Histories of Oklahoma during the Great Depression usually stress the enormous economic and social damage inflicted upon the state. Less often appreciated is the resourcefulness with which public and private entities responded to the calamity. In particular, the Great Depression called forth a nationwide experiment in the issuance of local currency. Faced with devastating declines in demand, employment, and output, hundreds of communities around the country returned to a distinctively American tradition of monetary experimentation to solve their problems. in Oklahoma alone, nearly fifty different experiments in local currency were undertaken during 1933. Those experiments ranged from municipal, charity, and self-help scrip to the issues of private companies and banks. ¹

The most prominent of the scrip issues occurred during the bank holiday of March, 1933. Denied access to their bank balances and desperate for a circulating medium, private employers worked with civic leaders and banks to issue replacements for United States currency that would be both within the law and accepted by the public. They did so not only in the absence of consistent guidance from the national government but in the face of open hostility from Governor William H. Murray. While the most prominent example of such emergency money was the scrip of the Cash Relief Trust of Oklahoma City, similar arrangements on a smaller scale also were introduced in the cities of Bristow, Cushing, Pauls Valley, Ponca City, Sapulpa, and Seminole. This article both details those arrangements and places them within the broader setting of Oklahoma’s response to the bank holiday of March, 1933.

Oklahoma’s experience of the bank holiday of march, 1933, was shaped by two distinct, but related, financial developments. First, Oklahoma banking had been plagued by weakness and insolvency throughout the 1920s. Hard times had arrived early in the Sooner State. Burdened by illiquid and bad loans to beleaguered farmers suffering from low commodity prices, the rate of bank failures soared. Oklahoma’s small, undercapitalized unit banks, which had resisted branch banking and the burdens of membership in the Federal Reserve System, proved particularly vulnerable to price deflation. Devastated by the agricultural depression of 1921, Oklahoma’s state and national banks failed at their greatest rate during the early 1920s. Failures and consolidations over the next decade reduced the number of stated banks by nearly half; by 1934, barely 30 percent of the organized national banks were still in existence. State banks in particular, by remaining outside of the Federal Reserve System, lacked direct access to its discount facilities. Instead, they relied upon their correspondent banks in the larger cities for emergency liquidity. In order to maintain banking facilities in small communities, the state bank commissioner beginning in 1931 allowed suspended banks to accept new deposits on a trust basis, even as older deposits remained frozen pending liquidation. That echoed similar arrangements in other states, and by March 1, 1993, nineteen Oklahoma institutions operated in restricted fashion as “moratorium” banks. ²

Second, against that grim backdrop, the spread of bank holidays nationwide led to the practical paralysis of the nation’s banking system by early 1933. Localized restrictions on deposits and withdrawals gave way to statewide closures beginning with Nevada in October 1932, followed by Louisiana in February, 1933, and, more seriously Michigan. Given Detroit’s importance as a reserve center for smaller banks, that closure hastened moratoria declared by the governors of Indiana, Maryland, Arkansas, and Ohio. At the national level, executive action was paralyzed by the interregnum between the Herbert Hoover and Franklin Roosevelt administrations. Unwilling to act vigorously without Roosevelt’s support, Hoover also sought policy commitments to financial orthodoxy that Roosevelt was unwilling to make. ³

The banking crisis reached Oklahoma on Wednesday, March 1. After conferring with bank commissioner William J. Barnett and bankers from Oklahoma City and Tulsa, Governor Murray issued an executive order that evening declaring a three-day bank holiday pending legislative work on a bank moratorium bill. ⁴  By the end of the day, Oklahoma was among fifteen states that had closed or restricted banking operations. Barnett assumed, under the governor’s emergency order, complete power to close or otherwise restrict the operation of any bank within the state. Technically, the national banks operated under federal charter and supervision, but Murray asserted control over them as well. Indeed, bankers taking issue with Murray’s authority would soon find themselves facing down the National Guard.

The immediate concern was not so much the condition of Oklahoma’s banks, but the vulnerability of the state banks’ reserve deposits in national institutions. The grinding distress of the 1920s had already winnowed out the weakest of the state banks, and the survivors were regarded as in good shape. Even though only on of Oklahoma’s 252 state banks belonged to the Federal Reserve System, many maintained their reserves with member national banks of reserve cities. Were the state banks unable to draw upon those funds, keeping Oklahoma banks open when other states had declared their own holidays would only force all of the state’s banks, good and bad, into suspension. ⁵

The possibility of issuing an emergency exchange medium was immediately raised. After all, Oklahomans remembered that during the panic of 1907 bank clearing houses in the new state as well as around the country resorted to the issue of clearing house certificates to relieve shortages of cash. Clearing houses were associations of banks that settled (or “cleared”) their mutual obligations; by the late nineteenth century, clearing houses became known for their distinctive solution to America’s periodic financial panics: the clearing house loan certificate. Clearing house certificates (the word “load” was frequently dropped) served as short-term credit instruments that allowed banks to borrow from each other in order to facilitate settlements, rather than use scarce cash. Backed by approved securities held in escrow by clearing house associations, such certificates provided banks liquidity when the money market had seized up. Before the era of the Federal Reserve discount window, those certificates serves ad the nation’s main source of emergency money. While used mainly for interbank transfers, in small denominations they also circulated hand-to-hand by the hundreds of millions of dollars in place of hoarded United States currency. ⁶

Despite their successful use in the past, even clearing house certificates were not an automatic solution to a currency shortage of the magnitude of 1933. An important institutional difference between 1907 and 1933 was, of course, the presence of the Federal Reserve System. Indeed, on basic reason for its existence was to impart an “elasticity” to the nation’s currency, which, by accommodating extraordinary demands, would remedy the need for clearing house certificates at all. From member banks’ point of view, the chief resource offered by the Federal Reserve was its discount facilities, but what the banks needed to meet bank runs in 1933 was not more credit, but cash to meet panic withdrawals. However, the issuance of the main forms of legal tender paper currency – national bank notes and Federal Reserve notes – was governed by different, and more cumbersome, mechanisms than the discount windows. Permission to issue clearing house certificates would nonetheless have to come from state and federal authorities. Given that the banks were actually closed by the holiday, that remained uncertain.

