What are Scrips?
Scrips refer to any object that is used as an alternative or substitute to legal tender. They were a popular alternative to wages and were used as a means to exploit workers. Today, scrips are used in the form of gift cards, tokens, certificates, and rewards points.
- Scrips refer to any objects used as an alternative or substitute for legal tender. They were a substitute for wages as a way to exploit workers, now deemed illegal under labor laws.
- Today, scrips are used as additional compensation, such as gift cards, reward points, tokens, and certificates.
- The Métis scrips are a historical example of scrips used by the Canadian government.
History of Scrips
Scrips can be thought of as a form of credit in the absence of cash, entitling the scrip holder to receive certain goods or cash when redeemed. They became the popular source of compensation under the truck system.
The truck system is a practice in which employers pay workers with money substitutes. Such substitutes included vouchers, commodities, tokens, and more. Typically, the scrip is worth less than what the wages would have been for the same work. Furthermore, the scrips limit what the workers can redeem, whereas, with cash, the uses are limitless.
For example, it was commonplace for logging communities managed by a single company to issue scrips that can only be used at the company store. Because of the isolation of the store, it acts as a monopolistic price-setter. Therefore, not only were workers being exploited for not receiving their fair wages in cash but they were also exploited as profits by the company store.
During the Great Depression, scrips became a widely used form of wages due to the lack of money circulation. Such practices of using scrips in place of wages are no longer permitted in many countries today.
Today, scrips are still widely used, but as a form of additional compensation and bonuses instead of as a replacement for wages. The most prevalent form of scrips is gift cards. Despite the limiting aspect of gift cards compared to cash, they are still very popular because it is often unusual to use cash as a gift and the recipient is less likely to decline gift cards than cash gifts.
Another common form of scrips is reward points, such as PC Optimum Points. Consumers can rack up points at participating merchants, and points can only be redeemed at Loblaw subsidiaries, such as the Real Canadian Superstore and Shoppers Drug Mart.
Lastly, scrips are also used as tokens, such as at arcades like Chuck E Cheese or casino chips. Token holders may only derive value from using tokens where they are issued.
Nowadays, scrips are often used strategically by businesses to ensure customer retention. Gift cards lack value if they are not spent at participating merchants. The same logic applies to reward points and tokens.
In the context of the stock market, scrips are entitlements to a fractional share of stock. If a listed company is facing liquidity problems or decides to reinvest the cash into the company, they may issue scrips instead of cash dividends.
In 1870, under the Manitoba Act, scrips were issued by the Canadian government to the Métis as an IOU that can be redeemed for money or land. The Métis are descendants of First Nations and European origins. However, it became clear that the government used scrips to reduce tension instead of providing genuine compensation.
The scrips were extremely disorganized and hard to redeem, causing many delays and frustration. In 2013, the Supreme Court of Canada declared the wrongdoings of the government, and currently, the redemption process for Métis scrips is still active.
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