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Emergency Currency of the Great Depression $1 Pay Warrant Single Banknote Folder


From October 29, 1929 until the beginning of the Second World War, the industrialized world suffered through one of the longest and deepest economic downturns in its history. The Great Depression was a perfect storm of speculative busts, bank failures, widespread deflation, mass unemployment, and overall financial hardship that lasted for almost exactly a decade. Only the economic stimulus caused by war, which found jobs for the unemployed in factories or on battlefields, turned the tide.

The Great Depression began in the United States, on Wall Street in New York City. After a decade in which the stock market swelled to unforeseen heights, propelled by a variety of factors including real estate speculation in Florida, the bubble suddenly and emphatically burst. On October 24, 1929, and again five days later, the stock market experienced an epic collapse. Some $30 billion was wiped away virtually overnight.

“Black Tuesday” had widespread ripple effects. There were runs on banks, as terrified investors sought to withdraw their money. Loans were called in. The panic worsened as banks began to fail. With fewer banks, businesses had fewer options to take out loans. Companies went out of business, workers were laid off. Within six months, the unemployment rate in the United States had doubled. President Herbert Hoover, a proponent of the theory that government intervention in finance is uniformly malefic, gave speeches extolling the health of the economy, but little else. The protectionist Smoot-Hawley Act, which imposed tariffs on foreign imports, backfired spectacularly, and exacerbated the economic downturn in Europe and elsewhere. The Great Depression thus spread from the United States to the rest of the world.

The underlying causes of the crisis remain a subject of debate. Some hold with the famed economist John Maynard Keynes, who at the time decreed that only deficit spending by the federal government to artificially simulate growth would fix the economy; indeed, when President Franklin Delano Roosevelt implemented those policies, the economy did show signs of recovery. Others argue that the economy would have recovered on its own, were it not for mismanagement by the Federal Reserve Bank. Probably a combination of factors, including the world’s reliance on the increasingly-obsolete gold standard, caused the Depression to endure. Whatever the reason, the pain was widespread and deep.

During the Great Depression, the global gross domestic product fell by a staggering 15 percent. Half the banks in the United States failed. Unemployment soared to record levels. Municipalities were so strapped for cash that they issued pay warrants—quasi-currency that could be used in local markets, and traded in at various times of the year for cash. In Europe, an economy that had been sluggish since the Great War continued to underperform.

The woeful financial condition in Germany specifically led to the rise of Adolf Hitler and his Nazi regime. Ironically, Hitler would have some hand in the world’s recovery from global economic collapse. As the Allied countries, and Great Britain especially, mobilized for war after the Nazi invasion of Poland on September 1, 1939, there was a surge in both the manufacturing and military sectors, which created employment, which helped end the Great Depression.

The Note: South Carolina Depression Era, pay warrant, $1 | Dimensions: 209 x 75 mm

Issued by the city of Charleston, South Carolina to pay municipal employees at the height of the Depression, these pay warrants could be exchanged for goods at local shops; merchants would turn them in at set times during the year for cash. The pay warrants ranged from one dollar to ten dollars and accrued interest at an annual rate of four or five percent.