Healthy Money Healthy Planet - library.uniteddiversity.coop

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Enz, who were supporters of the free­money theory of Silvio Gesell (see Chapter 12).
The two made a trip to study barter exchanges in Norway and Denmark, and then
adapted the schemes they saw there to suit the conditions of Zurich. Green
economist Richard Douthwaite has described the system in many his writings. 4
Following its launch in October 1934, the scheme grew to the point where, in
early 1935, some 1000 members were actively exchanging goods and services and
running trade shows. 5 Very soon after, however, they faced their first challenge –
massive hostility from the press. Despite this, members stood by the group and its
ideology, and continued to do so through 1939 and 1940, which also proved very
difficult as the standards for allowing credit were often far too lenient. The audit
office investigated the situation, which resulted in WIR being brought under Swiss
banking law and the introduction of new expertise. In spite of these hard times, WIR
managed to cut costs and raise more capital through subscriptions. Following a
decline in membership during World War II, WIR revived again through the 1950s
and 1960s, only to experience another challenge.
In 1973 there was an economic downturn and the WIR system suffered a drop
in the volume of exchanges. WIR operators attempted to boost the volume by
lowering the standards for credit, so that too many interest­free loans were
consequently made to its members. This resulted in too much WIR currency in
circulation, and so its value decreased and members couldn’t spend it. This, in turn,
resulted in a second problem: the discount trade. Owners of large amounts of
currency, unable to spend it in the system, began offering it for sale for cash, and so
a black market on WIR currency developed. Discount trading occurred using WIR
as credits. This almost destroyed the system. However, WIR survived because of the
foresight, integrity and determination of a small group of people. They made it
against the rules to buy or sell WIR for cash, they devalued the WIR by 95 per cent,
and they brought about a change of management. 6
Today, the farmers, civil servants, lawyers, chimney sweeps, architects and whitecollar
workers who become members of WIR have to follow a strict entry procedure.
First, potential members must offer some collateral – usually in the form of a second
mortgage on their house or business premises – to back an interest­free loan they
may get from the system. Second, they apply for a loan to the WIR Credit Approval
Committee, which often asks for a credit check from an agency, just as if the member
wanted a loan from a bank. Once the potential members have passed these tests,
they can start trading with other members using WIR money. New participants get a
cheque book, a charge card and a large catalogue listing the other participants. The
interest­free working capital used enables members to bypass the banks. According
to Richard Douthwaite, in 1993 there were 60,000 account holders, turning over 2,521