Thursday, February 27 1908 — Before government regulation did much to smooth the terribly bumpy road of the economy, financial panics were relatively common occurrences, happening on average about every seven years. One of the effects of these panics was often a localized shortage of government currency due to hoarding. When currency became scarce, banks and other institutions sometimes printed their own temporary currencies, commonly called scrip.
In the Panic of 1907, the Los Angeles Clearing House Association, one of those institutions, had to issue scrip. Today they burn all the cancelled scrip paper, satisfied that the panic is over and it won’t be needed again, at least for awhile. Herriman cartoons the scene when huge piles of scrip were fed into the furnace of the Llewelyn Iron Works.
Certain factions in the country today, mainly those with no knowledge of history, shout endlessly about the need for smaller and less intrusive government, and for allowing the free market to fly forward unheeded by government regulation. Financial panics at the rate of one or two per decade are one of the features of the ‘good old days’ before government interference. Is this what we’re supposed to be nostalgic for?