Oklahoma’s financial community responded to the moratorium with proposals that reflected its commitment to a small-scale, unit banking system. Appealing to Oklahoma Sen. Elmer Thomas, a well-known inflationist and foe of financial centralization, state bankers, regulators, and the Oklahoma Bankers Association (OBA) scored the federal government’s postal savings system for unfairly siphoning off scarce deposits. The Federal Reserve System was accused of denying the smaller state banks the benefits of its accommodation through high minimum capitalization requirements. Proposals to permit nationwide branch banking, particularly those promoted by Sen. Carter Glass of Virginia, were perceived by country bankers as a direct attack upon Oklahoma’s financial way of life. Furthermore, they feared any banking reform that might nationalize state institutions, force them into the Federal Reserve System on unfavorable terms, or otherwise treat them unfairly under some future reorganization plan. ⁷   As an alternative to branching, Oklahoma bankers sought what the OBA termed “reasonable discount privileges” for nonmembers from the Federal Reserve System. Despite the bad memories of the state’s failed deposit guaranty law, smaller banks supported some sort of federal deposit insurance system, especially if its premiums were paid for by depositors or by the government. One banker noted that the credibility of deposit insurance would provide all the more reason for abolishing postal savings as unfair competition, especially if such insurance were limited to less than 100 percent of deposits. ⁸

Bankers were not, as a group, averse to scrip or clearing house certificates, but the banking moratorium left them uncertain as to their legal ability to underwrite either alternative. One Alfalfa County banker, who otherwise favored an issue of “soldier bonus certificates” to circulate as money, proffered a reasonable complaint about scrip: “If there is sufficient credit and backening [sic] behind the script, which there must be in order that it will pass, why can’t that same credit be used at our federal reserve banks to get the actual currency and not have to issue scrip?” ⁹

The severity of the cash shortage depended upon how quickly the state’s banks could be reopened. Moratorium legislation would give Barnett the power to restrict withdrawals from all banks and impose a system of segregated deposits for future transactions if the commissioner determined that a reopened bank could no operate on an unrestricted basis. The moratorium bill went to the legislature on the morning of March 1 with Murray’s plea “to pass it in as short a time as possible, without a change of a dot of an ‘I’ or the cross of a ‘t’.” ¹⁰   Barnett and Murray met the next day to consider whether to allow partial withdrawal. Oklahoma City Clearing House officials downplayed the seriousness of the crisis, declaring “that the proclamation of the governor declaring a holiday in the state was not occasioned by the Oklahoma City banks,” and that “as far as this city is concerned a holiday and moratorium was wholly unnecessary.” One Tulsa institution, the Remedial Finance Corporation, even remained open to pay out cash on demand. ¹¹   Even as the number of state moratoria nationwide grew to twenty-one, a number of Oklahoma banks flouted Murray’s order, with R. D. Williams, president of the First National Bank of Idabel, even declaring that he would not close “unless forced to by the militia,” a threat that Murray later proved quite capable of fulfilling. ¹²

On Friday, March 3, Murray extended the banking holiday to the following Wednesday, march 8. The prospects for an adequate circulating medium dimmed when Barnett ruled that frozen assets of the banks could not be used, as in past crises, to back clearing house certificates. Despite the closure, the legislature managed to secure a $12,000 advance for its own salaries from the Oklahoma City Clearing House, a political favor that was quickly protested by large depositors, who then threatened court action if the banks released any further funds for payrolls. The Oklahoma City and Tulsa Clearing house met separately to deal with the problem of weekend payrolls without their traditional tools. Unwilling to challenge the governor by advancing funds for businesses’ payrolls or even issuing clearing house certificates, the banks instead deferred to local business leaders to devise a scrip plan.

In Oklahoma City, Hubert Hudson of the Oklahoma Railway Company took the lead in mobilizing the business community to coordinate a scrip alternative with the banks. Meeting with other prominent businessmen at the First National Bank, Hudson headed an executive committee that founded the Cash Reserve Association on the afternoon of Friday, March 3. ¹³   Hudson, whose company urgently needed cash to meet its Saturday payroll, pushed for scrip when it became cleat that the governor’s executive order had effectively impounded al currency in the bank’ vaults. Working Friday night in its offices in the First National Bank Building, the law firm of Hayes, Richardson, Shartel, Gilliland, and Jordan produced a plan for a cooperative trust whose charter would be sought from the secretary of state the next day. Meanwhile, the Trave-Taylow Printing Company stood poised to produce scrip throughout the night for Saturday distribution. The actual facilities of the Cash Reserve Association would be staffed and opened by 9:00 a.m., Saturday, March 4, in the building’s ground floor. Scrip purchasers would pay by check $101 for every $100 issued, the extra amount covering operating cost. ¹⁴

Crucial to the success of the scrip plan was its acceptance both by the general public and by the retail community. The Oklahoma City Chamber of Commerce, which had pledged its willingness to support any plan for dealing with the bank moratorium, hosted a meeting of retailers’ association on March 4 to seek business support for the new currency. For their part, the clearing house banks issued a statement endorsing the new scrip as a stopgap measure until the banking moratorium was lifted. To bolster public confidence in the proposed medium, scrip could be obtained only by reputable firms against their frozen bank balances. While banks themselves could not guarantee the scrip, they did stand ready to divulge to the Cash Reserve Association financial information about firms and individuals seeking to purchase scrip; in effect, the banks would unofficially “earmark” purchasers’ accounts to the amount of scrip they drew. ¹⁵   While it was unlikely that scrip would be accepted far beyond city limits, Hudson nonetheless declared his eagerness to subscribe to a first issue of $17,000 to meet his payroll. Other prominent retailers joined the executive committee on March 3, pledging both to accept scrip and to pay it to their employees.

What would the scrip look like in the hands of the public? The denomination would be one, five, and ten dollars, with any change below one dollar made in coin. An issue worth $600,000 was planned – 200,000 ones, 40,000 fives, and 20,000 tens. For security, the design would be lithographed on gray, bank safety paper unavailable except to authorized users, with a black-on-white front and a green-on-white back, in somewhat larger size than standard United States currency. On one side, the scrip would bear the reminder “This is Not United States Currency”, with spaces for the signatures of the president, secretary, and manager of the scrip plan.

