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Austria, for a period of 14 months in the 1930s. It had all the right ingredients, the support
of an enthusiastic and influential mayor, a sensible committee to run it, and the correct
formula for applying a demurrage charge.
Back in 1932, the mayor of Wörgl was one Michael Unterguggenberger, a train driver
who had left school at the age of 12. A trade unionist, Unterguggenberger had read the
works of Marx, Proudhon and Gesell, and had watched the Schwanenkirchen experiment
with interest. His town was seriously in debt and 500 of its 4300 inhabitants were out of
work. The parish was ten times as indebted as the town. So, on 8 July 1932, the mayor
convinced his community advisory board that ‘slow money’ was the cause of the economic
paralysis and that they had nothing to lose by trying an emergency scrip. He then
convinced local businessmen and the newspaper to back the idea. Four days later the town
started work on their overdue street repairs, and by 31 July they had issued their first ‘work
confirmation certificates’, also called local schillings.
Wörgl issued 20,000 local schillings in three denominations, and deposited the same
amount in the bank in national currency. The currency was superscribed with the words
‘They alleviate want, give work and bread’, and had to be validated every month with a
stamp worth 1 per cent of the nominal value of the note (a ‘misery payment’ for the local
welfare committee). If people wanted to exchange their local currency for Austrian
schillings, they could do so with a 2 per cent penalty, high enough to act as a
discouragement.
In his book Stamp Scrip, Irving Fisher says, ‘All city employees, including the mayor,
were to receive 50 per cent of their salaries in scrip and the new emergency workmen were
to be paid 100 per cent in that form.’ 10 Despite initial scepticism, the booster effect soon
began to work. Taxes, in arrears since 1926, were repaid. Seven streets were rebuilt and
asphalted, 12 roads were improved, the sewer system was extended, trees were planted
and forests were improved. The construction of a ski jump was started in January 1933,
along with a water basin for the fire department. A bridge in the town still bears the
inscription ‘Built with free money’.
In her book Interest and Inflation Free Money,
Margrit Kennedy says: ‘Within one year, the 32,000 Free Schillings circulated 463 times,
thus creating goods and services worth over 14,816,000 Schillings. The ordinary Schilling
by contrast circulated only 21 times.’ 11 Unemployment in Wörgl dropped 25 per cent, when
in the rest of Austria it had risen 10 per cent during the same time period.
Soon the miracle of Wörgl had attracted more general attention around Austria, with
200 other towns showing signs of copying the system. But on 8 November 1933, just 15
months after the currency was put into circulation, the government made it illegal after it