Een (1), Vijf (5) and Tien (10) cents and Guldens. All of these notes bear the following: De Japansche Regeering Betaalt Aan Toonder, (“The Japanese Government promises to pay the bearer on demand”).

David Klinger reported that The Commonwealth Bank of Australia (CBA) counterfeited the Japanese invasion money of the Netherlands East Indies in his blog “Klinger’s Place.” Tony James also wrote an article entitled “Research Unearths Evidence of Wartime Australian Copies of Indonesian JIM” in the IBNS Journal Vol. 51, No. 1.

In the past few years several important documents have surfaced. On 5 October 1942, Chief-Commissioner Dr. J. E. van Hoogstraten sent the following letter to the Governor of the Commonwealth Bank of Australia:

In order to effectively prosecute the war against Japan the Government of the Netherlands East Indies considers it essential to have at its disposal supplies of currency similar to that issued by Japan for circulation in the Netherlands East Indies. The need is urgent and we have to request you to arrange to supply us as soon as they can be printed with the following quantities of notes which resemble as closely as possible the specimen notes handed to your Melbourne manager: 1/2 Gulden 12,800 pieces; 10 Cents 30,000 pieces; 5 Cents 10,000 pieces and 1 Cent 10,000 pieces.

When completed we would be glad if you would deliver the notes to the order of Dr. R. E. Smits as they may be required by him.

Signed: Dr. J. E. van Hoogstraten, Chief-Commissioner

The second letter was from Dr. Smits, Managing Director of the Javasche Bank to the Governor of the Commonwealth Bank of Australia (CBA). It recommended approval of the basic request. There was also a hand-written note:

I saw Mr. Chiffley [Finance Minister]at Canberra on 30/9/42. I told him of Dr. Smits wishes including his views regarding absolute secrecy. Mr. Chiffley raised no serious objections and he fully appreciated that action of this sort is necessary in war; and that the Axis is already doing what we propose to do. He is satisfied for us to go ahead and he will leave the whole matter in our hands. [Initialed 5/10/42]

The third letter requests more of the counterfeit banknotes. This letter was sent from the Netherlands Indies Commission to the Manager, Commonwealth Bank of Australia, on 20 January 1943:

Referring to our letter dated 5th October 1942 to the Governor of the Commonwealth Bank of Australia, Sydney, we beg to inform you that our stock of the special notes you have printed for us is nearly exhausted. This paper has proved to be very useful and we request you to print for us the same quantity as in October. When completed we should be glad if you would deliver the notes to our commission as they may be required.

Signed: Ch.O.Van der Plas, Chief-Commissioner

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XJM-48-C

There were some Office of War Information (OWI) “white” propaganda leaflets that used money as a point of interest. These were dropped over the Japanese soldiers in Burma. Two were coded XJM-48-C (in red) and XJM-48-E (in blue). The front of the leaflet depicted Japanese 5 and 10 yen coins used during the years 1933-40. The message on the front was identical on both leaflets:

No longer a fight to the death, it has become a mistaken war. Going beyond the point of desperation won’t lead to victory; it will continue to be a losing war.

The message on the back of XJM-48-C is:

Where is the Navy? “Our navy has vanquished the American Navy.” This statement was made by Premier Tojo on 27 May 1942. American soldiers then invaded Saipan Island. This caused the Japanese Government to take drastic measures. On 18 July 1944 Japan lost Saipan Island. This caused Premier Tojo to resign. Fellow Japanese soldiers, our navy can no longer provide you with the necessary materials you need as soldiers. Because of the present situation, we can't even protect our own land.

The message on the back of XJM-48-E tells of the failure of the invasion of India.

The OSS became aware of the United States Government's secret plan to introduce occupation money into Germany and France in early 1941.  A declassified Office of Strategic Services document dated 23 February 1944 from Stanley P. Lovell, Chief of Research and Development to the Chief of the Morale Operations Section says in part:

As you know, our contacts with American money producers are extremely intimate. We have reason to believe that paper money by use for Allied troops upon the occupation of both France and Germany is now actually made.

It has been suggested by Lieutenant Colonel W. C. Reddick [the OSS Forger in London] of this office that a tremendous psychological effect would be produced if all aviators flying over Germany were to carry some of this (counterfeit) money, and other potential prisoners of war were to have it found on them.

I am unable to evaluate whether this would be demoralizing to the Germans or not, but pass the idea on to you for whatever it is worth.

It is obvious that the OSS also gave some thought to the actual counterfeiting of German currency. A declassified 27 June 1944 report entitled “General Plan for Morale Operations against Germans as Holders of cash” mentions what might be done and the problems that the operation would entail. Some of the comments of the 14-page document are:

German marks can be counterfeited satisfactorily; it would take about three months to make the plates; it would take two to three months more to begin a sizable program in Germany. Dropping marks from planes is the only feasible method of increasing the supply of money…if bombers carried two and one-half tons each, 1000 bomber loads could drop 100 billion Reichsmarks. Clearly therefore, the task is manageable.

Objections of this project take the following lines. Dropping money is not a moral or proper way to fight a war. It is in the same class as gas…A severe inflation in Germany would embarrass the Allied postwar occupation authorities…dropping money on Germany would evoke retaliation in kind against Britain…the Germans already think that the United States has such stocks and they have threatened special reprisals against airmen who drop currency.

It is recommended that the OSS proceed immediately, independently of the British, to have currencies of Germany and her satellites counterfeited and held in readiness for use.

One of the chief American counterfeiters of enemy currency was retired Major Willis Reddick who is mentioned above. I spoke to him many times in the last years before his death. He worked for Stanley Lovell, OSS Director of Research and Development. Lovell was troubled with the assignment, for although he had Roosevelt’s permission to forge enemy currency, he had no signed authorization. Should the operation blow up in his face, clearly it was he that would take the brunt of the criticism. He stalled and moved forward very slowly. Reddick did eventually counterfeit Japanese currency, but probably never did the German banknotes. 