Barstow "Participating Certificates" (above), issued in denominations from twenty-five cents to ten dollars, were the first of Oklahoma's emergency issues of 1933.  The city of Cushing issued "Trade Script" (p. 168) (copyright 1933, Oklahoma Publishing Company, above; Copyright 1933, Cushing Daily Citizen, p. 168).

While the mechanics of scrip issuance seemed established, it remained unclear how long it would be needed. In Tulsa, where merchants preferred a clearing house issue to business-sponsored scrip, the banks held back on any plan until the received national guidance. Not every community remained as patient. The oil town of Bristow began moving as early as March 3 to put its own scrip into circulation. At a meeting Friday night, Bristow merchants created the Bristow “scrip bank” under supervision of the local chamber of commerce, and approved a first issue of $2,000 in “home made money” for the next day. Lea M. Nichols, the Bristow publisher, served as president of the scrip bank. Denominations of the Bristow “Participating Certificates” ranged from ten dollars to twenty-five cents. Staffed temporarily by employees seconded from the American National Bank and the Community State Bank, the scrip bank issued its paper against deposited payroll checks. ¹⁷

That Friday night, March 3, also saw Cushing merchants forming the Cushing Trade Clearance Association to pursue a similar plan. Backed by payroll checks, Cushing’s scrip would rely upon the good agencies of S. A. Bryant, president of the Farmers National Bank, and the First National Bank’s cashier, Charles Foster, to confirm employers’ account balances. Ten thousand dollars in Cushing scrip was printed Sunday on blue and yellow safety paper and countersigned by L.N. Stephenson of the Farmers National Bank and Levi Swingle of the First National Bank. The scrip would supplement a plan by O. H. Lachenmeyer, president of the Publishing Company of Cushing. Lachenmeyer, who published the Cushing Daily Citizen, proposed issuing to his employees one-dollar scrip backed by his frozen bank accounts and receivable for advertising and subscription fees. He was joined by Cooksey’s General Store, which planned to issue its own checks in denominations up to two dollars and redeemable in the store’s own merchandise. ¹⁸

At an all-day meeting on Sunday, March 5, the Seminole Chamber of Commerce founded a Cash Reserve Association that would issue one-, five-, and ten-dollar scrip in the form of checks signed by association members. At the initial meeting, fifty merchants and businessmen committed to underwrite the scrip’s redemption. Although oil company checks would be the principal security for the scrip, utilities like the Seminole Gas Company and Oklahoma Gas and Electric Company also signed on. The Seminole Cash Reserve Association’s method differed from other schemes. Instead of selling scrip to companies or employees, merchants would secure scrip in exchange for payroll checks which they received from employees and which they would deposit as collateral. As additional security, scrip would be signed by the individual merchants who drew it out as well as by the association’s officers. ¹⁹   A meeting of Guthrie businessmen on March 4 created a Committee of Ten to devise a scrip plan; by Monday, march 6, they had arrived at the idea of Guthrie banks issuing one-, five-, and ten-dollar certificates of deposit against frozen accounts. ²⁰

Finally, in Ponca City, also on March 4, the retailers association worked out the details of a substantial $50,000 scrip issue in the same range of denominations. Backed by bank deposits, scrip was to be purchased by check in amounts as low as fifty dollars. Applicants for scrip would assign to the Ponca City Retailers Association an equivalent claim upon their bank accounts. As in Cushing, the plan was made more palatable by the roles played by local bankers. L. K. Meek and C. O. Johnson, presidents of the Security bank and Trust and the First National Bank respectively, were not only members of the scrip committee but signatories of the scrip. Clyde E. Muchmore, editor of the Ponca City News, waxed confident: “It is good for the reason that we say it is good, and after all that is the only reason that any money is good. This scrip will and should have free circulation in Ponca City.” ²¹

While those local currency efforts were building, Murray’s order on Friday night, March 3, extending the state bank holiday until next Wednesday morning, gave the legislature more time to work up a legal framework to deal with the crisis. In addition to giving Barnett the power to close and restructure banks, the bill also provided for draconian penalties, suggested by Barnett, of fine to ten years’ penitentiary service for violators prosecuted “on approval of the Governor and the Bank Commissioner.” ²²   Recalcitrant banks fell in line with the governor’s closure proclamation when Murray, noting the amount of state funds deposited at each bank, telegraphed the threat that “if you do not close today, this will be withdrawn and you will never get any other accommodations from the state while I am Governor.” ²³   As of Friday, March 3, two days into the state’s moratorium, only H. H. Champlin’s First national Bank in Enid resisted even that threat, and he soon found his bank shut down when Murray, using a techniques honed during the oil proration wars, declared martial law within a twenty-foot perimeter around the bank and dispatched the national Guard to enforce its clousure. ²⁴  

Seminole "Scrip Dollar" (Copyright 1933, Oklahoma Publishing Copmany)

Having gone through the 1907 bank holiday in Oklahoma when everyone was happy and nobody starved by the use of cashier’s checks – which became the scrip of the community – there is not reason why we shouldn’t revert to the same system in this emergency….[S]o just get used to using checks instead of money. ²⁵

Saturday morning, March 4, brought the distant thunderclaps of bank moratoria in Illinois and New York; by March 4, the day of Roosevelt’s inauguration, the entire nation’s financial system was essentially shut down. In Oklahoma, Saturday brought legal concerns that delayed the issuance of cash reserve scrip, even as the legislature made progress towards giving Barnett the statutory authority he needed to take command of the situation. Patterned after similar legislation in other states, the law would restrict withdraws to a percentage of banks’ deposits, depending upon their financial health. New deposits would be segregated from the old and would not be subject to such restrictions so that current business would continue unimpeded. Examiners in the State Banking Department worked furiously behind locked doors to determine the asset quality of all 252 state banks in time for reopening. ²⁶

