Dollar Dilemma: Why the U.S. Burned $200 Million Cash in Hawaii During World War II

U.S. Currency Tactics in WWII Hawaii

World War II caused countries to take many unprecedented steps, in the face of unexpected scenarios. The United States had to take one such unique call in Hawaii, after being taken aback by the attack on Pearl Harbor by Japan in 1941, Mental Floss reported. Believing that Hawaii could be the next target of Japan's military, U.S. authorities got concerned about their paper money in circulation in the region. They took various steps to ensure that the enemy did not lay hands on the currency, and cause an economic crisis. Here are five ways in which the U.S. handled the currency crisis in Hawaii during and after World War II.

Recalling all U.S. Currency

After the attack on Pearl Harbor, U.S. military officials became scared of the prospect of a similar situation in Hawaii, Pearl Harbor reported. The authorities understood that the Invasion of Hawaii would give Japan the perfect launching point for a strike against the U.S. mainland. The biggest cause of concern would be the Japanese troops getting access to millions of dollars of American money, that they, in turn, could use to fuel their war efforts. To prevent such a scenario U.S. authorities recalled all of their paper money from the region. The order was passed by Lt. Gen. Delos C. Emmons, on January 10, 1942. Civilians were instructed to trade their notes, starting from June 25 of the same year. To, make the proceedings easy on civilians Hawaii overprint notes were introduced. 

Capping the Cash

Not only was currency recalled, but certain caps were set for individuals and businesses, on how much money they could transact with at a particular time even with the new notes, Ke Alakai reported. It became illegal for a person to own more than $200 in cash, while the limit was extended to $500 for businesses. This was done because the authorities suspected that Hawaii citizens, had begun hoarding money expecting a Japanese strike. Authorities understood that in the case of invasion, this hoarded money could create a big problem for them, as it could go into the hands of Japan. Such limitations further made it hard for civilians to use any of the American currency notes they might have collected, as officials had been permitted to monitor their expenses.  The rule was applied strictly and by August 15, 1942, no non-overprint notes were left in Hawaii and no other paper currency could be used on the island without special permission.

Hawaii Overprint Notes

To make the changes easier on civilians, authorities released Hawaii Overprint notes, Harford Coin Company reported. Civilians were supplied with a special series of notes, made for circulation only in Hawaii. The notes had distinctive brown seals, along with bold black "HAWAII" overprints on both front and back. These notes could not be used for transactions outside the island. This move ensured that even if Japan did seize Hawaii, the notes they would have in their custody, will not be of any use to them. The new notes were released by authorities in July of 1942.  It was the only form of paper money legal for transactions in Hawaii from August 15, 1942, until October 1944. People required special licenses to use any other form of paper money or currency during this time. 

Burning the Dollars

World War II was stressful for U.S. authorities, so instead of stockpiling, officials decided to burn the notes they had collected in the recall, Mental Floss reported. The recall reportedly led to a collection of $200 million. It was important officials took care of this large sum of money as quickly as possible, to prevent it from going into the hands of the enemies. The option of burning had its own set of challenges. Initially, the authorities took the money to a crematorium in Honolulu and soon found it very time-consuming. Trying to get rid of the currency in their hands as quickly as possible, officials began to look at other methods. They decided to employ some furnaces at a sugar mill in Oahu to get the job done.

Fate After the War

The Japanese capture of Hawaii never happened. In October 1944, all restrictions on any form of paper money were lifted by the authorities. Even after the ban on U.S. currency was lifted from Hawaii, the special notes remained legal. In late 1944 and 1945, the notes were used for transactions in US-occupied areas of the Pacific. Many soldiers returning home after the war took the special notes as souvenirs.  At present, very few Hawaii overprint notes remain in circulation, Mental Floss reported. They have become a collector's item and can sell for a few thousand dollars up to $52,000 or more.