The United States did not prepare any propaganda banknotes for use against Germany. However, they apparently did plan to use both genuine paper money and coins in a PSYOP campaign against the Third Reich during WWII. A declassified secret document in the U.S. National Archives reveals that the Office of Strategic Services had a plan to use currency as part of a propaganda campaign. The plan called for the airdropping of legitimate United States money and postage stamps on Germany inside envelopes along with a small 4 x 6-inch card with a propaganda messages. The messages would compare current events to the hyper-inflationary period after World War One.

The plan was first discussed at the end of June 1944 and known as Special Plan C-5 / U.S. Postage Stamps and Coins / Target German Civilians with Cash. It called for the printing of one million small envelopes with propaganda messages printed on them.  Each envelope would contain a stamp, a coin, or a one-dollar bill. Each envelope would be preprinted, “A Gift to the Finder from German-Americans.” The envelopes would be dropped over cities that had not been bombed since the OSS believed that Germans in undamaged cities would be more amenable to its message. The proposal called for the following items to be collected to be placed in the envelopes: 10,000 U.S. $1.00 U.S. currency notes; 20,000 10-cent silver coins; 40,000 5-cent stamps; 266,000 3-cent stamps; and 664,000 1-cent stamps. Note that this is exactly enough items to fill 1 million envelopes. The amount of money and stamps totaled $26,520.00. The estimated cost of printing the million envelopes was $25,000.00 for a total production cost of $51,520.00. The fact that all the envelopes contained something of value would be a strong incentive for the Germans to pick them up and open them. The OSS suggests that each envelope should state the value of the object inside in the value of 1923 German marks.

The message on the envelope with the $1.00 note was to be:

This $1.00 banknote was worth 4,000,000,000,000 marks in 1923. Then you had no gold, but your industry could produce and you were able to borrow from America the next year.  You have no gold now and your industry is being destroyed.  If you permit it to be completely destroyed, how can you ever borrow again?

The message on the envelope with the 1-cent stamp was to be:

This one-cent stamp was worth 400,000,000 marks in 1923.  Participation notes with a face value of one American cent actually circulated in Germany that year.  American money came to your rescue.

Other suggested messages are:

When you remember walls papered with German bank notes in 1923, you understand, do you not, why people who lived through the last inflation are now spending what money they have on the open market where they can buy something tangible before it is too late?

Do you know what the internal debt is in Germany today? What will it be when you reimburse those who have suffered losses in the war? Where is the money coming from?

Do you know how much currency is in circulation today? It increases while production declines. Is it any wonder that prices on the black market – which is the true measure of inflation – go up every day? Your money will buy less and less.

There was a suggestion in a 6 July 1944 letter to OSS Director Major General William J. Donovan that the United States counterfeit German money:

It is suggested that the Bureau of Printing and Engraving or some other suitable agency prepare a great quantity of counterfeit German paper currency. This counterfeit currency should be so perfect as to paper, engraving and all other characteristics that experts could not distinguish it from bona fide German issues. The currency should be patterned after the latest type found on German prisoners. On every bombing mission large volumes of this counterfeit currency would be dropped over cities and other heavily populated areas. The currency should be crumpled and treated to look as if it has been in circulation for some time. If this procedure were carried out systematically, it would result in a spending spree that would cause great confusion.

There were two problems with this plan. It was determined that the Bureau of Printing and Engraving would have to print German currency day and night at the expense of U.S. currency in order to damage the German economy. The second problem is that there seems to have been an unwritten “gentleman’s agreement” between the U.S. and Germany that they would not counterfeit each other's currency.

This plan never came to fruition. A similar campaign was waged during Operation Enduring Freedom in Afghanistan 60 years later when genuine 100-afghanis banknotes were dropped with the message “Our goals will be achieved, if not willingly, then by overwhelming force” and envelopes adorned with an image of President George W. Bush were dropped containing two banknotes and a propaganda message.

Great Britain

During World War 11, Great Britain produced numerous "black" propaganda documents, including postage stamps and banknotes. Ellic Howe, the British master forger, wrote of his part in this project in The Black Game, Michael Joseph, London, 1982. He mentioned that the Psychological Warfare Executive (PWE) had controlled both black and white propaganda from 1941 until the end of the war. His own organization, the “Fakes and Forgeries Unit” did not become active until spring of 1942.

Howe had been a printer in civilian life, and according to Sefton Delmer, author of Black Boomerang, Viking Press, N.Y., 1962:

He had made a special study of German typography and printing techniques. Even before the war he had regularly visited Germany and made a point of collecting specimens of German printing. At the start of the war, Howe had been a lance-corporal in the Royal Engineers. In late September of 1941 he wrote a paper “Political Warfare and the Printed Word - A Psychological Study.” The paper brought him immediate attention and he was drafted by the PWE in the first week of November 1941.

Through the contacts he had made in civilian life he proceeded to make arrangements with Fanfare Press in London for printing, with Spicer's Limited for paper, and with Monotype Corporation for printing matrices. He stated that he could “supply anything from a few forged letter headings to several million forged German ration cards.”

[Note: I was contacted by Channel Four of the United Kingdom in 2004 to consult on a Television program about Howe’s wartime work and they advised me that they had found Howe’s original type in the Monotype Corporation archive].

Ellic Howe adopted the code name Armin Hull for the remainder of the war. When requested to produce a forged or parodied document, he would code the item with an “H” and a number. He claims to have produced about two thousand different propaganda documents during the war. The total number of items actually printed and disseminated behind enemy lines probably runs into the millions. Although the official listing of “black” propaganda materials prepared by the British is still a guarded secret, it is likely that the majority of the propaganda banknotes we will discuss in this article were directly or indirectly conceived by Armin Hull and his PWE cohorts.

