Free Marekt Money in Coal-Mining Communities; R. Timberlake

Although many mourn the days of a bustling and active coal economy, little can be said to sup port the ... issuance of scrip." (Truman L. Sayre, "Southern West Virginia Coal Company Scrip," in Trade Token Topics, reprinted in Scrip, Brown, 1978,pp. 343-344) 1. ThePossibllityof FreeMarketMoney Ever since the abolition of the operational gold standard in the early 19308,the federal gov ernment through its agent, the Federal Reserve System, has been almost the sole creator of the monetary base, and has also been the licensing agent for the banks that create most of the de mand deposits used in the United States. No money of any significant amount can be created today without some sanction or act of the Federal Reserve System. This condition has encouraged the notion that government is a necessary, or at least desirable, Richard H. Timberlake is professor of economics, Uni versity of Georgia. This article originally appeared in the Journal of Money, Credit, and Banking, Vol. 19, No.4 (November 1987) and is reprinted here with per mission. Copyright © 1987 by the Ohio State University Press.

regulator of any monetary system-that without government involvement any monetary system quickly degenerates into "chaos." If this supposi tion were valid, the evolution of money could hardly have occurred. The barter system that pre ceded early monetary systems, in which govern ment had no part, would not have been super seded if the resulting monetary systems were destined to be chaotic. This logic suggests the possibility and perhaps the feasibility of a non government money. However, the practical effi cacy of such a system cannot be deduced from a theory that merely suggests its possibility, but must be sought from historical evidence of mone tary arrangements that have developed sponta neously in the private sector. This paper examines one such incidence of pri vate money creation-the issue and use of scrip, which occurred primarily in the isolated econom ic environments of mining and lumbering compa ny towns during the first half of the twentieth century. Fortunately, numismatic collections and records reflect the operational character of the scrip systems in these communities so that some evaluation of their monetary properties is possi ble.

Much of the recent research on the creation of private money has focused on that issued by pri vate banks in the presence of a dominant legal money such as gold. (White 1984, Sylla 1976, Rolnick and Weber 1982)The issue of scrip, how ever, had nothing to do with banks. It was issued by private mining and lumbering enterprises. While it, too, was redeemable in a dominant money, its issue and acceptance were not critical ly dependent on any dominant money. For this reason, the phenomenon of scrip issue is especial ly revealing. 2~ LegalRestraintsAgainstthe Issueof PrivateMoney Proscriptions against the arbitrary or ca~ual is sue of money appeared at the very beginning of this country's political formation. First, the Con stitution stated: "No state shall ... emit bills of credit, [or] make anything but gold and silver coin a tender in payment of debt." (U.S. Consti tution, Art. 1, Sect. 10) No money except gold and silver was to be the legal tender issue of any governmental unit.

Money to be money, however, does not have to be legal tender. It can be what one might call common tender, i.e., commonly accepted in pay ment of debt without coercion through legal means. Indeed, privately issued money to exist at all would have had to be common tender, and would have had to earn its acceptability in a mar ket environment. Even though the states and Congress were constrained to monetizing only gold and silver, the general laws of contract and commercial in struments sanctioned the appearance of moneys issued by privately owned commercial banks. (Hurst 1973) In addition, "Nothing in the Consti tution barred private manufacture of coin, and through the first half of the nineteenth century Congress did not act against private coinage.... General contract law allowed any contractor to issue his notes and coins and circulate them so far as the market would take them." (Hurst 1973) Free enterprise in the issue of common tender money was accidentally encouraged in practice by the federal government's ineptness in estab lishing a useful denominational spectrum of frac tional currency during much of the nineteenth century. (Carothers 1967) Private transportation companies-canals, turnpike companies, and rail roads-issued significant amounts of such curren cy between 1820 and 1875. Municipal and state governments did likewise. Redemption of trans portation currency when called for was in ser vices rendered, while state and local government currency was redeemed as tax payments. (Tim berlake 1981) The paucity of government-issued fractional currency was catastrophically aggravated by the 399 first issues of greenbacks during the Civil War.

The metallic values of subsidiary coins rose rapidly above their monetary values in the sum mer of 1862, and the coins disappeared from cir culation. These circumstances provoked not only the ill-conceived issue of postage stamp currency, but also extensive private issues of minor coin. (Carothers 1967, Faulkner 1901) The act that au thorized postage stamps as currency in 1862 also outlawed the private issue of notes, memoranda, tokens, or other obligations "for a less sum than one dollar intended to circulate as money or to be received or used in lieu of lawful money of the United States." (Act of Congress, 12 Statutesat Large,592, July 17, 1862) Then in 1864, even the private issue of gold and silver coin was forbid den, again, "when the coins were intended for use as current money." (Hurst 1973) 3. The Appearanceof Scripas an EconomizingMedium The lack of adequate denominations in gov ernment-produced money was not the only factor that stimulated the private production of money.

