scrip as private money

Scrip as private money, monetarymonopoly, and the rent-seeking state

in Britain1

By ELAINE TAN

Scrip—promissory notes payable in goods at company stores—was issued by employ-ers to pay workers, and was an important component of British money during theindustrial revolution. As late as the third quarter of the nineteenth century, scripissued by coal firms, which represented the foregone demand for official currency,was at least 9 to 24 per cent of the value of English country or Scottish banknoteissues. In some areas, scrip was 38 per cent of the total wages paid. The state’ssuppression of this private currency to defend its seigniorage rents was in part themotivation behind the prohibition of the truck system in 1831.ehr_549 237..255

Governments today have the sole legal right to issue money.While economistsdisagree on the necessity of this monopoly and have proposed many theo-

retical arguments for and against privately-issued currencies,2 history has providedmany examples of successful competitive note issue, most notably by private banksin the US and Scotland.3 With a few exceptions, however, less attention has beenpaid to money issue by private non-financial enterprises.4 A non-financialcompany may issue currency by minting coins according to a common standard ofweight (for example, merchant tokens), or it can issue bills of exchange which areaccepted by non-firm organizations. A firm can also produce scrip, a currencysubstitute, to pay workers.5

In Britain, scrip was part of the truck system used by employers to pay wagesand was mainly found in coal industries in the nineteenth century. From 1831,after the passage of the anti-truck law that year, scrip was used primarily in thepayment of wage advances, while wages on payday were mainly in official money.This use by employers makes scrip different from bank-created private money andprovides a departure point for thinking more broadly about unregulated paymentssystems, a free market in currency issues, as well as their importance compared to

1 I am grateful to two anonymous referees and the editors for comments. Thanks are also due to StanEngerman, Anna Schwartz, Richard Timberlake, and John Wood for comments on a related paper and insightfulconversations on monetary economics. The warm hospitality of American Institute for Economic Research andCity University, Hong Kong, where this article was revised, is acknowledged gratefully.

2 See the survey by Selgin and White, ‘Invisible hand’.3 For example, Rockoff, ‘Free banking’; Sylla, ‘Forgotten men’; White, Free banking; Horwitz, ‘Competitive

currencies’.4 One exception is Timberlake, ‘Private production’. Bills of exchange, discussed later, were issued by non-

financial enterprises. However, they were money only if they were accepted by individuals and households. If billswere only transferable among firms, they were trade credit; Brechling and Lipsey, ‘Trade credit’. In general, onlysmall bills functioned as money, and medium and large bills were not used as currency.

5 Scrip was also issued in lieu of legal currency by local governments and transportation companies; Timber-lake, ‘Scrip money’, p. 401.

Economic History Review, 64, 1 (2011), pp. 237–255

© Economic History Society 2010. Published by Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 MainStreet, Malden, MA 02148, USA.

other forms of money during British industrialization. Scrip, comprised of papercurrency called ‘notes’, ‘tickets’, or ‘lines’, was non-interest bearing. It was a formof endogenous money, the demand for which was driven by labour transactions.Scrip was redeemable, without notice, for goods at company stores affiliated tofirms that issued it. It was accepted by independent third parties and householdswithin the locale for payment in lieu of legal tender. By the mid-nineteenthcentury, scrip taking the form of wage advances was usually redeemable within aperiod of a few months. All these characteristics qualified scrip as a form of privateshort-term local money, and the truck system as a rudimentary credit system.6

Parliament passed a general prohibition of the truck system and the use of scripin 1831, when it mandated wage payments in legal tender only.This law is viewedtraditionally as the result of motives to protect workers.7 Evidence for this inter-pretation is usually based on the declared motives of parliamentarians. Forinstance, the two men who introduced the bill to the Houses of Commons andLords concurrently both said that the intention of the law was to benefit theworking classes. For instance, Edward Littleton, who introduced the Truck Act asa private member’s bill, ‘reminded the House, that this Bill was founded on thestatements contained in petitions from all the great manufacturing towns andcounties, most numerously signed by the labouring classes, and not contradictedby any counter petitions or statements whatever. The measure was introducedtherefore at the desire of the working classes, and was intended for their benefit’.8

The same bill was introduced concurrently in the House of Lords by LordWharncliffe, who reasoned that the truck system had to be abolished as it was not‘conducive to the prosperity and interest of the manufacturing population’.9

However, labour protection could have taken other forms, such as monitoringprices at company stores or requiring scrip-issuers to incorporate as banks. Thehardships of the working classes had little to do with the mode of payment. AsThomas Attwood pointed out, workers paid in official money were also havingproblems.10

In forbidding currency substitutes, the state was in effect eliminating rivals to itsprerogative in money production. By using scrip, the truck system bypassed officialcoin and banknotes, as Littleton andWharncliffe also argued.This would have hadthe effect of compromising the single monetary standard backed by the state andreducing its seigniorage rents. Hitherto neglected, this monetary perspective ontruck indicates that the British state was not a disinterested party. It had in factmuch to gain potentially from the abolition of truck.

Direct evidence for the seigniorage hypothesis is hard to come by becausegovernments are generally loath to reveal their rent-seeking motivations. SomeMPs who advocated the prohibition of truck argued explicitly for a commoncurrency standard and the centralization of money production under state control.Although relatively few in number, they were prominent government officials,including the Master of the Royal Mint and Robert Peel, the then Home Secretary.

6 Indeed, a contemporary newspaper called it a ‘bad system of banking’; Spectator, 18 Dec. 1830, cited byHilton, ‘Truck Act’, p. 471.

7 For example, Hilton, Truck system, pp. 63–87.8 Hansard (Commons), 3rd ser., VI, 12 Sep. 1831, col. 1360.9 Hansard (Lords), 3rd ser., IV, 7 July 1831, col. 923.

10 Hansard (Commons), 3rd ser., I, 14 Dec. 1830, col. 1168.

238 ELAINE TAN

© Economic History Society 2010 Economic History Review, 64, 1 (2011)

So we turn to indirect evidence. That seigniorage was an important consider-ation for the government could be seen from various taxes and duties placed onfinancial instruments which reduced demand for official currency. It was alsoevident in debates about the Bank of England’s charter at about the same time andthe charges imposed on it for its note-issue monopoly privileges.

The more significant scrip was, the greater the state’s incentive to abolish it. Inorder to determine its significance, this article uses a two-step argument. Firstly, itasks: how significant was scrip during the third quarter of the century, after its usehad declined for decades? If private currency remained important even after aprolonged period of decline, then it would have been much more significant in the1830s when the state acted against it. This enables the use of wage records fromthe 1870s to cast light on the institution right before the Act of 1831, a period forwhich data are unavailable. Secondly, the significance of scrip is quantified bypresenting a model linking the potential increase of official currency to the absenceof scrip.Thus, the model and the 1870s data enable us to determine the counter-factual gain to the state with the abolition of scrip in 1831.

