Irving Fisher: Stamp Scrip, 1933

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Content: Stamp Scrip (by Irving Fisher, 1933)

IV. STAMP SCRIP ADAPTED TO AN EMERGENCY SITUATION IN READING, PENNSYLVANIA

By Hans R. L. Cohrssen

The Chamber of Commerce to issue a certain amount of dated stamp scrip to the city, school board, county, factories and the merchants. For the amount issued to the city, county and school board, the Chamber of Commerce would receive anticipation tax warrants as collateral. Scrip issued to manufactures or others for payrolls must be bought with cash or checks. The scrip is to be issued in denominations of 50 cent and $1.00, to he stamped three or four weeks after issuing. Perhaps the first stamping will be Wednesday, April 5. The reason for having the scrip circulate without stamping in the beginning is (a) to issue any needed amount as a substitute for money which might not be available at this moment and (b) to get general acceptance of the scrip and gain time to fully prepare the public for the stamping feature through a publicity campaign.
The proceeds from this issue is to be used primarily for poor relief so as to help the unemployment situation, as a relief not only to the poor but the city, county, school board and the taxpayers as well.
The Chamber of Commerce will set up a clearing house service which operates in two ways.

1. Central Clearing House

The Central Clearing House is to take scrip off the hands of local retailers and wholesalers who cannot use it for out-of-town purchases. It passes this scrip on to local manufacturers who pay for it with out-of-town checks or cash which is then given to the local retailers. In the same way, any surplus of scrip is taken off the hands of the banks.

2. Branch Clearing House (3)

The Reading banks will accept scrip on deposit by merchants and others and pass it on automatically to their customers, rather to those of their customers who have agreed to draw a certain amount of scrip for payrolls. Any surplus the banks will not be able to dispose of immediately goes to the Central Clearing House. For outright redemption in cash asked at the banks by persons who have no regular accounts, the banks are entitled to charge a redemption fee of 4%. Scrip deposits will be carried by the banks on special scrip accounts. After all scrip has been retired from circulation, these accounts will be changed into regular accounts and the bank shall be entitled to charge a special fee for the service rendered. In case the banks should be in no position to cooperate with the scrip transactions they may permit the Chamber of Commerce to establish "scrip windows" in their offices from which the Clearing House Service could be operated. The scrip bills will contain the following information on the front side:

"READING, PENNA. STAMP SCRIP NOTE"

Issued by the Reading Chamber of Commerce to circulate at face value in trade and may be accepted for taxes until further notice by the City of Reading, County of Berks and Reading School District.
Redeemable at face value when fully stamped on back with 52 special "Reading Unemployment Stamps" upon presentation not later than May 5th, 1934.
Stamps for sale at all stores displaying signs.

On the reverse side there will be 52 spaces in which the dates of the 52 consecutive Wednesdays of one year are printed beginning with Wednesday, April 5. On a one-dollar bill, a "2" is printed in each space and on the fifty-cent bill, a "1" is printed. The bills are to be a little larger than the present one-dollar bills.

OPERATING THE PLAN

To begin with there might be a rather large issue in order to satisfy immediate payroll demands. The city, county and school board will soon receive large amounts of this first issue for taxes in arrears, etc. Part of this they will use again for payrolls. Any excess they may receive would be returned to the Clearing House which in turn would give back the same amount of collateral.
Another large portion will go to local retailers who will deposit it at their banks. Through the banks it comes in part to the Central Clearing House, that part goes to the Clearing House which could not immediately be exchanged by the banks into cash received from local manufacturers for payrolls. This excess over the amount which can comfortably be kept in constant circulation within the community will be exchanged by the Clearing House for the (perhaps temporarily frozen) collateral received at the beginning.
Thus any amount which was originally issued in excess of local requirements will be retired automatically.
After "stamping" has started we may expect that the scrip will move at greatly increased velocity as everyone will want to avoid the stamp tax. Besides stimulating business this will also reduce the volume of outstanding scrip considerably. The amount of stamp scrip which can be carried through a period of one year depends entirely upon the cooperation of the community, on the part of labor to accept it in payrolls, the merchants to accept it for goods and the Clearing House Service to prevent anyone from getting overloaded. It is desirable that public sentiment be aroused in order to carry through a large issue and thus get the greatest possible benefit for the relief of unemployment. It depends, of course, how the national currency situation will develop within the next few weeks or months to determine whether stamp scrip is merely an addition to ordinary currency for stimulation of trade and poor relief, or whether it will constitute the major part of the local circulating medium.