The first British propaganda parody we will discuss is of the German 50 pfennig Behelfszahlungsmittel fur die Deutsche Wehrmacht (Auxiliary Payment Certificates for the German Armed Forces). There are four different propaganda messages on the back and they were given the PWE numbers H.692A-D. Since they were also prepared for balloon dissemination they collectively bore an additional identification Q38.  Apparently the banknotes were popular. Howe printed them a second time with the code H.917. None of these codes appear on the leaflets. 10,000 copies of each were sent to the Special Operation Executive (SOE) on 24 February 1944. 80,000 were sent to the Royal Air Force on 1 March 1944. 210,000 of the reprinted H.917 leaflets were sent to the R.A.F. on 19 May 1944.Balloon drops occurred from 13 March to 16 July 1944.

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The front of the British parody is an excellent copy of the genuine note except that the red and orange colors are just a shade duller. At first glance the fraud could easily pass a casual inspection. The British placed their anti-Nazi propaganda messages on the back of the parody. The genuine note had a blank back. Four messages are known, with German text typewritten in red on a white background. The first two messages appear double-spaced as quatrains:

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H.692A

H.692A: My name is 50 pfennig - I'll cheat everyone out of 4.50 who believes Hitler will give him anything.

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H.692B

H.692B: I am a piece of Hitler’s ass-paper. Nobody accepts me because nobody can buy anything with me.

These quatrains were allegedly written by ex-Berliner Peter Seckelmann, who had left Germany upon Hitler's rise to power. Working under the code-name “Paul Sanders,” he broadcast to Germany on PWE's clandestine radio station, Gustav Siegfried Eins.

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H.692D

H.692D: This variety of the parody bore both the first and second quatrains, single-spaced so that the eight lines could fit on the back of the 120 x 60mm leaflet:

I am a piece of Hitter's ass-paper. Nobody accepts me because nobody can buy anything with me. My name is 50 pfennig - I'll cheat everyone out of 4.50 who believes Hitler will give him anything.

The British were attacking and attempting to undermine this military currency because they knew that by regulation these notes were issued strictly to the armed forces. The notes were valued at ten times their face as long as they were used in a military establishment. If a soldier tried to use the note in the local civilian economy it was worth only face value. Thus, if he tried to go on the black market or purchase illegally outside of the military canteens and barracks he suffered a 90% loss. This unusual method was a safeguard against the general public attempting to acquire and use the military currency. It worked well for the German economy, but made an easy target for the British propagandists.

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H.692c

I have gone out of order and placed the third printed note last. H.692c is very different from the other three, with seventeen lines printed in a small typeface. The message is:

This bill is a farce - just as the war is. With this piece of toilet paper, they want to pay for the soldier's blood - Soldier's blood, which carries on the war - the war which is continued only so that the big shots can get their loot out of the country. The high ranking officers, SS Big Shots, the Party racketeers and trustees can obtain as much hard currency as they want. With that, they can buy and send home anything they want. They live high on the hog in their illegal private clubs and can afford to pay fantastic prices for their food. But the troops only get this concentration camp money which they can only spend in canteens. The troops have to eat whatever the canteens want to get rid of because they can't spend this paper anywhere else. This bill is a farce, a bad check which can't be cashed - Just as everything else which we have been promised. End the War! End this farce!

Erik Gjems-Onstad says in Psykologisk Krigforing i Norge (Psychological Warfare in Norway), Sollia Forlag, Oslo, 1981, that 2800 of these 17-line 50-pfennig propaganda notes were received for distribution during Operation Durham in the Trondheim area beginning in March 1944 and ending in March 1945. There is a second report that they were airdropped on the German-occupied British Channel Islands in Autumn 1944.

The Falling Leaf (Journal of the Psywar Society) of March 1964 published a comment in regard to this currency campaign:

I have been told by an ex-RAF pilot that on one occasion he had to sign for several parcels as they were being loaded on his aircraft prior to an operational flight, with instructions that they were not to be opened until the target was close-approached. When the parcels were opened just before their dispatch, he found that they contained piles and piles of German money. This pilot cannot recall what money or value it was, but it was most certainly 50-pfennig notes for the German Army. These were “lager notes” for use by servicemen in canteens and barracks; they were worthless in the civilian world.

R.G. Auckland says in Air-Dropped Propaganda Currency, 1972 edition:

The original idea came from the Political Intelligence Department, but the technology and printing was done by a private firm under the strictest security. The printing staff put 5 percent by quantity into bombs already loaded with newspapers and/or leaflets so that a drop of one million units of propaganda would have fifty thousand 50-pfennig notes included. When supplies ran out, a phone call to PID would mysteriously produce further parcels of banknotes delivered from nowhere on the backs of nondescript lorries.

Charles Cruickshank mentions the banknotes and other forged documents in The Fourth Arm: Psychological Warfare 1938 – 1945, Davis-Poynter, London, 1977:

Black leaflets included a whole range of ingenious forgeries: posters purporting to be of German origin; currency notes; clothing coupons; ration cards; postage stamps.... 

 

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Genuine 10 reichsmark

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10 reichs mark parody

The next note we will discuss is more mysterious. It is a parody of the German 10 reichsmark Reichsbank note of 22 January 22 1929. The front of this parody differs quite a bit from the genuine note. The paper is green instead of the white found on the original. The engraving is also dull and obviously a reproduction. There is no serial number on the parody, and no red color in the center as found on the genuine. There is simply a general impression of the 10 mark note that might pass a casual inspection in very poor light. Because of the poor workmanship, some researchers doubt that this is a British production. It appears too crude to have come from Howe’s workshop. The typewritten text on the back is:

Souvenir of Hitler’s ‘ Thousand Year’ Reich. Hitler promised a thousand-year Reich. It lasted only ten years and is now drawing to a close. Only the oppression by your Nazi tyrants let it appear like a thousand years. Throw off your chains -- They will be punished -- and the people will be protected. 

