A challenge coin is a small coin or medallion (usually military), bearing an organization's insignia or emblem and carried by the organization's members. They are given to prove membership when challenged and to enhance morale. In addition, they are also collected by service members. \
Origin of the challenge coin in the U.S.
Like many aspects of military tradition, the origins of the challenge coin are a matter of much debate with little supporting evidence. While many organizations and services claim to have been the originators of the challenge coin, the most commonly held view is that the tradition began in the Army Air Corps (a precursor of the current United States Air Force).
Air warfare was a new phenomenon during World War I. When the Army created flying squadrons they were manned with volunteer pilots from every walk of civilian life. While some of the early pilots came from working class or rural backgrounds, many were wealthy college students who withdrew from classes in the middle of the year, drawn by the adventure and romance of the new form of warfare.
As the legend goes, one such student, a wealthy lieutenant, ordered small, solid-bronze medallions (or coins) struck, which he then presented to the other pilots in his squadron as mementos of their service together. The coin was gold-plated, bore the squadron's insignia, and was quite valuable. One of the pilots in the squadron, who had never owned anything like the coin, placed it in a leather pouch he wore around his neck for safekeeping. A short while later, this pilot's aircraft was heavily damaged by ground fire (other sources claim it was an aerial dogfight), forcing him to land behind enemy lines, resulting in his capture by the Germans. The Germans confiscated the personal belongings from his pockets, but they didn't catch the leather pouch around his neck. On his way to a permanent prisoner of war facility, he was held overnight in a small German-held French village near the front. During the night, the town was bombarded by the British, creating enough confusion to allow the pilot to escape.
The pilot avoided German patrols by donning civilian attire, but all of his identification had been confiscated so he had no way to prove his identity. With great difficulty, he crept across no-man's land and made contact with a French patrol. Unfortunately for him, the French had been on the lookout for German saboteurs dressed as civilians. The French mistook the American pilot for a German saboteur and immediately prepared to execute him.
Desperate to prove his allegiance and without any identification, the pilot pulled out the coin from his leather pouch and showed it to his French captors. One of the Frenchmen recognized the unit insignia on the coin and delayed the execution long enough to confirm the pilot's identity.
Once the pilot safely returned to his squadron, it became a tradition for all members to carry their coin at all times. To ensure compliance, the pilots would challenge each other to produce the coin. If the challenged couldn't produce the coin, he was required to buy a drink of choice for the challenger; if the challenged could produce the coin, the challenger would purchase the drink.
Wikipedia 2011
Heraldry of the Florida West Coast Chapter 30 ASIS Challenge Coin
