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Content: Stamp Scrip (by Irving Fisher, 1933)





STAMP SCRIP can very appropriately be sponsored by private organizations, such as exchanges and chambers of commerce; but my belief is that municipal governments, generally speaking, are in the best position to execute a local plan, because a municipality has the best chance of enlisting the support of every element in the community.


It is more than likely, however, that the municipality may derive its first impulse from a committee of private citizens; and if there be such a committee, it should not rest after enlisting the authorities, but travel with them.


Both the committee and the town authorities should first know their scrip-lesson. Let us here assemble the points which may be gathered from the few cases now on record.
First. The end depends upon the beginning; and the beginning, in this case is a matter of
(a) interesting enough people of enough different kinds.
(b) educating them enough.
(c) enthusing them enough.
Second. The Woergl type of Stamp Scrip (the dated type) is far superior to the Hawarden type, in which the stamps go as you please,
(a) The dates insure the cooperation of those who use the scrip by enlisting their self-interest. It is to the interest of the passer of a scrip-certificate to see that it passes, lest some day it costs him a dollar to pass a dollar. It is to the interest of the recipient to check up on the passer and see that the scrip has been duly stamped. Thus, both passer and recipient improve their scrip-education by daily practice, and the recipient serves the city as a scrip-watchman.
(b) The dated type moves faster; and the faster it moves, the smaller the amount of it that you have to issue and guarantee.
(c) It is more convenient to have the redemption all at one time than straggling.
Third. Redemption should be permissible at any time; but in order to prevent the privilege from being too often exercised by the more timid souls, it should (as in Woergl) be made more costly than the next transfer of the scrip. For instance, it might be provided (and stated on the face of the scrip) that to redeem the certificate prematurely one must, besides affixing the neat stamp to advance, also take a discount of 2 to 4 per cent.
Fourth. To prevent petty disputes across counters, there might be means of making change in scrip denominations of less than $1.00 - 50 cents being perhaps the lowest. Also there might be a requirement that when a dollar denomination is passed for less than a dollar's worth of goods, the purchaser shall provide the tradesman with the next stamp in advance. Also it might be provided that where a dollar denomination is offered for less than a dollar's worth of goods, the tradesman may have the privilege (as in Knoxville) of keeping the balance, and issuing credit for it on the next purchase by the same customer.
All these provisions might be printed on the face of the Scrip; but probably it will be sufficient to have most of them merely included in a prospectus referred to in the general agreement signed by the chief elements of the population as a preliminary to the issue of the scrip. The scrip might, in turn, refer to this agreement.


In what ways can Scrip be Issued?

(1) Some can be put at the disposal of the city's Welfare Department.
(2) The city can hire otherwise jobless men with it (on worth-while projects only).
(3) The city pay roll can use a portion.
(4) The pay rolls of large private establishments also can do so.
(5) If city work is to be let out to contractors, the city can offer a subsidy to the lowest bidder - that is, to the bidder who asks the lowest subsidy; no subsidy to exceed 30 per cent of the contractor's expenditures. Payment to be only on completion of the job and on proof of the expenditures. (This is the anti-depression plan of Col. Malcolm C. Rorty as it would apply to Stamp Scrip.)
(6) Loans on balance sheet could be made to any business whose assets are sound, but not liquid enough to obtain banking accommodations.
(7) In the case of failed banks, the city could buy some portion of the depositors' frozen deposits, thus enabling currency to get into circulation in advance of the actual distribution of the bank's assets. Scrip could also be used to compensate the depositors for part of their losses.

How Much Scrip Can be Absorbed?

We have the following data:
In America, the turnover of money (credit currency - we have no figures for other money) is, in normal times, about once a forthnight. But this is a national average. It varies according to the nature of the locality, being slow in sparse settlements and fast in crowded ones. (1)
In a depression, this turnover is reduced by 50 or 60 per cent.
Scrip turnover in Russell, Kansas (undated type), was once every three days.
Scrip turnover in Rock Rapids, Iowa (undated type) was once every four days. (2)
Scrip turnover in Woergl (dated type) was estimated at 20 times a month; but what had been the Woergl turnover for conventional money, I am not informed.
As to the distribution of the scrip after it is in circulation, we learn from Russell (a town of 2000 inhabitants) that the sale of stamps was distributed ,as follows:

Labor and general population 51 per cent
Retailers 49 per cent

How far these figures represent the relative turnovers of the corresponding classes in your own locality can probably be more or less roughly ascertained from the Census of Retail Distribution by Cities and Counties which may be available through the local Chamber of Commerce.
For some localities the claim is made that large retail establishments, like department stores, do two-thirds of the retail business. As to your own locality, local authorities will probably have some guess about these proportions.
Let us construct a case based on the above supposed data. (3) You have surveyed the uses, and you arrive at a possible issue of $10,000; but the figure is tentative.
You expect this $10,000 to turnover say 20 times a month. This means $200,000 a month or (roughly) $7500 a day.
Of this daily $7500, 48 per cent is handled by the retailers - that is, $3600. The small retailer who handles but a few dollars a day may be trusted to dispose of his intake for home uses and in the purchase of supplies and the payment of wages.
So we arrive at the case of the large establishments such as department stores and chain stores. These may handle two-thirds of the $3600 or $2400. But many of their purchases are made out of town where the town scrip will not circulate; so they will probably have some of it left over every night, for the bank; - to be on the safe side, say the entire $2400.
The bank, therefore, becomes important as a clearing house for the scrip of the larger retailers. Can the bank dispose of $2400 of scrip every day?
If not, the proposed issue should be changed accordingly. But first, to facilitate the banks in reissuing the scrip, all who have pay roll demands, including the town, might be induced to re-arrange their pay roll clays through the six days available, so as to even up the daily demands on the bank.
If too much scrip has been issued there is no reason for alarm. Follow the Woergl example, and keep your excess with the issuing body - in other words re-issue only as much as can comfortably be absorbed by your community. Forcing excessive amounts into circulation would tend to lessen its purchasing power as compared with ordinary dollars. For rural districts, where the speed of circulation cannot be expected to equal that of a fairly populous town, the two per cent weekly "stamp tax" recommended in this text might well be deemed excessive. In such cases, a figure might be adopted more appropriate to such special conditions. For instance, to the Canadian Prairie States, I have recommended two per cent bi-weekly. In such case, the issue would naturally run for a considerably longer period - two years or even four.

Have At Least One Bank

To win the cooperation of the banks (one will do to start with)
(1) It should be provided that anyone making a deposit of scrip in the bank must pay for the stamp next due, or, what amounts to the same thing, be debited for that amount. This may be considered a service charge to be pocketed by the bank if the scrip is passed on by them before the next Wednesday.
(2) For premature redemption, the bank should receive, in addition to the foregoing, a penalty of 2 to 4 per cent and should reissue the scrip.
(3) The bank should be free to discriminate, in this matter, in favor of large depositors and of their own customers - that is, to charge a lower rate for a larger volume.
(4) The bank should hold the redemption fund and perhaps charge interest on it. The rate, however, should be low since the guaranty fund will involve little more than bookkeeping. Moreover, the bank should remember that it will share in the increased prosperity brought about by a well administered Stamp Scrip plan. Anything that stimulates business will stimulate business borrowing.
As to the convenience of the general population, it is to be noted that the larger the population, the greater is the sub-division of functions per capita; so that the danger of clogging up certain classes of the community with surplus scrip is reduced, not merely in proportion, but per capita. That is, a larger town can absorb not merely more scrip, but more of it per capita.
Perhaps it is better not to be too laborious over the actual figures; the main point is to begin with not too large an issue; and then prepare some agency for watching its subsequent behavior for whatever lessons may be learned. (4)
After the estimates are made, you should plan to inject the scrip into the circulation at all points as nearly simultaneously as possible, so that all of it will be in circulation within one week of the first launching.


The Key Men - The Public

It is all right to do a little selling of the idea as you go along; but the concentration would naturally be first on the "prospectus" and second on the selling.
The experience of Woergl shows that it is not necessary to sign up everybody. If some of the more important business houses accept the scrip, the rest will have to follow suit for reasons of competition. As some of the leading citizens accept and use the scrip, the others will follow automatically and soon everybody will accept it and pass it on, even though they did not pledge themselves to do so, because everybody else does. The first few weeks are the hardest, and therefore need careful preparation. As the Mayor of Woergl says, "some soft pressure from above" might prove helpful.
Sell the key men first. and then the public. Begin on the more accessible key men and use their names fur prestige as you approach the less accessible.
You cannot explain the plan without a form of scrip for demonstrations (marked "sample" so as to preclude any future attempt to pass it). Also very large forms should be prepared for store windows and other exhibition points. These specimens should be complete to the last detail, including the stamp spaces and the stamps.
A form of the prospectus and the sign-up (and of the petition to the city council if that method is to be used) should be presented. Forms for all these are given in the appendix.
With the key men, the general exposition comes first. It is vain to show the advantages of scrip before the mechanism is made abundantly clear, as in Chapter III of this hook.