Perhaps the British purposely prepared the parody in this manner to make the Germans think that it was printed in their own country by a left-wing underground movement. It might be another in the long history of British and American plots attempting to confuse German security by having them constantly on the search for nonexistent, anti-Nazi movements. One clue that points to this note being a British production is that the propaganda on the back is typewritten just like that on the 50 pfennig notes. There were at least six German typewriters at Howe's forgery plant and it is possible that this note was prepared there.  We know nothing of the background of this strange parody. It is believed that it was distributed in Germany sometime in 1944, but there is no proof.

The Rumor Campaign

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In an attempt to raise the morale of occupied Europe and lower the morale of the German military, civilians and their allies, the secret British Underground Propaganda Committee produced well over eight thousand rumors, (they called them “Sibs” from the Latin sibalare – to hiss). Researcher Lee Richards mentions the whisper campaign and many of these rumors in his book Whispers of War, Psywar.org, 2010. In regard to British propaganda rumors about the Allied forging of German banknotes he lists dozens of moral-destroying rumors that attempt to make the Germans lose faith in the value of their own currency. I have selected a few of the more interesting ones:

24 September 1943 – The German Government has taken no steps about the millions of forged mark notes which have been dropped by the Royal Air Force which shows what they think about the value of the mark.

25 March 1944 – Over 100,000,000 marks, specially printed, have been dropped by aircraft on various parts of Germany since the beginning of 1944. The Reichsbank have made no comment and has not shown any concern.

16 March 1945 – Leading German bankers are trying to dissuade the Reich government from their current inflation policy on the grounds that it will upset the intended Allied plan for stabilizing the mark at 40 to the British pound or 10 to the U.S. dollar when Germany is occupied. 

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Genuine 50 Franc note

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British propaganda of French 50 francs note

The next British propaganda leaflet is a caricature of the French 50 francs Bank of France note. This note is "white" propaganda and makes no attempt to fool the French people or appear genuine. It is code numbered “90” and is mentioned in the official British publication, A Complete Index of Allied Airborne Leaflets and Magazines with the following listing, “Bank of France, first dissemination 10/11 June 1941, last dissemination 12/13 June 1941.”  Two dates are given for each airdrop since the missions were flown overnight. A bomber leaving on 10 June would return on the morning of 11 June.

The British made no attempt to closely imitate the original currency. The genuine is multicolored, while the parody is brown on white paper. Where the signatures should be, we find in French “The traitor Laval” and “The spy Abetz.” There are small smiling caricatures of Hitler and Laval at the top of the columns at left and right. A shocked Jacques Cover is depicted in the vignette writing on a piece of paper that reads, “Daily cost of occupation 400,000,000.” At the bottom there is a tablet engraved, “To the plundering Boches nothing is impossible.” The serial number is 26.6.1940; the day the collaborator Laval was named vice premier of France and General de Gaulle announced the formation of the French National Committee in London.

On the back there is a long propaganda message in French attacking the cost of the German occupation forces stationed in France:

Here is a vignette that is fitting for the new 50 francs notes, for it illustrates the history of the systematic pillage of France, pillage made according to a well thought out plan.

First of all, the occupation costs 400,000,000 francs a day. As there are at this moment almost one million Boche soldiers in France, that is 400 francs per day, per soldier. That is double the entire cost of living in luxury on the Cote d’Azur. The 400 million a day represents double the entire budget for all of France - although there are 40 million Frenchmen. Each German is costing the Treasury as much as 80 Frenchmen.

Of course, the Germans do not spend 400 francs a day for each soldier. Fine wines and extravagant dining are reserved for officers and agents of the Gestapo. The Germans save more than two-thirds of this amount and with the ‘savings’ buy French businesses. In this way they count on reducing all of France to economic slavery.

This is not all. While obliging Frenchmen to accept their “Reichskreditkassenscheine” at 20 francs a mark - although it wasn't worth even 6 francs before the Armistice - they force the Bank of France to print paper francs endlessly.

These are the same Boches who, over the years, bewailed the payment of reparations!

We will remember all this on the day of final reckoning.

These propaganda notes are punched with a small hole. This hole was used to run a fuse to a balloon. The notes were sometimes floated over France, and the slow-burning fuse released them over a wide area.

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French Francs from the Sky

The British did another aerial propaganda operation dropping banknotes over occupied France. This one utilized real French banknotes. We don’t know the actual denominations of the notes that added up to 600 French francs. We add the note above just as an illustration. Researcher Lee Richards discovered this operation while in the British Archives. According to Lee:

On the night of 25/26 April 1942, the Royal Air Force on a mission to Occupied France, dropped not just bombs but a rather more unusual package over Paris. The package contained 600 French Francs and the following message. Its intention was to publicize the radio propaganda broadcasts of Colonel Britton and his “V” army.

Colonel Britton was in fact Douglas Ritchie, later director of European broadcasting for the BBC. He originated the “V for Victory” campaign on 6 June 1941. His broadcasts were identified with the Morse signal for the letter V, and the appropriate bar from Beethoven's Fifth Symphony. In order to drum up listeners for his broadcast, the British dropped the French banknotes and a leaflet:

TO A SOLDIER OF THE "V" ARMY

Here are six hundred francs.

They are the gift of an American friend of liberty who wishes the money to be used in any way most needed to forward the interests of the "V" army in its struggle against the Nazis.

This American sent me a check for five dollars, saying that in the United States a five-dollar bill is sometimes referred to as a "V." I have changed this into francs, and, with French currency ruined by the Germans, have obtained for you six hundred francs as against the one hundred and seventy six francs which the five dollars would have purchased before the war.

