Prosperity certificates During the Great Depression of the 1930s, a number of towns and cities issued scrip or certificates that circulate...
Prosperity certificates During the Great Depression of the 1930s, a number of towns and cities issued scrip or certificates that circulated as money. In August 1936, Alberta’s Social Credit Government, led by William Aberhart, issued “prosperity certificates.”8 These were issued in denominations of $1 and were used to pay relief workers on provincial public works projects. Additionally, the legislation allowed certificates to be put into circulation via special agreements with municipalities. To promote the circulation of certificates, increase spending, and deter hoarding, holders were required to affix a one-cent stamp to the certificates every week to maintain their value. At the end of two years, the Government of Alberta promised to redeem the certificates using the proceeds of the stamp sales, with the residual (after paying the expenses related to the issuance of the certificates and the stamps) going to the government. Prosperity certificates, quickly known as “funny money,” were not well received by the general public who objected, among other things, to having to buy stamps to maintain their purchasing power. Most stores were also reluctant to accept them. Almost immediately, the Alberta Supreme Court issued an interim injunction halting a deal between the province and the city of Edmonton on the issuance and circulation of 8. See An Act Respecting Prosperity Certificates, Alberta, 1936. Canadian Tire coupon, 10 cents, 2002 Canadian Tire “money”
—a Canadian icon certificates by the city.9 Following a subsequent decision by the government to redeem the certificates monthly instead of waiting two years, the stock of outstanding certificates declined sharply. The Alberta government finally abandoned the issuance of prosperity certificates in April 1937. At that time, only $12,000 were still in circulation out of $500,000 printed.10 Community money Communities, typically isolated ones such as islands, have sometimes issued scrip or alternative currencies that could be used locally to buy goods and services. In 1837, William Lyon Mackenzie issued dollar-denominated notes in the name of the Provisional Government of Upper Canada on Navy Island in the Niagara River, following his abortive attempt to seize Toronto in the Rebellion of 1837. During the second half of the nineteenth century, private notes, denominated in dollars, were issued by Calvin & Son, a family-owned firm, on Garden Island, located in Lake Ontario near Kingston and then home to about 750 people.
The company, which was principally involved in the timber and ship-building businesses, owned virtually everything on the island. Its notes could be used to buy goods in the company-owned general store (Swainson 1984). Since 2001, Salt Spring Island, British Columbia, with a population of about 10,000, has issued its own alternative currency. Salt Spring Island dollars are issued by the Salt Spring Island Monetary Foundation, a not-for-profit society, whose objective is to maintain a local currency on A History of the Canadian Dollar 95 9. The Court did not base this judgment on the constitutional merits of prosperity certificates, although it believed this to be a very important issue. Rather, the injunction reflected the fact that the payment of a stamp tax on the certificates by the city represented a burden on Edmonton tax payers and that the city did not have the authority to carry on business through two monetary systems, one based on legal tender, the other based on certificates. Although the Supreme Court of Canada apparently never gave an opinion on the prosperity certificates themselves, it ruled in 1938 that three pieces of Social Credit legislation (An Act Respecting the Taxation of Banks, An Act to Amend and Consolidate the Credit of Alberta Regulations Act, and An Act to Ensure the Publication of Accurate News and Information) were unconstitutional. 10. The Globe, 8 April 1937 Alberta, $1, prosperity certificate, 1936 96 A History of the Canadian Dollar the island for community projects and to promote local commerce and goodwill.1
1 The bills, which are considered to be gift certificates, are designed by local artists and are protected by sophisticated anti-counterfeiting devices. They are widely accepted by stores, individuals, and financial institutions on the island. While not legal tender, they are redeemable upon demand in Canadian currency. To ensure convertibility, each Salt Spring Island dollar in circulation is backed by a reserve fund in the form of cash, term deposits, or gold. Certificates may be bought and redeemed on demand at participating stores, banks, and credit unions. An interesting feature of Salt Spring Island dollars is that they are issued in limited editions. It is hoped that the attractive bills will be retained by visitors to the island as souvenirs. Net income generated by the reserve fund is used to help finance community projects.
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