Wisconsin Depression Scrip

$1.00 scrip issued by the city of De Pere. The city’s assets were tied up in banks on
moratorium and it was unable to make payroll or pay other expenses.

This week I highlight the various forms of scrip issued during the Great Depression in Wisconsin. If you would like to read more about it, please see my new website: www.wisconsinscrip.com.

As the Great Depression wore on into the early 1930s various schemes were developed to try to move the economy forward. High unemployment, failing banks and the stock market collapse ground the economy to a halt and money had become scarce. Commerce virtually ceased nationwide when President Roosevelt ordered all banks closed on March 6, 1933.

Various forms of scrip were circulated at the local level to try to re-start the economy. The types of scrip can be divided into several different categories.

Example of a $1.00 piece of Wisconsin Bank Scrip. This piece was punch cancelled and included in a souvenir set that was given to the printer, Gugler Lithographic Company in Milwaukee.

State Scrip. Only one statewide issue of scrip was issued and that was in Wisconsin. The State Banking Department had scrip printed and made it available to 172 Wisconsin state chartered banks. Over $3,000,000.00 in state scrip was issued and $4,710.00 remained unredeemed in September 1934.

Tax Redemption Note or “Baby Bond” issued by the city of Milwaukee.
Milwaukee issued scrip from 1933 to 1939 to meet payroll.

Municipal Scrip. Local governments were squeezed by two factors. First, cash was tied up in closed banks. Second, tax collections dropped off as it became impossible for people and businesses to pay them. There were several types of municipal scrip including tax anticipation notes, certificates of indebtedness, payment orders and relief orders. Low denomination municipal bonds also were circulated.

Clearing House Certificate from the Milwaukee Clearing House. The Clearing House made the scrip available to banks against deposits held by the Clearing House.

Clearing House Certificates. Clearing houses had been established in most communities in the late 1800s to aid in the clearing of checks among banks. During the panics of 1893 and 1907 clearing houses operated in a manner similar to the Federal Reserve by issuing circulating certificates backed by deposits held by the clearing house or the banks. Similar scrip was issued in many communities in 1933 as a result of the Bank Holiday.

This $1.00 stamp scrip was issued by the Central Wisconsin State Fair in Marshfield to pay the prizes for the 1932 fair. The Fair Association was unable to pay the prizes because its assets were held in closed banks

Stamp Scrip. Silvio Gesell, a Swiss economist, developed the concept of a circulating medium that would lose it value as time went on. The goal was to keep it moving from hand to hand in an economic version of the kids game “hot potato”. The full value could be restored by buying a stamp and affixing it to the certificate either at fixed intervals or when used. This type of scrip was self-liquidating in that the scrip would be retired once the equivalent of its face value had been purchased in stamps.

The Commodity Exchange was established by Mayor Daniel Webster Hoan in Milwaukee. It allowed its members to trade goods and services without using cash. Scrip certificates were used instead.

Barter and Exchange Scrip. Barter exchanges were established in many cities as a means for the unemployed to trade labor and time for necessities. Members traded services for labor or goods, or goods for services or other goods. The exchanges kept schedules of the value of goods and services so there was no dispute as to the value of items.

The Peavey Paper Company in Ladysmith issued scrip to free up cash to pay for improvements to the company’s facilities.

Payroll and Business Scrip. Many businesses were caught off guard by the Bank Holiday and did not have sufficient cash on hand to make payroll or pay bills. If they had sufficient economic muscle they were able to issue scrip, often in the form of small denomination checks, that was accepted in the local community.

Scrip issued in Horicon in the form of a check issued by local businessman H.V.B Wilcox.
Image courtesy of Chet Krause.

Private Scrip. There are a few instances of individuals issuing scrip. Some of these were opportunists, some were altruistic dreamers and others were local business leaders.

The success of the various types of scrip varied from place to place. It was most successful in areas where there were existing economic drivers that only needed assistance.

The Sturgeon Bay and Lake Michigan Ship Canal

ship canal 1.jpg

A few months ago I wrote about transportation numismatics of Door County. Somehow I managed to forget to include one of the largest pieces in the collection.

