Local Currencies – Wörgl in the Great Depression
Posted by dvd on 13 Oct 2008 at 10:36 am | Tagged as: act local, cooperation, fascism/corporatism
As the economic crisis deepens and it becomes ever more clear that we are heading into a depression, it is useful to study the previous depression of the thirties to learn from history. The most inspiring story of people coming together to overcome the troubles is the Austrian town of Wörgl, which in 1932 issued a local currency to complete public works projects with and encourage trade and employment:
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 and 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
By issuing a local currency whose value decays rather than grows as in the current system of virtual debt, the town could create a vibrant local economy despite the crisis. As its value decreased and hoarding was counter-productive, if practiced on a wider scale it would promote sustainibility – the problems of growth can be avoided. However, the state did not like 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.
By challenging the banksters that effectively control the front organisation known as the state, this small town’s success became an example of how to run our own affairs. Sensing the threat to their power this could create if adopted by other communities, it was crushed. The state would rather let its citizens become unemployed and impoverished rather than let them create their own reality. As a result, fascism could sweep across the country as a ‘solution’ to the crisis, welcomed by the banksters as a way to tighten their control.
We need to learn from history – as the crisis worsens we need to set up projects like this in every community, village, town and city to take back the economy, and when the inevitable crackdown comes as we threaten the power of the banksters we need to resist and enact civil disobedience. If we don’t, the banksters will continue to rule us and impoverish us, from taking our taxes in bailout plans in this ‘democracy’ (did we get to vote on this plan, or was it chosen for us?) through to outright fascism.
Something as simple as our local own currencies can diminish the banksters and states power over us – they knew it in 1933, and they know it today. We can use money as a tool for dismantling civilisation, to serve people and planet rather than be its master. I call on all local environmental groups – transition towns, climate groups, campaign groups etc. – to investigate setting up local currencies and credit unions and consider it a vital part of making our world a better place.
Sounds worth a try to me. But then, I’m no banker
It’s a good thing we don’t need the bankers to have a healthy, sustainable economy – we can control our own destiny, and won’t need huge expertise either as it is much simpler to operate as a result! Although it seems unlikely and far off at the moment, it has and can be done again. We just need to be ready to seize the initiative when the time comes in our communities.