Tuesday, September 18, 2007

Not Real Money, But Scrip...

Until the late 1950's, when changes in federal and state laws, along with changing economic realities doomed the practice, many companies issued tokens, or scrip, for use by their employees in company run stores. This was especially widespread in the coal fields of Appalachia, where many miners also lived in company owned towns. In these company towns or "coal camps," the only store in town was usually owned or run on behalf of the coal company.

In theory, scrip was an advance against unearned wages and usable only by the employee to whom it was issued. In practice, many miners were never able to fully retire their debt to the company store and scrip became the unofficial currency of the community.

Paper scrip was first used by the Coal Companies. Metal scrip was issued after a determination was made that the paper scrip was not durable. Many companies had an identification punch in the scrip to help the store clerk identify it as their own. Each company had their own scrip and accepted no other.

Company scrip was often accepted at local schools for lunches, theaters, churches and saloons. Other local merchants would also accept the scrip, but taking a 20% discount.

The best working areas in the mines were often given to the miner drawing the most scrip against his wages. Refusing to draw scrip as pay for working in the mines often meant early discharge.

Camden-Carroll Library
Scrip pamphlet from the Beckley Exhibition Coal Mine


Mike said...

Scrip is still in practice in one local community as a way to thumb its nose at corporate chain stores.

Floyd Hours

MountainLaurel said...

I have a piece of cardboard scrip. It's the only one I've ever seen. I also have some metal scrip as a reminder of where we came from.

Tennessee Jed said...

As I understand, since America went off the gold and silver standard of backing currency our dollar is essentially scrip. Wherein the money we earn is actually on loan to each of us with interest, just like owing your soul to the company store. We need to take our country back while we can.

Eric Drummond Smith said...

Tennessee Jed,
An interesting and valid point - off the metal standards money tends to devalue as soon as it is earned; if the international money market is going against you. Of course, having a non-metal standard is generally regarded as perfect for very wealthy states, since it frees your economy from most threats of depression - not recession or downturns, but from that deep sort of slide which lasts for a decade or more and which generally represents more than 10 years. Why? All you have to do to devalue issued money is flood the gold or silver to devalue the currency - gold rushes, for instance, tended to causes economic downturns in many states that they were not occurring in. Alternatively, all you have to do to cause runaway inflation in a metal-based currency is over export the precious metals - like China experienced when it began trading with Western states, leading to its economic devastation and ultimately accelerating its drive towards revolution. This is not only an economic problem, it is a political one; imagine if East Asian or Middle Eastern states with huge gold and silver reserves decided, as a protest to American or some other state's political actions to flood the market with silver and we were on the silver standard. Odds are it wouldn't happen because before that they could hold us hostage, threatening us and forcing us to comply to their policy goals. This is, in fact, one of the great problems with having physical currency at all, even if it isn't money based; today the threat is to trade their holdings of physical dollars back into the market, thus devaluing the greenback; of course, to do that would lead to a rush, then the collapse of the dollar's immediate worth. But, since the dollar's value is largely based on the general wealth of the Union, rather than on a single or few metals held in reserve whose real value can be disipated by actors other than the US, the result would most likely be an unpleasant recession rather than an unendurable depression. At least, that is why I, despite my misgivings, support the current valuation of the dollar - of course it is also why I want the national debt lowered, but hey, there it is.

Jeremy Peters said...

Scrip not only affected miners, it impacted the local economy. When folks began accepting mining jobs and scrip as payment for their labor, they also sacrificed the barter economies that had previously been in existance for decades. By utilizing the company store and introducing goods at inflated prices that were not locally produced, coal companies wielded tremendous leverage over not only their employees, but the communities in which they operated. Miners no longer had the time to produce their own goods, and therefore could not engage in bartering. Suddenly, the tradable value of a locally produced chicken, a bushel of beans, a cord of wood, or whatever the tradable commodity; had deminished economic value because they were outside the artificial system created by coal companies. This economic shift was most acutely felt once a coal boom ended and the artificial economy collapsed with the coal company.

A couple of modern examples that correlate to scrip: frequent flyer miles or similar points system; and arcade tickets, which are used to purchase over-valued stuffed animals or toys.