Accounting Historians Notebook Volume 16 Number 1 Spring 1993 Article 5 Spring 1993 Scrip: The alternative unit-of-measure in company towns Roxanne Therese Johnson Follow this and additional works at: https://egrove.olemiss.edu/aah_notebook Part of the Accounting Commons, and the Taxation Commons Recommended Citation Johnson, Roxanne Therese (1993) "Scrip: The alternative unit-of-measure in company towns," Accounting Historians Notebook: Vol. 16 : No. 1 , Article 5. Available at: https://egrove.olemiss.edu/aah_notebook/vol16/iss1/5 This Article is brought to you for free and open access by the Archival Digital Accounting Collection at eGrove. It has been accepted for inclusion in Accounting Historians Notebook by an authorized editor of eGrove. For more information, please contact [email protected]. Johnson: Scrip: The alternative unit-of-measure in company towns SCRIP: THE ALTERNATIVE UNIT-OF-MEASURE IN COMPANY TOWNS by Roxanne T. Johnson University of Scranton The growth of industry in the United explosives plants in the west were located States evokes images of dynamic, vital, and far from populated areas (Allen 1966). aggressive men pursuing and finding a pot Although this is an obvious example, firms of gold at the end of some elusive rainbow. in other industries also found it necessary These men were variously described as to supply the needs of employee sagacious, daring visionaries with an eye to populations. Due to the isolated locations the future, and, sometimes simultaneously, of plants, mines, refineries, or raw money-grubbing, opportunistic robber materials, for example, firms built barons without a care for their employees. company towns and also provided all life's Indeed, the second description, and the basic necessities to employees isolated from resulting abuses of company employees, are any other sources of commodities. The the focus of this paper. The abuse of company stores helped to provide these company employees was especially evident necessities. Stores maintained by the firm in the company towns built to house the were operated as either departments or laborers who supplied the human resources subsidiaries of the "parent" company. essential to the company and the stores Alternatively, some companies contracted associated with these towns. These abuses with outsiders to operate the stores were masked, for a time, under the guise of (Company 1935). paternalism. Company stores, or "pluck-me's" or "grab- all's", were operated as an active component Influence of Paternalism of an entity on the basis of rational, The support of paternalism was based on managerial reasons (Rochester 1931). the belief that workers were not able to Among the various reasons for operating deal with the exigencies of existence and company stores, the most altruistic reasons required comprehensive care off the job as were based on the idea of paternalism. well as supervision at work (Chafee 1923). However, the moneyed purposes of the In the early nineteenth century, prior to entrepreneurs who ultimately ran the stores the growth of major companies, this also existed. Company stores afforded an attitude meant that firms operated opportunity to earn additional income and to essentially as banks for employees. Thus, exert control over workers' lives. the firms provided or paid for goods, services, or other eventualities. Use of Scrip When large, industrial firms began to In the latter half of the nineteenth develop, however, they were usually century and the early twentieth century, located far from population and company stores essentially used an commercial centers. For instance, I.E. alternative unit-of-measure called scrip. DuPont de Nemours & Company Scrip was issued by the company as 6 The Accounting Historians Notebook, Spring, 1993 Published by eGrove, 1993 1 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 5 payment to the employees and was forced, in turn, to deal with the higher recognized within a particular geographic priced company store. This practice community as tender, a practice sometimes resulted in two different prices, introduced, fostered, controlled, and often one when scrip was used and one for cash mandated by the company. Its purpose transactions (Company 1935). seems to have been to keep the individual In some cases, the employee only tied to the company store. received a piece of paper called a "bob-tail Scrip could take many forms, but it was check" as payment for wages. This check always issued in lieu of cash. In one represented the amount earned as wages, instance, the Sonora Exploring and Mining less any expenses contracted through the Company, the owner of Tubac in Southern company store (Rochester 1931). The Arizona, issued cardboard rectangles or result, most often, was a zero or negative boletas in denominations denoted by the balance, another means of tying the pictures of animals (Allen 1966). The employee to the company. Due to this Kirby Lumber Company in Kirbyville, practice, easy credit was available to the Texas, issued merchandise checks. These employee and often kept him/her