To preview the result: in the absence of scrip, country or Scottish banknotes (thealternative legal private currency) in circulation would have increased by a non-trivial 9 to 24 per cent at the minimum. Scrip made up 38 per cent of wages insome locales, even in the waning years of the truck system.The amount of officialmoney displaced, and correspondingly the state’s potential gains in rent, thusprovides indirect support for the seigniorage hypothesis.

Previous studies of scrip in Britain and the US have argued for its significance,but have not managed to estimate by how much official money would haveincreased if scrip had been abolished.11 Moreover, discussions of money duringthe industrial revolution have tended to ignore private, non-bank monies.12 Includ-ing such non-bank currencies, of which scrip in mining communities was acomponent, suggests the wide use of paper credit and monetization in isolatedareas.

Previous research has not delved into scrip’s benefits vis-à-vis other forms ofmoney. That employers issued, and workers accepted, scrip indicates that it waspreferable to other forms of money, such as bills of exchange, banknotes, and coin.Bills were taxable through stamp duties. Banknotes were only as stable as theirissuers and supply was rigid from mid-century, and coin tied up capital in unpro-ductive stocks of money commodity.While well-functioning scrip was beneficial toworkers on the whole, fraud and abuse by some employers gave the system its badreputation among contemporaries and historians.

The article proceeds as follows. The next section reviews the legislative restric-tions in Britain on private money issues, as well as evidence for the state’smonetary concerns in the truck debates and in contemporary related bankingissues. Section II notes the institutional adaptation arising from the 1831 law,and estimates the value of scrip circulation in 1871, the only year for whichdetailed systematic data are available. Section III discusses the implications andconcludes.

11 Hilton, Truck system; Timberlake, ‘Unaccounted currencies’; idem, ‘Scrip money’; Fishback, Soft coal.12 For example, Huffman and Lothian, ‘Money’; Collins, ‘Long-term growth’.

SCRIP AS PRIVATE MONEY 239


I

Under the truck system before the early nineteenth century, wages due on paydaywere paid in goods or in scrip that were redeemable for goods at the companystore.13 Scrip was circulated locally and was honoured by independent shopkeep-ers. A good example was Samuel Oldknow, who issued shop-notes in lieu ofdominant currency to his Mellor mill workers in 1793–4. The notes were used atstores not owned by Oldknow, and were later redeemed by the industrialist.14 Theperiod of validity for scrip was three to four months.15

The truck system undermined the dominant specie in two ways: payment ofwages in goods or scrip bypassed and reduced the use of the dominant currency byemployers; and scrip in circulation beyond the company stores was a substitute forlegal tender. In both respects, truck reduced the seigniorage returns to the Britishstate. Parliament was aware of the system’s money-creating aspects and the com-petitive threat posed to its monetary monopoly. It sought repeatedly to outlaw theinstitution throughout the early nineteenth century, and in particular passed theseminal 1831 Truck Act mandating the payment of wages in banknotes and coinonly.16 The fact that scrip continued to be a significant currency 40 years laterattests to the inability of the law to eradicate it.

More generally, the proscriptions against truck up to 1831 need to be examinedin the context of other legal developments defending the state’s prerogative incurrency issue.This monetary interpretation of the political economy of anti-trucklegislation is, however, non-exclusive. The state’s seigniorage interests coincidedwith those of workers in the abolition of truck. Moreover, the timing and contentsof the 1831Truck Act were shaped by ideological changes in perceptions of poorerclasses.17

The impetus to create currency substitutes—including merchant coin tokens,bills of exchange, and scrip—stemmed from the lack of official currency in smalldenominations. There were frequent complaints of the inadequacy of coinage,18

and the smallest note was £1 until 1826, when it was raised to £5. At that time,the average industrial wage was under £1 a week. Indeed, Ashton writes that:‘Much time was spent riding about the country in search of cash with which to paywages, and in the northern and western parts of England the dearth of coin wasoften acute’.19

Indeed, legislators considering the Truck Bill linked scrip to the lack of smallchange, specifically the abolition of the £1 note from 1826: ‘Wages were paidweekly; the payment day arrives; you require that payment shall be made to theworkman in gold money. But suppose the case of a manufacturer who is unablelonger to procure gold money. The £1 note, which he could have more easily

13 Hansard (Commons), 2nd ser., XXIII, 17 Mar. 1830, cols. 464–70; Hansard (Commons), 3rd ser., I, 14 Dec.1830, I, col. 1133–4; Hilton, Truck system, pp. 1, 71–3, 102–3.

14 Unwin, Oldknow, pp. 179–89.15 Hansard (Commons), 2nd ser., XXIII, 17 Mar. 1830, col. 470.16 For discussions on the legislative history of truck bills and acts before and during the early nineteenth

century, see Batt and Vaines, Master and servant, pp. 124–9; Hilton, Truck system, pp. 63–87; Tan, ‘Ideology’.17 Tan, ‘Ideology’.18 For an explanation of why the inadequate supply of coins persisted, see Sargent and Velde, Big problem.19 Ashton, Economic history, p. 173.

240 ELAINE TAN


procured, a previous Act of the Legislature has abolished’.20The Earl of Carnarvon‘had no doubt the increase of the practice . . . had originated in the suppression ofsmall Banknotes’.21

Although currency supply was inadequate, non-official tokens were suppressedrepeatedly. In the mid-seventeenth century, when industrialists responded to thelack of coinage by producing merchant coin tokens, the Crown quickly undertookits own production of copper coins and banned private tokens. Similarly, in the lateeighteenth century, when the British economy was growing, official supplies ofmoney could not keep up with demand and businesses began to strike their owncoins to pay employees. One example was the Adelphi Cotton Co. whose redeem-able copper tokens were circulated widely.22 The parliamentary response in 1797was to issue additional official coins and forbid the further manufacture of tokens.The same pattern repeated itself in 1811–13 when manufacturers took the lead inprivate coin production. Reacting to this, Parliament then made illegal the circu-lation of unofficial tokens in 1812, and provided for full-capacity production at theRoyal Mint.

