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Published online by Cambridge University Press: 07 November 2014
This is an account of the issue of dated stamp scrip in Alberta in 1936. The data were gathered a year later, and the scantiness of the information then available has resulted in important gaps which cannot be filled. But for several reasons it has seemed desirable to attempt a description and explanation of what happened. First, there is general interest in the actions of the present Alberta government, the only Social Credit government which has been elected to office in any country. The second reason is the paradox that the Social Credit government's first monetary innovation was not the installation of Social Credit, but the adoption of a rival monetary reform, the dated stamp money of Gesell. Thirdly, the interest of many people, including the monetary theorists, J. M. Keynes and Irving Fisher, in the economic ideas of Gesell seems to make an investigation of the Alberta episode worth while, even though Gesell's device was not introduced in exactly the manner he would have adopted. Fourthly, the prevalence in our time of many types of movements for monetary reform calls for as much documentation as possible of what is actually done. Finally, the economic problems of the Prairie Provinces are persistent enough to justify a record and analysis of each type of solution which is offered.
The writer is indebted to the Rockefeller Foundation for a grant which made possible a visit to Alberta in August, 1937. He is also indebted to his colleague, Professor V. W. Bladen, who accompanied him, shared part of the labour, and aided in many friendly ways.
2 The writer hopes to publish a succeeding article which will deal with the theoretical aspects of dated stamp money.
3 Dated stamp money is money which is made expensive to hold by the requirement that a stamp, costing a definite sum, has to be placed on it at regular intervals (or dates). All stamp scrip is not dated stamp scrip; the more common type of stamp scrip is that upon which a stamp must be affixed on transfer, instead of on a certain date.
4 Gesell, Silvio, author of The Natural Economic Order, English translation 1934,Google Scholar from the third German edition of 1920.
5 Cf. the references in his General Theory of Employment, Interest and Money (London 1936).Google Scholar
6 Cf. his Stamp Scrip (New York, 1933).Google Scholar
7 Cf. an article on “Monetary Theory and Politics” by the present writer in Essays in Political Economy in Honour of E. J. Urwick (Toronto, 1938).Google Scholar
8 See the following articles in this Journal, Nov., 1936, dealing with the recent events in the province: A. F. McGoun, “Social Credit Legislation, A Survey”; G. E. Britnell, “The Elliott-Walker Report, A Review”; D. C. MacGregor, “Income and Expenditure in Alberta, A Revision”; J. C. Elliott, “The Elliott-Walker Report, A Rejoinder”.
9 See in this connection The Alberta Experiment (London, 1937),Google Scholar by Major C. H. Douglas.
10 Edmonton Journal, June 16, 1936.
11 This is presumably a certificate entitling one to receive a dividend.
12 Reference to the papers and magazines of the Social Credit, Gesell, and other movements for monetary reform will indicate the close attention paid to all developments of monetary theory and politics, especially of an “unorthodox” type.
13 This information was supplied by Mr. E. S. Woodward, Canadian representative of the Gesell organization.
14 Vermillion, a town of 1,500 population, issued, in payment for materials and services, $1,300 of cheques post-dated a year. Acceptance was voluntary, and as each cheque was issued it was covered by a deposit of cash in a savings account, on which interest was paid. When tax payments came in, long before the end of the year, the town abandoned the scheme, and all of the cheques were destroyed, except $175 worth believed to have been retained as souvenirs (Winnipeg Free Press, May 19, 1936).
Mr. Fallow estimated that the cheques changed hands on the average of eight times in four months, and also asserted that the whole amount could have been withdrawn at any time in a week or ten days simply by retaining the cheques as they came in. There seems to be a discrepancy between the two statements, for if the cheques changed hands only once in two weeks, they could scarcely have been received by the town once in every week or 10 days. Perhaps Mr. Fallow meant that they changed hands eight times a month. All such guesses at circulation are subject to a wide margin of error. The speed with which the scrip returned to the authorities indicates the willingness to pay it for taxes. Such information as this writer has seen respecting the issues of municipal scrip in the depression seems to show clearly only one thing, namely, that scrip can be useful in collecting tax arrears and unpaid debts.
