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The E-Sylum:  Volume 9, Number 51, December 17, 2006, Article 13

DEPRESSION-ERA LABOR EXCHANGE NOTES

Regarding the recent item on Smythe’s offering of Labor Exchange
notes, David Gladfelter writes: "Labor exchange notes again came
into use during the Great Depression. To quote from Ralph Mitchell
and Neil Shafer's Depression Scrip catalog:

'As the unemployed had no money with which to buy anything, it became
the purpose of the various organizations of the unemployed to find a
way of providing necessities to members without having to use money.
Barter and trade were often resorted to, and some organizations issued
scrip as an exchange medium.

'In January of 1933, there were over 140 separate barter exchanges
in the United States, with over a million people making use of their
facilities through trade scrip. Members of these groups traded one
service for another or exchanged one commodity for another. When it
was not possible for one member to perform a service directly for
another, some means of credit for future exchange had to be given.

The formula was simple -- trade hours of work for value to be
received later.'

David continues: "One way of doing this was to issue scrip, sometimes
valued in units of time (as with the De Bernardi notes) and sometimes
in monetary equivalents although the scrip would state that it was a
credit unit and not money.

"Some scrip of the Milwaukee Unemployed Labor and Commodity Exchange
was saved by my father and has been in our family for over 70 years.
Shafer considers this organization to have been one of the most
successful of the unemployed labor groups.

"It should be noted that Thomas Edison once proposed that the Federal
Reserve system be operated as a commodity exchange. In the introduction
to his pamphlet entitled "A Proposed Amendment to the Federal Reserve
Banking System," Edison wrote, "Some time ago Mr. [Henry?] Ford asked
me to see if I could not invent some plan for helping the Farmer. I
have approached the matter in the same way that I do with a mechanical
or other invention, namely, get all the facts as far as possible, and
then see what can be done to solve the problem." Edison's proposal got
a cold reception from economists, so he abandoned it. The story is told
by David Hammes and Douglas Wills in the Winter 2004 issue of Financial
History magazine."

  Wayne Homren, Editor

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