Bills of exchange, another popular currency substitute in the late eighteenthcentury, were subject to taxation. Bills in small denominations were circulatedextensively in places where coin or banknotes were in short supply until the firstfew decades of the nineteenth century, when rising stamp duties decreased theirvalue.23 Increasing stamp duties was probably a means employed by Parliament tocompensate for seigniorage losses from the use of bills instead of legal tender. Asduties were fixed fees, they were costly when used in small denominations. By1830, the stamp duty was one shilling for a bill under £5 5s. in value.24

Private issues also included country banknotes in England and Wales, but thesecould not compete with the Bank of England on an equal footing. In 1708–9,Parliament disallowed firms or partnerships of more than six individuals to estab-lish banks and issue notes. Provincial banks were therefore severely constrainedand, after the passage of the Stamp Act in 1808, had to obtain licenses to issuemonies. Stamp duties levied on these licenses also enabled the state to extractsome of the gains from seigniorage. Many of these country banks were unstableand bankruptcies were frequent.25 Although a law in 1826 permitted joint-stockbanking and lifted the six-partner restriction, it also secured the monopoly of theBank of England within 65 miles of London and opened up the countryside to itsbranches. This led to the Bank dominating the note issue of country banks.26

Private money production was further undermined in 1833, when the notes issuedby the Bank became legal tender for the redemption of country banknotes. In1844–5, two Bank Acts forbade new note issuers throughout Great Britain andfroze the circulation of existing ones, effectively securing the Bank’s monopoly onnote issue.27 In Scotland, although the right of note issue was universal until the

20 Hansard (Commons), 3rd ser., I, 14 Dec. 1830, cols. 1173–4.21 Hansard (Lords), 3rd ser., IV, 7 July 1831, col. 928.22 Ashton, Economic history, p. 174.23 Ashton, ‘Bill of exchange’; idem, Economic history, p. 187; Pressnell, Country banking, pp. 173, 178–9.24 H. of C. Journals, LXXXV (1830), pp. 306–9.25 White, Free banking, p. 59.26 Moss, ‘Bank of England’.27 White, Free banking, pp. 67–80.



Bank Act of 1844, fractional notes under £1, which were mostly issued by smallbanks and employers, had been banned since 1765.28

The legal developments against scrip, and more broadly the truck system, can beinterpreted in the light of these official constraints placed on private moneycreation and state extraction of private seigniorage. Goods and scrip were com-monly used to pay workers during coin shortages.29 Like merchant tokens, numer-ous laws were passed to suppress truck, beginning with a municipal rule inColchester in 1411.They targeted specific trades facing temporary difficulties, andall expired after a year or two.30 These measures culminated in the 1831Truck Act,which was a legal departure in that it was a broad and permanent prohibition.31 Itspassage coincided with a period of intense debate about a common legal currency,free banking, and the Bank of England’s role.

The 1831 Act mandated that wages were to be ‘payable in current coin of therealm’. Clause 8 permitted wages to be paid in the notes of the Bank of England,or in the notes of ‘any person licensed to act as a banker and to issue bank notes’,or in the drafts of ‘any bankers so licensed within fifteen miles’ of the employer. Inother words, official coin, Bank of England notes, and notes or drafts of nearbycountry or private banks were permitted. All other forms of money, as well asgoods, were prohibited.

For MPs and notable writers who supported the 1831 law, monetary reasonswere often very important and many saw the system as a threat to notes issued byformal banks and in particular by the Bank of England. Littleton, who had the fullsupport of the government,32 was also instrumental in securing passage of anearlier law, which forbade new issues of private copper tokens and withdrew thevast majority of them in 1817.33

Although Littleton stated that his primary intention for the Truck Act was todefend the interests of the working class, he frequently saw scrip as a breach of thestate’s monopoly over note issue, and a threat to wider use of official coin. Littletontold the House:

The circulation of the current coin is depressed and superseded . . . One effect of theTruck System, if allowed to continue, would be to displace the coin of the realm, andsubstitute for it the truck notes. At present Truck-masters supply their shops with smallbills, at three or four months’ date, which form no small part of the circulating mediumof some districts.34

Later, he repeated the threat posed to the official currency: ‘Unless the Housewished to see the system become universal—unless it was prepared to see moneybanished from the manufacturing districts . . . it would take measures to put astop to the truck-system’.35 At all times, however, Littleton also emphasized theneed to defend workers’ interests.

28 Ibid., pp. 29–30.29 Hilton, Truck system, pp. 63–87.30 Examples include 4 Edward IV, c.1, for weavers in London; 8 Elizabeth c.7, s.6 and 14 Elizabeth c.12 for

drapers, cottoners, and frizers in Shrewsbury. See Batt and Vaines, Master and servant, pp. 124–9, for moreexamples.

31 Tan, ‘Ideology’.32 Hansard (Commons), 2nd ser., XXV, 5 Jul 1830, col. 959.33 57 Geo. III, c.46.34 Hansard (Commons), 2nd ser., XXIII, 17 Mar. 1830, cols. 464, 470.35 Hansard (Commons), 3rd ser., I, 14 Dec. 1830, col. 1139.

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Scrip’s displacement of legitimate money was also highlighted by Lord Wharn-cliffe in the upper chamber. He argued that Parliament could not allow ‘themanufacturers to pay in what he must call a base currency, instead of paying insterling money . . . The Legislature had a right to say, “Here is the current coin ofthe realm”, we insist on your paying your workmen in that medium’.36

For many workers whose wages were too small to be paid in banknotes, scripand goods substituted for coins produced by the Royal Mint. Coin supply, by thistime, was no longer determined by private bullion holdings but by the state, whichadvanced funds to the Mint to purchase silver, or used Bank of England gold.37

John Herries, the Master of the Mint, was a vocal advocate of theTruck Act, citingmonetary reasons:

The law established a legal tender for the discharge of all money engagements betweenindividuals, and no man had a right to offer another, in satisfaction of a debt, anythingbut the lawful coin of the realm. That ought to be the only medium of paying thelabourer his wages; but from the system of truck, the legal tender was wholly banished.38

Another influential participant was Robert Peel, an adamant supporter of theCurrency School, which believed that excessive supply of notes led to inflationarypressures. His motive was to establish, and preserve, a uniform standard of legaltender controlled by the state. Later it was he, as prime minister, who passed theBank Acts of 1844 and 1845, which froze private note production throughout theUK, disallowing new issuers and effectively making the state a monopolist incurrency issue.39

Peel’s perspective on currency provides insight into his position on truck. AsHome Secretary, he threw his support behind Littleton,40 and was noted by alegislator to have taken ‘the bill under his protection’.41 Peel facilitated the passageof communication from protesters against truck to the Board of Trade,42 andintroduced into Parliament three anti-truck petitions from workers.43 He alsospoke against convening an inquiry, which was supported by many Members,including those who opposed truck.44

At the same time as theTruck Bill was debated, Parliament considered a motionon the currency question put forward by Thomas Attwood, who advocated rein-stating silver as legal tender (in addition to gold) and reintroducing small notesunder £5.45 Peel’s response was telling: ‘Four changes had taken place in thecurrency during the last thirty years, and it was surely at length time to try theeffect of a continued adherence to one system’.46 Similar sentiments for a single

36 Hansard (Lords), 3rd ser., IV, 7 July 1831, cols. 925–6.37 Dyer and Gaspar, ‘Reform’, p. 484.38 Hansard (Commons), 2nd ser., XXV, 5 July 1830, col. 960.39 Another prominent member of the Currency School who opposed truck was the noted economist J. R.

