The Vermilion Scrip Experiment
During The Great Depression, unemployment was rampant and many citizens of Vermilion could barely make ends meet. In 1935, the Social Credit Party was elected to power on the promise of providing $25 every month to every person in Alberta. That promise was enough to wipe out every United Farmers of Alberta MLA in the election.
Premier William Aberhart touted his scrip, stating that his flow of credit theory would help residents of the community. He and his candidates stated that their experiments with the scips was a success.
However, in Vermilion, it was already tried and it failed.
In 1933, Vermilion issued scrip in $2 and $5 bills, amounting to $1,500 to $2,100 in the first issue of the scrips. It was claimed that it would increase business in the town by at least $65,000.
A resident could go into a store with a two-dollar scrip and make a purchase. The merchant was obliged to give change in Canadian currency. If the merchant owed taxes, he could pay them with scrip.
For a time the scrip circulated freely but as it came back into circulation it began to back up among business people and the town was eventually called upon to take the accumulation.
The problem was that if the merchant ceased being indebted to the municipality, he could not pass the scrip and found himself accumulating it. This forced the town to redeem it. Private individuals dealt with it as well and even municipal employees were paid wages in scrip for a time.
As it turned out, there was no increase in business because of the scrip and no more demand for goods and services above the ordinary demand. As well, the scrip was not accepted by creditors or banks outside the town, so it was only confined to within Vermilion.
Within four months, all scrip was withdrawn and the town resumed business on a cash basis.
As for Aberhart and the Social Credit Party, they never did implement their scrip because there was simply too many logistical problems with it. Within four years, The Great Depression was over and there was no more need for the scrip.
Even though they were elected to power on something that did not provide, the Social Credit Party remained in power until 1971.
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