15 See Municipal Scrip issued by the American Municipal Association and the Municipal Finance Officers' Association (Chicago, 1934) for a large number of reported instances.
16 Ibid.
17 An account of one of these measures and the speeches by the legislators is given in Fisher's Stamp Scrip.
18 The factual part of the account which follows is based upon the reports in the Edmonton Journal and Winnipeg Free Press, both of which reported events in considerable detail. The editorial policy of both newspapers was opposed to the general programme of the Social Credit party. The writer is indebted to Dr. J. W. Dafoe and Mr. George Ferguson of the Winnipeg Free Press and to Mr. John Imrie of the Edmonton Journal for their courtesy in making available the files of their newspapers.
19 See the account by McGoun (“Social Credit Legislation”) and the quotation from the Act below, p. 67.
20 Those which passed between September, 1935, and March, 1936, were published by Major Douglas in his The Alberta Experiment.
21 Cf. The Alberta Experiment, pp. 178-98. He had been retained as reconstruction adviser by the previous (U.F.A.) government.
22 O.C. 815-36, approved June 11.
23 Statutes of Alberta, 1936, c. 5.
24 See n. 18 for the sources relied on in the following summary.
25 Six months later, on January 16, when the stamp scrip was a dead issue, Premier Aberhart refused to comment on the statement by John Hargrave of the English Social Credit party, that stamp scrip had nothing to do with Social Credit.
26 Mr. Woodward (see n. 13) writing in the Edmonton Bulletin from July through November outlined Gesell's theory and sharply criticized the methods of application by the Alberta government.
27 See the discussion of redemption below.
28 By Mr. S. W. Field, K.C.
29 O.C. 1085-36.
30 By the Order-in-Council no. 1132, 1936, the provincial treasurer was authorized to issue credit certificates to cities willing to accept them in lieu of grants for relief. To the Act of September 1, 1936, which validated the various Orders-in-Council respecting prosperity certificates, there was annexed the schedule of the proposed agreement between Edmonton and the province.
31 In a return tabled in the House by Provincial Treasurer Low on March 11, 1937, he stated that up to August 24, 1936, no certificates had been redeemed for individuals or companies. There were, however, more than two weeks between August 24 and the first redemption date.
32 This kind of statement seems to imply that the wholesalers believed there would be monthly redemptions before a public announcement to that effect had been made.
33 According to newspaper reports at the time. It is difficult to tell accurately either the time or the amount of payment.
34 See its paper The Way Out, San Antonio, Aug., 1936. The points criticized were the failure to accept for taxes, the lack of a definite exchange value on demand, the payment to relief workers, the failure to provide against inflation and for stabilization of the price level, and the physical form of the scrip.
35 The account published in The Way Out was designed to dissociate the Gesell movement from the expected failure of the Alberta scheme. But in view of the great publicity which attended the minute issue at Woergl, the lack of interest of the Gesell organization in the details of the Alberta experiment is odd.
36 See Fisher, , Stamp Scrip, pp. 22 ff.,Google Scholar for an account of the issue in Woergl, Austria.
37 Columns 1-4 of this table and tables III and IV were supplied by the provincial treasurer, the Hon. Solon Low, for whose courtesy the writer is grateful.
38 I am indebted to my colleague, Professor A. F. W. Plumptre, who worried with this puzzle and produced a plausible estimate of the monthly amounts which were sold and which leaked from circulation as souvenirs. Column 7 is based upon this estimate. In the first two months, novelty and large circulation are assumed to have resulted in large leakages and sales, and in November and December the circulation among a new stratum of people is assumed to have increased the leakage.
39 By one of the officials in charge.
40 In March, 1937, Mr. Duggan estimated the cost at $12,000 as against a cost of $2,200 for borrowing the same sum. Mr. Low replied, on April 7, that the government was $1,200 ahead as compared with a course of borrowing the same sum of money.