checks were pasteboard disks stamped with perpetually in debt to the company, an amount and the name of the company. whether out of necessity or, unlikely under These merchandise disks would never the circumstances, frivolity. Complicating become cash, however, unless discounted at this situation was the actual pay period, some unrelated store for 10% to 20% of which could range from weekly to monthly the face value of the disk (Creel 1915). In and, at its most abusive, semiannually. other instances metal tokens may have been Often implicit in the above scenario was used, or coupon books with detachable collusion between the company store and coupons, or various other kinds of specie the payroll department. Store personnel (Allen 1966). would often have ready access to the earnings records of the employees for Abusive Practices determining credit eligibility (Company There were instances where the 1935). To make matters worse, the discounts on scrip amounted to approxi­ employee was not able to seek employment mately 40% of par (Johnson 1952). elsewhere due to misfortune, gullibility, or Unfortunately, there were times company other reasons for indebtedness to the employees found it necessary to produce company store. Eventually, efforts were cash in this way. Employees leaving the made to rectify these abuses. These efforts company were paid in scrip and had to were not very effective, however. exchange it for cash that could be used elsewhere. Also, cash was needed to pay for Efforts to Reform services or merchandise which were not The first attempts to counteract the available at the company store. abuses evident in the company town The company store would only accept system occurred at the state level. The the company's scrip for merchandise, which Pennsylvania General Assembly passed an was habitually priced 5% to 20% higher act in 1881 which precluded the issuance than competitors'. The discount charged by of scrip that could not be redeemed at its other stores was partly due to the exchange face value, plus interest where appropriate, service offered by these other merchants for cash on demand. Later, in 1891, a law but was also because these merchants were continued on page 32 The Accounting Historians Notebook, Spring, 1993 7 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/5 2 Johnson: Scrip: The alternative unit-of-measure in company towns Scrip: continued from page 7 system (Johnson 1952). was passed which absolutely prohibited company stores associated with mining Summary and manufacturing firms. This law was The company store system and scrip far from effective, however, as payment practices coexisted with the legal companies simply evaded the bill by monetary system in this country as late as incorporating the company stores as the mid-twentieth century. Scrip payment separate entities. In 1901, another effort practices served as alternative money to halt the abuses of company stores in systems on a local geographic scale. Due to Pennsylvania was made. The Store this system, large numbers of corporate Order Act of that year was an attempt employees suffered the indignities of to tax company stores out of existence restricted opportunity and paternalistic (Johnson 1952). control. As the National Recovery Legislation was enacted in other states Administration committee determined, which was aimed at correcting what paternalism as a practice was dubious in its many considered a blight on the merits and acceptability. Predictably, the country's industrial character. By 1933, abuses evidenced in company stores thirty-two states had passed legislation contributed to the demise of the company concerning company stores in an effort to town, and the paternalistic practices of the control, limit, or forbid such operations. nineteenth and early twentieth centuries. The results of such legislation were mixed at best (Johnson 1952). In 1934, the abusive practices of the REFERENCES company store system received Allen, James B. The Company Town in the organized national attention. On March American West. Norman, Oklahoma: 16, 1934, a special committee was University of Oklahoma Press, appointed by the National Recovery 1966. Administration specifically for the Chafee, Zechariah, Jr. "Company Towns in purpose of investigating abuses when the Soft Coal Fields." The wage payments were made in other than Independent. (September 15, 1923): lawful currency. The committee 102-104. determined that company scrip was "Committee Report on Scrip Payment of discounted by merchants and stores in Wages and Company Stores." the same area as the company at rates Monthly Labor Review. (December ranging from 10% to 30%. Further, 1934): 1353-1355. company stores charged from 2.1% to "Company Stores and the Scrip System." 10.4% more for merchandise than did Monthly Labor Review. (July 1935): competing stores (Committee 1934). 45-53. Although no national legislation was Creel, George. "The Feudal Towns of passed with respect to this committee Texas." Harper's Weekly. (January report, the national attention did appear 23, 1915): 76-78.