I have asked the Royal Air Force to drop this packet in occupied France where I know that a good friend of liberty and decency may easily be found, and I ask that the finder of this packet shall, to the best of his or her ability, use this small sum of money in the way that the giver has suggested.

It is, I know, difficult for you to communicate with us, but if you can find a way I should be glad to hear that you have received this packet.

In case you are unaware of it, I should like to tell you that I broadcast in English from London every Friday at midnight (Central European Summer Time) on wavelengths: 1500 meters, 373 meters, 285 meters and 261 meters and on short waves on the 49 and 21 meter bands.

London broadcasts daily in French on 373 meters and on the 49 meter band, as well as on other short waves, at 7.15, 12.15, 15.15, 17.15, 19.15, 21.15 and 01.15 (Central European Summer Time). You can also hear all these broadcasts on 1500 meters, except those of 19.15 and 23.15.

Good luck to you.

COLONEL BRITTON,
LONDON.

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Genuine Japanese occupation currency

The British were also active in the Far East. The British military commander, General Percival, had surrendered Singapore on 15 February 1942. The Japanese issued currency for occupied Malaya and this was used until the end of the war.

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British propaganda parody of the Malayan 10 dollar (Type I)

The British produced a propaganda parody of the Malayan 10 dollar Japanese invasion money. The note bears the code SMA/39. It is believed that the note was printed by the British Army’s Psychological Warfare Division in Calcutta and dropped in late 1944 or early 1945 by aircraft of the 231st Wing of the Royal Air Force over Malaya and Singapore. I first wrote about this propaganda banknote in “Propaganda currency of the Far East,” Whitman Numismatic Journal, April 1968.

The British parody is a fair imitation of the genuine note. The vignette is identical, if not quite as sharp and crisp. The major difference on the front of the parody is that there is a diagonal propaganda message in Malayan that reads, “Japanese money is about to become dead together with the Japanese.” The banknote front is printed in a dark (Prussian) blue; size 162x76 mm. The “I” in “MATI” lies below the “N” in “WANG”.

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British propaganda parody of the Malayan 10 dollar (Type II)

It is believed that two different printings were prepared. The notes are virtually identical with the following exceptions: The second note front was printed in a pale gray-blue; size 160x75 mm. The “I” in “MATI” lies below the space between the “A” and “N” in “WANG”. There is no explanation for the second printing, or even documentation to prove which was first. There simply is the fact that two printings exist.

The back of the leaflet bears a propaganda message written in High Malay, Union Malay (in Arabic (Jawi) script), and Chinese, using language that is highly insulting in its context and idiom:

Now in the country of Burma the Japanese currency is no longer valid; what is valid is the former British currency. When the British return to the country of the Malays, their currency, which has gone underground, will be valid as before. The currency of Japan will fall like Japan, but the currency of the British will last forever.

The Malay scripts were used because in the 1940's a large population of the Malay States could not read Rumi (Romanized script introduced by the British) since they had been educated in local schools which taught Jawi (traditional script based on the Arabic alphabet). The reason for the third language is that the Chinese were the second largest racial group in the Malay Peninsula.

There were at least two agencies counterfeiting Japanese occupation currency of Malaya. The British Special Operations Executive (SOE) printed 987,000 $10 notes and 200,000 $1 notes. It is believed that the SOE in Burma printed another one million $1 notes in May 1944. The SOE counterfeits had the letter blocks MC, MD, MF and MG.

The American Office of Strategic Services (OSS) printed 50,000 $10 counterfeit notes with the letter block MK at the request of Lieutenant Colonel Carl Eifler, Commander of Task Force 5405-A (OSS Detachment 101). Eifler also requested counterfeit Burmese currency, both under the code name “Grenville.”

Grenville is a very mysterious operation and it is hardly ever mentioned in the literature. There are two very brief comments in Ian Dear’s: Sabotage and Subversion: the SOE and OSS at War, Cassell, 1996; and Charles Cruickshank’s: SOE in the Far East, Oxford University Press, Oxford and NY, 1986.

Dear says in regard to the counterfeits:

The counterfeiting of currency was another area of cooperation between the OSS and SOE. Under the code name “Grenville” SOE in London printed large amounts of Japanese military currency for the use of agents in the field in the Far East, and for the intended purchase of rubber and other essential commodities. The OSS also worked on counterfeiting the same currencies; a memo in SOE files, dated 6 December 1943, records, “OSS, working with agreement of U.S. Treasury, have achieved perfect imitations of Japanese Burman 1-rupee notes and expected to achieve similar results for Malaya” Considerable quantity of the Burman notes were stated to be already in circulation by BB400 [the Indian Mission]. Further, OSS were working on other issues, such as Siam.

Cruickshank says:

The other currency enterprise undertaken by SOE in the Far East was the counterfeiting of Burmese military rupees and Malayan military dollars printed by the Japanese. This was first mooted by Galvin in Chungking. He proposed that counterfeit notes should be provided by agents…The Reserve Bank of India objected, fearing reprisals in kind. Most Japanese agents captured after September 1942 carried counterfeit India 10-rupee notes, which suggested that the enemy was equipped to embark on a massive circulation of forgeries…

By July 1944, SOE London had printed and dispatched a million Japanese/Burmese ten-rupee notes and 200,000 one-rupee notes; and roughly the same quantities of Japanese/Malayan ten-dollar and one-dollar notes. These were issued to agents along with a supply of genuine currencies in use at the time, and a small supply of gold sovereigns...One party going into Burma took 10,000 genuine Burmese and Indian rupee notes, twenty sovereigns, and 15,000 Grenville.

The Japanese spotted the Malayan forgeries – SOE’s note was one-tenth of an inch too long, and smoke from the steamer on the back of the note was omitted. At the end of hostilities the remaining stocks of Grenville were destroyed in the presence of at least two officers of field rank.

