Why would you need a slug to use the phone instead of a proper nickel or a dime?

I can dimly remember when almost every vending machine had engraved on the coin slot escutcheon "NO SLUGS." I had no idea that the legend might be referring to anything more sophisticated than those round pieces punched out of electrical junction boxes.

Later, however, I was to discover that a penny immersed in a certain acid solution for the duration of a high school chemistry lab would be interpreted by at least one city's parking meters as being a dime. As the statute of limitations has long since granted me immunity, I can confess that the four cents profit I made on each one I sold to classmates adumbrated a career possibility to me until my better nature deterred me from such a risky life path -- that and my desire to attend West Point rather than matriculate at San Quentin.

I cannot help but notice the wonderful hand painted decorations on the walls. The lower ares between the booths also look to be faux cut stone.

The Antique Telephone Collectors Association reports about this 3 slot payphone:

The original design for the 3 slot pre-pay paystation was the result of an engineering partnership between the Gray Telephone Paystation Company and the Western Electric Company. This partnership was formed after the loss of lawsuits by the Bell System brought by Gray Mfg.
......
The history of the 3-slot payphone is a part of Americana that spans almost 70 years.

Right above the vault compartment you may read:
“The Gray Telephone Paystation Company and Western Electric Co. Inc. Makers”

I think the WARNING on the back wall of the booths is titled "An Ordinance Prohibiting the Use of Slugs...". A little research shows that Chicago has a law against using a slug in a fortress pay phone to make a free call, or trying to fish a coin out of the coin box. It's still on the books, at the Municipal Code of Chicago, section 8-8-180. That section only has two clauses, but I think the warning in the booths also includes section 8-8-190, which is the penalty.

It shall be unlawful for any person to insert, or to attempt to insert, into the coin box or money receptacle of any telephone, any slug, button, or other substance, or to manipulate or operate, or to attempt to manipulate or operate, in any manner whatever, any telephone instrument or any mechanism or device connected or commonly used therewith, with the intent to obtain telephone service without paying therefor.

It shall be unlawful for any person to insert, or to attempt to insert, into the coin box or money receptacle of any telephone, any slug, button, wire, hook, or other implements or substances with the intent to obtain from such coin box or money receptacle a legal tender coin of the United States.

8-8-190 Violation - Penalty.

Any person violating any of the provisions of this chapter, where no other penalty is provided, shall be fined not less than $5.00 nor more than $200.00 for each offense.

So ... why does the sticker want you to buy a slug, that the sign tells you that you can't use?

This concept is new to me. Was it intended to discourage nickel thieves? Or was there another reason?

... when your chances of being killed in your automobile by someone using the telephone were basically nil. *sigh*