McCulloch, who celebrated the passage of the 1831 Act, which he credited—erroneously—for eradicating scrip;Hilton, ‘Truck Act’, p. 477.

40 Hansard (Commons), 2nd ser., XXV, 5 July 1830, col. 958.41 Hansard (Commons), 3rd ser., I, 14 Dec. 1830, col. 1167.42 Hilton, ‘Truck Act’, p. 472.43 Hansard (Commons), 3rd ser., I, 14 Dec. 1830, col. 1044.44 Hansard (Commons), 3rd ser., I, 14 Dec. 1830, col. 1165.45 Hansard (Commons), 2nd ser., XXV, 8 June 1830, col. 102.46 Hansard (Commons), 2nd ser., XXV, 5 July 1830, col. 169.



currency standard were expressed when he likened the Truck Bill to laws onweights and measures and regulations on medical competency.47 This position wasnot inconsistent with his desire to protect better labourers’ rights in litigationunder a common monetary standard: ‘If the poor man were to be paid in money,then it was easy for the Magistrate to decide, if a complaint had been made tohim’.48 Another legislator also argued for theTruck Bill on grounds of maintaininga standard legal tender: ‘Until the House decided that another system of currencyshould be established, they ought to adhere to that which existed’.49

Truck in goods and scrip also substituted for private banknotes. Although thereis no direct evidence of country bankers publicly supporting the abolition of truck,some politicians who supported competitive note issue by private banks neverthe-less opposed currency issued by non-financial institutions. One prominentexample was William Huskisson, the principal author of the truck law,50 whofavoured repealing restrictions on joint-stock banking.51 He rejected the lack ofsmall change as the reason why masters paid in truck.52 Like Peel, Huskisson wasadamant that there had to be an invariable standard of value: ‘the suffering of thosewho already endured a great deal would be much aggravated, were the House toallow the value of their labour to be measured by any other standard than thatgenerally adopted by the community as the measure of value’.53 He repeated thenecessity for a common monetary standard, and warned further that moneycapital would be replaced by scrip, even as he acknowledged that the latter had theadvantage of raising money supply:

Hon. Gentlemen talked of the great advantage of producing a larger quantity of moneytransactions; but one of the great evils of this system, if it were persevered in, would be,that capital would be driven out of the manufacturing districts . . . Unless Parliamentresorted to some measure of value, as the standard whereby to determine the fairremuneration of the workmen, the degradation and extortion of the present systemwould be inevitably continued.54

Huskisson, however, did not explain why having an invariable standard in legaltender would preclude scrip, since the latter was denominated the same way.Unfortunately, by the time Parliament reconvened in the new year, he had died ina train accident.

One possible motivation of Huskisson, and others, could have been the desire tostrengthen the money-issuing role of the joint-stock banks by keeping out non-bank rivals. This was especially important since the main source of profit forprivate banks was note issue at that time, prior to the expansion of deposits laterin the century.55 Although private banking was given a boost with the lifting of thesix-partner restriction in 1826, there were few joint-stock banks established five

47 Hansard (Lords), 2nd ser., XXV, 5 July 1830, col. 987.48 Hansard (Commons), 3rd ser., I, 14 Dec. 1830, col. 1166.49 Hansard (Commons), 3rd ser., I, 14 Dec. 1830, col. 1174.50 Hilton, ‘Truck Act’, p. 472.51 White, Free banking, p. 59.52 Hansard (Lords), 2nd ser., XXV, 5 July 1830, col. 979.53 Hansard (Commons), 2nd ser., XXIII, 17 March 1830, cols. 473–4.54 Hansard (Lords), 2nd ser., XXV, 5 July 1830, col. 980.55 Cameron, Banking, p. 26.

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years on. By 1845, joint-stock banks issued just £3.5 million, in contrast to the£5 million issued by country bank partnerships.56

One important dissenter to both the truck law and the Bank of England’scontrol over money issue was the radical politician Joseph Hume, who stuck to theprinciple of free trade in all markets. Hume was an advocate of free banking andopposed giving the Bank special privileges.57 He also:

deprecated [the Truck Bill] as contrary to the soundest principle of political science,which forbad the unnecessary, and . . . mischievous interference of Parliament, inmatters which had better be left to be adjusted by the competition of capitalists andlabourers . . . The less they legislated on matters between master and servant, or onmatters of a commercial nature, the better it would be for all parties.58

However, the link between prohibiting private notes and abolishing truck wasnot always clear cut. Some people, such as David Ricardo, argued that note issueshould be a rare exception to the general rule of market competition.59 Truck,however, should not. Ricardo in fact opposed the extension of a truck law in1820.60

Contemporaneous debates about the Bank of England’s privileges indicate thatthe state was concerned about seigniorage.61 In 1826, when note-issuing limita-tions were placed on the Bank’s competitors within 65 miles of London, the statedid not require an explicit payment for those rights. However, seven years later,when the Bank’s charter was renewed for a further 10 years, it was required to payan annual sum of £120,000, in addition to stamp duty. This payment took theform of a deduction from the fees for public debt management due to the Bank.The 1833 Bank Charter Act stated explicitly that the sum was in exchange for themonopoly privileges and for the full legal tender status of Bank notes.62

As Bank note circulation grew, the state extended its extraction of seignioragesurplus.The 1844 Act granting the Bank of England sole rights to issue additionalcurrency also mandated that all net profits from issues exceeding £14 million werehenceforth to be transferred to the state.63 The tussle for seigniorage was evidentin the correspondence between Bank governors and the Chancellor Henry Goul-burn that year.64 Over and above the net profit from excess issues, Goulburn hadsought to raise the £120,000 charge by estimating net profit to be twice that figure:‘The net profits therefore in which the public would have a right to share would bea sum of £240,000’.65 Bank governors replied that costs had been underestimated,and counteracted with an appeal for a reduction. Goulburn rejected the request,but changed the £120,000 charge, which excluded variable stamp duty, to£180,000, including a fixed £60,000 stamp duty.66

56 Dawes and Ward-Perkins, Country banks, p. 20.57 White, Free banking, p. 61.58 Hansard (Commons), 3rd ser., I, 14 Dec. 1830, cols. 1140, 1151.59 White, Free banking, pp. 57–8.60 Hilton, ‘Truck Act’, p. 471; Grampp, ‘Combination laws’, p. 514.61 I am grateful to an anonymous referee for this point.62 3 and 4 Will. IV, c. 98, §2, §8.63 7 and 8 Vict. c. 32, §9.64 Gregory, Select statutes, pp. 121, 124–5, 128.65 Gregory, Select statutes, p. 121.66 Ibid., pp. 124–5, 128.