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Japanese Genuine 10 dollar note
Notice smoke
Notice red security threads

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  SOE Counterfeit 10 dollar note
Where is the smoke?
Notice lack of security threads

Note: This comment about the missing smoke is incorrect. The variety is known as the “faint smoke” variety; there is smoke but not as dark as in the genuine note. Specialist Wong Hon Sum has pointed out:

When the war was over, the contention that the notes were “smokeless” was debunked. The smoke trail billowing from the steamship thought to be missing from the counterfeits was in fact present, only too fine to be seen clearly by the naked eye. The smoke, as finely hatched lines, could be seen under the scrutiny of a magnifying glass.

I suppose we might ask, if you can’t see the smoke with the naked eye…is it really there?

Regarding the Japanese forgeries mentioned above, according to the former head of SOE Force 136 in Burma, J.R. Gardner:

…The only forgery that I recollect having handled was a Japanese forgery of our 10-rupee notes. A couple of Sikhs had just been captured when I was visiting a forward unit and they were carrying a bundle of those good forgeries. They were good and would have passed easily in a bazaar.

Vic Brown says in an article entitled “A British Forgery of Japanese Malay Invasion Currency,” Bank Note Reporter, June 1976, that “The main differences are that the paper of the forgery bears no watermark, and no steam emits from the steamer on the back. The face, yellow and purple background, appears rather bright in comparison with most Japanese issues and minute engraving variations appear to exist in leaf veins.”

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Japanese Genuine 10 dollar note                                                                          OSS Counterfeit 10 dollar Note
Four Leaves                                                                                                          Three Leaves

The United States OSS forgery of the Malaya 10 dollar Japanese invasion money closely resembles the genuine note. The steamer on the back does have smoke so that cannot be used to identify it. However, on the back of the counterfeit, in the inner border just below the palm trees, leaf-like filigree is formed from three curved lines. In the genuine Japanese notes, at the base of the leaf, there is a short fourth line pointing downward. Curiously, the fourth line is also missing in the SOE counterfeits.

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A Possible Fantasy Overprint of Malayan Occupation Currency

This interesting propaganda overprint and Red three-star flag is found on the 1941 1, 5, 10 and 50 cents Japanese occupation notes for Malaya. I have seen them offered several times at various Internet auction houses for around $100. They are usually described as “Unknown issue.” I have looked through all the reference books and find no mention of them. I have to assume they are just clever fantasies unless someone can prove otherwise.

I should point out that there are some overprints on Malaya occupation banknotes that are at least mentioned in the literature. When the Japanese attacked Malaya there were Chinese in the country, former members of the Chinese 19th Route Army. Their sworn purpose was to assist and coordinate war efforts with the Allies, implement the three people’s principles (Nationalism, Democracy, the people’s livelihood) and to protect the welfare of the people. Note that regular use of “three.” At the end of the war as a souvenir they allegedly overprinted $1000 banknotes with the Chinese characters “Protect the Motherland” in four variations. In one variation a single red star is printed above the block letters and the year “1944” at left and right. In the second variation there are three stars representing the Malay, Chinese and Indian people and the Three-Star Movement. In the third variation three stars are placed vertically at the left and right. The final variation has just one star similar to the first type. Remember, these overprints only appear on thousand-dollar banknotes.

So what is the above overprinted bank note? I suspect someone with easy access to low values of the occupation currency printed the three star flag in an attempt to make the public believe that they were printed by the Chinese guerrilla Army and its Three Star Movement.

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The Kvernberg fantasy Overprint

Former typesetter and a reference librarian Anders Kvernberg seems to agree and points out that his research indicates a recent use of computer technology to produce these overprints. I quote a small part of his very detailed letter on the subject:

I have a banknote where the flag on this overprint is reversed compared to the one pictured in your article. There are also four lines of Chinese text. Perhaps most interesting is a hand stamp on the back, which reads “The Malayan Peoples’ Anti-Japanese Army” and “5th Independent Regiment.” interspersed with three stars and centered around the same text in Chinese.

The type specifications change throughout the text line: The type is upright in the center but slants increasingly towards the middle as it reaches the outer edges of the ellipse; The letter-spacing increases gradually towards the outer edges and the character width also increases towards the outer edges. I feel certain in saying that these are all tell-tale characteristics of the digital processing of a so-called "rainbow" text setup. The warped text is a result of a computer calculating the type specifications simply from the text baseline, not the overall balance of the lettering. As text reaches too far into the narrow ends of the ellipse, the baseline becomes a sharp curve and spacing, width, etc. will be calculated inconsistently. A rubber stamp produced from a lead-type print or hand-lettered design would typically have the whole text line spaced consistently and in such a way that the narrow ends of the ellipse are avoided.

In my opinion the hand stamp used on the back of this $5 note could not have been made in the 1940s. That of course leads me to believe that the designs on the front are also modern, especially since they are all printed in the same ink. (For the sake of argument I ran a very simple RGB (red, green, blue) color recognition on these scans, and both overprints fall within the same specter.)

Wong Hon Sum says in The Japanese Occupation of Malaya (Singapore) and its currency:

Even on the assumption that the overprints did in fact emanate from the occupation period, the simple print allows easy duplication which negates any effort in their authentication…These overprints cannot be treated as historical relics.

We can also discuss the Grenville forgeries of Burmese banknotes:

Louis Allen says in Burma: the Longest War that the British forces in the hills of Eastern Burma were readily supplied with counterfeit Grenville banknotes, one million ten-rupee notes and one million one-rupee notes. He says that the British printers De la Rue also printed 10 million Siamese ticals, three million Nanking dollars, and additional amounts of Malayan and Netherlands East Indian currency. 

The Burmese forgeries are on plain bond paper, without watermark. The forgeries were produced in Britain under Operation Grenville for SOE Force 136, which had responsibility for the Asian theatre, for use by guerilla units operating behind enemy lines. Force 136 had three subgroups: Force 136 (Group A), with responsibility for Siam and Burma; Force 136 (Group B), for Malaya; and Force 136 (Group C), for China. Operation Grenville was the code name for counterfeiting Burmese and Malayan currency.

