Financial History Issue 131 (Fall 2019) - Page 15

Left: Put Cleveland to Work Society, Inc. five cents scrip, 1933. Right: Pismo Beach, California, 50 cents clamshell scrip, 1933. to Sing Sing for embezzlement, having defaulted on loans worth today nearly half a billion dollars. It looked momentarily like the worst had passed. Some said stocks were now at bargain prices, presenting great buys. Not everyone was lulled. In the governor’s mansion in Albany, Franklin D. Roosevelt denounced “the fever of speculation.” But by the following Tuesday, October 29, the selloff turned catastrophic. In ensu- ing days, John D. Rockefeller was prevailed upon to break his habitual silence to deliver a message of confidence. “Believing that fundamental conditions of the country are sound,” he said, “my son and I have for some days been purchasing sound com- mon stock. The comedian Eddie Cantor joked: “Sure, who else had any money left?” There would be money after the country fell into the Great Depression. Only it wouldn’t always be the kind Americans usually carried in their pockets. It would be a new kind of emergency currency— scrip, a provisional certificate of money, maybe derived from “subscription receipt” or an old French word for purse, escrepe. In 1933, two New York newspaper- men, Wayne Weishaar and Wayne Par- rish, published a book called Men Without Money: The Challenge of Barter and Scrip. Now that the country had tumbled into the Depression, they wrote, “Economi- cally and socially the barter movement in all of its phases is the outstanding ‘story’ in the United States today.” Barter, of course, was the ancient medium of commerce, where people trade what they have for what they need from someone else. A farmer trades bushels of corn to a shoemaker for a pair of shoes. But in a complex society, making such matches was cumbersome. What do you trade if you are say, a lion tamer, or a mirror-silverer? So amid the shortage of legal tender, municipalities, organizations and busi- nesses came up with their own unof- ficial medium of exchange—scrip. Some of it was paper, mimicking Treasury bills. Some was wood, literally wooden nick- els. Pismo Beach, California, even issued clamshells as currency. One little town in western Washing- ton State between Seattle and Portland was particularly innovative. Tenino (Ten- NINE-Oh), named for an Indian tribe, suffered the closing of its only bank in 1931. With the next closest bank 15 miles away, depositors were encouraged to assign to the Chamber of Commerce 25% of their frozen bank assets in exchange for scrip certificates that local merchants agreed to accept for purchases, in amounts of 25 cents, 50 cents, $1, $5 and $10. It was printed at the local newspaper, the Thurston County Independent, but along with paper, some of the 27,000 certificates were run off on thin strips of “slicewood”—two rectangles of spruce, 3¼ by 5½ inches, with paper in the mid- dle. Word spread quickly with motor- ists detouring to Tenino to snap up the wooden money. In the end, of the $10,000 in scrip issued, only $40 was actually spent. Almost everyone wanted to hang on to it, which defeated the purpose but made Tenino world-famous in numismat- ics. To this day, wooden money is printed there for souvenirs. According to one leading scholar, Loren Gatch of the Department of Politi- cal Science at the University of Central Oklahoma, by 1933 the amount of scrip in circulation, in today’s valuation, was as much as $14 billion. There was so-called reputational scrip issued by corporations and organizations (and backed by their solid reputations) to meet payrolls or purchase goods. There was bank and financial scrip exchanged as certificates between financial institu- tions or issued to depositors in lieu of cash. There was barter and self-help scrip, exchanged in cooperatives where farmers traded crops for harvest help and goods. There were tax-anticipation notes issued by cash-strapped municipalities to their employees with certificates. Some scrip required the application of stamps each time it was exchanged. When a sufficient number of stamps had been affixed, the currency lost its value, adding an incentive  |  Fall 2019  |  FINANCIAL HISTORY  13