A local currency to revive the local economy in Austria

Gesell’s demurrage theory is hardly told without referring to the successful historic experience which took place in the middle of the Great Depression in Wörgl, Austria. This time I’d like to show you how effectively this monetary system worked to help the economic recovery of this Tyrolean community.

This small town, like everywhere else at that period, suffered from the recession: As many as 350 people were jobless in a town with the population of only 4,216 and more than 200 had already run out of their unemployment insurance in spring 1932. The tax revenue diminished and the city hall too was on the verge of bankruptcy. Then the mayor Michael Unterguggenberger decided to issue the “labor certificate” in July 1932 as a local currency to get rid of this plight.

Bills of 1, 5 and 10 Schillings were printed and paid by the city hall as a salary for construction workers. Each bill expired every month and a stamp of one hundredth of its face value was needed to keep it valid again. That means, your €10 “labor certificate” is only valid until May 31st if you receive it today(May 09) and you need to buy a €0.10 stamp to paste on this bill if you fail to spend it by the end of this month. So bearers of this local currency were encouraged to circulate these bills rather than to hoard them, reviving economic activities in Wörgl. The average money supply of only 5,490 Schillings created more than 2.5 million Schillings of transactions during merely a bit more than one year, allowing the city hall to spend more than 100,000 Schillings for its public works and decreasing the unemployment by 1/4. There were even some people who offered to pay tax in advance(would you do so even when you were rich enough?) because they were so affluent.

This boom of parallel currency, however, frightened the central authority in Vienna and Wörgl had to stop the circulation of this wonderful currency in September 1933: but this success was reported in different media and has been proving how effective Gesell’s theory is. Now the Unterguggenberger Institute has been working to collect related materials as well as promoting the contemporary local initiative “I-motion”, receiving many visits of those who work for “Regio”(regional currencies, to be presented next time) practices in Germany.


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