The Paper Money Guaranty (PMG) blog published an uncredited article this month on company scrip. Here's an excerpt. -Editor
The promissory notes gave companies control over employees but also helped businesses and communities survive and thrive.
In the late 19th century, the U.S. and several other countries around the world went through a rapid phase of industrialization known as the Second Industrial Revolution or the
Technological Revolution. Inventions like the telegraph, the lightbulb and the compressed-air brake greatly changed how people worked. Wages increased overall and so did the
quality of life for many people.
However, the Technological Revolution also brought on new and dangerous working conditions and a continuation of unfair labor practices, holdovers from previous ages. Tycoons
and magnates of the Industrial Revolution not only developed new methods of manufacturing but also sought new ways to control their labor force. One method was to issue company
Company scrip consists of promissory notes issued by a business as wages to its employees. Unlike government-backed notes, company scrip can only be redeemed for company goods
or company services. The scrip was usually printed as sheets on rice paper. Often, the vignettes were pulled from catalogs and the originality and complexity of the notes depended
on budget and whether anti-counterfeiting measures were deemed necessary. At its peak, scrip was accepted by some 20,000 company stores across North America. Companies distributed
scrip for a number of reasons.
For one, it meant that employees gave a large portion, if not all, of their paycheck right back to their employer. A company could mark up prices on goods because employees had
no other alternative — they couldn't take their scrip notes to any other stores. Company scrip also made it harder for employees to move, allowing the company to retain a
workforce without raising wages or improving working conditions.
Company scrip wasn't all bad. It also allowed for the growth of industries in areas that were cash-poor and otherwise would not have had the chance to develop. It was given to
workers who otherwise would have had no access to credit in cash-strapped regions and allowed companies to survive or even grow during economic slumps.
Company stores, by necessity, often became the social and economic epicenter of many mining and lumber towns. Because these industries were often in remote areas, cash was
short and competition for supplies, and entertainment, were lacking. The goods you could buy at your company store ran the gamut from miners' lamps and safety shoes to bubble
gum, candy and pop. Company stores also might include the town's barbershop, blacksmith and post office.
To read the complete article, see:
Company Scrip: The Tainted Lifeblood of 19th-century Remote Industrial Towns
Wayne Homren, Editor
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