Depression-Era Scrip

The Great Depression is remembered for the devastation it brought to the American people. Joblessness, homelessness and debt plagued the country, but even when hundreds of banks closed, Americans found a way to continue commerce with local currencies called “scrip.”

 

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Heppner, OR Sheepskin Scrip, 1934

The closing of American banks was both an early effect of the Great Depression and a factor that grossly exacerbated it in the early 1930s. Between December 1930 and the “banking holiday” President Roosevelt declared in March 1933 – which shut down the entire national banking system – about half of the banks in America either closed or merged with others. Surviving banks cut back drastically in their deposits and loans, contributing to a decline in money supply, and causing people to hoard their cash rather than entrusting it in a banking system that was rapidly deteriorating. Hoarding effectively removed money from circulation, further contributing to the deflation that characterized the Depression era. With decreasing cash availability and with money worth markedly less than before, Americans turned to local currencies to carry out daily commerce.

Mecosta County, MI Scrip, 1933
Mecosta County, MI Scrip, 1933

Depression-era scrip was issued by local governments, businesses and even individuals. The scrip spurred local economies by being most valuable in the community that had issued it. Some store owners accepted scrip issued in other neighborhoods, but usually at a highly inflated rate to compensate them for the risk of the currency being invalid elsewhere. Scrip was issued on a variety of materials, including paper bills, wooden tokens or bills, animal skin, fish skin parchment and even seashells. Though local currencies existed in America long before the Great Depression, and some even today, Depression-era scrip played a vital role in reviving local businesses and keeping their owners and employees from suffering the worst blows of the Depression.

Washington Fish Skin Parchment Scrip, 1934
Washington Fish Skin Parchment Scrip, 1934

 

 

 

 

 

The Museum of American Finance holds an impressive collection of Depression-era scrip representing a variety of issuers and materials from communities across the United States. Below are a few of our favorite examples from the collection.

 

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North Bend, OR Wooden Token Scrip, 1933, Obverse
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North Bend, OR Wooden Token Scrip, 1933, Reverse

 

 

 

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Pendleton, OR Scrip, 1933, Obverse
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Pendleton, OR Scrip, 1933, Reverse

 

 

 

 

 

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South Bend, WA Wooden Scrip, 1934, Obverse
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South Bend, WA Wooden Scrip, 1934, Reverse

The Bond Club of New York

Professional organizations and clubs have long provided a place for both networking and socializing. One club, The Bond Club of New York, traces its history back to 50 Wall Street, on the same block that the Museum of American Finance now sits.

The Bond Club of New York was founded in 1917 as a way for the men selling Liberty Bonds to sell more through a collective effort. While they are no longer selling Liberty Bonds, the club still serves as a social organization for people involved in the financial world of New York City.

1983 Dinner Invitation from the Bond Club of New York.
1983 Dinner Invitation from the Bond Club of New York. The speaker that night was John Glenn.

The club has a long history of having prominent businessmen and politicians as speakers at their luncheons and annual club dinners. This distinguished group includes future presidents Franklin D. Roosevelt, Dwight D. Eisenhower, Richard M. Nixon and George H.W. Bush, along with multiple vice presidents, senators (including astronaut John Glenn), governors, New York City mayors, CEOs of major corporations and members of the armed forces. The trend of having noteworthy speakers continues today with recent speakers including former Governor Jeb Bush, Governor Chris Christie and Mayor Rudolph Giuliani.

Cartoon from the June 29, 2009 edition of the Bawl Street Journal entitled: The Buy and Shell Game.
Cartoon from the June 29, 2009 edition of the Bawl Street Journal entitled: The Buy and Shell Game.

Along with luncheons and dinners, the Bond Club publishes The Bawl Street Journal, a satirical newspaper that pokes fun at the club members and Wall Street events. It is filled with cartoons and mock advertisements that provide commentary on the financial world of New York City.

The Bawl Street Journal has been published since the Bond Club of New York’s founding. Before it went digital in 2005, it was traditionally distributed at the annual field day at the Sleepy Hollow Country Club in Westchester County, New York.