II

After the passage of the Act, the truck system underwent an institutional change.Scrip came to be handled differently and truck involved mainly wage advancesthrough the company store. The change stemmed from the exclusion of advancesunder the 1831 law, which made no mention of wages paid before payday.Although its legal status was dubious, contemporaries understood that wageadvances in goods or scrip were not strictly illegal and often called for theprohibition of scrip.67 This loophole was exploited partly because small currencycontinued to be scarce in rural mining areas. Employers were forced to relyincreasingly on coin and Bank of England notes after the Bank Acts. The changein the truck system indicates that the 1831 Act was not the ‘total failure’ thatHilton alleges.68 As a general prohibition on payday wages in non-official money,the legislation compelled employers to use the dominant currency on payday, thusinadvertently shifting truck use to advances. This suggests that more non-cashwages would have been paid in the absence of the 1831 law.69

The nature of the truck system after the 1831 Act can be noted from the variousparliamentary investigations in 1842, 1854, and 1871, as well as the evidencepresented by legislators in House debates.These provide a consistent picture of theuse of scrip in advances in the middle two quarters of the nineteenth century.From the 1830s, workers who needed income before the next payday could obtainwages earned, but not yet disbursed, from the company store. Amounts advancedwere limited to two weeks’ wages, and were given in a combination of cash andcompany store goods. Employees would first indicate how much advance theywanted, and would receive a proportion of the advance in cash.The remainder wasin store goods taken immediately or in scrip payable without notice in goods in thefuture. Wages paid on payday were in coin or banknotes in compliance with the1831 law.70

Like scrip paid on payday, scrip in advances was money because it was a storeof value and was a transferable medium of exchange. Some firms took variousprecautions against forgery, with one issuing lines made of blue paper and potas-sium ink.71 Scrip continued to be used frequently as payment at local independentshops unconnected with the company store. Like workers, these private shopkeep-ers later redeemed them for goods at the company stores.72 A greengrocerexplained the common arrangement to the 1871 committee: ‘The workmen atCalder Bank bring lines to me . . . When I get them I sell them to the store. I gettheir full nominal value in goods at the store prices’.73 Truck notes were even usedto pay for a doctor’s midwifery services.74

67 Report of the Commissioner on Mining Districts (P.P. 1852, XXI), pp. 16–18; Hilton, Truck system, pp. 128–9.68 Hilton, Truck system, p. 154.69 Despite various investigations and parliamentary attempts, scrip used in wage advances was not abolished

until the 1887 Amendment Act.70 On the Operation of 5 and 6Victoria c.90 (P.P. 1844, XVI), pp. 23–4; Report of the Commissioners (P.P. 1871,

XXXVI), pp. 2, 70; QQ. 854, 1846, 4778, 5273, 6561, 8854, 9979, 11790, 16679, 17894, 20149, 21773, 24160,26946, 27812, 38845.

71 Report of the Commissioners (P.P. 1871, XXXVI), p. 22.72 Ibid., p. 4, 37, 39, 42–3, 46–7; see also ibid., pp. 14, 20–1, 23, 29.73 Ibid., p. 4.74 Ibid., p. 40.

246 ELAINE TAN


Some company stores issued scrip in fixed denominations. For instance, thegrocer associated with Connell’s Shipbuilding gave lines of different colours,representing values from one to five shillings.75 Most firms, however, issued scripas IOUs with varying values, depending on the amount of the advance.These werevery similar to small bills of exchange, except that scrip was redeemable incompany store goods instead of the dominant specie. Scrip also had the advantageof avoiding stamp duties, which as fixed fees could be significant when smallamounts were advanced.

Like bills, scrip was discounted by independent shopkeepers as compensationfor redemption costs and higher retail prices at company stores. Information onthe discount rate is scarce: two shopkeepers testified that they took 1–2 penniesoff each shilling in scrip, a rate of 8 to 16 per cent,76 another gave 191/2 shillingson a one-pound ticket, discounting only 2.5 per cent,77 while a fourth witnessmentioned a rate of 10 to 20 per cent.78 Some shopkeepers claimed not to havediscounted scrip at all, although they could have raised prices on their goodsbought with scrip.79 The wide span of discount rates reflected the broad range ofcompany store prices, which were 2.4 to 25 per cent greater than independentshop prices.80 As redemption costs and discount rates increased with distancefrom the company store, scrip’s geographical reach was limited to localneighbourhoods.

The truck system in this new form remained significant in certain parts of thecountry throughout the nineteenth century. The 1871 inquiry estimated that atleast 150,000 workers were subjected to it.81 One way to judge the importance ofscrip after 1831 is to quantify the amount of official money displaced by the use ofscrip. In other words, what would have been the increase in circulated legal tenderunder the counterfactual of no scrip?

To estimate the change in official circulation systematically, we use the funda-mental monetary relationship:

MV M M f V V PTO S O S= +( ) ( )( ) =, (1)

where M denotes money in circulation; V, velocity; P, prices; and T, total trans-actions in the economy. Subscripts O and S denote official currency and scrip,respectively. Total money in circulation is made up of circulated scrip and legaltender.Total velocity (V) is expressed as a generalized function of the velocities ofscrip and legal tender.The present model focuses on movements in the monetarysystem only, so PT is taken as unchanged.

75 Ibid., p. 21.76 Ibid., p. 4.77 Ibid., p. 43.78 Ibid., p. 58.79 Ibid., p. 47.80 Report of the S.C. on Payment ofWages Bill (P.P. 1854, XVI), QQ. 107–9, 376, 395–7, 507–12, 673–83, 1412,

4568, 5036–9, 5064–71, 5242, 5282–94, 5646–7; Report of the Commissioners (P.P. 1871, XXXVI), QQ. 111, 126,229, 466, 657, 1060, 3465, 3541, 4012, 8772, 9258, 10108, 10129, 10171, 11328, 13144, 15516, 15540, 17894,18124, 18206, 22270, 24160, 27288, 27436, 28017, 28152.

