A scrip (or chit in India) is any substitute for legal tender. It is often a form of credit. Scrips have been created and used for a variety of reasons, including exploitive payment of employees under truck systems; or for use in local commerce at times when regular currency was unavailable, for example in remote coal towns, military bases, ships on long voyages, or occupied countries in wartime. Besides company scrip, other forms of scrip include land scrip, vouchers, token coins such as subway tokens, IOUs, arcade tokens and tickets, and points on some credit cards.
Scrips have gained historical importance and become a subject of study in numismatics and exonumia due to their wide variety and recurring use. Scrip behaves similarly to a currency, and as such can be used to study monetary economics.
History
A variety of forms of scrip were used at various times in the 19th and 20th centuries.
Company scrip
Company scrip was a credit against the accrued wages of employees.
In United States mining or logging camps where everything was owned and operated by a single company, scrip provided the workers with credit when their wages had been depleted. These remote locations were cash poor. Workers had very little choice but to purchase food and other goods at a company store. In this way, the company could charge enormous markups on goods, making workers completely dependent on the company, thus enforcing a form of loyalty to the company. Additionally, while employees could exchange scrip for cash, this could rarely be done at face value. This kind of scrip was valid only within the settlement where it was issued. While store owners in neighboring communities could accept the scrip as money, they rarely did so at face value, as it was worth less.
When U.S. President Andrew Jackson issued his Specie Circular of 1836 due to credit shortages, Virginia Scrip was accepted as payment for federal lands.
In 19th-century Western Canada, the federal government devised a system of land grants called scrip. Notes in the form of money scrip (valued at $160 or $240) or land scrip, valued at 160 acres (65 ha) or 240 acres (97 ha), were offered to Métis people in exchange for their Aboriginal rights.[1]
During the Great Depression, at the height of the crisis, many local governments paid employees in scrip. Vermilion, Alberta was just one example. [2]
In the U.S., payment of wages in scrip became illegal under the Fair Labor Standards Act of 1938.[3]
The expression scrip is also used in the stock market where companies can sometimes pay dividends in the form of additional shares/stock rather than in money.[4] It is also a written document that acknowledges debt.
After World War I and World War II, scrip was used as notgeld ("emergency money") in Germany and Austria.
Scrip was used extensively in prisoner-of-war camps during World War II, at least in countries that complied with the Third Geneva Convention. Under the Geneva Conventions, enlisted prisoners of war could be made to work and had to be paid for their labor, but not necessarily in cash. Since ordinary money could be used in escape attempts, they were given scrip that could only be used with the approval of camp authorities, usually only within the camps.
Poker chips, also referred to as casino tokens, are commonly used as money with which to gamble. The use of chips as company money in the early 19th century in Devon, England, in the Wheal Friendship[5] copper mine gave its name to a local village of Chipshop.
Stamp scrip
Stamp scrip was a type of local money designed to be circulated and not to be hoarded.
One type of this worked this way. Each scrip certificate had printed boxes; every month a stamp costing a certain amount (in a typical case, 1% of the face value) had to be purchased and recorded in a box, otherwise the scrip lost all its value. This provided a great incentive to spend the scrip quickly. The scheme was used successfully in Germany and Austria in the early 1930s, after national currencies collapsed. National governments considered themselves threatened by the success of stamp scrip projects, and shut them down; similar misgivings discouraged their later use elsewhere.[6]
The Alberta Social Credit Party government in 1937 issued prosperity certificates, a form of provincial currency, in an effort to encourage spending. This scrip had boxes in which a stamp equal to 2% of the value had to be affixed each week. Thus, the value of the certificate was covered by the cost of the stamps at the year's end when it matured.
Modern usage
Scrip survives in modern times in various forms.
Community-issued scrip
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The use of locally issued scrip accepted by multiple businesses within a community has increased during the late-2000s recession. Community-wide scrip usage has begun or is on the rise in Ithaca, New York; Detroit; The Berkshires; Pittsboro, North Carolina; Traverse City, Michigan; Lamar, Colorado; Calgary, Canada; Bristol, UK; and Hagen, Germany.[7][8][9][10]
Breadcoin scrip was created in Washington DC in 2016 to address food insecurity.[11]
Thailand's township Amphoe Kut Chum once issued its own local scrip called Bia Kut Chum: Bia is Thai for cowry shell, which was once used as small change, and still so used in metaphorical expressions. To side-step implications that the community intended their scrip as an unlawful substitute for currency, it now issues exchange coupons called Boon Kut Chum.[12]
Company-issued customer scrip
Some companies still issue scrip notes and token coin, good for use at company points of sale. Among these are the Canadian Tire money for the Canadian Tire stores and gasbars in Canada, and Disney Dollars (no longer printed, but still accepted), in circulation at The Magic Kingdoms and at other establishments owned and operated by The Walt Disney Company.