Official resistance stalled the Cash Reserve Association’s plans. In Sunday consultations, Barnett warned bankers across Oklahoma against scrip. The Tulsa Clearing House backed away from any issue in advance of federal guidelines, while the Ponce City Retailers Association dropped its original plan and considered reforming itself as a clearing house. ²⁷   The Cash Reserve Association held back on printing scrip and postponed the opening of the scrip bank’s offices until Monday morning, March 6. As a result, many Saturday payrolls such as Hudson’s simply went unpaid. The delay did not prevent numerous merchants, including professions like insurers, doctors, and lawyers, from declaring their willingness to accept the scrip. Building and loan and savings and loan associations agreed to take it, but would treat it as they would checks, that is, subject to collection. Even a charity like the Community Fund, whose tills were empty that weekend, looked forward to future pledges in the new medium. Locally-owned gas stations were amenable, while those owned by chain companies hesitated. As the house and senate worked on their versions of the moratorium bill, scrip received critical support from Oklahoma City, when city manager Albert McRill announces that the city council had agreed in its Saturday meeting to accept it for fines, license fees, and other city bills. In contrast, Oklahoma County offices elected not to accept scrip for taxes and court costs. ²⁸

By Sunday night, March 5, 500 businessmen meeting at the chamber of commerce were introduced to the “Cash Relief Trust” as a replacement for the Cash Reserve Association. Ten thousand dollars was raised at the meeting to assure its operating costs. Unlike the previous entity, the Cash Relief Trust would not sell scrip in individual purchasers, but would offer it directly to firms in thousand-dollar quantities. Hudson and Edgar T. Bell of the Oklahoma Publishing Company remained chairman and secretary respectively of the new incarnation. Not coincidentally, first in line to purchase were the Oklahoma Railway Company with a payroll of $17,500 and the Oklahoma Publishing Company with a payroll of $20,000. Serving as trustees of the new organization were Edgar Honnold, the hardware merchant M. S. McEldowney, and Herbert M. Peck. “Major” Peck in particular exemplified the close ties among the principals of the scrip scheme. A vice president and trust officer of the Fist National Bank until 1928, Peck served as the Oklahoma Publishing Company’s general counsel. Under the revised plan, the trustees were especially important because they were the ones to assess whether or not an applicant qualified to receive scrip.

Legal work on the new arrangement was superintended by Samuel W. Hayes and Kent Shartel, who worked throughout Sunday night, March 5, on a revised plan that involved two types of trust agreement: the first between the businessmen composing the trust that would guarantee collective responsibility for redeeming the scrip, and a second agreement (and guarantee of redemption) between the buyer of the scrip and the bank where the buyer’s account was located. In the revised procedure, at the time of application the corporate buyer would give the scrip bank permission to examine the company’s account balance in its regular bank. The Oklahoma City Retail Merchant’s Association, whose job it was to assess the credit risks of new customers, welcomed scrip as a safer and more convenient alternative to purchases on credit or to the widespread use of small checks, but argued unsuccessfully that the trust make available to smaller merchants the scrip in lots of $500. The scrip bank established by the trust would continue to be located at the First National Bank and Trust Company building. As in the old plan, the first printing would amount to $600,000. Instead of obtaining a charter from the secretary of state, the “Declaration of Trust” was signed March 4 and filed at the county courthouse on March 8. ²⁹

National developments on the night of Sunday, March 5, also called into question the timetable for issuing scrip. Roosevelt’s Sunday declaration of a national bank holiday beginning Monday morning and lasting until Friday, March 10, pre-empted state moratoria and put Barnett in the position of taking orders from Treasury Department secretary William Woodin. ³⁰   The original jurisdictional question that Murray’s edict had broached was reversed: what authority did the national government have over the closure and restructuring of state banks? Since it was the national banks that typically held state bank reserves, their openings took precedence and it would have been difficult for Murray to object. In putting Roosevelt’s order into effect, Woodin also provided a schedule for restricted operations that promised to meet the most immediate needs for change and access to safe deposit boxes. He also allowed the cashing of government checks and the provision of credit to move critical supplies of food.

Cash Relief Trust Scrip of Oklahoma City

The prospects for Oklahoma scrip dimmed further on Monday, March 6, when Governor Murray came out roundly against the businessmen’s plan. In a rambling broadside to the press he reminded Oklahomans:

[B]efore statehood the coal operators in the Indian Territory issued script, which ultimately was good at the Commissary of the Company, whose prices were outrageously high for redemption of this scrip. In the Constitutional convention we set the ground work and completed in the first Legislature the destruction of this script.

Murray was referring to early legislation that sought to force mining companies to pay its employees in “lawful money of the United States” instead of the company scrip that commonly circulated in areas without banks. ³²   That has been a delicate point for the original scrip plan. He continued:

I thought it was good, but I read in the Sunday’s and today’s Oklahoman a proposition to issue, without limit, script by certain concerns in Oklahoma City, in which they say: - “Trust will be filed and it is guaranteed.” Evidently it is a Common Law Trust simply and guaranteed by themselves who pass out this script, by their own bankruptcy….I warn those who are attempting to unload such a bubble on the public to stop now, and I warn the general public, especially the little business man, not to accept such chromos in the name of money for such are never sound, even in times of prosperity and solvency. ³³

The Daily Oklahoman, which had just published on Monday a full-page advertisement promoting scrip use, and whose officers were intimately involved in the scrip plan, reacted furiously:

In comparing the scrip just issued to the scrip of the old pre- State coal fields, Governor Murray is going to the utmost bound of error. The scrip he has in mind was issued by companies and too often redeemable at company stores only. The scrip now circulating in Oklahoma City is redeemable in the money of the company issuing the scrip. No company repudiating its scrip or failing to make it good would last any longer than if it had repudiated its checks…In referring to the company scrip of the coal fields the governor makes no mention of the irregular paper issued in the panic days of 1907. That paper kept business alive and prevented suffering, and no one who accepted it lost a penny through using it. ³⁴

In fact, Murray did distinguish between clearing house paper and the issue of the Cash Relief Trust. “Our position is clear on the question of scrip,” opined Murray’s mouthpiece, the Blue Valley Farmer:

[T]hat is, only clearing house centers issue such scrip – based assets in the banks, the depositors therein, and the solvency of the institution; that no private group, through any “common law trust,” or group of individuals, who are merely “hard up” and want to do business of fictitious chromos should indulge in the issuance of such scrip or chromos as a circulating medium. ³⁵

