Fiat Currency – Scrip by Another Name


American culture can teach us historical lessons without us even realizing it. We are all familiar with the chorus of the song, “Sixteen Tons” where it goes, “I owe my soul to the company store”. The song describes the mining “company towns” of the day. Due to the isolation of these towns, the low amount of employment opportunities and a lack of competition, most mining companies would pay their workers in “scrip” rather than cash on the barrelhead*. This company mandated currency could only be redeemed at the approved company-owned retail outlets. In order to retain workers in other than less-than-desirable working conditions, the mining companies depended on the workers remaining in a state of indebtedness. As The Grateful Dead put it in the song “Cumberland Blues”, they would “make good money, five dollars a day. If they could “make any more” they would “move away.”

The idea of being in debt to the company store wasn’t isolated to the Appalachian mining towns. The sharecropping system in the American south implemented a similar scheme. Certain midwestern  and western companies such as the Pullman Palace Car Company, Pacific Lumber Company, and Hershey Chocolate City were all company towns in one way or another. Many modern midwestern towns were originally established as company towns.  The oil fields implemented another version of the company store. Even in Great Britain, we find the same scheme in what was known as the Tommy System or Truck System. Thankfully these schemes are reminiscent of a bygone era. Or are they?

Why Waste Real Money?

The main idea behind paying workers in scrip was all about cost and cash flow. The business owners could increase their cash holdings and either plow it back into the company or add it into the profit column, thus satisfying shareholders and themselves. The scrip couldn’t be redeemed in anything other than what was sold in the store. The merchandise of which was purchased at discounted rates, usually also on credit. The scam proved to be quite lucrative. Imagine reducing payroll costs and boosting profits simply by paying your workers with Monopoly money. In essence, that’s all scrip really was.

ohio-coal-company-scrip-2

This may sound fantastic. You may ask, “How could people be so gullible as to accept worthless pieces of paper instead of real money wages?” Now, open your wallet and ask that again. The reality is, ever since gold as money was outlawed by the government, we all have been working for scrip, albeit Federal Reserve Notes.

The Scam Never Ended

Today, the company store has taken on a global dimension. Any and all economies that rely on central banking are running on a form of scrip. Regardless if we call them Dollars, Yen, Yuan, Euros or Pecos, these currencies can only be redeemed for what is sold in the company store. Because gold and silver are no longer available upon redemption, currencies are only exchanged for goods and services. Any business that buys and sells in fiat currency is just another smaller part of the global “store”. Just as the miners and sharecroppers were indebted to the company in their day, so too are hundreds of millions of today’s labor force. Each and everyone that uses credit is in fact, a debt slave not unlike the miners and sharecroppers of old.

Understand that all fiat currency is backed by nothing else than your labor. More precisely, your taxable labor. It’s no coincidence that in 1913, when the Federal Reserve Act was passed, the 16th Amendment was also passed into law. For more on this read, “Death by Taxes: The Elites“. Under the gold standard, currencies were actually called bank notes. A bank note is a promise to redeem in the medium which backs the note. In our case, today redemption is performed by way of the IRS and no longer at the teller window at the bank. To make redemption even more convenient for the central bank, a tax withholding was implemented during the second world war.

Let us tie all of this together. Not unlike sharecropping, you must pay the landowner (government) a percentage of the yield of your labor (taxes). This payment is to be performed in the owner’s approved currency, called scrip (fiat currency). Those who do not comply will be removed from the owner’s property (prison). But the reader may ask,”But wait! This is my property. I’ve paid my mortgage off.” Guess again. As long as you pay property taxes you are, in essence, only renting the land. You may own the structure upon the land, but extremely few individuals actually “own” any land. Normally, those few individuals are descendants of royal blood lines. Think of it as tenement farming, sharecropping or better yet, the feudal system.

In order to survive, the workers must purchase their merchandise from the company store. In modern times that would be the global economy. Whenever a credit card is used, a loan is approved or a mortgage granted to someone more scrip has been created. This not only increases the supply of scrip but also the total debt since all fiat currency is backed by someone’s ability to repay. This diabolical scheme is what keeps the masses indebted to the “company store”. The problem being, unless you abstain from transacting in monetary terms, you can’t move away from the global economy. “I can’t go; I owe my soul to the company store”.

Rays of Hope

Fortunately, the human spirit doesn’t sit idly by and just “takes it”. Ever more people are getting fed-up with the Fed and are turning to alternative mediums of exchange such as crypto-currencies. These anonymous currencies are becoming more stable and therefore more popular, especially among the liberty minded population. Billions of dollars worth of goods and services are transacted, on a daily basis, in crypto-currency.  Even gold and silver as money are slowly making a comeback.

Other alternatives to the company store are such things as the Agorists Movement, the peer-to-peer economy, and open source economies only to name a few. These attempt to establish themselves as a way to circumvent the central banking scheme by providing goods and services and with alternative forms of payment, such as one’s promise to perform labor for someone else in lieu of currency. Most importantly, they are attempts by free-thinking people to stay out of the company store and actually experience what so many of us talk about; freedom.

If you’re disgusted with the status quo and seek an alternative way to live and raise your family, there are ways of doing it. The above examples are merely the tip of the underground iceberg. Almost every facet of day-to-day life can be performed off the grid. Whether you homeschool your children, ride on Uber, stay in an Air BnB home, raise your own food, transact in promised services to receive goods and services in a peer-to-peer network there are ways and means to achieve your chosen ends, outside of the company store.

It’s easier to play the game and adhere to the system. I understand that. The choice to stay in the company town or leave it behind is purely subjective to the individual. It may not be an easy adjustment to make, either. But as more and more local economies and alternative currencies become more popular, the transition will also become easier as well. Time is of the essence, and because of events like the US elections, global sovereign debt, derivative bubbles, race tensions, the migrant crisis, etc., time is running out. How much time do we have? No one knows. One thing is certain, the longer you wait you only get “another day older and deeper in debt”.

 

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*Author’s Note: The term “cash on the barrelhead” came about as an incentive to attract oil field workers away from competitors who still paid their employees in scrip.

Image credits:

[www.appalachianhistory.net]

[http://www.coalcampusa.com]

 

 

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