Military Coin or Challenge Coin History

One version:

During World War I, American volunteers from all parts of the country filled the newly formed flying squadrons. Some were wealthy scions attending colleges such as Yale and Harvard who quit in mid-term to join the war. In one squadron a wealthy lieutenant ordered medallions struck in solid bronze carrying the squadron emblem for every member of his squadron. He himself carried his medallion in small leather pouch around his neck.

Shortly after acquiring the medallions, the pilot's aircraft was severely damaged by ground fire. He was force to land behind enemy lines and was immediately captured by a German patrol. In order to discourage his escape, the Germans took all of his personal identification except for the small leather pouch around his neck. In the meantime, he was taken to a small French town near the front. Taking advantage of a bombardment that night, he escaped. However, he was without personal identification.

He succeeded in avoiding German patrols and reached the front lines. With great difficulty, he crossed no-man's land. Eventually, he stumbled onto a French outpost. Unfortunately, the French in this sector had been plagued by saboteurs. They sometimes masqueraded as civilians and wore civilian clothes. Not recognizing the young pilot's American accent, the French thought him a saboteur and made ready to execute him. Just in time, he remembered his leather pouch containing the medallion. He showed the medallion to his would-be executioners. His French captors recognized the squadron insignia on the medallion and delayed long enough for him to confirm his identity. Instead of shooting him, they gave him a bottle of wine.

Back at his squadron, it became a tradition to ensure that all members carried their medallion or coin at all times. This was accomplished through a challenge in the following manner: a challenger would ask to see the coin. If the challenged could not produce his coin, he was required to buy a drink of choice for the member who challenged him. If the challenged member produced his coin, the challenging member was required to pay for the drink. This tradition continued throughout the war and for many years after while surviving members of the squadron were still alive.

Most detailed version we found on the web:
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Just about every new author to take on this subject adds a new take to "The History of Challenge coins". Indeed many articles have been written on the subject. Here's what we know of Military Coins and Challenge coins.

The use of metal tokens to commemorate special events dates back many centuries. From Military Medals to locally produced tokens the practice is as old as metal work itself.

As a practical matter we can see the use of custom coins in the USA dating back at least as far as 1824. There are Campaign Coins from the 1824 election supporting Andrew Jackson for President. It is fair to assume that this practice didn't originate in that year so custom coins may date back even further.

Many organizations produced custom coins from very early in our history. There are Masonic Coins sometimes called Masonic Tokens dating back to the 19th century. Some Lodges are currently minting Masonic Coins so the tradition continues.

Often a distinction is made between Military Tokens and Military coins. Certainly some custom coins were minted to replace US currency that was in short supply during the Civil War. There are, however, presentation coins dating from the civil war. There is a coin that has the flag of the US on one side and the saying "If anyone tries to tear it down, shoot him on the spot" dating from 1863. The flag has the Phrygian cap (often called the Cap of Liberty) atop the staff. This symbol is incorporated into the current US Army Seal. There are, in fact, over 11,000 known Civil war Military Coins and tokens. These were divided into two basic types. As we have mentioned some were minted to replace US currency that was being horded. Suttlers to the Union and Confederate armies would issue tokens sponsored by their stores and redeemable for merchandise. In addition to this there are Military Coins that clearly share the same purpose as today's coins. In addition to the above coin that interestingly bears the name "Dix" (Camp Dix didn't open until 1917). The post was named for Major General John Adams Dix who served both in the war of 1812 and the Civil War. Is this coin a reference to him? If so it could be quite a unique find indeed. There is a military coin bearing the date 1863 that commemorates the USS Monitor sunk in that year, and bearing the inscription "Our Monitor".

The above, based upon the most superficial research clearly establishes the use of Campaign Coins to at least 1824 and Military Coins to at least the civil war. This seems to refute both commonly held "origin" stories, the first dating the use of Military Coins to world war one flying units and the second dating them to the Vietnam Conflict. Either of these stories may account for the use of Military Coins or Unit Coins as "Challenge" coins. The practice of challenging a unit member to produce his coin or "buy a round of drinks" is probably fairly recent. Even so the tradition of "Challenge Coins" has become an integral part of the military lexicon of today.

Soldiers Magazine article on Military Coins or Challenge Coins:
Taken from Soldiers Magazine Aug 94 Vol 49, No 8
Story by Maj. Jeanne Fraser Brooks

Within days of his liberation from a prisoner of war camp, Sgt. Troy Dunlap received two Iraqi coins from an employee of the hotel where he and the other U.S. POWs were being housed by the Red Cross following their release. "One for you and one for me," he told Maj. Rhonda Cornum who also had been taken prisoner when their UH-60 helicopter was shot down by members of Saddam Hussein's Republican Guard during Operation Desert Storm. "We joked that we could use them like military coins. ... We planned how we would use the Iraqi money to 'coin' our friends when we got back to Fort Rucker," Cornum wrote in her book, "She Went to War."

"Coining" is a relatively new U.S. military tradition, but has roots in the Roman Empire, where coins were presented to reward achievements. In the U.S. military, the tradition goes back to the early 1960s. A member of the 11th Special Forces Group took old coins, had them over-stamped with a different emblem, then presented them to unit members, according to Roxanne Merritt, curator of the John F. Kennedy Special Warfare Museum at Fort Bragg, N.C.

A former commander of the 10th SFG picked up on the idea, becoming the first to mint a unit coin for a U.S. military unit. The 10th Group remained the only Army unit with its own coin until the mid-1980s, Merritt said, when "an explosion took place and everybody started minting coins." Originally, the coins, which bear the unit crest on the front and whatever design the unit wants on the back, were given out by commanders and sergeants major to recognize outstanding acts performed by soldiers in the course of duty.

"They're a real morale booster," said Duvall, "and tell the soldier, 'you're a member of our unit' which builds unit cohesion. The soldiers carry their credit card, driver's license and unit coin - their wallets are permanently deformed." Don Phillips, a former commander of the 20th SFG, designed a coin for his unit and presented it to his soldiers when he retired. "Another unit asked me to make a coin for them, and then another, so I went into business making them," said Phillips. To date, Phillips has made coins for "between 600 and 700 units." The tradition has spread to the other services and is even being adopted by paramilitary units like the U.S. Marshall's SWAT team, according to Phillips.

The proliferation of coins and their availability to the general public in post gift shops has caused Dr. Joseph Fisher, Special Operations Command historian, to view them as "not as special as they used to be; there are so many of them out there now." But that doesn't stop Fisher from carrying his with him at all times.

Making the coins available for purchase has added yet another dimension to the tradition - collecting. SMA Richard A. Kidd has approximately 300 of the coins on display in his office "museum." He has even issued an open invitation to soldiers visiting the Washington, D.C., area to stop by his office "even when I'm not here" to see his collection of unit memorabilia.

According to Phillips, World War II soldiers were given a coin when they mustered out of the service.

But it wasn't until the Vietnam era that a "challenge-response" was added to the tradition of giving unit members a coin. The initial challenge was to prove membership in a particular unit by producing the unit coin.

That was followed by the addition of the requirement to "buy a round" if a soldier didn't have the coin. "Buying a round isn't the only challenge these days," said Phillips. "Drinking is frowned on, so the challenge can be anything. If you don't have your coin, you get the detail." Kidd still uses the original premise in distributing coins and carries some with him whenever he travels. "It's a way to immediately recognize above-and-beyond - the-call-of-duty actions on the part of a soldier when you're in the field," said Kidd.