The Cash Relief Trust reacted more circumspectly to Murray’s attack:

[I]nasmuch as the Secretary of the Treasury has issued a statement this morning to the effect that existing banking restrictions will be lifted to permit the meeting of payrolls, we are delaying the opening of the scrip bank, but the organization we perfected will be held in readiness to meet any emergencies that may develop occasioned by any undue delay in taking care of the immediate needs of the people of this city. ³⁶

Whether reasonable or not, Murray’s and Barnett’s opposition to Oklahoma City scrip reinforced national developments that cast the businessmen’s plan into doubt. Printed scrip bearing the name of the Cash Relief Trust and amounting to $600,000 languished in the vaults of the First National Bank. ³⁷   The governor’s attack on scrip also delayed its issue in Seminole, where directors of the Seminole Chamber of Commerce Cash Reserve Association awaited word of a national scrip plan. Cushing’s Trade Clearance Association, which had printed its supply on March 5, delayed releasing it through March 8. Skeptical of scrip, Sapulpa businessmen held off on and issue through the chamber of commerce pending consultation with the Tulsa Clearing House and with their local bankers. In the meantime, Sapulpans desperate for cash resorted to drawing down their water meter deposits with the city. Guthrie merchants also paused in their plans. ³⁸   Ponca City businessmen scrambled to meet official objections by restyling themselves as the Kay County Clearing House Association, whose membership consisted of the two Ponca City banks, the First National and the Security Banks of Blackwell, and the First National Bank and the bank of Commerce of Tonkawa.

This full page advertisement ran on March 6 and 9, 1933, in the Daily Oklahoman.  Similar appeals ran in the Ponca City News, Bristow Daily record, and Seminole Producer (Copyright 1933, Oklahoma Publishing Company).

Kay County certificates were one of fifeteen clearing house issues emitted in the entire nation during the 1933 bank holiday (Copyright 1980, Society for Ppaer money Collectors).

Following the national timetable, Barnett permitted banks to pen on Tuesday, March 7, in order to make change. Meeting early Monday, the Oklahoma City Clearing House considered its own issue of certificates; Tulsa bankers also promised swift action, even as Barnett reminded them that “no scrip of any kind, no clearing house certificates or cashiers’ checks be issued until the plan is worked out in Washington and instructions received from there.” At an OBA gathering in Oklahoma City, bankers from around the state obligated by coming out against any scrip measures of their own. Muskogee’s bankers returned home to instruct their clearing house against any issue of certificates or scrip; its three national banks later opened on the federal schedule without incident. Meanwhile the new bank law seemed headed quickly for Murray’s signature. ⁴⁰

Oklahoma City businesses got along the best they could. Most preferred customer purchases on account to the cutting of small checks. Groceries cooperated by issuing trade coupon books that companies could give to their employees; the value of these coupons was charged against the employees’ salaries. Utilities waived the usual penalties for late payment, while checks were accepted for regular accounts. Loan firms promised to take checks and scrip, if issued. Companies without substantial cash receivables resorted to a number of devices. The Oklahoma Transfer and Storage Company issued small-denomination checks to its employees on Saturday, march 11, while Hill’s Business University planned to meet its payrolls with grocery credits. Southwestern Bell chose to replace the cash business of its employee cafeteria with deductions from employees’ future paychecks. The Oklahoma Railway Company, which had missed its regular Saturday payday, advanced its workers five dollars each in cash from streetcar fare receipts. ⁴¹

Government entities also adjusted to the cash-starved condition. The Oklahoma City Council voted unanimously that “the Manager, Auditor, and Treasurer be authorized to purchase scrip in such amount as in their judgment they deem advisable to take care of the city’s obligations.” Oklahoma County employees faced a different problem. The moratorium prevented them from cashing their warrants, whose validity had recently been subject to constitutional dispute. Unable to deposit its cash receipts, the county was at least able to divert that revenue to the cashing of highway warrants in order to pay its employees on work relief. ⁴²

Elsewhere in the state, corporations and governments made creative use of popular demand for their goods and services. Following the example of the Publishing Company of Cushing, other newspaper owners capitalized on their importance in the local economy (as well as on their ownership of printing presses) by issuing scrip. On Tuesday, March 7, Muchmore’s Ponca City News put out $1,400 in its own “Make-Business-Better” certificates, while the Bartlesville Daily Enterprise paid out $500 in private currency to its employees in denominations from five dollars down to twenty-five cents. The Miami Daily News-Record paid out scrip to its employees in amounts up to five dollars. In general, those issues gained easy acceptance not only because of the stature of the local publishers, but because they were receivable for advertising and subscription payments to the newspapers. ⁴³

Edward Galt of the oil giant Wirt Franklin announced that pay would be issued in the form of small checks in round denominations. The Magnolia Petroleum Company of Wewoka met 30 percent of its payroll in cash, the rest in small checks. The Ponca City Milling Company paid its employees entirely in its own one-dollar scrip, while the merchants W. A. Graham Co. (Pryor) and Morgan and Hayes (Luther) circulated store scrip redeemable in merchandise. ⁴⁴  

Clyde Muchmore's "Make-Business-Better Checks" came in one and five dollar denominations.  Like Kay County certificates, the checks sported a vignette of the Ponca City Municipal Building, suggesting that Muchmore was the printer for both issues (Courtesy Tom Muchmore).