Scrip gift cards and gift certificates
A scrip card from a babysitting group
In the retail and fundraising industries, scrip is now issued in the form of gift cards, eCards, or less commonly paper gift certificates. Physical gift cards often have a magnetic strip or optically readable bar code to facilitate redemption at the point of sale.
In the late 1980s, the term scrip evolved to include a fundraising method popular with non-profit organizations like schools, bands and athletic groups.[13] With scrip fundraising, retailers offer the gift certificates and gift cards to non-profit organizations at a discount. The non-profit organizations sell the gift cards to member's families at full face value. The families redeem the gift cards at full face value, and the discount or rebate is retained by the non-profit organization as revenue.[14]
Commercial gift cards
Main article: Gift card
Visa, Mastercard and American Express gift cards are initially funded by a credit card or bank account, after which the funding account and gift card are not connected to one another. Once the predetermined funds are consumed, the card number expires. A gift of a gift card, maybe in an attractive wrapper, may be seen as more socially acceptable than a gift of cash. It also prevents the gift being spent on something the giver views as undesirable (or used as savings).
However, unless the gift card is obtained at a discount (paying less than the actual value of the card), buying scrip with ordinary money is arguably pointless, as it then ties up the money until it is used, and usually it may only be used at one store. Furthermore, not all gift cards issued are redeemed. In 2006, the value of unredeemed gift cards was estimated at almost US$8 billion.[15]
Another disadvantage of gift cards is that some issuers charge "maintenance fees" on the cards, particularly if they are not used after a certain period of time; or the card will expire after a given period of time.[16] Some provinces and states in North America (e.g. California, Ontario, Massachusetts, Ohio, Washington) have enacted laws to eliminate non-use fees or expirations,[17] but because the laws often only apply to single-merchant cards[18] buyers have to review the gift card conditions prior to purchase to determine exact restrictions and fees.[19] Additionally, if a retailer goes bankrupt, gift cards can suddenly become worthless. Even if stores do not close immediately, the company may stop accepting the cards.[20] This became a significant issue during the global financial crisis of 2008–2009, prompting the Consumers Union to call upon the Federal Trade Commission to regulate the issue.[21]
Land scrip (United States)
Land scrip was a right to purchase federal public domain land in the United States, a common form of investment in the 19th century. As a type of federal aid to local governments or private corporations, Congress would grant land in lieu of cash. Most of the time the grantee did not seek to acquire any actual land but rather would sell the right to claim the land to private investors in the form of scrip. Often the land title was finalized only after the scrip was resold several times utilizing land agents also called warrant brokers.[22] These grants came in the form of railroad land grants, university land grants, and grants to veterans for war service.[23][24]
Obsolete currency refers to paper money issued by entities other than the federal government, e.g. state banks, railroads, merchants, state and local governments. The money issued by state banks makes up the largest portion of obsolete currency, also commonly referred to as “Broken Banknotes”.
Scripophily is the study and collection of stock and bond certificates.[a] A specialized field of numismatics, scripophily has developed as an area of collecting because of the inherent beauty of certain historical certificates, and because of the interesting historical context of many of the documents. In addition, some stock certificates serve as excellent examples of engraving. Occasionally, an old stock certificate is found that still has value as actual shares in the original or a successor company.
History
Ezekiel Air Ship stock certificate
Scripophily, the collecting of old stocks and bonds, gained recognition as a hobby around 1970. The word "scripophily" was coined by combining words from English and Greek. The word "scrip" represents an ownership right and the word "philos" means to love.
Today, there are thousands of collectors worldwide (Scripophilists) in search of scarce, rare, and popular stock and bond certificates. Whether they are private investors or a variety of different types of businesspeople, many collectors enjoy scripophily as a hobby, while many others also consider it a good form of investment.
Many collectors appreciate the historical significance of old certificates. Others prefer the beauty of older stock and bond certificates that were printed in various colors with fancy artwork and ornate engravings. In recent times, certificates issued by dot-com companies and companies involved in scandals have become particularly popular amongst Scripophilists.
A recent addition to the hobby of Scripophily is collecting real, live shares issued in one's name. Common companies that issue personalized stock certificates include The Walt Disney Company, Harley-Davidson, McDonald's, Starbucks, Google, Ford Motor Company, The Coca-Cola Company, and Berkshire Hathaway. Framing is a popular option for these certificates.
