I don't remember ever participating in one of these as a kid but I knew about the American Pinewood Derbies because for years I had a subscription to Boys Life Magazine, the official magazine of the BSA.
The design of the badge is quite clever. If you collect three of them, one for each year you can be a Cub, they can be sewn together in a circle to make one big badge. I could do this when I collect three of these but I decided I liked the way it fit onto the blanket by itself. There are so many round badges that a different shape is a good thing once in a while.
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