The document shown above is a specimen of a $1,000.00 bond issued by the Sturgeon Bay and Lake Michigan Ship Canal and Harbor Company. The bonds were issued to finance the construction of the canal connecting these two bodies of water across the Door County peninsula in 1873. The original piece is too large to fit on a standard scanner. The lower half not shown in the scan consists of interest coupons. This is either an unissued remainder or a printer’s specimen.

I obtained the bond from Chet Krause in about 2012. Chet thought enough of it to picture it in his book on Wisconsin Obsolete Paper Money and Scrip even though it is neither. Chet knew I lived in Door County (he referred to me affectionately as that damn lawyer in Sturgeon Bay) and offered it to me when he was dispossessing himself of his collection in the years before he died. I am proud to be its current caretaker.

A not entirely to scale rendition of Lake Michigan, Green Bay and the Sturgeon Bay canal from the Chicago publication the Land Owner marking the opening of the canal. (The Newberry Digital Collection).

Construction on the canal began in 1872 across a 1.3 mile strip of land that separated Sturgeon Bay and Lake Michigan. It was completed in 1881. The canal shortened the trip between Green Bay and the Lake Michigan ports by 150 miles. It also eliminated crossing Death’s Door, the treacherous channel between the northern end of the Door peninsula and Washington Island.

The canal had a tremendous effect on the development of Sturgeon Bay and Door County in the late 19th Century. The ships passing through provided a vital link between the county and the rest of the world as the roads to the county were primitive and there was no rail connection yet. It resulted in Sturgeon Bay becoming a center of shipbuilding.

NOAA map of Sturgeon Bay and the canal. The yellow line is the canal and the red line is the dredged ship channel. The inset is the city of Sturgeon Bay

Great Lakes shipping continues to pass through the canal but it has a greater significance for smaller boats than the lake freighters. The canal makes Sturgeon Bay the center of a large and varied sport fishing industry allowing for salmon fishing on the big lake, smallmouth bass on Sturgeon Bay and perch and walleye on Green Bay all from a central location.

Oberammergau

Notgeld from 1921 from Oberammergau depicting death ravaging the area in the 1630s

It is Easter weekend and the only notes that I could find related to this Christian holiday are notgeld from the German town of Oberammergau highlighting the decennial Passion Play performed there.

The Oberammergau Passion Play has its origins in an outbreak of bubonic plague in 1633. The villagers promised God that they would perform a play depicting the life, death and resurrection of Christ every 10 years if the community was spared. Over the next year deaths in the village declined dramatically. The villagers kept their promise and performed the play for the first time in 1634. It has been performed ever since in years ending in zero (except for 1940 when WWII got in the way).

The play includes dramatic renditions of Old and New Testament stories. It is performed for five months from May through October. The production lasts several hours. The performers are all residents of the village.

The central vignette on this 50 pfennig notgeld from Oberammergau depicts a scene from the 1634 production of the Passion. Two of the authors of the original Passion, Othmar Weiss and J. A. Daisenberger flank the image. The back is a depiction of Oberammergau in 1634.

A Dirty Little Secret

The United States took possession of the Philippines from Spain after the Spanish-American War. Coinage and paper money for the Philippines were made by the United States until independence in 1946.

After the Japanese invasion in 1941, the gold and silver in the Philippine treasury was secreted out of the country on board the submarine USS Trout. Guerrilla forces loyal to the United States administration harassed the Japanese occupiers. Feeding and equipping the guerrilla armies cost money.

USSNarwhalSS167.jpg
USS Narwahl, one of the submarines that supplied
the guerrilla armies in the Philippines.

Arms, equipment, food and other provisions were brought to the Philippines by submarine during the war. These supply missions also brought with them money. Two different types of money were brought in — counterfeit Japanese military pesos and pre-war Commonwealth of the Philippines notes. The counterfeit Japanese notes will be discussed in a subsequent post.

The War Department asked the Bureau of Engraving and Printing to print additional pre-war Philippine paper money. The last series of paper money issued in the Philippines had been put into circulation in 1941. The BEP printed a short run of these notes for the War Department in denominations of 1, 5 and 10 pesos.

