Tokens

Tokens were a precursor of green stamps idea. However, they were much, much more, and used like cash and in lieu of cash.  They incorporated a form of loyalty discount, even better than green stamps of the 50s.  When you bought something, then you received a token — sometimes in lieu of change — which could be returned for merchandise — but only at that store.  They were durable, of course, so could be used and reused.  I expect that, at first, at introduction, they amounted to around 5% discount.  Merchandisers, even back then, realized, as they do today, that “loss leaders” pay by getting customers in their store, and sure to buy other things than what is on sale.  Also, trade generated more trade.  The fact that you came in, will help to also bring others in as well.  This is trade 101.

chadwick25cBut, other merchants  could also agree to honor some one else’s tokens, in addition to their own tokens, and further the spread of any tokens.  It is not a new idea nor a dated one. Vegas casinos will honor each others chips.  Of course the chips are visible advertising, so should you put someone elses token on the counter — then they will immediately replace it with their own (and trade tokens with the other token guy under the table) — fast as they can so it can no longer advertise.  You will notice that White Hardware also had tokens.  Yes they were common as you would expect anything worth 5% discount.  F. S. Stevens had that brick corner building (on Elm/Main) that had a grocery in the back, and they used tokens.

If you think back on your history, then you will remember that the earliest form of currency in Middle East did the same.  You sold a merchant some grain, he gave you money — say coins, or tokens if he had no coins.  However, at first he was the only one who had money. So to spend your money you had to go back to him and trade it for something else.  Only gradually did others begin to accept these coins.  And, the idea spread.

Early American Colonists did the same — in fact different bank notes were the currency clear up thru the Civil War and until the US began to issue its own money.  Bank notes were merely the bankers “tokens.”  Tokens like we have here were eventually in use in most gold camps, as they matured — much easier to use than gold dust.  Weighing gold dust invites chicanery and loss.  Tokens don’t (at least at first).

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(An aside: My cousins in Weiser told me that in late 1800s there were men in Weiser making fake silver dollars — counterfeiting. They melted lead into a mold, then smeared it with mercury making it look silver.  Got caught when feds were notified and seized their molds.)

theclubnp25aTokens were a way to create a quasi monetary unit in a locality that was adapted just to that community.  Golden eagle gold coins ($5, 10, 20)  were the coin of the realm — but far too valuable for trade that might really be valued in pennies — and with no local small change available.  For this reason, “bits” were used. A silver dollar was chiseled into pie shapped pieces (bits).  25 cents was two bits, 50 cents was four bits. (We still used bits in the 30s).  However, these bits had a sharp edge made by the chisel that would wear and tear your pants pocket — losing your money.

The solution for merchants was to make their own money — the tokens — and to redeem their own.  A practical idea. And, it was even more practical because then you could make the value anything you wanted in order to serve the needs of the locality. Gold coins of course sufficed for larger amounts — but if you ever had ten dollars in your pocket, then you know that won’t work — way too heavy cumbersome, just not practical. Tokens took the place of fed small change. The frontier did not have the ability of modern banking to disperse coins — so the colonists merely made their own coinage — the tokens.  And, they could change what the value of each was simply by printing that value on them.

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We have vastly increased this same form of bartering.  We now use a store’s own credit or debit card (just modern tokens), we use visa cards, and we order things on internet that requires no exchange of anything substantial — only computer bytes causing a printed entry, debit or credit somewhere.  And, lets not forget coupons.

The US has only 3 billion printed or coin money in circulation at any given time — when our economy may see many billions or even trillions passing hands via ledger entries.  A sort of “floating” currency and currency generation.  Just think — when you buy something with a visa card — or the web, you actually created money with that purchase that was not there before.  Sure, it is merely an entry on someones balance sheet, but it represents money none the less.

Early merchants with their tokens also “created” money — buying power — more buying power in circulation.  Their motives were not creating money, but simply to make it easier and more practical for customers — with perhaps a tad of “customer control.”

New Plymouth also had still another form of monetary trade. Credit.  Every merchant granted credit.  You merely said, “Charge it.”  And, the merchant made an entry into his charge ledger.  Think about it, and you see this is identical to visa cards of today — but without using the cards.  Of course the merchant had to collect — a real problem with only a few sending invoices or statements.  Kind of the honor system.  Charge amounts could be on the books sometimes even that entire crop year — until the harvest.  However, the reality, further credit, relied upon one making payments on past accounts enough to please the merchant enough to grant future charging.  It was the way of life in New Plymouth, based upon trust and respect.  No merchant that I knew of did not extend credit — it was his very life blood.  Dr Davis, our only doctor, also always extended credit.

You can bet that such charging eventually cost the merchants some losses.  When I did it in my businesses the loss amounted to ~8%, but that was because I was better than average at collections.  But, when eventually we did get some who demanded cash, then they paid for that posture with much less business. So in a real sense, granting credit while losing a little you gained much more business and more than made up the loss in increased business.  I practiced next door, in the 60s, to a dentist that did not grant credit.  I did.  My business was twice the size of his.  Very typical.

I never laid eyes on any folding money until after WWII started.  One, I was too young. Two, there were precious few in circulation in New Plymouth.  If you understand commerce then you understand the absolute necessity of currency, coined or folding.  It allows “velocity.”  Velocity is how many times/day that the very same currency can be passed to still another customer — with all earning a living from it. A good friend lives in Montana — kind of way out in boonies.  Velocity out there because of paucity of people is around 3, while in LA it can be 30.  Velocity is a multiplier.

You can see why tokens were so important to New Plymouth!

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