PLEDGES

In order to work the plan successfully pledges should be solicited from the following. (Of course, it will not be necessary to have everyone signed up. It is sufficient to have the leading men in each field; the rest will follow without much thinking or will be forced to follow for reasons of competition.)

1. Labor is to accept scrip in wages. Percentage according to conditions, but not less than 20%.
2. Retail merchants are to accept it at face value in payment for goods.
3. Manufacturers are to pay it to labor to the extent to which the laborer is willing to accept but not less than 20%, and to take it off ,the Clearing House hands regularly.
4. City, County and School Board are to accept it for taxes and use it in payrolls not less than 20%. Municipal employees are to accept it in salaries and wages not less than 20%.
5. Banks are to accept it on deposits as outlined above and are to aid in the Clearing House Service.

PLEDGE FOR LABOR CROUP

"We, the undersigned, agree and pledge the members of ........
to accept part or whole of our wages in Reading Stamp Scrip. We understand that by accepting a minimum of 20% of our wages in stamp scrip (and this might be up to 100% at times) for the period of one year, we help ourselves and our fellow workers towards more work and better conditions. We urge upon our fellow workers the following of our example."

PLEDGE FOR MERCHANTS, PROFESSIONAL MEN AND CONTRACTORS

"We, the undersigned, agree to accept in trade for goods and services rendered or work done 'Reading Stamp Scrip' at face value. We also pledge full support to make this issue of stamp scrip a success by displaying educational signs, distributing literature, and displaying signs 'Reading Stamp Scrip Accepted Here.'"

For Stores Only

"We also agree to sell Reading Unemployment Relief Stamps which we shall buy from the Reading Chamber of Commerce for cash paid in advance."

PLEDGE FOR MANUFACTURERS

"We, the undersigned, pledge ourselves to buy from the Chamber of Commerce or from our banks for cash, part or whole of our weekly payrolls (to the extent to which labor is willing to accept it) 'Reading Stamp Scrip.'"
"We understand that Stamp Scrip will stimulate local trade, reduce the burden of taxation and bring relief to the poor."

COMMITTEE ON MEDIUM OF EXCHANGE FOR BERKS COUNTY (4)

Merchants' Bureau
Retail Grocers
Mayor of the City of Reading
Chairman, Board of County Commissioners
The School Board
Chairman of the Relief Board
Manufacturers and Building & Loan Assn.
Contractors & Builders Exchange
Utilities Executive (Electricity)
Utilities Executive (Gas)
Utilities Executive (Telephone)
Railroad representative
Transportation Executive (Street Railway)
Attorney-at-Law
Federal Trades Council
Labor representative
Farmers' representative
Chain Store Executive
Wholesalers
Berks County Medical Society
Reading Industrial Loan & Thrift Co.
Insurance Interests
Welfare Federation
Manufacturers' Division of the Chamber of Commerce
Chairman, Board of Poor Directors
Milk Interests
Gasoline & Oil Interests
Hotel Interests
Automobile Dealers
Berks County Bankers Assn.
Reading Clearing House
The Penna. Trust Co. - The Berks County Trust Co.
The Reading Trust Co.
The Farmers National Bank & Trust Co.
Council of Civic Clubs

At this writing the actual operating of Stamp Scrip in Reading has not yet been started. All preparations have been made. One of the local banks, the Berks County Trust Company whose president, Mr. J. Turner Moore, is Chairman of the Operating Committee, has turned over to the Committee an empty bank building which is planned to be "Scrip-Headquarters." The Operating Committee will also appoint the employees of "Scrip-Headquarters." The following is a circular suggested to be printed and distributed in large quantities to the citizens of Reading.