An SOE advisor by the name of Woods put the number of counterfeit notes made in the UK one million ten-rupee Burmese notes supplied by July 1944 and 200,000 one-rupee Burmese notes supplied by July 1944 and another one million ordered. He said that 987,000 ten-dollar Malayan notes were supplied by July 1944 and 200,000 one-dollar Malayan notes were supplied by July 1944 and another one million ordered. Woods also commented that the Office of Strategic Service printed Burmese notes in the United States and sent 112,000 ten-rupee notes to Burma in May, 1944.

Michael Robinson says in the Banknote Reporter, Volume 27, No. 2, that the former head of Force 136 in Burma said that he recalls the counterfeits being given to agents who were Communist or Anti-Fascist People’s Freedom League. That would imply that the Force did not have great faith in them for his own agents but was willing to lose Communist agents to the Japanese.

Colonel John Borgerson of the U.S. OSS Detachment 101 wrote a short article in the Ex-CBI Roundup in 1984. He depicted a ten-rupee Burmese banknote and stated that it was made for the Americans in Calcutta. The American counterfeit was without watermark and red and blue silk threads.

The Colonel may be correct about Calcutta, but we have already mentioned that Major Willis C. Reddick told me that he had established an O.S.S. forgery plant in Washington DC at 25th and E Streets and produced Japanese occupation currency there.

Thomas N. Moon and Carl F. Eifler mention this plan in: The Deadliest Colonel, Vantage Press, New York, 1975. They say:

The Japanese had been cleverer in their handling of the people of Burma than in many other countries. Rather than the customary “currency” ground out by army presses, they issued banknotes stating: “The Japanese Government promises to pay the bearer on demand the sum of…” Impressed by this seemingly kind treatment, the acceptance of the Japanese claim of Asia for the Asians and a hatred of the British, the Burmese returned more good will than the Allies cared for. The solution? The OSS had a sample of the money picked up with an air hook, flown to Washington, and counterfeited by the hundreds of thousands. The operation was deemed so important that the OSS purchased a paper mill to make sure they got the right paper. There were never any cases where it was found to be counterfeit by the enemy.  Eifler also had a small supply counterfeited in Calcutta, but the work was such that it was easily detected by local experts. He was afraid to use it for fear it would give his agents away.

Eifler mentions that the Calcutta banknotes were planted with pro-Japanese collaborators to “frame” them. It was also given to natives in some parts of Burma to wreck the local economy and hurt the Japanese war effort.

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Colonel Carl Eifler

Carl Eifler was a member of the Los Angeles Police Department and in the U.S. Border Patrol. He served as an undercover Customs agent in Mexico during the prohibition era. A Reserve Army officer, he was called to active service when the U.S. entered World War II. One month after the Pearl Harbor attack Eifler was ordered to report to the Coordinator of Information in Washington, D.C., the agency that became the Office of Strategic Services, the OSS.

He commanded Detachment 101, a paramilitary organization operating against the Japanese in the Burma Campaign. Detachment 101 ultimately included 800 Americans and as many as 10,000 natives. During three years of jungle warfare, Detachment 101 claimed to have killed 5,447 Japanese, while another 10,000 Japanese soldiers were wounded or reported missing. The 250-pound hard-as-nails Eifler often dealt directly with General Stilwell who would greet him as “Buffalo Bill,” and then introduce Eifler to senior officers as the “Army’s Number One Thug.” Detachment 101 received a Presidential Unit Citation for its actions and Eifler was awarded the American Air Medal, a Purple Heart, and three Legion of Merit awards for his bravery.

He signed some of the forged Burma banknotes during the war as souvenirs for his Custom Agent pals, and upon his death one of the signed “short snorters” went with his military memorabilia to the Intelligence Museum at Ft. Huachuca. He was inducted into the Military Intelligence Hall of Fame by former President George Bush in 1988. He was once quoted:

I broke every law of God and man, but I never did anything for personal gain. I was out to win a war for my country, and you can't fight a lawful war.

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Malayan War Souvenir with "MK" block

There are also a number of Malayan $5 dollar occupation notes with the block letters "MK" or "MR" overprinted with the text “MALAYAN / WAR SOUVENIR” [in red] at the top and bottom, with a large red “VJ” in the center, and the words “Grim Memories / of / 1941-1945.” in script diagonally across the letters VG. They are exactly what they claim to be - simple souvenirs printed at the end of the war. It was once believed that only the 5 dollar denomination was overprinted by released POWs, and the other values were done later to reap profits. Schwan and Boling state in World War II Military Currency:

A source in Malaya reports that the overprint recently has been reproduced on high grade $5 notes, as well as $1 and $10 notes (not originally used).

Wong Hon Sum gives the overprinted notes more authority in The Japanese Occupation of Malaya (Singapore) and its Currency. He says in part:

In Kuala Lumpur, the capital of Malaya, the Japanese handed over [to the British] an estimate of 300 tons of invasion currency with the face value of 500 million dollars.

To publicize the Allied victory over Japan and the demise of invasion currency, certain parties (unknown)…overprinted the $5 Japanese invasion money…These leaflets were airdropped by the Allies beginning 20 August 1945…two types, one with block MK and the other with block MR.

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A Possible Fake $100 Overprinted Banknote

The $10, $100 and $1000 notes could be experimental pieces, or were produced by the printers for their own amusement.

Before the official surrender, the Japanese released the goods from their warehouses at bargain prices…When the British took over they incinerated large amounts of the worthless notes. But a portion was retained to be made into souvenirs and leaflets for distribution…

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A Possible Fake $10 Overprinted Banknote
Note the Japanese chops on the back. The text is:

Showa 18th Year [1943] and Kensazumi [Censored]

Recognizing the potential, in 1978 some enterprising money pundits in Kuala Lumpur created replicas of the V-J overprints on $1000, $1000, $10, $5 and $1 notes. They were well received and whetted the appetite of collectors.

