The Wörgl Experiment
The Wörgl Experiment was a pioneering economic initiative undertaken in the small town of Wörgl, Austria, during the Great Depression. This innovative monetary experiment, led by the town's mayor Michael Unterguggenberger, was inspired by the economic theories of Silvio Gesell, a German-Argentine economist known for his advocacy of demurrage currency.
Background
In the early 1930s, the global economy was entrenched in the Great Depression, a period marked by widespread unemployment, deflation, and economic stagnation. Wörgl, like many other towns, was suffering from these economic hardships. In response, Unterguggenberger proposed a bold solution: the introduction of a local currency that would stimulate economic activity and alleviate unemployment.
Implementation
On July 31, 1932, the community of Wörgl launched its own currency, the Wörgler Schwundgeld (meaning "diminishing money"). This currency was designed to depreciate in value by 1% each month, a feature that encouraged its rapid circulation. This concept, known as stamp scrip, required users to affix stamps to the currency to keep it valid, thus discouraging hoarding and promoting spending.
The currency was used to pay for local public works projects, such as road repairs and infrastructure improvements, which provided employment to many residents. It was accepted by local businesses and even in nearby towns, enhancing its utility and reach.
Economic Impact
The Wörgl Experiment proved to be remarkably successful. Within the 13 months that the currency was in circulation, Wörgl experienced a significant economic revival. Public projects were completed, unemployment decreased substantially, and the town's tax revenue increased. Merchants reported increased sales, and the overall prosperity of the town improved.
This success drew attention from economists and policymakers from around the world. Many other towns in Austria and beyond considered adopting similar initiatives. However, the experiment was curtailed in September 1933 by Austria's central bank, Oesterreichische Nationalbank, which saw it as a threat to its monetary monopoly.
Legacy
The Wörgl Experiment is often cited as a successful example of a complementary currency system. It has inspired numerous other local currency initiatives, such as the WIR Bank in Switzerland and the Chiemgauer in Germany. The concept of local currencies remains a subject of interest for economists and community organizers aiming to foster economic resilience and sustainability.