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Forum Post: Wörgl's stamp scrip – The threat of a good example?

Posted 8 years ago on April 21, 2012, 11:43 a.m. EST by niphtrique (323) from Sneek, FR
This content is user submitted and not an official statement

On July 5th 1932, in the middle of the Great Depression, the Austrian town of Wörgl made economic history by introducing a remarkable complimentary currency. Wörgl was in trouble, and was prepared to try anything. Of its population of 4,500, a total of 1,500 people were without a job, and 200 families were penniless.

The mayor, Michael Unterguggenberger, had a long list of projects he wanted to accomplish, but there was hardly any money with which to carry them out. These included repaving the roads, streetlighting, extending water distribution across the whole town, and planting trees along the streets.

Rather than spending the 40,000 Austrian schillings in the town’s coffers to start these projects off, he deposited them in a local savings bank as a guarantee to back the issue of a type of complimentary currency known as 'stamp scrip'. This requires a monthly stamp to be stuck on all the circulating notes for them to remain valid, and in Wörgl, the stamp amounted 1% of the each note’s value. The money raised was used to run a soup kitchen that fed 220 families.

Because nobody wanted to pay what was effectively a hoarding fee, everyone receiving the notes would spend them as fast as possible. The 40,000 schilling deposit allowed anyone to exchange scrip for 98 per cent of its value in schillings. This offer was rarely taken up though.

Of all the business in town, only the railway station and the post office refused to accept the local money. When people ran out of spending ideas, they would pay their taxes early using scrip, resulting in a huge increase in town revenues. Over the 13-month period the project ran, the council not only carried out all the intended works projects, but also built new houses, a reservoir, a ski jump, and a bridge. The people also used scrip to replant forests, in anticipation of the future cashflow they would receive from the trees.

The key to its success was the fast circulation of scrip within the local economy, 14 times higher than the schilling. This in turn increased trade, creating extra employment. At the time of the project, Wörgl was the only Austrian town to achieve full employment.

Six neighbouring villages copied the system successfully. The French Prime Minister, Eduoard Dalladier, made a special visit to see the 'miracle of Wörgl'. In January 1933, the project was replicated in the neighbouring city of Kirchbuhl, and in June 1933, Unterguggenburger addressed a meeting with representatives from 170 different towns and villages. Two hundred Austrian townships were interested in adopting the idea.

At this point, the central bank panicked, and decided to assert its monopoly rights by banning complimentary currencies. The people unsuccessfully sued the bank, and later lost in the Austrian Supreme Court. It then became a criminal offence to issue 'emergency currency'.

Unterguggenberger was opposed to both communism and fascism, championing instead what he referred to as 'economic freedom'. Therefore, it was deeply ironic that the Wörgl experiment was first branded 'craziness' by the monetary authorities, then a Communist idea, and some years later as a fascist one.

The town went back to 30% unemployment. In 1934, social unrest exploded across Austria. In 1938, when Hitler annexed Austria, he was welcomed by many people as their economic and political saviour.

The 1920's had already seen a scrip currency called the 'wara' in the German town of Schwanenkirchen. This saved the town's economy and kept a coal mine operating. It started circulating more widely, and became part of a movement called 'Freiwirtschaft' (Free Economy), based on the ideas of the economist Silvio Gesell.

Central to Gesell's ideas was the use of a hoarding fee of the kind used in Wörgl (technically known as 'demurrage'). The soundness of such an idea was affirmed by John Maynard Keynes in his 1936 work 'General Theory of Employment, Interest and Money'.

Perhaps the most groundbreaking feature of demurrage is that it is intrinsically anti-inflationary. Whereas conventional currencies are progressively devalued by interest, anti-inflationary money steadily increases in value. As each monthly stamp is added, the value of the note effectively increases by the stamp amount. This is technically equivalent to a negative interest rate.

The present short-term focus of investments, and the consequent lack of long-term vision are exacerbated by interest-driven currency devaluation that, from a profit perspective, reduces the appeal of longer-timescale projects. The use of a demurrage currency gives an edge to those working for sustainability, because a rate of return is achieved SIMPLY BY LENDING OUT MONEY. When money is repaid (remember these are non-interest currencies), it will have increased in value owing to the money saved by having avoided paying the monthly demurrage fees. This has the potential to enable investment in highly benefical but economically marginal activities such as earth repair.