The City as a Community

(1) The scrip will tend to keep business at home where the scrip circulates (purely a self-interest argument).
(2) New business will be created.
(3) New buying power will reach the citizens through the scrip without being taken from them by a burdensome tax to pay for the scrip.
(4) The citizens as a community will buy themselves new public improvements and pay for these out of new business.

City Finances

(1) A new sum equal to the scrip issue will be added to the city treasury.
(2) This will bring much needed relief to the city finances.
(3) For instance, the budget may be balanced.


(1) The stamp sales are the equivalent of a tax paid by the citizens out of new business created by that "tax."
(2) An equal amount of taxation of a burdensome kind will thereby be made unnecessary.
(3) The collection of this quasi-tax will be taken care of by the citizens themselves.
(4) Back taxes will be easier to collect out of the new business.

Local Welfare Work

(1) Some of the projects for which the scrip is to be initially spent will relieve want and unemployment.
(2) The jobs involved will not have the demoralizing effect of charity.
(3) Neither will they be useless jobs merely invented to conceal charity.
(4) The scrip, by stimulating business, will make the forms of re-employment more and more a matter of normal, private enterprise.


If possible, use a professional publicity man.
There should be news items, editorials and posters.
Perhaps, in this part of the work, the local applications of Stamp Scrip should be put first (before any general exposition like Chapter III), since the public wants news. Pictures, by word and cartoon, could be represented-pictures of destitution, of run-down streets, of idle machines, and "Stamp Scrip will stop this! Why? Because . . . etc. . . . Stamp Scrip will stop this! Why? Because . . . etc., etc. . . ."
Then your exposition.
By way of further exposition, literature could be left on counters, lodge tabics, hotel desks: "Stamp Scrip - Stamp Out the Depression Locally. TAKE ONE" In the same locations there might be specimens of scrip marked "SAMPLE - TAKE ONE."


Special drives might follow, among special classes: labor drives conducted by labor men - merchant drives by merchants, and so on, including Chambers of Commerce. The organized efforts of boy scouts and girl scouts may perhaps be enlisted to advantage.
Sign-up agents could be planted near the aforesaid counters, lodge tables and hotel desks, etc.
Prizes could be offered to sign-up agents for signatures from selected lists.
Prizes could be offered for posters, slogans and school essays.
The prize slogan should be put on the scrip.


If the town is rich enough, have the scrip printed by a bank-note company to make forgery difficult. Have a sufficient supply of bills and stamps on hand for replacements. Put up on walls greatly enlarged replicas of the scrip in actual use, with a brief, large-print instruction sheet. (A form of instruction sheet will be found in the appendix.) Leave instruction sheets, including a cut of the scrip, on counters, lodge tables and hotel desks, marked "Take One."
Urge each person to use his scrip in as many different ways as possible and, in passing it on, to divide it among as many different people as possible, in as many different lines as possible - this, to avoid clogging.
Don't relax too soon after the scrip is in operation. Take note of all criticisms and if the critic is wrong, vouchsafe further instruction - if right, try to profit by the lesson. If he stumps you, I would like to know the difficulty.
In the next chapter, I suggest answers to some of the objections commonly brought out by the first propounding of Stamp Scrip. They are theoretical objections. Objections based on real experience with Stamp Scrip are largely based on experience with the undated form, or based on an illmanaged, or half-hearted, or insufficiently prepared plan of Stamp Scrip. Yet the most troublesome objections, thus far, are the initial theoretical ones, based on total inexperience. The only complete answer is, of course, a clear and connected exposition to start with, and this I have tried to supply in the foregoing chapters. Nevertheless, specific answers are desirable, too.
Answers must be softly delivered, if what you want is to win your man; and if, in the next chapter, I have supplied some answers that read like retorts, it is for the sake of a bird's-eye brevity, and for your convenience, in the course of good-natured discussions with open-minded prospects.

(1) See my Purchasing Power of Money, pp. 87 and 315.
(2) These figures are rather unexpectedly good for the undated type - other instances seem to indicate a pour turnover.
(3) These calculations are those of Mr. C. T. Southwick made for the Welfare Service Corp. of New York City.
(4) I wish to collect all possible data on the operation of stamp scrip and shall appreciate any information. Mr. Hans R. L. Cohrssen, I understand, intends to compile this material and publish it regularly in form of a bulletin.