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In the winter of 1932 the town of Hawarden in the US state of Iowa began printing and distributing scrip dollars — pieces of paper, shaped and printed like dollar notes from the Federal Reserve, managed and guaranteed by the town. The scrip did not save Hawarden from the Great Depression. But it did make Christmas a little easier.
In wartime everyone becomes a general, and in the winter of 1932 cranks and executives wrote pamphlets on how to solve what they called “the money problem” — as banks closed, both cash and deposits dropped out of circulation, prompting rapid and crippling deflation. We are conditioned now to think of inflation as the only mistake with money, but historically deflation has been just as devastating.
After the global prices of corn and hogs collapsed in the late 1920s, one of Hawarden’s banks had already closed its doors in 1927. By the time a new round of bank failures began to hit the Midwest in the fall of 1932, the town was ready to try something unorthodox. By December, a Pathé film crew had added a story about the Hawarden scrip to its newsreel. Irving Fisher, America’s first famous economist, visited Hawarden and praised the project in his national column.
Charles Zylstra, a Dutch-born Maytag salesman, was the architect of Hawarden’s dollar scrip. He didn’t invent the idea. American cities had printed “hard-time money” as early as the Panic of 1837, and Zylstra said he’d discovered it when reading Silvio Gesell, a self-taught German economist. By December, as Santa Claus announced in the Hawarden Independent newspaper that he was still coming to town, other nearby towns began adopting Hawarden’s plan.
There was a lot of scrip in a lot of places in the winter of 1932. Zylstra’s succeeded, for a time, because he recognised that money lives on administration. As the historian Rebecca Spang has argued, money doesn’t just have quantities, it has qualities. To say that money is created is to assign it a kind of magic, ignoring the work it takes to keep it moving from hand to hand.
The city of Hawarden paid out its scrip as a stimulus, to men gravelling the road from Central Avenue to the cemetery for example. Then, each time someone passed a scrip note over a counter as payment, the note had to have a new 3 cent stamp stuck to its backside. The city sold the stamps, and after 36 purchases, the city had $1.08 in an account to redeem the scrip and pay for overheads. That December, the Des Moines Register reported that each scrip note had changed hands 10 times on average.
The historian Claude Million has argued that scrip can either serve a social goal or can fill a money hole in a crisis. By this standard Hawarden’s scrip succeeded. It kept money moving in town until the US recognised the need to have a truly national and stable currency. In 1933, the federal government passed a deposit insurance programme and began opening up banks and shovelling Federal Reserve notes out to farmers in particular.
American chambers of commerce today will still issue a form of dollar scrip they call “booster bucks” or “chamber bucks” or “Christmas cash”. These programmes serve the other purpose of scrip, to make sure people spend money in town and not at Amazon. In Hawarden, there’s still a cultural memory of the town’s depression-era experiment. And the Hawarden Chamber of Commerce calls its programme by a name that’s now more than 90 years old: Christmas Scrip.
On November 4 this year, Julie Coyle, the chamber’s director, began canvassing businesses to help with the scrip programme. People buy the scrip from the chamber at 85 cents on the dollar. Local businesses pay the rest, and agree to accept the scrip as payment. Coyle sells the scrip from her office in the Hawarden Public Library as $10 cheques, drawn on the chamber’s account at River’s Edge Bank. This year she sold $25,000 in Christmas Scrip in three days.
Coyle still does a lot of what Zylstra recommended in 1932. She works with businesses every year to make sure the programme’s still accepted. She has to deposit cash at River’s Edge the day she starts selling, since scrip sold in the morning will be spent by the afternoon. She tracks redemptions with the chamber’s account at the bank, so she knows what’s still outstanding. The Hawarden Christmas Scrip isn’t just paper. It’s a financial instrument, embedded in almost a century of local habit. It works the way all successful money does: through custom and reliable administration that gives a familiar sense of comfort until you come to rely on it, without even thinking about it.
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