While public authorities around the state could hardly assert legal tender privileges, they did exploit whatever currency their warrants possessed. At its March 7 meeting, the Guthrie City Council voted to issue "all salary warrants for the month of February in $1 denominations insofar as acceptable" and designated a deputy to assist the treasurer and city clerk in the tiresome job of signing each warrant. The city clerk's office stayed open all night preparing the warrants and on Wednesday, March 8, paid out over, $4,000 to forty-three city workers. The Guthrie School Board considered doing the same thing. Enid teachers managed to get 25 percent of their salaries paid in one-dollar "trust certificates limited by a specific warrant which will be held for their redemption," while in Norman the large university and hospital payrolls covered by state warrants meant that local scrip would be unnecessary. Miami paid $3,000 in employee salaries using five-dollar warrants backed by bonds. ⁴⁹   The Miami Chamber of Commerce also discussed, but never acted on, a proposal to issue $5,000 in scrip backed by the business organization. Holdenville's chamber also contemplated scrip. In Claremore, chamber officials conferred with officials of the Tulsa Clearing House about coordinating a scrip issue, but decided to wait for the larger city to take the initiative. ⁵⁰

On March 8 Murray extended his original hank holiday until Friday, March 10, to match the federal timetable. The passage of Senate Bill 331 gave legislative sanction to the bank moratorium. Barnett then had the power to restrict withdrawals, segregate new deposits from old accounts, and, if necessary, supervise, the liquidation of insolvent banks. Meanwhile, after some hesitation, Secretary Woodin authorized clearing house associations to issue certificates, but only by March 10 at the earliest, pending any national scrip plan. Federal Reserve officials in Washington, D.C., opposed any national plan, arguing that the Federal Reserve System already possessed adequate mechanisms for currency expansion. Moreover, they feared that the widespread appearance of scrip might only encourage popular sentiment for reckless monetary experiments. Despite that opposition, clearing houses around the country moved to issue certificates. In particular, Governor Herbert H. Lehman of New York oversaw the creation of an Emergency Certificate Corporation that would provide state scrip based upon sound bank assets. ⁵¹

While the nation's hanks awaited New York's example, printing presses across the country produced millions of dollars of emergency circulation. The Oklahoma City Clearing House announced its own plans for issuing up to $3 million in certificates, in denominations of one to twenty dollars, against 75 percent of the value of approved assets. Banks scrambled to find the proper paper on which to print them. A final decision on clearing house certificates was delayed, however, when banks disagreed as to whether the notes should be a collective liability of the clearing house or a debt of the individual bank that issued them. In any event, given Woodin's restrictions, Oklahoma City Clearing House president John Campbell saw no chance of issuing them before the weekend. The Tulsa Clearing House promised an expedited Friday release of certificates. ⁵²

With the Cash Relief Trust apparently out of business, the Daily Oklahoman complained bitterly about Murray's interference:

It is rather like Governor Murray to see more evil in the emergency plans of local business men than he can see in his own emergency plans.... When local business men drive determinedly towards a wider measure of local relief by issuing local scrip for local convenience the governor attacks the program with a mass of unrestrained epithets and unvarnished errors and advises all people to wait for the launching of the Roosevelt program. But in the matter of banking reform refuses to wait. While advising others to wait and then follow, he refuses to wait and he fails to follow. ⁵³

Compounding Murray's hostility were the effects of new national legislation. Instead of endorsing nationwide issues of scrip or clearing house certificates, the Emergency Banking Act of March 9 provided for a rapid increase in the supply of Federal Reserve notes by expanding the category of eligible assets against which notes could he issued. In particular, Woodin forbade the issue of emergency certificates by the State of New York, and clearing houses around the country either truncated or abandoned their plans to issue certificates. In Oklahoma City, banks fell silent about any issue of certificates. ⁵⁴

Those developments did not dissuade the Cash Relief Trust. Ignoring Murray, the trust went ahead and issued the first, $34,500 in scrip on Wednesday, March 8. To the Daily Oklahoman, “issuance of the scrip here acted like a blow torch on the ice cake of frozen assets, with virtually every merchant joining in the move to liquidate business and resume normal trade." A. C. DeBolt, president of the Oklahoma Railway Company, made the first scrip withdrawal on Wednesday, taking $9,000. "I can go back to the office and know that I will be greeted with open arms now," DeBolt declared. "I've been going around empty handed for so long, I've simply become afraid of my own shadow." His company accepted a dollar in scrip for a fifty-cent ride card and fifty cents’ change in silver.

A one-dollar Sapulpa "Participating Certificate."

The release of Oklahoma City scrip was a signal to other schemes around the state. In Seminole, where the city council voted to accept scrip for water bills and other city expenses, $2,500 in Cash Reserve Association scrip was issued in the first two hours of business. With its bank opening delayed, the Sapulpa Chamber of Commerce finally voted to issue $10,000 in "participating certificates," hastily printed in denominations that, like Bristow's, ranged from twenty-five cents to ten dollars. Signed by the chamber's president and secretary, the scrip was underwritten by the payrolls of factories, oil companies, and utilities. In a simple procedure like Seminole's, payroll checks could be cashed directly with local merchants in exchange for scrip. The Pauls Valley Chamber of Commerce became an impromptu bank of issue, providing scrip to businesses in exchange for their checks, and quickly had $500 worth of scrip in circulation. As the local paper repotted, "[M]any merchants are cashing personal checks with the 'hone-made' money, and practically every business house in Pauls Valley is accepting the same as cash." ⁵⁶

Cushing's scrip eventually entered circulation, while in Bristow, where the first emergency issue had begun, thousands more in scrip were put out as the week wore on, mostly in the smaller denominations. In addition to the numerous businesses advertising their readiness to take scrip in payment, the Bristow City Council voted to accept it for water bills; other utilities followed the city's lead. In Ponca City, the Kay County Clearing House estimated that up to $100,000 in clearing house certificates would be required to meet local demand. Guthrie, which like Miami had issued a large number of negotiable warrants to pay employees, found its liquidity needs correspondingly reduced and did not go forward with scrip. ⁵⁷

By Friday, March 10, only limited banking services were available statewide as Oklahoma banks adhered to Woodin's timetable, instead of implementing the scheme of partial withdrawals as contained in the legislation signed by Murray. While state banks were included in the national moratorium, federal authorities clearly lacked the manpower and expertise to examine every state hank outside of the Federal Reserve System. Accordingly, by executive orders of March 10 and 18, the granting of licenses for healthy non-member banks was left up to state authorities. Meanwhile, Woodin set a staggered schedule for the reopening of member banks. Approved banks in the twelve Federal Reserve cities could open their doors on March 13; banks in cities with recognized clearing house associations were scheduled for March 14; and by March 15 all good banks could resume business. For Barnett, a key unresolved question was the availability of state bank reserves deposited in national banks. Overwhelmed by the information flow from Washing-ton, Barnett's office solicited donations from state banks to pay the added expenses for postage and telegraph. ⁵⁸

