Hawaii's Secret WW2 Doomsday Plan

Economics Explained Essentials
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23 Video Views·Oct 28, 2022
This is a dollar bill which to most of you watching looks pretty unremarkable,
but flip it over and you will find some pesky hooligan has scribbled hawaii all over it.
Well it turns out that pesky hooligan was the US government and it defaced its own currency
as a way to ensure that hawaii had its very own special type of US dollar.
Now hawaii is great and all but surely there are larger and more influential
states in the union that should get their 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 harbour is the headquarters of the US navy's pacific fleet.
But it was also and still is a regular place filled with regular people going about their
regular days spending their regular dollars. This was a very 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 islands.
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 marked with this hawaii strip
are no longer valid currency. Now you might be asking,
what about those poor people that happen 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
the 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 their
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 its currency,
and the guarantee that it will always be honored 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 have in it. And this trust is never more important
than during times of war. Even today foreign US military bases 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.
