Shinplaster was a common name for paper money of low denomination circulating widely in the frontier economies[clarification needed] of the 19th century. These notes were in various places issued by banks, merchants, wealthy individuals and associations, either as banknotes, or circulating IOUs. They were often a variety of token intended to alleviate a shortage of small change in growing frontier regions. They were sometimes used in company shop economies or peonages in place of legal tender. An example of this type of operation was the Reynolds Bros. Mill and Logging operation in Reynoldston, New York which issued its own shinplasters or scrip money in the 1880s to its mill workers and loggers. Original shinplasters from the Reynolds Bros. still exist and can be seen at the Reynoldston, New York website. The shinplaster could only be used in the Reynolds Bros. Company Store. By 1890, the United States Government made them stop this practice. The employees of the Reynolds Bros. strongly resented this practice and a song about this hardship has survived today.
According to the Oxford English Dictionary, the name comes from the quality of the paper, which was so cheap that with a bit of starch it could be used to make paper mache–like plasters to go under socks and warm shins.
A book roughly contemporary with the term, John Russell Bartlett's The Dictionary of Americanisms, defines a shinplaster as "A cant term for a bank-note, or any paper money. It probably came into use in 1837, when the banks suspended specie payment, and when paper money became depreciated in value." Then the book quotes the New York Tribune of December 3, 1845: "The people may whistle for protection, and put up with what shinplaster rags they can get."
Shinplasters circulated in the United States from 1837 to 1863, during the period known as the "Free Banking Period."
In Canada, the term shinplaster was widely used for 25-cent paper monetary notes which circulated in the 19th century and early 20th century. The first design was printed on March 1, 1870 and the final design was first printed on July 2, 1923
Shinplasters or calabashes (as they were known in southern Queensland) were a feature of the Squatters' vast pastoral enterprises, and often circulated in the towns of the bush alongside and in place of legal tender. These private IOUs circulated widely, at times making up the bulk of cash in circulation, especially in the 1840s and 50s.
In some places they formed the core of a company shop economy (Truck system), circulating as private currencies. They were often of such low quality that they could not be hoarded, and shopkeepers off the property would not take them, as they would deteriorate into illegibility before they could be redeemed.
There are tales of unscrupulous shopkeepers and others baking or otherwise artificially aging their calabashes given as change to travelers so that they crumbled to uselessness before they could be redeemed.
- As commerce and trade grew in centres such as Toowoomba, more and more calabashes were issued, and more and more merchants, squatters and others engaged in transactions were forced to give their 'paper' in change or as payment for goods and services.
- Rolnick, Arthur J. & Warren E. Weber, "Free Banking, Wildcat Banking and Shinplasters," Federal Reserve Bank of Minneapolis Quarterly Review, Vol. 6, No. 3, Fall 1982. http://minneapolisfed.org/research/qr/qr632.html