Applications for Cash Relief Trust scrip, encouraged by the Oklahoma City Chamber of Commerce's endorsement, remained heavy through the week. ⁵⁹   Although the federal legislation squelched the movement for national scrip, Roosevelt's bank holiday probably increased demand for Cash Relief Trust since the Emergency Banking Act did not allow for the partial withdrawals envisaged under the Oklahoma law. About the scrip, Governor Murray sneered, "[I]t's worth a hundred cents on the dollar in trade where it's issued, but it's not worth a damn for anything else." ⁶⁰   Even if true, that was good enough for its users. As of Thursday, March 9, $88,400 in scrip was in circulation. Noteworthy among the applicants for scrip was the city government itself. Indeed, city treasurer Joe W. Ammerman proved the single largest purchaser of Cash Relief Trust scrip to use for cashing employees' salary warrants. The city also accepted several hundred dollars' worth of the paper in payment of various bills and fees. Generally, scrip was taken wherever offered, although wholesalers with obligations outside of the city declined the scrip. Many retail merchants, like Cavitt's Drug Store and Irene's Bake Shop, imposed a "50–50" rule: change would be given if the purchase were half the size of the exchange. The first marriage license paid in scrip went to Sarah M. Adams and R. R. McBride. ⁶¹

City bankers prepared for limited operations on Monday, March 13, according to the federal schedule. The minimum scrip purchase from the Cash Relief Trust was dropped on Friday, March 10, to $500, although many smaller merchants facing Saturday payrolls chafed at even that minimum. Friday was its busiest day, with twenty-four applications for scrip approved, the largest being Oklahoma Gas and Electric and the city treasury, which each took $10,000. That rush of business also highlighted one inconvenience in the operations of the Cash Relief Trust. As trustees, Honnold, McEldowney, and Peck were obliged to travel from bank to bank in order to inspect personally the accounts of scrip applicants. ⁶²

By the weekend, issues of Cash Relief Trust scrip peaked at $132,000. On Sunday night, March 12, Secretary Woodin issued orders allowing other government financial institutions in addition to the twelve reserve banks to begin operating, while national banks in cities with clearing houses could open on Tuesday, March 14. Restrictions would be placed on large withdrawals; affidavits would be required if hoarding were suspected. Not only were gold and gold certificate withdrawals banned, but banks were given twenty days to remit their gold stocks to the federal government. ⁶³

With major banks in Oklahoma set to reopen, the redemption of Cash Relief Trust scrip was envisioned. Barnett allowed major state banks in Oklahoma City and other big cities to open Monday, March 13, while smaller ones remained closed until Wednesday, March 15. Far from experiencing withdrawals, the reopened institutions received a massive inflow of deposits on the first day of normal banking. Deposits in Oklahoma City banks outweighed withdrawals by five to one; similar conditions prevailed throughout the state. Deposits of gold coin and gold certificates in Oklahoma City alone topped $300,000. Barnett worked up a list of state banks that would be allowed to open on March 15, while awaiting word from Kansas City about the reopening of national banks outside the clearing house cities. Instead of needing new currency to meet withdrawal demands, banks actually shipped currency back to the Federal Reserve.

According to Barnett's plan, state banks would fall into three classes: those open for unrestricted business, those operating under some sort of percentage restriction, and those kept closed until further notice. Barnett's list was held up because many of the non-clearing house national banks served as depositories for the smaller state banks. The Cash Relief Trust redeemed about $50,000 before it closed at 2:00 P.M. on March 14 and set June 3 as the final day for redeeming scrip, after which the notes would become worthless. In contrast to the trustees' scurrying of earlier days, the scrip operation became quieter, as customers lined up to redeem their holdings for United States currency. The scrip could be redeemed at the temporary offices until Thursday, March 16, after which it would have to be presented at the First National Bank. By Friday, March 17, only $15,000 remained outstanding, and the scrip bank wound up its operations. ⁶⁴

As with the banking crisis itself, Oklahoma's experiment with emergency money blossomed and then folded up with great rapidity as commercial conditions returned, if not to prosperity, at least to a pre-crisis calm. On March 17 redeemed and unissued scrip of the Cash Relief Trust amounting to $564,543 was incinerated in the furnaces of the First National Bank building, witnessed by the trustees "with appropriate ceremony." While about $10,000 was estimated to be outstanding in late March, this figure shrank through redemptions to a final quantity of something under $1,000 worth of lost or keepsake notes. No canceled scrip was made available as souvenirs, and by the terms of the trust any collateral behind the unredeemed remainder would be turned over to the Community Trust sixty days after the final redemption deadline. After expenses, it was reported that this gift amounted to $21.22. ⁶⁵

Only one Oklahoma City institution, the Capitol State Bank, failed as a result of the banking crisis of 1933. Banks in Seminole and Cushing opened on an unrestricted basis, and the scrip issues in both towns (including that of Cushing publisher Lachenmeyer) also were quickly retired. In Cushing, timely federal payments to military personnel and Indian tribes limited the need for scrip. Pauls Valley banks accepted the town's scrip against cash, and a total of $1,071.60 was redeemed through the chamber as it deposited the business checks it held as collateral. Of the $10,000 in Sapulpa "Participating Certificates" authorized, apparently only something less than $2,400 was actually issued. In the first two days after redemption was permitted, all but $146.50 had been returned. The chamber declared outstanding scrip invalid after ninety days. Bristow's "scrip bank," whose final circulation reached $9678.50, even published a rudimentary balance sheet, signed by Nichols and Brawner, that trumpeted a "surplus" of $2.37 from its operations. On Thursday, March 16, Bristow's own "Participating Certificates" were recalled, and by the next day alone $6,453.25 had been turned in. June 1 was set as the deadline for redemptions. Proceeds from unredeemed scrip reverted to the chamber of commerce treasury. Guthrie, which had relied upon one-dollar salary warrants, hastened to retire them before other obligations "because of their bulkiness." ⁶⁶