The War Department believed that the Japanese would be suspicious of anyone who was found in possession of brand new currency notes so the first group of notes ordered by the War Department was artificially aged by the Bureau of Standards. The notes were tumbled in metal drums containing dirt, coffee grounds and other contaminants to soil the notes.

The printing and artificial aging of the notes was a clandestine operation. The existence of this special series of notes was uncovered by author and researcher Neil Shafer in the 1960s when he stumbled upon correspondence and records relating to their printing in the National Archives. Included in this documentation were the serial numbers of the notes that were artificially aged. The serial numbers for each denomination are as follows:

1 pesoE6008001E – E6056000E
E6064001E – E6072000E
E6080001E – E6324000E
5 pesosE1208001E – E1328000E
10 pesosE810001E – E870000E

As you can see, the number of notes printed was small — 300,000 1 peso notes, 20,000 5 peso notes and 60,000 10 peso notes. All denominations are scarce with the 10 peso being rare. The artificial aging can fool dealers and collectors alike who may pass on the notes because of their low grade.

UNESCO Coupons

In 1948 the United Nations Educational, Scientific and Cultural Organization (UNESCO) established a coupon system to aid in the acquisition of educational, scientific and cultural books and other media especially in less developed countries.

Coupons were originally issued in values of US$.25, 1.00, 3.00 and 10.00. The $.25 coupon was dropped many years ago and a $30.00 and $1,000.00 coupon have been added. Coupons can be purchased from UNESCO representatives in any country using local currency at the exchange rate for US dollars. A surcharge not exceeding 5% may be added by the local UNESCO office.

The coupons can be used to purchase qualifying materials from suppliers who are willing to accept the coupons. Qualifying materials originally only included books but this has been expanded to include maps, sheet music, computer hardware and software, textbooks and school supplies, as well as scientific supplies such as laboratory equipment, testing devices and tools. The UNESCO offices maintain lists of suppliers who are known to accept the coupons.

UNESCO coupons are bearer instruments but can only be redeemed by merchants who who deal in eligible products. They are valid for four years from the date of issue. Coupons that have passed their expiration date can be exchanged for new coupons at UNESCO offices.

The Numismatic Legacy of the SMS Emden

Fifty pfennig notgeld depicting the SMS Emden issued by her namesake city in 1918.

The SMS Emden was a cruiser in the German Imperial Navy. Her keel was laid in 1906 and the ship launched in 1908. After shakedown, she was commissioned in 1909. Her first and only posting was to the East Asia Squadron whose home port was the German concession in China at Tsingtao. She arrived on station in July 1910 meeting the rest of the fleet in German Samoa.

SMS Emden in the port of Tsingtao in early 1914.

For the next four years, Emden took part in operations in the Pacific protecting German interests. She participated in Yangtze patrols and helped suppress rebellion in the Carolines. In August 1913 she thwarted an attack on her by Chinese revolutionaries while at Nanjing.

Korvettenkapitan Karl von Muller.

In May 1913, Lt. Commander Karl von Muller took over command of the Emden. He had spent his early career as a signal officer on ironclads and spent time in German East Africa on the SMS Schwalbe. He served on the staff of Admiral Prince Heinrich of Prussia and then with the Imperial Navy Office in Berlin. In that service he caught the attention of Admiral von Tirpitz who rewarded him with command of the Emden.

With the winds of war blowing throughout the summer of 1914, von Muller took Emden out to see at the end of July. Germany declared war on Russia on August 2 and Emden recorded her first victory by capturing a Russian vessel that had yet to hear the news that war had been declared.

Admiral von Spee determined that the East Asia Squadron was to return to Germany to assist in the European conflict by sailing around South America. (Most of it would be destroyed at the Battle of the Falklands). Von Muller suggested that one cruiser remain to keep a threat in the area. Emden was the fastest of the German ships so she headed for the Indian Ocean while the remainder of the fleet went southeast across the Pacific.

Emden’s route through the Indian Ocean.

Emden wreaked havoc in the eastern Indian Ocean as a commerce raider. Between August and November she sank 30 Allied vessels and attacked Madras and Penang. Shipping traffic dropped by over 60% in the region as a result. She was partly aided by deception and the slow pace of communications. The Germans installed a dummy smoke stack to disguise Emden as a British vessel and when she put into Diego Garcia for maintenance the British garrison had still not received word that the war had begun over a month earlier!

