The State of Wisconsin issued a unique type of scrip, known as Bank Scrip, which did not represent obligations of the state, but was intended to be used as a circulating medium by state chartered banks which were unable to circulate United States currency because of the Bank Holiday. In other words, the state printed and made available to the Wisconsin banks currency issued by the state.
No other state issued scrip that circulated like the Wisconsin Bank Scrip and there is a serious question whether such scrip was legal under Article I, Section 10 of the United States Constitution which prohibits the states from declaring anything other than gold and silver to be legal tender. Despite the fact that the Wisconsin Bank Scrip circulated for over a year, no legal challenge to its validity was pursued.
The records of the state agency responsible for the scrip – the Scrip Bureau of the Banking Department of the State Treasurer’s Office – are available at the State Historical Society of Wisconsin. The holdings contain account ledgers, applications from banks for scrip, monthly reports from banks detailing the amount of scrip held and returned by them, and office correspondence. The ledgers contain daily entries for the amount of scrip outstanding, on hand, issued, and returned. Curiously, although the State Historical Society has the records and state law provided that redeemed scrip could go to the Historical Society, the Historical Society does not possess any examples of the scrip.
The Scrip Bureau opened its offices in the Capitol City Bank Building in Madison on March 16, 1933. On the same day, the Bureau took possession of $10,168,632.00 in scrip which had been ordered from the Gugler Lithographic Company of Milwaukee.
Wisconsin Bank Scrip was issued in denominations of $1.00, $5.00, $10.00 and $20.00. The face of the scrip has a vignette of the state capitol. A repeating underprint of the state seal was printed on both sides of the notes. The printing process involved three steps. First, the underprint was lithographed. Second, the text was printed. Finally, the serial numbers were added by machine. The scrip was printed in sheets of 12 or 15 pieces.
There were two machines that printed the serial numbers. The two machines printed different serial number styles which are shown above. The numbering machines had only six digits. When the one dollar notes reached 999999, the letter K replaced the last digit and the numbering started over at 1K.
The majority of banks were in smaller communities, although a handful of banks in Milwaukee, Beloit and other larger cities did participate. One interesting point is that no banks from Appleton, Green Bay, Madison, Stevens Point, Eau Claire or La Crosse — all good sized cities — participated as circulating banks.
Banks could only circulate scrip in an amount equal to 5% of their deposits. The Beloit Savings Bank and the Beloit State Bank were the two banks that ordered the largest amount of scrip. The Beloit Savings Bank asked for $175,000.00 while the Beloit State Bank received $125,000.00. The Sarona State Bank received the smallest amount, only $2,500.00. There were a few banks that returned scrip sent to them without actually circulating any.
Each bank was required to pay the Banking Department an amount equal to 5% of the total scrip ordered to defray the costs of printing the scrip and administering its circulation. The total cost of the program was $61,826.00 which was $14,480.12 less than the amount collected from participating banks for the expenses. A proportionate amount of the excess was refunded to each bank.
Spreadsheets of the serial numbers issued by each bank can be downloaded here:
Clearing the Scrip
Banks that circulated scrip were required to receive it, although non-circulating banks were not. This led to a great deal of confusion. The records are filled with correspondence from non-issuing banks inquiring as to the validity of the scrip and how to redeem it. This correspondence also reveals that the scrip was received by banks in Chicago, Minneapolis and Cleveland.
The first order of scrip was sent to banks on March 18, 1933 and the last was shipped on July 7, 1933. Although the serial numbers were recorded, banks were not responsible for redeeming scrip by serial number. Instead, the amount of scrip circulated by a bank was a liability owed by the bank to the Banking Department. Although issuing banks were required by the statute to accept the scrip at par, neither the Banking Department nor the issuing banks were authorized to redeem scrip for cash except between issuing and non-issuing banks.
The law authorizing the scrip did not contain procedures for its redemption. Issuing banks were required to satisfy their outstanding scrip liability by returning to the Scrip Bureau an amount of scrip equal to that circulated by them. No provision was made for redemption of the scrip by non-issuing banks. This presented a problem as non-issuing banks refused to accept the scrip since there was no method for redeeming it.
A plan was developed for non-issuing banks to exchange scrip received by them for currency with an issuing bank which would then retire it. This presented an administrative nightmare for the Banking Department since large amounts of scrip were eventually received by non-issuing banks.