The Kay County Clearing House Certificates issued in Ponca City turned out to be the second largest issue of scrip after Oklahoma City's and the most orthodox in terms of banking practices. Alone among the seven Oklahoma experiments in emergency money, Ponca City recast its issue as a liability of the new clearing house's banks; its certificates were backed by financial securities rather than earmarked bank accounts or payroll checks, as happened elsewhere. In the event, the Security Bank and Trust issued only $20,000 in certificates, the First National Bank $5,000. With the lifting of the national holiday, Meek called for their immediate redemption, and over half the issue was paid in on March 16 alone. Ponca City banks were not as fortunate as elsewhere, as the First National Bank remained closed because of frozen deposits held by its correspondent bank, the Fidelity National Bank of Kansas City. The Kay County Clearing House represented one of fifteen clearing houses across the country that, following the 1907 precedent, actually issued scrip in 1933, although twice that number prepared issues but never put them into circulation. Redeemable up to two years after issue, a mere forty dollars of the Ponca City currency remained outstanding by 1935. ⁶⁷

With the lifting of the banking restrictions, Oklahoma's emergency money was quickly canceled and the bulk of it reduced to ashes. Roosevelt's bank holiday, which had produced a national catharsis, also energized Oklahomans.

Trust officials, with Herbert Peck in the center, witness the burning of Cash Relief Trust scrip on March 17, 1933 (Copyright 1933, Oklahoma Publishing Company).

Legislation alone would not erase the more enduring damage inflicted by economic depression. As a start, public confidence in the nation's banking system depended upon speedy as well as reliable assessments of banks' health. During the first three days of the banking suspension alone, the United States Treasury licensed to reopen about three-quarters of the member banks nationwide, containing 90 percent of the system's deposits. Barnett's office, working under federal authority but according to its own discretion, opened 163 state banks and trust companies by March 15; 96 remained under partial or complete withdrawal restrictions that were progressively lifted as information about their solvency accumulated. On April 20 the legislature approved Senate Bill 265, establishing routine procedures for the bank commissioner to follow in reorganizing and liquidating failed banks. ⁶⁹   Finally, as if to answer his state's clamor for more money, Sen. Elmer Thomas successfully attached the inflationary Thomas Amendment to the Agricultural Adjustment Act of May 12, 1933, giving the president considerable direct powers to expand the supply of currency.

In the event, most of those alternatives remained unused during the Great Depression as Roosevelt sought other means of monetary expansion. Local experiments in emergency money were super-ceded by the new flexibility given to the Federal Reserve to meet unusual demands for currency. As a result, the venerable clearing house certificate as well as other forms of emergency scrip finally passed into American financial history. In Oklahoma, those samples of emergency currency still extant, tucked away as curiosities or mementos, testify to the resourcefulness of the state's business and financial elite in meeting local needs at the crescendo of national crisis. To be sure, that elite was looking out for its corporate interests, but to do that it had to create circulating media that, through its widespread currency, served the public as well. Successful local currency required not only business support but public confidence. The panicky runs on banks nationwide bespoke a radical distrust of financial institutions and authorities in favor of hard, real cash. The attempts by communities to provide their own liquidity highlighted the degree to which money itself rested upon social trust. In the Oklahoma experiments in emergency money, that trust was cultivated by careful mobilization of business interests as well as by scrupulous attention to what backed the scrip and even to its physical appearance. Widespread publicity promoted popular awareness and support for the new circulating media. The larger the issue (as in Oklahoma City and Ponca City) the more elaborate those safeguards became.

Observers of the scrip movement understood its special significance. In declaring its support for the Cash Relief Trust, the Daily Oklahoman averred that "if the cloud passes immediately, the heroic efforts of the men launching the movement will have been patriotic work of little consequence. If the situation continues for a long time the originators of the plan will deserve the everlasting appreciation of the city for their quick and effective action.” ⁷⁰   Other commentators rhapsodized about scrip at some length. "What is back of that bit of printed paper?" asked James T. Jackson, publisher of the Seminole Producer:

Confidence is behind that bit of paper, brother. The same sort of confidence that backs the currency of the nation... Integrity is back of it, the integrity of Seminole's most substantial business men, men who have pledged their worldly goods that the sting of a national emergency might be less painful to this community.... Seminole's scrip will be paid in full when this emergency passes, if there is anything worth while left in this world. It will be paid in full, if there remains on this old earth the honest word of an honest man. It will be paid in full if men may still look up with hope. It will be paid in full unless man's struggle through all the centuries has been futile - and then it won't matter." ⁷¹

The Sapulpa Herald waxed congratulatory: "Sapulpans, who had never seen scrip before, got an idea of what this medium of substitute money was like over the past weekend. It stimulated an interest and satisfactory business - and helped in large measure to dispel the gloom of over a week of closed banks." The Herald then imagined that "perhaps some rosy day in future years, those who kept a souvenir of the paper money will look back on their years of depression and say, 'we got out of that rut and nothing can ever stop us now.” ⁷²   In Pauls Valley, the paper noted:

[A] real community service was rendered by the... Chamber of Commerce in keeping the trade channels open by providing a means of exchange.... [T]he ready acceptance of ‘made money' exemplifies the confidence and trust placed in any activity of the Chamber of Commerce, some business firms preferring the scrip of the organization to personal checks during the bank holiday.” ⁷³

However effusive, the common claim underlying all those appreciations was the unanswerable conceit expressed by Clyde E. Muchmore on his "Make-Business-Better" checks: "There is nothing back of this check but our word. We trust it is sufficient."

Just as the banking crisis of 1933 brought out the best in community spirit, its inconvenience also may have postponed some of the worst in human larceny. Burris G. Penn, editor of the Cordell Beacon, noted another unanticipated benefit of the financial turmoil:

Some of us may have thought the banking holiday worked a great hardship upon us, but imagine the consternation of Oklahoma's numerous efficient bank robbers when they found every bank in the state suddenly closed and their means of living completely shut out. If the holiday should continue longer these modern buccaneers might have to resort to raiding henhouses. ⁷⁴

ENDNOTES

Copyright 2004: Reprinted with permission from The Chronicles of Oklahoma
(Oklahoma City: Oklahoma Historical Society, 2004).