On November 9, von Muller turned the ship’s attention to the wireless station on Cocos Island. Arriving early in the morning and seeing no Allied vessels in the region, von Muller put a landing party on shore to take care of the transmitter. Emden was spotted and when she failed to identify herself the wireless station broadcast that an unidentified vessel was approaching.

HMAS Sydney

Answering the call was HMAS Sydney. von Muller believed Sydney was 200 miles furtjer away than she was and thought there was enough time for the landing party to complete its mission. At 0900 lookouts on Emden spotted smoke in the distance and identified it as a warship. Knowing that he was probably outgunned and definitely outnumbered, von Muller knew it was time to escape. There was no time to retrieve the shore party.

Sydney closed to 9,500 yards and began to shadow Emden’s moves. von Muller knew his only chance was to come within Sydney’s range and fire all he could at the Australian vessel and hope to inflict as much damage as possible before Sydney could find her range. The German volleys had little effect. von Muller tried four times to approach to within torpedo distance but Sydney backed away every time.

The wreck of the SMS Emden off Keeling and Cocos Islands.

It did not take long for Sydney’s guns to zero in on Emden and by 1045 Emden was no longer able to return fire. von Muller ran the remains of his ship onto the reef off Cocos Island to prevent its sinking and to save the crew. Emden’s weapons were disabled and the code books burned. The German casualties were heavy — 134 dead, 69 wounded. Most of the survivors were taken prisoner.

German shore party departing Direction Island in the Keeling and Cocos Group. The three masted schooner in the background is the Ayesha.

The landing party observed the naval battle and knew there would be no rescue. They commandeered the three masted schooner Ayesha and headed for the Dutch East Indies (the Netherlands was still neutral). The landing party eventually made its way to the Ottoman controlled Arabian Peninsula and back to Germany.

It would not be until November 11 before the Sydney and her crew could board the remains of the Emden. Although the weapons and code books were destroyed, the Australians did find one thing of use still on the ship. Emden’s payroll consisting of some 3,000 Mexican silver dollars were seized. The Australian Admiralty turned some of these into souvenirs by affixing a commemorative broach and presented them to senior officials.

Mexican one peso coin from 1884 that survived the sinking of the SMS Emden off the Keeling and Cocos Islands in 1914.

At least one German also made a souvenir out of a Mexican Peso inscribing the piece shown above with the legend “Von Bord S.M.S. Emden 9 Novbr 1914 Riff Nord Keeling”.

Canteen tokens used on SMS Emden. The denominations are 10 pfennig, 50 pfennig, 1 mark and 2 marks.

German naval vessels issued tokens for use in their canteens. The above set of tokens were from the SMS Emden. Most of the SMS Emden tokens in the collector’s market were looted from the ship by the crew of the HMAS Sydney.

The Collapse of the McCartney National Bank of Green Bay

$10.00 Second Charter note from the McCartney National Bank of Green Bay, charter number 4783.

George A. Richardson began working as a messenger for the McCartney National Bank of Green Bay at the age of fourteen in 1891. He worked his way up the ladder to cashier and was made president of the bank in January 1931 succeeding his brother-in-law J.H. Tayler. On May 21, 1931, Richardson arrived at the bank in the morning and met briefly with Tayler, cashier T.G. Bailey and assistant cashier Bernard Olejniczak. He retrieved a pistol from the cashier’s cage, walked into the bathroom and shot himself — precipitating the beginning of the end of the bank.

The McCartney Exchange Bank was founded as a state bank in 1882 by David McCartney in Fort Howard, Wisconsin (presently the west side of Green Bay). It was incorporated as a national bank in 1892 as the McCartney National Bank of Fort Howard receiving charter number 4783. Three years later when the borough of Fort Howard was married to the city of Green Bay the bank changed its name. McCartney was lured to Wisconsin from Ohio by the lumber industry and operated two saw mills near Green Bay before investing in pine lands in Georgia.

