The newspaper acts a a cheap and readily available in quantity "stiffener" when the fabric's stitched / embroidered.
I have a couple of WWII era German "trade" badges with the remnants of newspaper on the back although it's almost all removed leaving the layers of paper sandwiched out of sight between the embroidery and fabric.
I have some Vietnam War American insignia with newspaper used as a stiffener but I think they're fake or repro with the newspaper serving a practical purpose but also possibly adding a touch "authenticity".
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