READING-BERKS COUNTY STAMP SCRIP

Why? When President Roosevelt declared a national bank holiday and closed all banks, Reading-Berks County, like the rest of the country, was left without a medium of exchange. This bank holiday is not yet determined, and even if it were, business conditions as well as the unemployment situation in Reading and Berks County must be helped. Therefore, the issuance of a supplementary local medium of exchange of "Stamp Scrip" has been effected.

By What Authority? Under pressure from local business men, manufacturers, and banks, the directors of the Reading Chamber of Commerce authorized its officers to prepare for and effect the issue "Stamp Scrip" as outlined in a plan especially adapted for this community by Mr. Hans R. L. Cohrssen. The plan had been approved by a group of representative citizens who met on Sunday night, March 5th. This action was dictated by the need of the community:
Manufacturers were anxious to pay their workers in scrip as they learned they could not obtain cash;
Merchants were anxious to see trade continue inn spite of a shortage of cash; Labor simply could not afford to work and go without pay at the end of the week.
Thus, necessity was the prime factor in the plan to issue Stamp Scrip.

Who Will Operate the Plan? The President of the Chamber of Commerce has appointed an Operating Committee consisting of 10 bankers and 2 business men to operate the Stamp Scrip plan. This assures the utmost efficiency and competence, as the same men will handle the scrip who ordinarily take care of money in this community. They know best how to transact the various phases of the plan which are all essentially of a banking nature; they are best acquainted with the financial needs of this community, so as to give the best advice that can be had in any case.

This is the list of the members of the Operating Committee:

MR. MYRON H. CLARK Vice-Pres., Reading Iron Co.
MR. A. H. SMITH, Topton Berks County Bankers Assn.
MR. D. C. KERSTETTER, Hamburg Berks County Bankers Assn.
MR. L. M. RUTH, Wernersville Berks County Bankers Assn.
MR. S. C. HOUCK, Boyertown Berks County Bankers Assn.
MR. GEO. D. SNYDER Secretary Reading Clearing House & Berks Cty. Bankers Assn.
MR. HENRY B. HAGY Pres. Penna. Trust Co.
MR. J. TURNER MOORE Pres. Berks County Trust Co.
MR. GEORGE R. HOWELL Pres. Reading Trust Co.
MR. CHARLES T. CUBELLIS Assistant to the Pres. Farmers National Bank & Trust Co.
MR. HANS GRAMM
MR. WALTER G. WADE Pres. Peoples Trust Co.

This Operating Committee has set up a Scrip Clearing Service to perform the usual functions of a clearing house.

Who Can Get Scrip, and How? Any one who desires to get scrip may fill out an application at Scrip-Headquarters 308 Penn Street, for his needs. The Operating Committee will pass on this application before allowing the issuance of any scrip. The Operating Committee has determined to give scrip under the following conditions:

(1) To depositors holding savings accounts in any Reading or Berks County Bank or Trust Company up to onehalf the amount of the deposit, conditioned upon surrender of the pass book, and the earmarking by the bank holding the deposit of double the amount of savings
(2) To holders of check-accounts up to 50% of their balance upon presentation of an assignment on which is certified that the double amount has been earmarked against the withdrawal of scrip
(3) To manufacturers and other payers of wages upon transfer of negotiable collateral to be passed upon by the Operating Committee
(4) To the City of Reading, the County of Berks, and the Reading School District upon depositing anticipation tax warrants with the Operating Committee and subject to such other conditions and security as may be determined by the Operating Committee
(5) To all citizens upon delivery of other security, at the discretion of the Operating Committee.

