Scrip, or emergency money, kept Depression-era businesses going

“In a world full of wealth, we have no money,” the Laurel State Register editorialized on Jan. 13, 1933, “That, it seems to us, sums up the present economic situation of the United States.”

In March 1933, the United States had been mired in the Great Depression for over three years, and the country was suffering from a serious lack of currency that threatened to bring down the entire economic system.

As the Laurel newspaper pointed out, “We didn’t need as much money when everybody had confidence in the banks. Checks (did) the work of currency. In these times with money moving slowly, with more sellers than there are buyers, with thousands of banks closed and public confidence in all banks (still) severely shaken, we find ourselves without enough currency to (do) business.”

Two months later, the Milford Chronicle announced a solution to the currency shortage, “Fitting nicely into the puzzle of present finances, a five-letter word that is to be synonymous for a time with money comes out of the dictionary and into the lives of Mr. and Mrs. Citizen. You spell it, of course, ‘s-c-r-i-p’ and its nature and use are just about as simple as that.”

When the stock market crashed and the Great Depression began, Sussex County was mostly an agrarian economy that functioned with minimal cash. Many families grew their own vegetables, raised chickens and livestock, and maintained a few fruit trees.

Wardrobes were limited to work clothes and house dresses for everyday use and a fine suit or dress for special occasions. For children, hand-me-down shirts and shoes were common, with the youngest child only occasionally seeing a new garment.

Many farmers also bartered their farm produce for items that they did not make themselves. A number of local stores accepted chickens, eggs, milk, and other items in lieu of cash. Lewes’ Beebe Hospital would sometimes accept farm produce in lieu of cash for its medical services.

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At that time, most banks served a small geographic area, and these institutions banded together and formed “clearing houses” that gave them additional clout to fight the money shortage.

According to the Milford Chronicle: “In brief, scrip is emergency money, though it is not fiat money, it is backed not by gold or silver as such but it is issued by groups of banks, known as clearing house associations, and has behind it the combined strength of these banks, assets.”

As could be expected, the clearing house associations did not spend a lot of time and effort in designing, engraving and printing the substitute money. The resulting scrip notes were relatively plain and bore a passing resemblance to money, but the certificates did not have pictures of the past presidents or national monuments.

Instead, they carried the statement that, “Securities having been deposited with the clearing house committee of such-and-such a clearing house association, this certificate will be accepted by the member banks of said association at the sum named.”

In many localities, paychecks were cashed in scrip, and the substitute money enabled businesses and banks to continue to operate.

When Franklin Roosevelt was elected President in 1932, many New Deal programs to build roads, control mosquitoes, and complete other public projects provided temporary work for many of the Sussex County’s unemployed workers.

These programs also pumped cash into the economy; and with the influx of currency, the need for scrip declined. It could no longer be said, “In a world full of wealth, we have no money.”