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U.S. Depression Scrip


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The best website for this is http://www.depressionscrip.com which has a good history and a wealth of images.


From my collection.




For an article in the MSNS Mich-Matist, I wrote:


In 1929, the New York Stock Exchange recorded dramatic price collapses on October 24 ("Black Thursday") and October 29 ("Black Tuesday"). What is missing is a connection between the NYSE of October 1929 and the banks of Detroit in February 1933. It was there, in Detroit, on February 14, 1933, 40 months later, and 600 miles away, that the bank failures of the Great Depression began.

To be sure, bank failures were common in the years before 1929-1933 – and so were bank openings. From 1884 to 1921, the number of banks had sextupled from 5000 to 30,000. Not only were these generally small banks – some capitalized near the minimum $25,000 – but after 1921, the new operations were often branches. The federal Comptroller of the Currency had opened the door to allow city banks to compete in towns and villages. From that point, bank failures increased, as is to be expected from increased competition. In January 1933, it seemed that the summer of 1931 had been the lowest point possible and that a recovery was unfolding.

Speaking to a United Press reporter in Dearborn, on February 1, 1933, Henry Ford called the period 1923-1929 “the real depression.” At that time, two holding companies dominated finance in Detroit. One was the Detroit Bankers Company Group. The other was the Union Guardian Group, colloquially called “The Ford Group.” When the Union Guardian Group experienced pressure from withdrawals, it turned to the federal government for a loan. However, the Reconstruction Finance Corporation required that the Fords subordinate $7 million that the banks owed to them, which Henry Ford refused to do. President Herbert Hoover set up a meeting with Ford, Arthur Ballantine (Under Secretary of Treasury) and Roy D. Chapin (Secretary of Commerce). Chapin was a former Olds executive and co-founder of the Hudson Motor Car Company. He appealed to Ford as a fellow manufacturer. Ford replied that Hudson stock was traded on the NYSE, which Ford’s was not, and that a washout of the banking industry seemed inevitable. Chapin replied that if people do not have money to buy cars, Ford was in for hard times himself. Ford said that he felt young enough to start over from scratch. Ford said that everyone else ought to be prepared to get up a little earlier and work a little harder. He also said that he would withdraw his $25 million from the banks in the morning. He did not get to do that.

The next morning, February 14, 1933, Michigan’s governor, William Comstock, declared a banking holiday. The proclamation had been signed at 1:00 AM, published, and delivered to bankers when they arrived for the start of the business day. Two weeks later, outgoing President Hoover hesitated to declare a national bank holiday, so the newly-inaugurated President Roosevelt did just that. On March 21, 1933, the Michigan Legislature passed the McNitt-Green bill, granting the governor “dictatorial powers” over banks. Unlike Hitler, Mussolini, and Stalin – to whom he was favorably compared by newspapers in those troubled times – Gov. Comstock had modest goals and eventually declined further powers to control the insurance industry as well.







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During the Great Depression of the 1930s, hundreds of communities created their own currencies. I believe that 1200 of all kinds have been catalogued. That includes "wooden nickels" as well as debt instruments, such as that of Detroit, and other cities, that borrowed against future property taxes. In Lansing, Michigan, the city-owned utility, the Board of Water and Light, created emergency money that could be used to pay for city water and electricity bills. The city's own workers were paid some fraction of their wages in this scrip and it circulated well in the community.




Stamp scrip was also a popular alternative. It was based on the theory of "velocity" of money, then still a relatively new concept from economist Irving Fisher who endorsed the scrip of Wörgl in Austria. Different plans were put into place, but essentially, at each transaction, someone paid a small fraction of the note's nominal value as a "tax" or "subsidy" and a validating stamp or sticker was affixed to the note. Usually the backs were adorned, though sometimes the fronts, depending on the number of stamps needed. In Howell, Michigan, stamps were required every 10 days. The notes seem to have been intended to circulate from July 25, 1933 to December 6, 1934, a total of 509 days, 519 allowing for a 10-day period before the first stamp was due.