Shortly after fractional coinage was stabilized around 1885, coal mining and lumbering became major industries. Both coal mining and lumber ing enterprises had to be organized in the vicinity of the contributory resources, so were often lo cated in isolated areas with low population densi ties significantlydistant from commercial centers. Coal-producing regions were hilly or mountain ous areas where agriculture had been marginal and other commercial development had lagged. "The 'Main Street,' " noted one observer in de scribing a coal mining community "was often rail road tracks." (Brown 1978) Coal mining en trepreneurs, therefore, had unique problems to contend with in organizing their enterprises. Their common problem was what is known to day as a lack of infrastructure-no streets, no churches, no schools, no residences, no utilities, and no banks or financial intermediaries. The specialized industries that might otherwise have provided these services were dissuaded from do ing so by the high start-up costs and the enduring uncertainties of dealing with low-income commu nities that might be there today and gone tomor row. Alternatively, the coal mining companies could deal with such conditions because they 400 THE FREEMAN • OCTOBER 1989 were in a better strategic position to change un calculable uncertainties into calculable risks.

(Fishback 1986, Johnson 1952) Mining compa nies, therefore, built residences, churches, schools, and water works, and opened company stores or commissaries. In so doing, they became both buyers of labor from, and sellers of com modities to, the coal miners and their households. This kind of organization invited an economy in the community's payments system-the use of scrip in lieu of ordinary money. "Scrip" has become a generic term for the is sue of a localized medium of exchange that is re deemable for goods or services sold by the issuer. Originally printed cards or "scraps" of paper, scrip evolved into metallic tokens with many of the physical attributes of official coins. Indeed, scrip in the very beginning was more in the na ture of a trade credit, or demand deposit, at the single local general store. Ledger credit scrip, however, gave way to scrip coupon books, which "eliminated the tedious bookkeeping chores that were incident to over-the-counter credit (day book or journal entries followed by ledger en tries)." (Brown 1978) The use of scrip not only implied an issuer-the mining company-and a deman der-the miner, it also required a supplying in dustry. The institutions that supplied coupon scrip were companies already in business printing tickets, tokens, and metal tags for various other kinds of enterprise. They advertised extensively in mining catalogues during the first half of the twentieth century touting the advantages of their own scrip systems. The Allison Company of Indi anapolis, for example, noted that when one of its coupon books was issued to an employee, "He signs for it on the form provided on the first leaf of the book, which the storekeeper tears out and retains for the [company] time-keeper, who deducts the amount from the man's next time check." Then, when the employee buys goods from the company store, "he pays in coupons, just as he would pay in cash, and the coupons are kept and counted the same as cash .... The coupon book is a medium of exchange between the company employees and the company store."

(from 1916 Mining Catalog,Brown 1978) Other scrip-producing ticket companies emphasized the safety of the scrip coupon system in coal mining communities "where little or no police protection is afforded." (adv. of the International Ticket Co., in the KeystoneCatalog of 1925,Brown 1978) The Arcus Ticket Company of Chicago adver tised a list of advantages of scrip to both the em ployer and employee, one of which for the em ployer was the fostering of employee good-will by avoiding misunderstandings on charge ac counts. The advantages to the employee included keeping the "'head of the house' better informed as to the purchases made by his family from day to day.... This frequently puts a check to extrav agance and debt." (Keystone Catalog, 1925 in Brown 1978) Local scrip of this type was very similar to modern day travelers checks. The costs of travelers checks were also the costs of coupon scrip: each unit could be used only once. It had to be signed out when it was issued and signed when it was spent. (Brown 1978)1 The transactions costs of coupon scrip eventu ally encouraged the increased use of metal scrip.

