NH Merchants Mint Their Own Money
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Written by J. Dennis Robinson

Portsmouth NH Merchants / SeacoastNH.comHISTORY MATTERS 

Private "scrip notes" replaced small currency when the New England economy was strapped for cash. These paper promissary notes replaced legal tender in times of fiscal crisis, bouying up the local economy. Call it financial Darwinsim, but merchants printed their own dough simply to stay alive. (story below)

 

Making Money Work

Strapped for cash in a down economy? Just mint your own dough. It’s been done frequently in Portsmouth -- and sometimes even legally.

In tough economic times when money was scarce, local merchants issued their own "scrip notes". This privately printed currency appeared here in the colonial era, during the Civil War and in the Great Depression of the 20th century. When fresh legal tender again became available, the temporary paper scrip lost its value and faded out of circulation. Today only a handful of ardent collectors like Kevin Lafond have even seen this rare Piscataqua money.

"I bought my first piece of scrip from Dolloff’s Coin Center in the 1970s," says Lafond. "I had no idea what it was, but it was from Portsmouth and looked like money."

Scrip Notes from Portsmouth, NH merchants replaced missing coins in war economy / Kevin Lafond Collection on SeacoastNH.com

Twenty years later Lafond attended an auction of items once owned by local antiquarian Joe Copley. Like other early Portsmouth collectors including Dorothy Vaughan, Joe Frost, and Garland Patch, Copley had a passion for all things Portsmouth. Lafond bought about a dozen more scrip notes at the auction and began digging into the history of this strange forgotten NH money. Almost nothing, he discovered, had been written about it.

"That’s when I went on a quest," says Lafond, who is a certified public accountant. He was born, and still lives in the city’s Atlantic Heights neighborhood. Today he works as a corporate controller for a pharmaceutical biotech firm in Boston.

"I wanted to know who issued them, and why. How many scrip notes existed? Most were redeemed or thrown away over the years, because people didn’t value them. Joe Frost used his as bookmarks, Lafond says."

 

CONTINUE SCRIP NOTES ARTICLE


 

The descent of money

Like most colonies, early Portsmouth residents bartered when they could. Gold and silver coins were hard to come by. The first New England paper money was issued in 1690, but as the New Hampshire economy grew, locals urged the provincial government to release more. In 1734 a group of prominent Portsmouth merchants issued 6,000 British pounds-worth of paper currency in small denominations. These "promissory notes" served as temporary local money. The merchants promised to redeem them on December 25, 1746 for their current value in silver, plus one per cent interest per year.

But minting money was illegal. Outraged Massachusetts merchants refused to honor the Portsmouth money and the colony levied a fine on anyone who used it. New Hampshire’s own governor predicted that the private paper currency was only good for wrapping up pies. But Portsmouth merchants had friends in high places. Convinced that there was too little money available in the province of NH, the British King sanctioned the use of local scrip notes here.

Early in the 19th century, a shaky new American economy, bank failures, and a rise in counterfeiting turned Americans against paper money. People were so weighed down carrying metal coins, according to Lafond’s research, that those who fell off ships sank like stones. When the federal government clamped down on the supply of gold and silver during the Civil War, citizens also began hoarding coins, leaving precious little currency in circulation.

Meanwhile the local war economy boomed at Seacoast factories and at the Portsmouth Naval Shipyard. Without coins and with little paper money, businesses suffered. Locals tried using postage stamps in place of cash until even the stamps were counterfeited. Inflation followed. Prices skyrocketed. Charities suffered. Workers went on strike.

Portsmouth, NH merchants issued their own scrip notes during dire financial times / Strawbery Banke Collection

 

Like paper coins

Local commercial banks, chartered by the state of New Hampshire, routinely printed their own money. Now called "obsolete bank notes", unlike merchant scrip, they were legal tender and ornately designed. A popular 20 dollar note from the Piscataqua Exchange Bank includes finely engraved portraits of George Washington and Benjamin Franklin next to a Portsmouth-built ship and a woman milking a cow. Both banks and private citizens horded gold and coins during the uncertain times of war. When commercial banks were banned from minting "fractional" currency of less than one dollar, coinage all but disappeared with nothing to replace it.

With a skilled worker earning about $1.75 a day, the dearth of pennies, nickels, dimes, quarters and half dollars became a full blown crisis. To offset the inflation of war, local merchants took action. They revived paper scrip by printing a variety of bills worth less than a dollar each. People called them "shinplasters" because the paper, once redeemed, was so worthless it was only good for lining one’s boots.

"It wasn’t legal," Lafond says, "but people used scrip, and you can’t lock up everyone in the country. It wasn’t counterfeit because it didn’t imitate federal currency."

Scrip was extremely local. Its value was based entirely on the reputation of business owners whom citizens trusted to back up their little promissory notes with real money once the fiscal emergency had ended. In New Hampshire, most Civil War scrip came from Portsmouth, Manchester and Concord. Some notes were elaborately and artistically designed while others were flat and crude looking.

The men behind the money

"I love this one from Fort Constitution," Lafond says, selecting attractive blue scrip.
It’s a nice looking note."

Fragile and smaller than a playing card, the note, issued by George L. Folsom, simply reads "Good for THREE CENTS". and was redeemable for official state bank notes "when presented in quantities of one dollar or upwards." A similar Civil War note for 10 cents says it may be traded only at Fort Constitution in New Castle. The underground success of scrip, however, was that a wide variety of local merchants accepted each other’s paper notes and treated them like cash. The same note might be worthless in another town or state.

Lafond’s quest has been to track down the individual merchants who issued these scrip notes – grocer James Yeaton, Rockingham House proprietor William Hadley, hardware store owner George Bailey, boot shop proprietor Albert Payne. The research has been difficult and time consuming, a true labor of love. These were usually average store owners, not wealthy people, who have never had their stories told. These practical merchants, through their cooperation, buoyed up the economy in hard times. Some also made a tidy profit.

George Folsom, for example, was a "sutler" or camp follower who set up a store at the New Castle fort. He sold supplies to soldiers not provided by the Army, things like writing paper, canned goods and tobacco. Lafond estimates that Folsom made about $8,000 at Fort Constitution during the war. He later opened a hardware store in Dover, then dabbled in manufacturing and publishing. His wife Nellie divorced him for nonsupport and "willing absence". 

Lafond has chronicled the lives of about 170 New Hampshire merchants who issued scrip. Their stories, lives usually lived below the radar of local history, fascinate him. He has slowly assembled these brief merchant biographies into a book of about 300 pages. He doesn’t expect it to be a bestseller, but he has a potential publisher – The Society of Paper Money Collectors. It will be a book targeted to collectors and historians.

Lafond is among a small handful of collectors focused on the rare topic of NH merchant scrip. The lack of interest, he believes, is due partially to a lack of information. People simply do not know what scrip notes were or how this practical community-based solution helped over come inflation and economic depression. And no one yet, he says, has studied the evolution of scrip notes by digging into the actual lives of local merchants themselves. The way they adapted to tough economic times, he says, may have value even today.

"Business has changed as technology has changed," Lafond says, "but human nature stays the same."

 

© 2009 J. Dennis Robinson. All rights reserved. Robinson is editor and owner of the history web site SeacoastNH.com. His column appears here every other Monday. Kevin Lafond’s research on "Portsmouth Merchant Scrip" has been assembled into a booklet that can be seen in the reference section of the Portsmouth Athenaeum and the Portsmouth Public Library.