Franklin Delano Roosevelt was inaugurated President of the United States on Saturday, March 4, 1933. Immediately following his inauguration weekend, at 1:00 AM on March 6, Roosevelt issued Proclamation 2039. This action ordered all banks in the United States to close. No one would be able to withdraw, transfer, or deposit money between Monday, March 6 and Thursday, March 9. But even after some banks were allowed to reopen, those deemed to be in danger of failing would remain closed until they were deemed sound. This emergency measure was intended to prevent runs on banks that would cause a catastrophic ripple effect throughout a fragile economy, giving Congress time to pass legislation to shore up the nation’s banking system. On March 9, they passed the Emergency Banking Act. Gradually, banks reopened, now backed by the Federal Reserve. If a bank failed, account holders were insured against the loss, removing motivation to withdraw and hoard government-issued scrip.
In the interim, citizens all over the United States scrambled to find solutions to the problems that nearly a week or more without access to currency, without warning, would cause. One popular solution was for individuals and private corporations to issue their own scrip to circulate locally. Newspapers, in particular, commonly offered scrip, because they had ready access to printing presses.
Many businesses did not use charge accounts, given that they dealt with such small transactions. These were the ones most at risk during the bank holiday. William K. Selden ’34, the business manager of the Daily Princetonian, talked over the problem with economics professor George Modlin. Selden thought the Prince could issue scrip for students to use, that could then enter local circulation in Princeton until the banks reopened. Modlin thought the idea was good, and encouraged Selden to make an appointment with Luther P. Eisenhart, Dean of the Faculty and then acting President of Princeton University. Eisenhart supported Selden’s plan.
Immediately, Selden sent a group of freshman to local businesses to ask whether they would accept scrip issued and backed by the Daily Princetonian. If they agreed, the Prince would print their names in the next issue. Meanwhile, Selden designed the scrip and had it printed. By Tuesday morning, the Prince was ready to begin issuing currency to students, who would buy it with checks drawn on their closed banks.
On March 7, 1933, the Prince announced their offer of scrip on the front page. John Colt, Princeton Class of 1914 and president of the Princeton Bank & Trust Company, called the move “exceedingly patriotic.” Students wasted no time in obtaining their $5-each limits of the yellowish local currency. The Prince rapidly issued all 2,000 of its 25-cent certificates in a single day and declined to offer more in spite of demand. One desperate student attempted to sell stamps back to the post office, but was unsuccessful.
Princeton’s banks reopened on March 15. The Prince then set about redeeming their scrip in circulation, with a warning that they would all be void after 30 days. Even so, 15 months later a student contacted the paper to ask that his scrip be redeemed, and the Prince agreed to return his 25 cents.
As Selden later remembered it, the Prince profited, rather than lost money, in the business of issuing scrip. Businesses scrambled to advertise their willingness to accept Prince scrip, driving up ad revenues for the paper. Collectors offered to buy it after it was removed from circulation. Some students never redeemed it, preferring, as did Palmer Hutcheson ’35, to keep it as a souvenir of their time at Princeton.
Armstrong, April C. “‘War Is Imminent’: The Veterans of Future Wars.”
Gatch, Loren. “Local Money in the United States During the Great Depression.” Essays in Economic & Business History 26 (2008): 47-61.