These Malayan banknotes are also known with a 1946 calendar in red on the back. At least three variations of this calendar overprint have been found. Once again, the makers of these overprinted banknotes are uncertain. All of the calendar overprints that I have seen are on $1000 Malayan occupation currency. I have also seen a Malayan $100 banknote with a Japanese language overprint in the back that reads:

Naval Department, Seal of Penang State

I continually get asked to look at new items that appear on the market. In 2011 a new style counterfeit overprint appeared on the market. The specimen I saw was on a 1 dollar banknote. The overprint appears in a thick rather than a thin overprint with some un-inked areas in the center of the letters. This note was possibly overprinted by a brand new printer that had not studied previous genuine overprinted banknotes in depth.

When I first wrote this article I described the genuine and forged overprints in depth. That is not necessary now. Just know that the souvenirs notes do exist and 99% of those you might see offered are fakes.

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WWII American Advertisement

This WWII advertisement for La Monte Safety Paper is interesting because it depicts three denominations of the Japanese invasion currency used in Malaya. Although the ad actually was written to sell the paper produced by La Monte, it does call the Japanese currency “Phony Money” and “counterfeit,” and says that such money is worthless and meant only to destroy the economy of the conquered nation. The ad was prophetic in that after the 1945 defeat of Japan the money was worthless. The $100 Malaya occupation banknote is only worth about $1 a full 60 years after WWII.

Did the British counterfeit Japanese currency? We don’t know for sure, but there is some evidence that they studied such an operation. In The Scarlet Thread, Panther, London, 1959, Donald Downes says:

We learned that Japanese money was made with a special reed...A lampshade made of these reeds was discovered in someone’s house. Traced, it proved to have come from a chain store. ..Hundreds of thousands of these shades were in storage. Would they sell them to the government? No, they would donate them.

How the money was made and distributed, the extraordinary security measures taken to maintain secrets of the technical details of a really perfect counterfeit job are better not related – but it did cause the Japanese some serious trouble.

A number of British propaganda leaflets picture currency in an attempt to catch the eye of the finder.

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SB/94

The best was produced by the Forward Base of the Psychological Warfare Division of Southeast Asia Command. This leaflet, coded "SB/94", pictures the 1 rupee Japanese invasion money for Burma. The banknote is printed in green and stands out against a white background. On the other side of the leaflet the British have pictured a 5 rupee Reserve Bank of India-Burma, a 1 rupee Government of India note, and a 2 rupee Reserve Bank of India note. There are at least two varieties of this leaflet. Both have the single banknote in green on one side. They differ on the other side, one showing the three banknotes in green, the other showing them in red. The code is "SB/94" in both cases.

The propaganda text is:

Look to your money! Burmese! Rangoon is liberated The Japanese are finished in Burma and the peace returns to your country. Here is a word of advice about money. British money is good money. British Burma banknotes are good. India small coin and India notes are good. British military administration notes are good. But beware of Japanese imitations made to look like good money. Remember: All forms of Japanese currency - The Japanese rupee, the military yen and the military dollar - are bad. Possession of such money is not against the law, but the last of the Japanese who issued this money and promised to back it cannot do so as they are being thrown out of Burma. British money is good money. Japanese money is worthless.

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Dropped by the R.A.F.

A second British leaflet for Burma depicts an affluent Japanese man making off with food, jewelry, and other goods, and paying a despondent Burmese native with a small pile of the 1/4 rupee Japanese Invasion Money for Burma. Most text is in Burmese; English at the top says "Dropped by the R.A.F." The Burmese text is:

Song / However good the new way of life is / One still enjoys the old ways.

The implication is that however well the Japanese might be treating the Burmese at the moment, the British way is still old, familiar and better.

Canada

There was only one propaganda note prepared by Canada during WWII. Curiously, the Germans never even got to see it. It was printed for internal use only, to encourage support of the war effort.

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Canadian parody of German 10-reichsmark

The note chosen was the German 10-reichsmark Reichsbank note of January 22, 1929. The Canadian imitation is printed in green on white paper. The parody bears the additional text on the front left: “Occupation Reichsmark - Army of Occupation - (signed) von Brauchitsch.”

On the back the note bears a longer propaganda message in English:

What would it be like if ... ? This is what we will have to accept for our labor, our services, our wheat, our land, if we fail in our job to fight a total war. Our money is good only if Canada wins the war. This worthless money represents slavery, broken pledges, suffering, and humiliation. It must not happen here! BUY VICTORY BONDS .. . AND KEEP THIS 'BLOOD'MONEY OUT OF CANADA. Bonds or bondage . . . the choice is yours!

As you might expect, this note was used as part of a bond drive. It was issued during the mock invasion of the city of Winnipeg on “IF DAY,” 19 February 1942. Canadians dressed as Wehrmacht troops invaded and conquered the city. It was promptly renamed “Himmerstadt” by the victorious mock-Germans. The Winnipeg Tribune was renamed Das Winipegger Lugenblatt by Gauleiter Erich von Neurenberg. Hundreds of leading citizens were rounded up by “Gestapo” teams. The Canadians were shown exactly what they could expect under Nazi occupation. Apparently the lesson was learned because the people contributed $60,000,000, well in excess of the announced goal.

Exactly 70 years later this mock invasion was celebrated on CBS News Sunday Morning. On 12 February 2012, they showed newsreels of the mock invasion of Canada including local politicians being marched to concentration camps and two major news magazines that covered the story. The segment was entitled “The Day we Lost Winnipeg,” and ended with the comment that ultimately this campaign led to the sale of 23.5 million dollars in victory bonds.

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