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This is a dollar bill which to most of you watching looks pretty unremarkable, but flip it over and you will find that some pesky hooligan has scribbled Hawaii all over it.

Well it turns out that pesky hooligan was the US government, and it defaced it’s own currency as a way to ensure that Hawaii had it’s very own special type of USD.

Now Hawaii is great and all, but surely there are larger and more influential states in the union that should get their own currency before Hawaii right? Well, that wasn’t the reason the government did this.

During World War 2 these little islands were an incredibly important naval base in the middle of the pacific, and even to this day Pearl Harbor is the headquarters of the US Navy’s pacific fleet, but it also was and still is a regular place filled with regular people going about their regular days spending their regular dollars.

This was a real problem during the war in the pacific when a Japanese invasion was an imminent threat.

Despite the devastating Strategic blow this could have been, it would also give Japanese forces the ability to plunder a huge supply of American cash that would be left behind by banks businesses and individuals on the island.

An enemy force having access to such a huge supply of your home currency is bad news because it can be an effective tool in espionage, weapons procurement or even economic warfare.

So the solution was simple, all currency in circulation on Hawaii was to be marked as Hawaiian dollars. These dollars were exactly the same as American dollars and could even be used on the mainland if one was so inclined.

However, in the event that japan did successfully invade Hawaii the government could quickly declare that all bills market with this Hawaii stamp are no longer valid currency.

Now you might be asking. what about those poor people that happened to have Hawaiian dollars at this time? Well this was the reason that Hawaiian residents were incentivized not to carry that much cash, only having enough to cover their day to day expenses and then keeping everything else in a bank.

Also for what it’s worth chances are if the Japanese had invaded the people of Hawaii would probably have bigger problems on their plate than losing some cash savings.

Now the banks that held this cash simply reported it to the federal reserve and in a situation where the island was lost the central bank would simply reimburse them for the lost currency.

The united states put so much effort into this system because a lot of the strength of the US Economy comes from the trust that people have in it’s currency, and the guarantee that it will always be honoured by the government.

A situation where some cash in circulation is tainted because it came from an adversarial foreign power therefore the government won’t accept it would destroy the fungibility of the dollar and quickly ruin the trust that people had in it and his trust is never more important than during times of war.

Even today foreign US military basses remain mostly cashless, Using the Eagle card instead. This is estimated to save the US government millions of dollars a year in security and logistics, while also ensuring that freedom dollars remain exactly that.

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