Many autograph collectors engage in Scripophily, looking for certificates signed by historic or well-known figures, such as stock certificates issued by Standard Oil Company and signed by John D. Rockefeller, Franklin Fire Insurance Company and signed by Henry Charles Carey, Ringling Brothers and Barnum & Bailey Circus, Atari Corporation, Eastern Air Lines and signed by Eddie Rickenbacker when he served as the company's president, Tucker Corporation, and many others.
As a hobby
Columbia Pictures
A large part of scripophily is the area of financial history. Over the years there have been millions of companies which needed to raise money for their business. In order to do so, the founders of these companies issued securities. Generally speaking, they either issued an equity security in the form of stock or a debt security in the form of a bond. However, there are many varieties of equity and debt instruments. They can be common stock, preferred stock, warrants, cumulative preferred stocks, bonds, zero-coupon bonds, long term bonds (over 15 years) and any combination thereof.
Each certificate is a piece of history about a company and its business. Some companies became major successes, while others were acquired and merged with other companies. Some companies and industries were successful until they were replaced by new technologies. Some companies have been the center of scandal or fraud. The color, paper, signatures, dates, stamps, cancellations, borders, pictures, vignettes, industry, stockbroker, name of company, transfer agent, printer, and holder name all add to the uniqueness of the hobby.[citation needed]
A lot of companies either were never successful or went bankrupt, so that their certificates became worthless pieces of paper until the hobby of scripophily began. The mining boom in the 1850s, railroad construction in the 1830s, the oil boom in the 1870s, telegraphy (1850s), the automobile industry beginning around 1900, aviation (around 1910), electric power and banks in the 1930s, the airline wars and mergers in the 1970s, cellular telephones (1980s), long distance telephone service in the 1980s and 1990s, and most recently the Dot-com era and Enron all resulted in historically significant certificates being generated and issued.[citation needed]
Today, more stocks and bonds are issued electronically, meaning fewer paper certificates are issued as a percentage of actual stock issued. The Internet has played a dramatic role in raising awareness of the hobby. A number of websites now exist that sell old stocks and bonds to include scripophily.com and oldstocks.com.
Guidelines
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Baltimore and Ohio Railroad
There are many factors that determine value of a certificate. These include condition, age, historical significance, signatures, rarity, demand for the item, aesthetics, type of company, original face value, bankers associated with issuance, transfer stamps, cancellation markings, issued or unissued, printers, and type of engraving process.
Condition - The grading scale that could be used in stocks and bonds is shown below. Generally speaking, the grading is not used in the hobby as strictly as it is in coins and stamps. Most people acquire certificates because of the artwork and/or history.
Uncirculated - Looks like new, no abnormal markings or folds, no staples, clean signature and no stains
Extremely Fine - Slight traces of wear
Very Fine - Minor traces of wear
Fine - Creased with clear signs of use and wear
Fair - Strong signs of use and wear
Poor - Some damage with heavy signs of wear and staining
Age - Usually the older the certificate, the more valuable, but this is not always the case.
Historical significance - What product did the company produce? Was it the first car, airplane, cotton gin, etc. Was the company successful? Was it a fraud? In what era (i.e. during a war, depression, revolution) was the item issued?
Signatures - Did anyone famous or infamous sign the certificate?
Cross Collecting Themes - Sports, finance, automotive, and railroad enthusiast interest.
H. J. Heinz Company
Newsworthy - Some companies that are in the news (good or bad).
Certificate Owner's Name - Was the certificate issued to anyone famous or to a famous company?
Rarity - How many of the certificates were issued? How many survived over the years? Is the certificate a low number?
Demand for Item - How many people are trying to collect the same certificate?
Aesthetics - How does the certificate look? What is in the vignette? What color of ink was used? Does it have fancy borders or writing on it?
Type of company - What type of company was it issued for? Does the industry still exist? Has the industry changed a lot over the years?
Original Face Value - How much was the stock or bond issued for? Usually, the larger the original face value, the more collectible it is.
Bankers associated with Issuance - Who worked on the fund raising efforts? Was it someone famous or a famous bank? Is the bank still in existence?
Transfer Stamps - Does the certificate have tax stamps on it? Are the stamps imprinted or attached? Are the stamps valuable or unusual?
Specimen Stock Certificate
Cancellation Markings - Are the cancellation markings interesting to the item? Do they detract or add to its history and looks?
Issued or Unissued - Was the item issued or unissued? Was the certificate a printer's prototype usually stamped with the word "specimen"? Usually, issued certificates are more valuable and desirable.
Printers - Who printed the certificate? Was it a famous printer?
Type of Engraving Process - How was the certificate made - By hand? By wood engraving? Steel engraving? Lithograph? Preprinted form?
Paper - Was the paper used in the printing high-quality or low-quality? Has it held up over time? Does it have a watermark to prevent counterfeiting?