How Scrip Machines Work

 

The system used two machines. The first was used in the company office and it issued the scrip to the employee. The second is a scrip register used in the company store.

 

Joe Miner goes into the scrip office and asks for $3 in scrip. Jim Clerk checks to see if Joe has some hours of pay coming to him. 

 

He does, so Jim pulls Joe’s card from the file and inserts it into the issuing register. He enters $3 on the scrip machine and pulls the handle.

 

Three one dollar scrip pieces are delivered, along with a record for the employee and the permanent record on the employee’s card.

 

Mr. Miner takes the three dollars and goes to the company store next door. He gets some food for supper that night and breakfast the next morning and gives the store clerk the three $1 scrip coins.

 

The clerk goes to her register and rings up the purchase, $2.62. The machine shows the change due, $0.33. A scrip quarter, a scrip nickel, and three scrip pennies fall into the slot. The clerk hands the customer his change and the transaction is complete.

 

Miners’ pay was so low that rather than being an occasional thing, scrip use was usual. Most miners had to use scrip to make it through the time before payday.

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The Scrip System

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For over a hundred years company stores were a fixture in the United States. Twenty thousand of these commissaries were at the mouths of the nation's coal mines. Thousands more were found at lumbering operations, cotton mills, and farms.

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Workers were paid in scrip, metal tokens about the size and shape of US coins which were good only in the company store. That allowed the companies to charge whatever prices they chose, since employees could use the scrip only at that one store.

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"Payable in Merchandise Only" was stamped on the tokens, and while company stores carried many items such as clothing, they were mainly food stores, stocked with the beans, flour, and corn meal that miners lived on.

 

Scrip was a system of paying workers in potatoes and flour, a huge cost savings for the companies.

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Most of these tokens were marked and "Not Transferable", meaning that one could not even pay a debt to another person with them. Only the worker who had been issued the scrip could spend it, only at the commissary.

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Economists called them Industrial Stores.

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Many of the miners also lived in company housing, often hastily thrown together four room houses with tarpaper siding, often with an outhouse shared my several families. The going rental rate was a $2 per room, rent deducted from the employees' paychecks.

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It didn't take long for the company to make back its initial outlay and start profiting from being a landlord.

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these were captains of industry and they were determined to make a profit on everything, and they did. A coal mine is three miles from the nearest town and there is no housing? Profit time. Like promoters running the concessions at a rock fest, those in attendance at the mine were at the mercy of the company.

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the workers much have incentive to work at places that paid in scrip,

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coal, lumber, and cotton

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and while these "Industrial Stores" as economists named them, 

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Capitalists are skilled at spotting a stream of money and siphoning some off. There's a fair in town? Every shopkeeper knows to go to Sam's Club and buy water for ten cents a bottle to chill and sell for two bucks.

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The coal industry could spot that stream years in advance and get a monopoly on food and housing. 

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The 

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Scrip depended on employees accepting the system.

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The success of the system depended on a number of factors. The law had to be satisfied and there had to be a way to keep track of the scrip. 

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Is it legal?

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