What is a Trade Token?
From the 17th to the early 19th century in the British Isles and North America, tokens were commonly issued by merchants in times of acute shortage of coins of the state. These tokens were in effect a pledge redeemable in goods, but not necessarily for currency. These tokens never received official sanction from governments but were accepted and circulated quite widely.
Most such tokens show the issuer’s full name or initials. Where initials were shown, it was common practice to show three initials: the first names of husband and wife and their surname. Tokens would also normally indicate the merchant establishment, either by name or by picture. Most were round, but they are also found in square, heart or octagonal shapes.
Thousands of towns and merchants issued these tokens from 1648 until 1672, when official production of farthings resumed, and private production was suppressed.
There were again coin shortages in the late 18th century, when the British Royal Mint almost ceased production. Merchants once again produced tokens, but they were now machine made and typically larger than their 17th century predecessors, with values of a halfpenny or more. While many were used in trade, they were also produced for advertising and political purposes, and some series were produced for the primary purpose of sale to collectors.
These were issued by merchants in payment for goods with the agreement that they would be redeemed in goods to an equivalent value at the merchants’ own outlets. The transaction is therefore one of barter, with the tokens playing a role of convenience, allowing the seller to receive his goods at a rate and time convenient to himself, and the merchant to tie the holder of the token coin to his shop. Trade tokens often gradually changed into barter tokens, as evidenced by the continued circulation of former trade tokens when the need for their use had passed.
The collecting of trade tokens is part of the field of exonumia, and includes other types of tokens, including transit tokens, encased cents, and many others. In a narrow sense, trade tokens are “good for” tokens, issued by merchants. Generally, they have a merchant’s name or initials, sometimes a town and state, and a value legend (such as “good for 5¢” or other denomination) somewhere on the token.
Merchants that issued tokens included general stores, grocers, department stores, dairies, meat markets, drug stores, saloons, bars, taverns, barbers, coal mines, lumber mills and many other businesses. The era of 1870 through 1920 marked the highest use of “trade tokens” in the United States, spurred by the proliferation of small stores in rural areas.
There were thousands of small general and merchandise stores all over the United States, and many of them used trade tokens to promote trade and extend credit to customers. Aluminum tokens almost always date after 1890, when low-cost production began.
Railways and public transport agencies used fare tokens for years, to sell rides in advance at a discount, or to allow patrons to use turnstiles geared only to take tokens (as opposed to coins, currency, or fare cards).
- Car washes – Though their use has decreased in favor of coins and credit cards.
- Video arcades
- Parking garages
- Pay toilets
- Shopping cart rental
- Public telephone booths in countries with unstable currency were usually configured to accept tokens sold by the telephone company for variable prices. This system was in effect in Brazil until 1997 when magnetic cards were introduced. The practice was also recently discontinued in Israel, leading to a trend of wearing the devalued tokens as necklaces.
- Fast food restaurants – Often given to children to collect and redeem for prizes.
- Commemorative coins have been produced with no monetary value to distribute by a company, country or organization.
In North America tokens were originally issued by merchants from the 18th century in regions where national or local colonial governments did not issue enough small denomination coins for circulation. They were later used to create a monopoly; to pay labor; for discounts (pay in advance, get something free or discounted); or for a multitude of other reasons. In the United States, a well-known type is the wooden nickel, a five-cent piece distributed by cities to raise money for their anniversaries in the 1940s to 1960s.
Local stores, saloons and mercantiles would issue their own tokens as well, usable only in their own shops. Railways and public transport agencies have used fare tokens for years to sell rides in advance at a discount. Many transport organizations still offer their own tokens for bus and subway services, toll bridges, tunnels, and highways, although the use of computer-readable tickets has replaced these in most areas.