This medium became cheaper overall than coupon scrip, in spite of metal's higher initial cost, largely due to the invention and development of the cash register after 1880. Pantographic ma chines also were instrumental in reducing the unit costs of metal tokens. (Brown 1978) Instead of receiving cash, the scrip-issuing "cash registers" paid out metal tokens, made a record of the pay-out and to whom it had gone, and kept a grand total of the amount issued. The scrip registers would eject a specified "dollar" amount of scrip when a lever like that on a slot machine was pulled. In a 1927 advertisement, the Osborne Register Company (ORCa) of Cincin nati pictured a 10-year-old child who, in a demon stration, issued $600 worth of metal scrip in vari ous amounts to 200 hypothetical employees in 55 minutes, implYingan average emission of $3 per employee every 16.5seconds. (Brown 1978) 4. The Positive-Sum Benefitsof Scrip The economics of scrip issue, as with all ex change between economic agents, required that both the issuer (the coal mining company) and the acceptor (the employee) benefit from the transaction. The company necessarily had contact with the outside world. It bought machinery and other resources and sold coal in a national marFREE MARKET MONEY IN COAL-MINING COMMUNITIES 401 keto All these activities required the use of stan dardmoney.

Scrip was used essentially as a working balance of money with which the coal operator could make advances to his impecunious employees be tween paydays. It was issued at the request of the miner to the extent of the wages he had already earned, and it was redeemable in standard money on the next payday. The amounts were usually small-five or ten dollars, or even less. To the worker it amounted to an interest-free, small-sum loan that he could get with almost no effort. It enabled him to buy ordinary household goods at the company store. To those workers who had "gone out and got drunk" on the previous week end, or who had suffered some kind of household emergency, scrip was a blessing only measurable by the cost of its common alternative. (Clark 1980,Johnson 1952) Its alternative in a conventional urban setting without scrip was the pawn shop, loan shark, or installment peddler. (Johnson 1952) An industrial worker in the same unfortunate position in, say, Detroit, Pittsburgh, or Chicago, had access to money between paydays only by borrowing against his household capital at a pawn shop where he paid exorbitant interest rates if he re claimed his pawned goods.

The scrip system could be abused in such a way that a discount would also appear in some scrip transactions. Since the company store did not sell liquor-for the obvious reason that its sale would encourage absenteeism and worker inefficiency-workers would at times obtain scrip from the company clerk and sell it for conven tional currency in order to buy liquor. The boot legger (during Prohibition) or other liquor ven dor, whose shop was not likely in the neighborhood of the company store, faced signif icant costs in redeeming the scrip for convention al money, thus giving rise to a discount. (Brown 1978,Caldwell 1969)2 In spite of the obvious advantages of the scrip system to both worker and mine owner, scrip, the company store, and the company town have been universally bemeaned. (Brown 1978) The ac counts of their operations include contradictions that appear sometimes in the same paragraph.

(For example, see quote of Sayre used as an epi graph, p.1, Brown 1978.) All accounts, while crit ical of the scrip system, acknowledge, first, that it was issued at the behest of the miner; second, that its issue cost the miner nothing; and, third, that it was redeemable in standard money on payday. The dogma of scrip's critics was that the company store, in which the scrip had to be spent, raised prices to monopolistic levels and thereby exploited the defenseless miner. (Dodrill 1971) Fishback's and Johnson's studies of prices in company stores versus those in independent stores refute this popular prejudice. Prices were four to seven percent higher, but so were costs. (Fishback 1986;Johnson 1952) The advantage of scrip issue to the mine oper ator was that it was one worker perquisite he could offer to attract labor into a somewhat unattractive environment. He already offered housing and mercantile services; by issuing scrip against future wages he also provided commer. cial credit with virtually no interest charges to the borrowers. (Johnson 1952) The practice, indeed, was so widespread that it can only be viewed asa traditional perquisite of the. trade. A company that did not offer the scrip privilege would have been at a competitive disadvantage.

The mine operator thus became a quasi banker. His cost for metal scrip during the 1920s varied from slightly less than 1 cent to 5 cents a unit for scrip tokens of simple design made in aluminum. In brass or nickel silver and with scal loped edges and more intricate designs, costs could run as high as 11 cents a piece. (All these values are unit costs in thousand-unit lots, and are from advertisements of several different scrip manufacturers between 1925 and 1940, in Brown 1978.) Scrip sales information from the Ingle Compa ny sales journal of 1928 reveals that the average denomination issued was about $ .25. (Brown 1978) Since the average cost per token was only about 3 cents and could have been even less, an investment by the coal company bank in, say, 5,000 pieces cost it about $150 for the scrip coin, and perhaps $100 more for a scrip-issuing ma chine. To carry out this same banking function with regular U.S. currency would have required an investment in cash alone of $1,250, as well as substantially greater security costs to protect the money_One observer noted, "The mining compa ny could pay almost its entire payroll in company scrip, disturbing only a few dollars of actual working capital." (Sayre, in Brown 1978) Of 402 THE FREEMAN • OCTOBER 1989 course, paying out scrip gave workers some addi tional claims on the working capital of the com pany stores. So the monetary economy of using scrip was in part offset by higher costs of mer chandising goods.3 The difference between the payment system costs of scrip and of real money was a form of seigniorage revenue the coal mine operator real ized and shared with his employees. They re ceived interest-free loans; he was able to offer a fringe benefit that tended to reduce what would have been a higher working capital requirement.