How Does Scrip Look? Reading-Berks County Stamp Scrip comes in denominations of 50¢, $1 $5 and $10. The 50 cent bill is yellow, the $1 bill is green, the $5 bill is rose and the $10 bill is blue. It is printed on especially secured safety paper. When holding the bills against the light you will detect the watermarks. Protect yourself by looking at the watermarks before accepting any doubtful looking bills, or if you are still in doubt you may come to Scrip-Headquarters for verification. The reverse side of a bill is divided into 52 spaces in which the dates of the 52 Wednesdays of a year are printed.

How to Use. When you receive Stamp Scrip in your payroll or in payment of a bill you may accept it without any hesitation. Each scrip bill is fully backed by ample collateral - it represents the same value as your ordinary money bills. (You have seen above by what collateral it is backed.) Take your scrip to your merchant, grocer, department store to buy whatever you need. Almost every business in Reading has agreed to accept Stamp Scrip in trade. The City of Reading, the County of Berks, and the Reading School District have also agreed to accept it in payment of taxes due them. Look at the signs: "Reading-Berks County Scamp Scrip Accepted Here." If you do not want to spend your scrip, but want to save it, you may open a Scrip Savings Account at Scrip-Headquarters. Ask for further information there.

How About the Stamps? Until Wednesday, April 5th you will not have to think of the stamps. Beginning on that date a special "Reading Unemployment Relief Stamp" amounting to 2% of the face value of the bills has to be affixed on each Wednesday by the holder of a bill into the space dated for that particular Wednesday. Stamps may be purchased at all stores displaying sign. After a bill has been fully stamped it will be redeemed at face value at Scrip-Headquarters. When depositing Stamp Scrip in a Scrip Savings Account or with the Scrip Clearing Service it must be stamped with the next stamp due.

Why Stamps? There are a number of important reasons for the stamping of the scrip:
First, as we have seen, stamping self-liquidates the scrip; it makes the scrip pay for itself. This means also that each stamp on a scrip bill is security added to the collateral which has already been placed behind the scrip.
Second, there will be a profit from the operation of the Stamp Scrip plan which will be given over to unemployment relief after the costs of operating the plan have been paid, and all outstanding scrip has been redeemed.
And third, the stamping puts speed behind the circulation of the scrip. As each one wants to avoid the affixing of stamps, he passes his bills on very quickly, and so does everybody else. In other words, stamping makes the scrip more effective as a medium of exchange; it stimulates business; it wipes out debts.
Another advantage of the quick circulation of the Stamp Scrip is that only a small quantity is needed to transact as much business and do as much good as a many times larger issue of slowly circulating medium. It goes without saying that the smaller your scrip issue is, the easier it is to handle and to redeem; it is a smaller responsibility for the Operating Committee and for the community.
Other plans have been made for publicity, such as explanations and addresses by members of the Operating Committee over the local radio station. A Speaker Committee has been formed and the training of a number of men to, explain the plan is contemplated. The teachers in particular are to be instructed in explaining the plan to their classes.
Some of the policies of the Operating Committee have not yet been decided on; for instance, whether it would be possible for the Committee to issue its own negotiable papers to the merchants who deposit scrip with the Scrip Clearing Service. The manufacturers' negotiable papers received for scrip would then be sent out directly for clearing by the Scrip Clearing Service. This would simplify scrip clearing, as it would permit the Scrip Clearing House to give the merchants negotiable papers reading for the same amount of dollars as they have deposited in scrip.
Another point is "Premature Cash Redemption," or exchange of scrip into dollars at any time. The redemption fee has not yet been decided on.

(3) On account of the emergency directions issued by the Secretary of the Treasury, prohibiting banks to handle scrip, banks were unable to cooperate to that extent. This has been met in Reading by setting up "Scrip Headquarters." See explanation on the following pages.
(4) Called upon to approve of the plan as presented by the Chamber of Commerce authorizing the President of the Chamber of Commerce to appoint an Operating Committee to put plan into effect if needed.