81 Report of the Commissioners (P.P. 1871, XXXVI), p. iv.This represents 1.3% of the total population employedin Britain in 1871. Of the 150,000 estimated, more than 75% were in mining and mineral trades (ibid., p. iv),making up some 23% of all workers in extractive industries (Mitchell, Historical statistics, p. 61).



Rewriting equation 1 to express MO as an identity:

M PT f V V MO O S S= ( )( ) −−, 1(2)

Taking the total differential of equation 2 yields the total change in circulatedofficial money in relation to changes in scrip and official money velocity:

dMMM

dMMV

dVMV

dVOO

SS

O

SS

O

OO= ∂

∂+ ∂

∂+ ∂

∂(3)

In words, equation 3 expresses the total change in circulated official currency interms of changes in three variables: circulated scrip, scrip velocity, and officialmoney velocity. Partially differentiating equation 2 with respect to each of thethree variables,

∂∂

= −MM

O

S

1 (4a)

∂∂

= ∂∂

= − ′( )( )

= − +( ) ′( )MV

MV

PTf V V

f V VM M f V V f V VO

S

O

O

O S

O SO S O S O

,

,, ,2 SS( )−1

(4b)

which together enable us to rewrite equation 3 as:

dM dM M M f V V f V V dVM M f V V

O S O S O S O S S

O S O S

= −( ) − +( ) ′( ) ( ) −+( ) ′( )

−1 1, ,, ff V V dVO S O,( )−1 (4c)

Intuitively, the first term of equation 4c states that official money circulationchanges by the same extent, but in the opposite direction, as changes in scripcirculation (that is, legal tender and scrip are substitutes). The second and thirdterms indicate that official money circulation also moves in the opposite directionto scrip velocity and its own velocity, respectively.

Equation 4c describes the general relationship between legal tender and scrip.Under our counterfactual of no scrip, the change in circulated scrip is the entirecirculation (that is, dMS = -MS), and scrip velocity drops to zero, hence dVS = –VS.Scrip velocity was very high as almost all tickets were returned over a period of afew months to the issuing employer who could reuse them. The term dVO waslikely to have been small, since the period during which official currency stayed inthe overall system was not affected significantly by scrip. For simplicity, dVO will betaken as zero.

In the absence of scrip, equation 4c simplifies to:

dM M M M f V V f V V VM M V M V f V V f V

O S O S O S O S S

S S S O S O S

= + +( ) ′( ) ( )= + ′( )

−, ,,

1

OO S O S O SV f V V f V V, , ,( ) + ′( ) ( )⎡⎣ ⎤⎦− −1 1 (5)

Equation 5 states that, without scrip, legal tender will increase by the amount ofcirculated scrip and the total value of scrip used by employers (MSVS). The termin the square parentheses exceeds one when circulated scrip, multiplied by any

248 ELAINE TAN


factor, is less than circulated official currency.This was the case as historical realitywould rule out the possibility that scrip could conceivably replace the entire legaltender in Britain.

Estimating how much scrip was in circulation (MS) is fraught with difficulty,because the precise speed at which it changed hands, the rate at which the ticketswore out, the number of transactions in which it was used, and the leakage rate areall unknown. However, available wage accounts from coal companies permit us toestimate how much scrip was used by employers, or its value (MSVS).

The value of scrip issued in 1871 is estimated to be at least 7 per cent of totalcoal wages paid, and as high as 38 per cent in some locales. These estimates arearrived at using gross wages, cash advances, and amounts advanced in entitlementsto company store goods. Table 1 presents data on 38 coal firms with companystores in south Wales and Scotland. English firms have been excluded because ofincompleteness of wage data. On average, about half of the gross wages wasadvanced, indicating the high demand for employer credit, in contrast to the US.82

Entitlements to goods in the company store made up 29 per cent in scrip, with theremainder in cash.

Of the 38 firms listed in table 1, 14 were identified explicitly by witnessesappearing before the select committee as establishments whose tickets were usedin payment at third-party independent shops. For these 14 firms, the mean andmedian of wages that were advances on the company store were 29.33 per cent,making them very similar to the other 24. Using the 14 firms, we estimate scripvalue to be 10.58 per cent of total wages paid by firms with company stores. Thisworks out to 6.96 per cent of all wages within the entire coal industry, as censusfigures indicate that Scotland and south Wales had 101,200 coal employees in1871,83 of which 66,600 laboured within the truck system.84 Assuming a meannominal wage of £66.20 per miner in 1871,85 the total value of scrip issued in wageadvances that year was £470,000. In comparison, the largest note issuer in 1845,before the Scottish free banking system was restricted by Parliament, was theBritish Linen Co. which issued £438,000.86

In terms of the model above, official currency in circulation would haveincreased by £470,000 in 1871 if scrip had been absent. This represents a non-trivial 9 per cent of country or Scottish bank bills in the same year.87 Hence,compared to the alternative legal private currency, scrip was not an insubstantialform of substitute private money. However, like country and Scottish banknotes,scrip was small relative to Bank of England currency.

The £470,000 figure underestimates the true extent of legal tender displaced forvarious reasons. Firstly, scrip in circulation (MS) has been excluded. As scripreturned to the issuing employer within a short time, this discrepancy was prob-ably small. Secondly, scrip value (MSVS) affects the change in circulated official

82 See Fishback, Soft coal, pp. 143–4.83 Mitchell, Coal industry, p. 106.84 Report of the Commissioners (P.P. 1871, XXXVI), p. 102.85 Mitchell, Historical statistics, p. 153.86 J. Wood, ‘Competitive money and banking’, mimeo (2003), p. 8.87 Mitchell, Historical statistics, p. 668. This denominator of private bank issues circulated among the public is

overestimated since banks would have been holding some of their own currencies to back deposits. This meansthat 9% would be a lower-bound figure. I am grateful to an anonymous referee for pointing this out.



Tab

le1.

Coa

lfirm

sw

ithco

mpa

nyst

ores

Fir

mPe

riod

Gro

ssw

ages

(£)

Wag

esad

vanc

ed(£

)%

adva

nced

Sto

resa

les

from

adva

nces

(£)

Sto

resa

les

from

adva

nces

as%

ofw

ages

Sou

thW

ales

Bla

enav

on18

6920

2,61

811

9,21

058

.83

n.a.

n.a.

Bla

ina*

Jan.

–Jun

e18

7033

,866

18,4

0554

.35

12,9

2138

.15

Cw

mbr

an*

1869

22,7

8812

,480

54.7

77,

000

30.7

2C

wm

tyle

ry18

6915

,258

9,94

765

.19

n.a.

n.a.