While scrip was usually specialized to one company in a particular community, many coal mining companies had mines in different regions. Their scrip was good in all the different locations where their mines operated. As the scrip-using communities gradually came to experience more extensive commercial relations withreach other, their localized scrips became interchangeable. Even some independent stores accepted coal company scrip. (Brown 1978) Given the proscriptions against the private printing or coining of money by the Acts of 1862 and 1864, one may wonder how scrip could have been issued and used legally.The key is the word "intended" in the proscriptive laws. The courts ruled that scrip was not intended to circulate as money: first, because it was redeemable only in merchandise until payday; and, second, because it resembled money only superficially and was clearly distinguishable from standard money.

(The coin under the court's scrutiny was a 50-cent token, but weighed only one-fifth as much as a standard 50-cent piece.) Any token that was re deemable in lawful money on demand was con strued to be illegal, and whether the token in question was coin or pasteboard did not matter. (Brown 1978) 5. The Environmentsin WhichScripAppeared The extent of scrip use has many dimen sions-temporal, geographical, and industrial. Its most notable occurrence in the twentieth century was in the coal mining regions of West VIrginia, in part because the state government passed a "wide open" scrip law some time before 1925. However, it was extensively used in other states as well. The Tennessee. Coal Iron and Railway Company, for example, ordered 547,500 pieces between 1933 and 1937 from the Ingle-Schierloh Company of Dayton, Ohio. (Brown 1978) An other source lists 20,000 coal company stores in the United States, Canada, and Mexico all of which used scrip between 1903 and 1958. (Dodrill 1971) Numismatic records indicate that scrip was also used extensively in several other indus tries-fishing canneries, agriculture (to pay crop pickers), fruit canneries, logging and lumbering companies, and paper companies. (Brown 1978, Trantow 1978. Trantow's index lists over 1,100 companies that issued scrip currency in 40 states.) One scrip numismatist cites a Chicago newspaper of 1845 that regularly quoted the discounted prices of coal scrip, city scrip, canal scrip, railroad scrip, Michigan scrip, Indiana State scrip, and In diana land scrip, as well as the notes of private and chartered banks. Private businesses issuing such scrip numbered in the thousands. (Harper 1948)Furthermore, as Brown observed, "The use of paper scrip was much wider than the use of [coin] scrip ... [but] only a comparatively small amount [of the paper] has survived." Therefore, the extent of scrip use must have been much greater than the vestiges in metallic collections would indicate. (See also Caldwell 1969.) Just as Brown in his work seemed unaware of scrip that had preceded the issues by coal compa nies, Harper in his study of Scrip and Other Forms of Local Money thought that intensive use of scrip only appeared in the United States during the depression years, 1932-1935. His re search uncovered several sources of "depression"

scrip: (1) issues by local governments due to de creases in tax revenues; (2) issues by chambers of commerce after local bank failures as a means of "corralling as large a proportion of the depres sion diminished volume of business as possible for their membership"; (3) issues by "home owned stores as a weapon against ... chain-store competition"; (4) issues by "barter groups as a means by which the unemployed could more con veniently exchange services"; and (5) issues by charitable organizations to needy ,persons as "commodity orders" for foodstuffs. "Local mon ey in some form," he concluded, "is likely to re cur in response to a public demand under sub stantially similar circumstances." Most of this "depression" scrip had appeared FREE MARKET MONEY IN COAL-MINING COMMUNITIES 403 in earlier times-for example, municipal scrip that was redeemable as tax payments. The de pression scrip, however, was usually linked to a dated stamp scheme that required the holder to fix low denomination (2-or 3-cent) stamps to the scrip at specified times. The stamps were to pro vide the revenue to redeem the scrip and to en courage spending, but they added an undesirable burden that greatly reduced the efficacy of the scrip's use. They also detracted from the scrip's effectiveness as an addition to the existing stock of ordinary money. (Harper 1948) 6. Implicationsof the Scrip Episode The phenomenology of scrip issue has signifi cant implications. First, no one had any incentive to leave scrip behind for monetary researchers to count or to analyze. Demanders of such currency would not regard it as a store of value for any time longer than the period between paydays.

