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.