The clearing process for non-issuing banks was described in a memorandum from A.C. Kingston, the Commissioner of Banking, dated May 3, 1933. The memorandum reads in part:
1. A central bureau will be set up at Madison as a part of the present issuing organization. Once a month on the 15th, each of the non-issuing banks may report to the bureau the amount of scrip that it has taken in from its customers for deposit less the amount it paid out.
2. Each of the issuing banks will once a month take its pro rata share of scrip on hand at the non-issuing banks from such non-issuing banks for which it will remit in convenient exchange. The bureau director will allot the scrip on hand at the non-issuing banks to the issuing banks on a pro-rata basis computed on the difference between what the issuing banks have on hand and their scrip liability.
These issuing banks at the same time will authorize the bureau director to inform each non-issuing bank the amount of scrip it may send to the issuing bank designated by him. The director will, likewise, notify each issuing bank the amount of scrip being sent to it and the name of the bank or banks by whom it will be sent.
3. The central bureau will act purely as the agency through which the information will clear. The process will be continued from month to month until the need for scrip appears to cease.
4. The State Treasurer will accept scrip in payment of taxes and will make his deposits in his working banks who in turn will be relieved of the scrip monthly as outlined above.
5. Likewise, the local treasurers will accept scrip in payment of taxes and will make deposits in their regular banks or pay it out all or part for pay rolls or local bills.
The cumbersome process for redemption was necessary to prevent the scrip from being considered state bank notes by the federal government. According to a letter to the First National Bank of West Bend, Wisconsin from Milo Hagen, the Secretary of the Banking Commission, the Commission was afraid that the federal government would consider the scrip as currency issued by the banks making it subject to federal tax.
When scrip was returned to the Scrip Bureau for redemption, it was counted, the serial numbers were recorded, and the notes were stamped with the date they were received for cancellation. This process was repeated twice for each note for accuracy. Each piece of scrip was handled seven or eight times by employees of the Scrip Bureau during the redemption and accounting process. An average of $10,000.00 per day was received by the Scrip Bureau during the height of the redemption period.
On September 7, 1934, $10,150,959.00 in scrip was destroyed by burning and $10,800.00 was punch canceled. This left an amount outstanding of $6,872.00. The last entry in the records is October 7, 1935. Between these two dates, $2,162.00 in scrip was returned to the Banking Commission, leaving $4,710.00 unredeemed.
There is no breakdown of the $2,162 redeemed by denomination. The $6,872.00 outstanding on September 7, 1934 when the scrip was destroyed represents the maximum amount of unredeemed and uncancelled scrip remaining consisting of the following:
The destruction of the scrip and plates was witnessed by the Attorney General, Secretary of State and Treasurer of the State of Wisconsin all of whom executed a document titled “Cremation Certificate of State of Wisconsin Bank Scrip –Series 1933” which certified the destruction. Elwell, Kiekhofer & Company, a certified public accounting firm in Madison, Wisconsin audited the destruction and produced an Audit Report that details the issue and redemption of the scrip. The audit also contains a list of the serial numbers of all the pieces of scrip still in circulation as of August 15, 1934.
In the collector’s market $1.00 pieces appear occasionally. Only two uncancelled $5.00 pieces are known. No uncancelled $10.00 or $20.00 pieces are known.
A schedule of the serial numbers of the unredeemed scrip can be downloaded here:
Many requests were received by the Banking Department for souvenirs. Initially, Director Herreid answered these requests by suggesting that individuals save $1.00 notes. Eventually, it was decided to cancel a number of notes by perforation for use as souvenirs. Three hundred pieces of each denomination were saved and cancelled as souvenirs. The cancelled notes were taken from the stock of unissued scrip held by the Banking Department, so this number is in addition to the unredeemed scrip destroyed.
The souvenir sets were compiled so that the last two numbers of the serial number on each piece in the set matched. The Banking Department probably anticipated that souvenir sets would be made since serial numbers 1-50 for the $1.00, $5.00 and $10.00 scrip were held in reserve and were eventually used for this purpose. The souvenir $20.00 began with 19001. The souvenirs were distributed to state officers, participating banks, and others who were involved in the production and administration of the scrip program.
The souvenir set that is shown at the top of this page was given to the printer, Gugler Lithographic Company of Milwaukee.
A list of the canceled souvenirs by serial number and to whom they were issued can be downloaded here.