Suppliers, to whom the scrip was an outstanding demand obligation, would redeem it first if they liquidated, merged, or closed down their enter prises. In addition, everyone who used it and benefited from it was aware of its questionable legality.Archival records of its outstanding quan tities, therefore, are almost nonexistent. (Timber lake 1981) Scrip's unrecorded existence is emphasized as well by the research that has uncovered its for mer use. Each scholar who has unearthed one of the diverse scrip appearances has treated the phenomenon as unique, and with good reason. Each one was widely separated in time, place, and circumstance from the others. Yet, each one had characteristics similar to the others. All episodes combined emphasize the feasibility of the spontaneous production of money in the pri vate sector. The coal mining scrip episode adds significant 1y to the total scrip experience for a number of reasons. First, it lasted for over 50 years, so it was not just a temporary happenstance. Second, it ap peared in a wide range of independent communi ties. In West Virginia alone, almost 900 coal min ing companies employing about 120,000miners issued scrip in one form or another. In other ar eas of Appalachia-southern Virginia, eastern Kentucky, eastern Tennessee and southwestern Pennsylvania-the experience was similar.

404 THE FREEMAN • OCTOBER 1989 Third, scrip's tenure was not dependent on the previous existence of standard legal tender mon ey. True, the coal company was bound to redeem the scrip on payday, but this guarantee was only a flourish that enabled scrip issuers to avoid violat.. ing the proscriptive laws against the issue of pri vate moneys. As it was, many children living in coal mining communities did not see a dollar of "real" money until they grew up and left the area. (Caldwell 1969) The self-sustaining nature of the scrip system, without recourse to standard money, stemmed from the fact that both the demander and suppli er of scrip were active participants in both the la bor market and the household goods market at the company store. This intimacy in two markets by both participants en~bled them to evaluate wages paid and received in-real terms, that is, by the quantity of household goods that the scrip wages could purchase..A decline in the purchas ing power of scrip at the company store would simply have indicated to the miner that the real value of his' services to the company had de clined. He thereupon would have moved to an other location or occupation. If the decline in real wages was due to an industrial depression or the competitive decline of the coal industry, as oc curred simultaneously in the 1930s, both mine workers and mine operators would realize re duced real returns in the mode of any resource owners under similar circumstances.

A fourth important result of the scrip system was its reflective·emphasis on the returns to the capital structure of the payments system. In the scrip system the money was supplied endoge nously: the coal company banks, the borrowing miners, and the scrip suppliers were all parts of an economy of private ownership. Scrip money was not dependent on any outside money, but was produced under the same condItions and in centives as any common commodity. The mining companies rathe'r than the workers produced the scrip because in working without wages until pay day, the workers were implicitly extending credit to the company. Scrip issue was a means of clear i~g this debt before the regular payday. In addi tion, the coal mining company had the collateral value of the.mined coal to secure the "loan."4 Both the companies and the workers realized the seigniorage returns from its existence. While the scrip system was small-scale and had a low profile, the government could ignore it because it posed no threat to the government's monopoly over the production of money. However, if scrip issue had shown any tendency to become a na tional practice, the proscriptive laws against pri vate coinage would surely have been interpreted and enforced much more rigorously.5 An observer of the scrip system might conjec ture that the experience of the isolated communi ties could have ramified into an intercommunity system using some' kind of scrip clearinghouses (Le., scrip banks) if the laws restraining the pri vate issue of money had not existed. Over time, technological and organizational developments could have led to economies of scale and enter prise. Probably as few as three or four or as many as two dozen issuers of scrip money might have appeared. Some of the minters of scrip-Ingle Schierloh, Osborne, Insurance Credit, Adams, Dorman, and others-would have expanded their enterprises to include management of inter community scrip systems and ultimately their probable evolution into credit card systems. Such an extension of function would have been analo gous to automobile dealers expanding into the car leasing business-a sort of horizontal integra tion to reap certain economies of scale.

Had the scrip system become intercommunal and given rise to scrip-on-deposit in scrip banks necessitating bank' reserves and clearing opera tions, some high-powered scrip into which local scrips could be converted would probably have appeared. The experience of the ages seems to confirm this evolution. (Friedman and Schwartz 1986) Less clear is why the high-powered money has to be issued or regulated by the state. The question of whether or not the market system could, alternatively, produce a private monetary base that would prove to be both stable and ser viceable has not been attempted. or allowed, and will remain unimaginable until a general belief in market efficacy becomes pervasive. That time as yet seems nowhere near.6 D LiteratureCited Brown, Stuart E., Jr. Scrip. Berryville, VA.: Vir ginia Book Company, 1978. Caldwell, Walter. Coal Company Scrip. Mont gomery,W. Va.: War Printing Co., 1969.

