On July 5, 1932, in the middle of the Great Depression, the Austrian town of Worgl introduced a complementary currency. Worgl was in trouble and was prepared to try anything. Of its population of 4,500, a total of 1,500 people were unemployed and 200 families were flat broke. Mayor Michael Unterguggenberger had a long list of projects he wanted to accomplish, but there was hardly any money to carry them out. These projects included paving roads, putting up street lights, 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 into a local savings bank as a guarantee to back the issue of a type of complementary currency known as stamp scrip. The Worgl currency required a monthly stamp to be stuck on all the circulating notes for them to remain valid, amounting to 1 percent 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 the holding tax, everyone receiving the notes would spend them as fast as possible. The 40,000 schilling deposit allowed anyone to exchange scrip for 98 percent of its value in schillings -- but this offer was rarely taken up. Of all the businesses in town, only the railway station and the post office refused to accept the local money. Over the 13-month period of the project, the council not only carried out all the intended works projects, but it also built new houses, a reservoir, a ski jump and a bridge.
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, the unemployment level decreased in Worgl while it rose in the rest of Austria. Six neighboring villages copied the system successfully. The French Prime Minister, Eduoard Dalladier, made a special visit to see the "miracle of Worgl." In January 1933, the project was replicated in the neighboring 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 complementary currencies.
This example shows that stamp scrip can end the grip of banks, large corporations and centralized governments over the destiny of ordinary people. This money, combined with a ban on charging interest, creates a more efficient financial system and can help solve the many problems facing the world today. It can work without a large organization -- one small, committed community like Worgl can be enough to change the world forever.
References: http://www.newciv.org/nl/newslog.php/_v105/__show_article/_a000105-000002.htm
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