$10.00 Third Charter Date Back note from the McCartney National Bank from 1912. Note
the stamped signatures of G.A. Richardson as Cashier and J. H. Tayler as president.

Tayler succeeded McCartney as the bank president in 1892. The bank prospered in the early part of the twentieth century under his direction. It was key to financing much of the development on the near west side of the Fox River. Among the banks largest customers were the Larsen Company canning operation and the Green Bay Sugar Company. Tayler served on the board of directors of these two companies as well as two state banks located in New Franken and Wrightstown, Wisconsin. This incestuous business and banking relationship would be a contributing factor in the bank’s demise.

$10.00 1929 Type 1 note from the McCartney National Bank.

The Fox River Valley area of Wisconsin weathered the Great Depression better than most parts of the country. The paper and tissue mills that lined the river remained viable although production decreased. The same could not be said for the local agricultural industries. Falling farm prices in the mid-to-late 1920s were caused by an overabundance of crops. The stock market crash of 1929 and the ensuing economic depression reduced the demand for agricultural products.

Stock certificate for Northern Bond & Mortgage, one of J. H. Tayler’s operations.

Tayler and Richardson were heavily invested in agricultural businesses in Northeast Wisconsin using their positions with the McCartney National Bank to finance the ventures. As the agricultural economy ground to a slow crawl, their house of cards began to unravel. Tayler and Richardson had borrowed heavily from the bank.

George A. Richardson, the final president of the McCartney National Bank of Green Bay.
(Picture from the Green Bay Press-Gazette).

As news of Richardson’s suicide began to spread, panic descended on the financial institutions in Green Bay. By the end of the day $25,000.00 in deposits had been withdrawn from the bank. At a special shareholders meeting held that evening it was decided not to open the next day. In order to try to quell the fear in the community, J. H. Tayler announced that Richardson’s books had been examined and everything was found to be in order. Tayler’s announcement regarding the state of the accounts was technically correct, but he failed to disclose that the books only balanced because of notes owed to the bank by he and Richardson and other investors.

An uneasy calm settled over Green Bay for the next week. The operation of the McCartney National Bank was placed in the hands of a receiver. The crisis flared back up on June 2, 1931 when the Brown County State Bank closed its doors for examination and it was revealed that that institution was heavily intertwined with the McCartney National Bank. Pandemonium ensued as worried depositors streamed into the other Green Bay banks that morning.

$20.00 1929 Type 1 note from the Kellogg-Citizens National Bank of Green Bay. The signature on the right is that of bank president John Rose who was instrumental in calming bank depositors during the 1931 panic in Green Bay.

John Rose, president of the Kellogg-Citizens National Bank, and other local leaders tried to soothe the mob. In a very public exhibition, Rose had prominent men enter the banks and ostentatiously make large deposits. The Kellogg-Citizens National Bank remained open after hours to allow depositors to make withdrawals – a sign that was intended to inspire confidence in the bank’s stability. A half million dollars in cash was trucked in from banks in Milwaukee and Chicago and when the Green Bay banks opened on June 3, it was displayed in large bundles on their counters. Sanity returned and the crisis was averted.

Stock certificate for ten shares of the McCartney National Bank of Green Bay.

But things would not go so well for the principals of the McCartney National Bank. C. C. Phelps, Tayler and Richardson’s brother-in-law and an investor in the bank and several of Tayler’s other businesses committed suicide as did Austin Larsen, president of the Larsen Canning Company, due to financial losses brought on by the collapse of the bank.

J. H. Tayler was arrested for embezzlement in September 1931 and filed bankruptcy in December of that year. He was essentially kiting checks among six different banks. He defended his actions as being acceptable banking practice. He was convicted in December 1932, the trial having been delayed due to poor health — despite this he managed to live another 28 years and passed away in 1959 at 100!

Check for $.02 representing the final liquidating distribution to a
depositor of the McCartney National Bank of Green Bay

Things went better for the bank’s depositors. The receiver sold off the bank’s assets and called in a 100% assessment against the stockholders. It took several years but the depositors received most of their money back in a series of liquidating distributions. The Kellogg-Citizens National Bank took over the redemption of the still circulating National Bank Notes issued by the bank.