Ebb

wV

ale

1869

168,

221

89,3

7453

.13

54,2

8732

.27

Abe

rsyc

han*

1869

124,

909

52,0

2441

.65

31,0

8924

.89

Sir

how

y18

6959

,325

26,3

6244

.44

16,4

7827

.78

Vic

tori

a18

6959

,374

31,7

5153

.48

20,5

5134

.61

Rhy

mne

y18

6920

0,13

713

2,31

066

.11

62,7

2331

.34

Ton

du18

6973

,729

41,8

1156

.71

21,6

7429

.40

Pen

tyrc

han

dM

elin

griffi

th(6

firm

s)*

1869

73,8

5812

,632

17.1

0n.

a.n.

a.

Lly

nyi*

1869

65,0

0025

,000

38.4

6n.

a.n.

a.Y

stal

yfer

a*18

6979

,468

62,4

7778

.62

n.a.

n.a.

Sco

tland

Cha

pelh

all*

Aug

.18

68–J

une

1870

36,4

4011

,069

30.3

89,

374

25.7

2C

alde

rban

k*A

ug.

1868

–Jun

e18

7085

,664

36,8

1342

.97

30,9

6736

.15

Leg

bran

okan

dC

lela

ndA

ug.

1868

–Jun

e18

7023

,900

8,35

534

.96

6,84

528

.64

Tha

nker

ton*

Aug

.18

68–J

une

1870

23,1

936,

391

27.5

64,

528

19.5

2A

rmad

ale

Aug

.18

68–J

une

1870

24,0

0310

,062

41.9

27,

848

32.7

0B

anke

nd,

Bill

field

,an

dC

omil

Aug

.18

68–J

une

1870

17,3

753,

418

19.6

72,

952

16.9

9

Mos

send

June

1868

–May

1870

106,

891

50,5

2047

.26

33,0

7130

.94

Mer

ryan

dC

unni

ngha

me

(13

firm

s)Ju

ly18

69–J

une

1870

165,

000

90,0

0054

.55

n.a.

n.a.

Sum

mer

lee

1869

and

1870

177,

500

88,2

0049

.69

46,4

5826

.17

Ave

rage

51.0

528

.71

Not

es:

Scr

ipis

sued

byfir

ms

mar

ked

wit

han

aste

risk

was

used

inpa

ymen

tat

thir

d-pa

rty

shop

s.S

ourc

e:R

epor

tof

the

Com

mis

sion

ers

(P.P

.18

71,

XX

XV

I).

250 ELAINE TAN


currency (dMO) by a factor of more than one, as indicated by the term in thesquare brackets in equation 5. The figure of £470,000, however, assumes thefactor to be one. Thirdly, the other 24 scrip issuers in table 1 have not beenincluded because their tickets were not observed explicitly by witnesses to havebeen used in third-party transactions.88 Accounting for these would raise scripvalue to £1.27 million in 1871, or 24.2 per cent of the value of country or Scottishbanknotes. Fourthly, the select committee noted that the population of coalworkers at mines with stores in south Wales and Scotland was an underestimate,because many firms did not respond to the survey of company stores.89 Fifthly,including the scrip issued by employers in other industries, such as railway con-struction,90 would raise further the value of scrip used. Finally, the truck systemhad declined considerably by 1871.91 Legal tender displaced by scrip would havebeen higher earlier in the century when wages and not just advances were paid inscrip, and when the 1831 Bill was before Parliament.

Scrip was sometimes open to abuse.There were complaints about company storesshort-changing and mistreating scrip-holders.92 Benjamin Disraeli famouslyimmortalized the rude treatment of shoppers at company stores in his novel, Sybil.However, when it functioned honestly as a currency substitute, scrip was beneficialcompared to other forms of money. In substituting for official coin, scrip wasadvantageous to the wider economy facing an inelastic supply of precious metals.Paper money was a cheaper medium than metallic currency, and scrip, in switchingmetal for paper, economized on exchange costs.93 Since wages formed a substantialcost for coal firms, considerable amounts of capital were released by the trucksystem substituting for coin payments. One estimate puts wages at 70 per centof total production costs.94 Thus, the truck system involving 29 per cent of wages(table 1) conserved about 20 per cent of production costs that would otherwise havebeen held in metallic currency.This was likely to have played an important role in theindustry’s impressive annual capital formation during this period,95 especially afterthe 1844 Bank Act made the gold-backed paper money supply as inelastic as thequantity of specie.96

Capital was also retained within the coal industry through scrip, compared tobills of exchange with their high stamp duties which would have transferred somecapital from the industry to the state. In 1831, a week’s wage of £1 paid with a billwould incur a stamp duty of one shilling, or a 5 per cent payroll tax on theemployer. Bills also had an additional disadvantage in that they could disclosefirms’ transactions to their rivals.97 Scrip was preferable to promissory notes in

88 In many of the other 24 cases, witnesses were not asked about the tradability of scrip, nor were independentshopkeepers interviewed. In almost no instances, however, was it mentioned explicitly that scrip was rejected aspayment in independent shops. One exception was the pawnbrokers in Coatbridge who refused scrip (Report ofthe Commissioners, P.P. 1871, XXXVI, pp. 29–30), probably because of the time limit on its redemption.

89 Ibid., pp. 98–102.90 For example, Report from the S.C. on Railway Labourers (P.P. 1846, XIII).91 Hilton, Truck system, p. 145.92 For example, Report of the Commissioners (P.P. 1871, XXXVI), pp. 2, 5, 7.93 Hicks, Critical essays, p. 158.94 Williams, ‘Coalowners’.95 See Church, Coal industry, p. 102.96 Cameron, Banking, p. 47.97 Ibid.,Ibid., p. 50.



specie which were not readily discounted.98 It was arguably a more reliable short-term store of value, since the scrip-holder could judge whether the firm was ableto redeem it through the availability of goods stocked in the company store whichwere in plain sight. Moreover, the firm’s incentive to safeguard its reputation wasstronger than the bank’s. Failure to honour scrip would not only mean thecessation of truck as a credit system, it would also mean the inability to continuehiring and retaining workers.