Carothers, Neil. Fractional Money (1930), reprint. New York: Kelley,1967.

FREE MARKET MONEY IN COAL-MINING COMMUNITIES 405 Clark, C. R. Florida Trade Tokens. St. Petersburg, Fl.: Great Outdoors Publishing Company, 1980. Dodrill, Gordon. 20,000 Coal Company Stores in the United States, Mexico and Canada. Pitts burg: Duquesne Lithographing Company, 1971. Faulkner, Roland E "The Private Issue of Token Coins." Political Science Quarterly 16 (1901), 320-22. Fishback, Price. "Did Miners Owe Their Souls to the Company Store? Theory and Evidence from the Early 1900's." Journal of Economic History 46 (December 1986), 1011-29. Friedman, Milton, and Anna J. Schwartz. "Has Government Any Role in Money?" Journal of Monetary Economics (January 1986), 37-62. Glasner, David. "Economic Evolution and Mon etary Reform," (unpublished). Harper, Joel W. Scrip and Other Forms of Local Money. Ph.D. dissertation, University of Chicago, 1948. Hurst, James Willard. A Legal History of Money in the United States, 1774-1970. Lincoln: Uni versity of Nebraska Press, 1973.

Johnson, Ole S. The Industrial Store, Its History, Operation and Economic Significance. At lanta: Foote and Davies, 1952. Rolnick, Arthur J., and Warren E. Weber, "Free Banking, Wildcat Banking, and Shinplasters." Federal Reserve Bank of Minneapolis Quar terly Review 6 (Fall 1982), 10-19. Sylla, Richard. "Forgotten Men of Money: Pri vate Bankers in Early U.S. History. " Journal of Economic History 36 (March 1976), 173-88. Timberlake, Richard H. "The Significance of Un accounted Currencies. " Journal of Economic History 41 (December 1981), 853-66. __________ . "The. Central Banking Role of Clearinghouse Associations. " Journal of Money, Credit, and Banking 16 (February 1984), 1-15. Trantow, Terry N. Catalogue of Lumber Compa ny Store Tokens. Ellensburg, Wash.: Trantow, 1978. White, Lawrence H. Free Banking in Britain. Cambridge: Cambridge University Press, 1984. The author is indebted for support and sugges tions to the sponsors and participants of the Man hattan Institute Monetary Conference of 1986, especially to David Glasner and Anna Schwartz.

My colleague, Price Fishback, and Milton Fried man also made valuable suggestions, as did Hus ton McCulloch and two referees for the Journal of Money, Credit, and Banking. 1. This comparison must be qualified. Many travelers checks,as well as other U.S. currency, are currently used as hand-to-hand me dia in foreign markets. Sometimes travelers checks return from abroad with more than a dozen endorsements on them. They are called "checks," but like food "stamps," they are a quasi currency. 2. Scrip was frequently advertised as redeemable only to the worker to whom it was originally issued. This condition applied in some mines. However, for metallic scrip, it could hardly have been enforced, and would have detracted from the utility of any scrip if it were enforced. 3. I am indebted to Huston McCulloch for this observation. 4. I am indebted to Huston McCulloch for suggesting these de tails.

5. In a thought-provoking paper, David Glasner argues convinc ingly that governmental assumption of a monopoly role over mon ey enabled governments to enhance their fiscal powers, particularly during war emergencies (Glasner, "Economic Evolution and Mon etary Reform," especially the section: "A Rational for Govern ment Monopoly over Money"). In short, not only is seigniorage an important revenue to the state, but capital expropriation through debasement of money's function as a unit of account may be even more lucrative. 6. However, the commercial bank clearinghouse system in the United States during the second half of the nineteenth century is an example of a private lender of last resort that produced base money efficiently at critical times. (TImberlake 1984) 406 The Forgotten Right of Association by David Hood T he Century Club of New York City, an . all-male social club, was told by city of ficials a few years back that it no longer could refuse to admit women members. The Club, thinking that private clubs weren't sub ject to such public regulation, took their case to the Supreme Court, arguing that the rights of privacy and association gave them the pow er to set their own membership rules. After all, this was the way the courts had always viewed private clubs.