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The Howell Trade Dollar

by Michael E. Marotta

The Stock Market Crash of 1929 marked the onset of the Great Depression, but it took 30 months for the banks to fail. After all, the stock market had crashed often, sometimes twice in a decade. While the effects were not to be ignored, they were negligible in an agrarian, frontier society. The purpose of the stock market is to raise new capital for industrial ventures and in this it competes with other avenues. (Venture capitalists were known in ancient Athens.) So, it took three years of government intervention, first under Hoover's New Deal, then, finally under Roosevelt II, before total economic collapse occurred. And even so, all that was missing was money. Most people had the same assets (and liabilities) they held the day before and would hold the day after. What they needed was a medium of exchange. So, the Howell Board of Commerce issued "stamp scrip."

The First National Bank in Howell was placed in conservatorship on February 13, 1933. The Howell Trade Dollar was issued on February 22. Within two weeks, all 5000 notes were in circulation. This is telling because in order to get one, you had to spend $5. Some people bought automobiles in order to acquire many of them. Other people paid off accounts three years old. The notes circulated for 6 months and were widely regarded as having been successful.

What made this scrip special and subject to study on the national level is that it depended on the "velocity" of money. The holder of a note had to spend it every three days. When the note was spent, a 2-cent stamp was affixed to the back. After 52 transactions, the note was redeemed by the Howell Board of Commerce for a real dollar. (If the note was not spent, the holder still had to buy a 2-cent stamp.) The idea was to keep this money in circulation.

The notes had a natural tendency to accumulate in the shops of retail merchants. Therefore, they were sold to businesses, school boards, etc., at a 5% discount. Citizens Insurance of Howell was one of many businesses to pay wages in Howell Trade Dollars.

Some of the details of how the scrip was actually used are no longer clear. Some issues show some kind of tally. It is not likely that these are final evaluations, since about half the places are still open. Many of the stamps have double zeroes written across them. The tallies could represent the whole dollar value of the purchase which necessitated the stamp. If so, the 00 would indicate that the stamp was bought as a penalty for holding the note without spending it.

Also, according to the legends on the back of the note, stamps were required every 10 days. The notes seem to have been intended to circulate from July 25, 1933 to December 6, 1934, a total of 509 days, 519 allowing for a 10-day period before the first stamp was due.




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Thank you for sharing - a very interesting period in history. The only similar example I can think of outside the US were the Alberta "prosperity certificates" which likewise were $1 "notes" which required periodic stamps. If I remember correctly, they were later found to be unconstitutional money.

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Yeah... that is an interesting fact, that governments claim a monopoly on money. I mean, it is in the US Constitution Art I Sec 8 as an enumerated power. But I also point out that Congress shall keep and publish a journal (Article I Section 5). Other people could sit in the galleries, take notes - sometimes verbatim with shorthand - and publish their reports. At first, the US Senate kept no records. They were not required to, only allowed to if they wanted: "shall". So that is a double problem. They were empowered to keep and publish a journal but chose not to; and, again, to meet the public need, private individuals reported on the Senate. So, what if the government chose not to mint coins? To me, this is a grey area, a contradiction within the Constitution.

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The Detroit notes were some of the best around - obviously they looked to ABNCo for printing which resulted in a higher quality of note. I have some from Reading PA and they were locally printed at the time and are considerably cruder.


One of my great great grandmothers lost her life savings when the bank failed in 1932 - this was before FDIC, before Social Security etc.

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  • 2 weeks later...

The Alberta notes (ccg #5 above) are considered part of the same cultural context. The economies and of course the cultures of the US and Canada being so tightly bound, that the standard reference - The Standard Catalog of Depression Scrip of the US by Mitchell and Shafer includes Canadian issues. See also the website http://depressionscrip.com for Alberta Stamp Scrip.


Re Detroit (Scottishmoney #8 above), yes, the note has the "snap" that bankers like. I am not sure if a general taxonomy can be made by this, but the the Detroit scrip was a loan against property taxes. So they had more resources to depend on. Also, Detroit was a large, otherwise booming industrial city of its time, the Silicon Valley or Edinburgh of its time. Henry Ford told a newspaper that the "real" depression was six months in the past. Whether or not that was true, the fact is that they had reason to expect a temporary condition that allowed them to draw on their resources, and thereby to print high quality notes.


On that point, when I worked with the Traverse City Bay Bucks committee, I found an old-style printer, Backwoods Press, who could have produced intaglio on hemp paper, but the Committee Comrades saw no reason to waste money on money, which to them was just a utilitarian medium; so Traverse City got the proletarian version.

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