This security advantage was greater in an era of insecure country banks inEngland and Wales, where provincial banking experienced significant failure ratesdue mainly to restrictions on capitalization. Country banks numbered about 700at their peak in 1812 before declining steeply to 250 by 1850.There were 89 bankfailures between 1814 and 1817,99 with failures peaking at about 40 each year from1824–6, and numbers of new banks established were also falling.100 This generalcontraction in country banking and uncertainty in its note issue would haveaffected rural mining communities more severely than manufacturers nearLondon or in large towns, who had better access to Bank of England notes,clearinghouses, and financial intermediaries. Insecure small country banknotesadversely affected labourers disproportionately, since they were mostly used inwage payments. For instance, when Ely Bank failed in 1811, it was reported thatthe ‘greatest consternation’ was felt among the working class.101 Employers’ riskswere also reduced with a smaller holding of country banknotes by paying part ofthe payroll in scrip.Thus, the truck system lowered financial risks for both parties.This advantage would have been smaller in Scotland, where note issue wasunrestricted until 1844 and the free banking system provided stable privatecurrencies.102

Scrip, and more broadly the truck system, also served many useful purposesapart from functioning as, or economizing on, media of exchange.The remotenessof the mining communities compelled firms to operate on-site stores selling basicnecessities, and to build houses, churches, and schools to attract labour. Nearbyindependent outlets were established later and these also sold a variety of goods.103

Company stores remained important after independent shops were establishedbecause they kept prices and real wages in check, as in the US case.104 As themarket for mining labour was highly competitive during that time, withoutcompany stores, private shops could drive up living costs and employers would beforced to raise nominal wages to attract or retain labour.105

Due to the interlocking labour, credit, and retail markets within the trucksystem, mining companies transacted with the workers in three ways: as an

98 Unwin, Oldknow, p. 177.99 Feavearyear, Pound sterling, p. 195.

100 Dawes and Ward-Perkins, Country banks, pp. 6–8.101 Pressnell, Country banking, p. 153.102 White, Free banking, pp. 23–49.103 On the Operation of 5 and 6Victoria c.90 (P.P. 1844, XVI), p. 23; Report of the S.C. on Payment ofWages Bill

(P.P. 1854, XVI), QQ.501–4; Report of the Commissioners (P.P. 1871, XXXVI), pp. 242–5; Hilton, Truck system,pp. 10, 19.

104 Fishback, Soft coal, p. 136.105 Report from the S.C. on Payment of Wages in Goods (P.P. 1842, IX), QQ. 550–64, 1352, 3362–4, 3388–91;

Report of the S.C. on Payment of Wages Bill (P.P. 1854, XVI), QQ.3542–52, 4256–7; Report of the Commissioners(P.P. 1871, XXXVI), QQ.10954, 11437, 11790, 29527–8.

252 ELAINE TAN


employer, as a lender, and as a seller of commodities. As in the US, integratingthese transactions reduced transaction costs.106 Administering a credit service incash separate from the company stores would have required more payroll staff, agreater volume of coin, and more capital tied up in precious metals.

Scrip was criticized by contemporary and modern commentators as ‘exploit-ative’ of workers.107 It was similarly demeaned in the US, but some scholars haveargued to the contrary.108 There is evidence indicating that company stores pro-vided a convenient shopping location, as private shops could be a few miles away.About 5 per cent of cash wages was spent at company stores in 1868–70, indicatingthat convenience was an important factor and not all custom was due to scrip.109

Secondly, scrip was a credit service and was mostly cheaper than alternativelenders. The median cost of employer credit was 8.5 to 11.6 per cent in themid-nineteenth century, compared to 14 per cent at private shops.110

III

The totality of the evidence, both direct and indirect, indicates that seignioragerents were very much the concern of state officials considering the truck system in1831. Although legislators mostly used labour protection arguments, some promi-nent legislators did urge the abolition of the truck system on monetary grounds.This perspective was also in line with the progressive extraction of seignioragefrom alternative financial instruments through taxes and duties, as well as from theBank of England for its note-issue monopoly rights. As British banks were forbid-den to issue new paper from 1845, the state as the sole claimant to the net profitsof additional issues was the sole loser from scrip from mid-century. The counter-factual rise in circulated legal currency was significant.The periodic suppression ofscrip was part of a wider, incremental nationalization of money production.Thus,the state and other official money issuers were important beneficiaries from theabolition, apart from the labouring class which historians generally think was theprimary gainer.

The non-trivial amount of scrip value in the nineteenth century also suggeststhat the degree of monetization within the economy was greater than previouslythought, especially in remote areas where scrip was highly significant.

More broadly, the significance of scrip also provides evidence that notes issuedprivately by non-financial companies could be used within the monetary system.As scrip was not circulated far from the issuing companies, there was littleinconvenience due to multiple non-uniform currencies. While there were costsassociated with trading scrip for goods not carried by company stores, these weresmall in comparison, because company stores carried basic necessities which wereconsumed widely. Historical evidence shows that scrip was easily accepted withinthe locale, and costs of exchange were unlikely to have exceeded the transaction-cost savings from the integration of multiple exchanges between the employer and

106 Timberlake, ‘Private production’, pp. 429–41.107 For example, Engels, Condition, p. 195; Hammond and Hammond, Labourer, pp. 70–1; Polden, County court,

p. 7.108 For example, Timberlake, ‘Private production’; Fishback, Soft coal.109 Report of the Commissioners (P.P. 1871, XXXVI), pp. 103–8.110 Tan, ‘Wages in kind’.



worker. Excessive supplies of scrip also did not occur, because it was issued onlyon demand. Moreover, since it was used during the period between fortnightlypaydays, and was not accumulated over long periods of time, there was littlechance of a large volume of scrip being offered for redemption at any one time.Runs on company stores were therefore improbable, and contagion to othercompanies and financial institutions non-existent.

Finally, the truck system was indeed a rudimentary credit system, but it was notnecessarily a bad one when it operated without fraud or abuse. It allowed employ-ees to borrow against wages, and gave companies transaction-cost and tax savings.Both also benefited from lower financial risks.Through scrip and the use of goods,credit between paydays was created and precious metals in coin were economized,enabling social gains and the release of capital.To the extent that firms and workerslost out on the advantages rendered by the truck system, state interference tosafeguard its monopoly on seigniorage gains would have had a negative economicimpact.

University of London, Royal Holloway

Date submitted 7 January 2008Revised version submitted 27 December 2009Accepted 12 February 2010

DOI: 10.1111/j.1468-0289.2010.00549.x

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(1980), pp. 94–113.

Official publicationsReport from the Select Committee on Payment ofWages in Goods (P.P. 1842, IX).On the Operation of 5 and 6 Victoria c. 90 and on the State of the Mining Population in Scotland and Staffordshire

(P.P. 1844, XVI).Report from the Select Committee on Railway Labourers (P.P. 1846, XIII).Report of the Commissioner on Mining Districts (P.P. 1852, XXI).Report of the Select Committee on Payment ofWages Bill and Payment ofWages (Hosiery) Bill (P.P. 1854, XVI).Report of the Commissioners Appointed to Inquire into the Truck System (P.P. 1871, XXXVI).



scrip as private money

Documents

mo ms

economic history review

ofcial money displaced

late eighteenth century

common monetary standard

circulated ofcial currency

british coal industry

rudimentary credit system