The chip system is thought to have begun in Indianapolis in 1942. The tradition is believed to have started with Doherty S., who originally brought A.A. to Indianapolis. Doherty himself, in a letter to Bill, seems to indicate the practice originated in Indianapolis in 1942.
Nell Wing wrote in 1962 about the history of the chip system: "…The chip system might have begun in Indianapolis….reference was made in a letter from Doherty to the start of giving out ‘AA chips’, AA coins', and ‘AA tokens.’ This was in 1942. I imagine this would be about right, because most of the early groups started in 1940 and it would take about a couple of years to think of anniversaries and marking any time of sobriety. I asked Bill about this and his memory is that the system started in Indianapolis."
In Dr. Bob and the Good Old Timers, it indicates that Sister Ignatia in Akron, working at St. Thomas Hospital, also used medallions: “Sister Ignatia gave each of her newly released patients a Sacred Heart medallion, which she asked them to return before they took the first drink. She would occasionally give out St. Christopher medals as well…” (page 195).
We don’t know precisely who started this system first, or when and how it spread to other groups. As with many things in AA, the exact nature of the history eludes us!