The example is even more threatening than it may seem at first. It is a clue pointing at a more efficient financial system that can take out the current one.




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[-] 1 points by JoeW (109) 8 years ago

It is I think important that we focus something like this on creating the right kinds of jobs. Ones that will restore the lost natural capital of our planet and nourish human capital.

[-] 1 points by niphtrique (323) from Sneek, FR 8 years ago

I think this too. It seems quite useless to me to fight the system by protesting and occupying.

I think it will not work as the top 1% does not care. The politicians also do not care because they have been bought by the top 1%.

So you have to rebuild the economy from the ground up, without the need of the top 1% and the politicians.

Like in Wörgl, you only need one community. I have built a computer programme to run banks in the new financial system. I have worked out why this type of money is more efficient.

For this to work I need people that will help me and present this solution to communities that may be willing to try something unconventional.

If it happens soon, we may even be able to derail the political process and the elections, and implement democracy in the US. At least there should be a referendum law so the citizens can take out any government decision. In this way the people are in charge and not the top 1%.

I have written something about political reform too. The main elements are:

  • referendums: In a democracy citizens should have a final say about everything a government is planning or doing. Often the government has become an oppressive force that is not working in the interest of the people. Therefore a country can only be called democratic when there is an option for a referendum like there is in Switzerland, in which the people can overrule any decision mady by politicians. If sufficient people support a referendum proposal then the referendum should be held.

  • copying best practices: Because the political debate is often not concentrated on essential issues, the political system has been unable to realise essential social reforms. It may be a good idea to implement social reform based on existing best practises. In many cases there already is a country that has a good educational system, a good public health care system, a good police force, a good political system, a good method to treat drugs addicts or a good method to integrate immigrants into society. It is a waste of time and resources to reinvent good principles that already have been discovered.

The reform proposals are worked out here: http://www.naturalmoney.org/buildfuture.html

[-] 1 points by XenuLives (1645) from Charlotte, NC 8 years ago

This is an interesting idea. I like it.

I see a lot of people switching back to a barter system, especially at the local flea markets. You mow my lawn, I give you these veggies, etc. It really is a breath of fresh air to see that we don't need "official" money to trade with each other.

[-] 1 points by niphtrique (323) from Sneek, FR 8 years ago

As the example shows, it is possible to make it work worldwide and to replace the current financial system that only benefits the top 1%.

[-] 1 points by niphtrique (323) from Sneek, FR 8 years ago

Well, if nobody helps me, then it will not work.

Maybe you only like to be angry and to blame others.

So if the banks kill your country then do not blame me.

You can only blame yourself.

[-] 1 points by gnomunny (6819) from St Louis, MO 8 years ago

If you start posting things like this, you will quickly become a welcome asset to this forum. Fascinating insightful piece.

[-] 2 points by niphtrique (323) from Sneek, FR 8 years ago

I hope to achieve something more than this.

I have built a computer program to redo the experiment of Wörgl and to create a word wide network of banks using this type of money.

If it works like in Wörgl then the current financial system and Wall Street are finished.

It only takes only one (small) community, so this can be done and probably will work.

[-] 1 points by gnomunny (6819) from St Louis, MO 8 years ago

Proving the viability of the system will probably be the easiest part. Getting it implemented will be almost impossible, at least at the outset. You probably already know these things. I suggest start small, build a following of like-minded professionals, academics and go from there.

[-] 2 points by niphtrique (323) from Sneek, FR 8 years ago

Well, it seemed that way to me too at first but if you consider the example of Wörgl then you may see that it does not need to be that way.


One village may be enough. I am trying to find one.

[-] 1 points by gnomunny (6819) from St Louis, MO 8 years ago

Yes, a test case would be ideal. Work the bugs out, if there are any (almost always are). Hopefully then, the idea can be spread. I've bookmarked your site and will check it out this week (lots of bookmarks to check).

Are you doing this in the States or Europe?

[-] 2 points by niphtrique (323) from Sneek, FR 8 years ago

It could be anywhere but I guess it will be in the US first.

[-] 1 points by gnomunny (6819) from St Louis, MO 8 years ago

Keep us abreast of developments. Great work.