1949 Field Day Invitation
Invitation to 1949 Bond Club of New York Field Day.

The Bond Club of New York archive held at the Museum of American Finance consists mainly of documents from the 1970s and 1980s. Notable items in the collection include membership applications from that time period, including the first applications that were submitted by women in 1979.

Along with the applications, the archive includes records from the 1970s and 1980s, assembled annually by the club secretaries. These records include information about the club’s events along with notes from board meetings and examples of Bond Club of New York letterhead.

The Museum also holds documents from the club’s early history. These early documents include copies of the annual year books from 1920 and 1923, which list the members for that year along with earlier speakers and former club officers. There is also an article from the New York Post on the Bond Club of New York from 1925 that outlines its early history, as well as a set of meeting notes from the early 1920s which provides another window into the early history of the club.

Peter Macfarlane is a Senior Collections Intern at the Museum of American Finance.

Banking Act of 1933

Carter Glass (left) & Henry B. Steagall

 

 

 

 

 

The Banking Act of 1933, also known as the Glass-Steagall Act, established the Federal Deposit Insurance Corporation (FDIC), which guaranteed banking deposits up to a specified amount, and joined two Congressional projects sponsored by Representative Henry B. Steagall.  That is, the Act combined both the creation of a federal system of bank deposit insurance and the regulation of mingling commercial, investment banking and other “speculative” banking activities.

Though synonymous to one another, the Glass-Steagall Act today usually refers to the four provisions that separated commercial banking from investment banking.  Of these provisions, section 16 prohibits Federal Reserve Member banks from acquiring securities on their own account.  Sections 16 and 21 further prohibit member banks from accepting deposits for the buying or selling of securities.  Section 20 disallows these banks from having any association with companies that deal with securities, including employee relationships with (i.e. sharing employees with) as stated under section 32.  Moreover, Regulation Q forbade banks from paying interest on demand deposits and capped interest rates on other deposit goods.

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May Day Deregulation Shakes Brokerage Industry

Jas. H. Oliphant & Co. Inc. was a securities broker and a member firm of the New York Stock Exchange specializing in providing research and execution services to institutional clients.  The firm went public in 1972 after acquiring the business of Jas. H. Oliphant & Co., a New York limited partnership founded in 1898.  The board made its decision to dissolve the 77-year-old firm in December 1975.

Oliphant Article

The reason: May Day—May 1, 1975.  Fixed commissions had been the norm for the past 183 years, since the signing of the Buttonwood Agreement on May 17, 1792.  But on May Day, the US Securities & Exchange Commission mandated the deregulation of the brokerage industry.  The securities industry lobby had battled very hard to keep Congress from passing HR 5050, mandating the end of the fixed commission system.  They had argued that Congress should allow the industry to fix the problem, and also argued that without Congressional approval, the SEC should not act administratively on this issue.  However, Congress did adopt the legislation ending fixed commissions.  The New York Stock Exchange announced within days that it would accept the SEC ruling.

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Muriel Siebert Remembered

On August 24, we lost a true pioneer in Wall Street’s history with the passing of Muriel “Mickie” Siebert, the first woman to own a seat on the New York Stock Exchange.  In her honor, we’re reposting this article we wrote for Bloomberg on the history of Wall Street’s women.

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On Dec. 28, 1967, Muriel “Mickie” Siebert became the first woman to own a seat on the New York Stock Exchange — a full 175 years after the exchange was founded. According to Siebert, her NYSE member badge was the most expensive piece of jewelry she ever bought (at $445,000), and it was also the hardest earned. She had been turned down by nine prospective sponsors before finding the two she needed to endorse her application.

As the lone woman among 1,365 men at the exchange, Siebert wasn’t universally welcomed. Headlines such as “Skirt Invades Exchange” and “Powder Puff on Wall Street” conveyed a reluctance on “the Street” to accept a sea change that had been making its way through many other professions for years. In fact, when Siebert purchased her seat, she wasn’t issued the standard scroll all new members received, and which she was required to display. She didn’t receive it until the following year, when the exchange had a new president.

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