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Message Subject Get rid of the money system, then get rid of goverrments
Poster Handle Silvio Gesell
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Schwanenkirchen and Wörgl from the Irving Fisher book STAMP SCRIP found online here: [link to userpage.fu-berlin.de]

The following is most, but not all of chapter four.

SCHWANENKIRCHEN

Not till 1931 was any general notice aroused by Wära. Then the owner of a Bavarian coal mine tried an experiment with it which gradually caught the public imagination. For two years the mine had been closed; and the owner, Herr Hebecker, conceived the idea that he might open it and pay his employees with Wära. He would have to buy the Wära (besides negotiating a loan) and he would have to pay for the Wära with Reichsmarks, but the Reichsmarks were not circulating and the Wära, he believed, would circulate. Moreover, there was already a thin layer of Wära loose in Germany, and Herr Hebecker hoped to win the patronage of those who used it. In part, he was a fellow propagandist with those users, and Herr Timm issued bulletins among them.

Hebecker's employees lived in Schwanenkirchen, a village of only 500 inhabitants. For over two years this village had barely existed by means of the dole. Everybody was in debt; nor could anybody see the slightest hope of the mine being reopened; for (says Mr. Cohrssen, writing in the "New Republic")(2) "deflation raged all through Germany, leaving bankruptcies, suicides and overcrowded jails in its wake. Herr Hebecker assembled his workers. He told them that he had succeeded in getting a loan of 40,000 Reichsmark, that he wished to resume operations but that he wanted to pay wages not in marks but in Wära. The miners agreed to the proposal when they learned that the village stores would accept Wära in exchange for goods.

"When, after two years of complete stagnation, the workers for the first time brought home their pay envelopes, no one was interested in hoarding a cent of it, all the money went to the stores to pay off debts or for the purchase of necessities. The shopkeepers, too, were happy. Although at first they had felt a little hesitant about Wära, they had no choice, as no one had any other kind of money. The shopkeepers then forced it on the wholesalers; the wholesalers forced it on the manufacturers, who in turn tried to pass it on to those who carried their notes, or they exchanged it at Herr Hebecker's mine for coal. No one who received Wära wished to hold it, the workers, storekeepers, wholesalers and manufacturers all strove to get rid of it as quickly as possible, for any person who held it was obliged to pay the tax. So Wära kept on circulating, a large part of it returning to the coal mine, where it provided work, profits and better conditions for the entire community. Indeed, one could not have recognized Schwanenkirchen a few months after work had been resumed at the mine. The village was on a prosperity basis, workers and merchants were free from debts and a new spirit of freedom and life pervaded the town.

"The news of the town's prosperity in the midst of depression-ridden Germany spread quickly. From all over the country reporters came to see and write about the 'Miracle of Schwanenkirchen.' Even in the United States one read about it in the financial sections of most big papers.

But no explanation was given as to the real cause of the miracle - that a non-hoardable money was being tried out and that it was working marvelously. Had Herr Hebecker used 40,000 Reichsmark instead of Wära, his efforts would have inevitably resulted in failure; the money would have circulated through only one or two hands, each person retaining as much as possible and hoarding it because of the hard times. And after a short while Herr Hebecker would have joined the defeated ranks of those thousands who had failed in their struggle with the depression.

"To complete the story about Wära it must be added that subsequently it was accepted in a few thousand stores throughout Germany, and that one or two more entire communities recuperated under the Wära treatment. A few small banks even opened Wära accounts, accepting the deposits and at once lending the Wära out to those who asked for credit. Of course these banks were under the same compulsion of circulating Wära to avoid the one per cent monthly tax, and it was obvious that the depositor was only too glad to have the par value of his deposit preserved without interest.
"The Wära movement had an important influence in Germany. It counteracted the deflationary policy of the government. Numbers of people found employment and in some places prices rose. Wära worked for those who believed in it."

But now the German Government interfered on the theory that Wära was money and therefore an illegal usurpation of a Government prerogative. The question was taken to the courts and Wära won. But the Government continued its opposition alleging that Wara might turn into harmful inflation. With war inflation still fresh in memory, the government was apparently unable to see the difference between the kind of inflation which begins at the level of the ground and aims at the sky, and the modest Wära which began at the bottom of the pit and aimed back at the threshold - without ever getting within shouting distance of it. Under a misconception, therefore, - one of the most common of monetary misconceptions, - the German government imagined that it could detect in Wära the threat of evil - evil to come out of good; and at last the government succeeded in stopping the good. It forbade Wära by means of an emergency law (3) "As a result," (writes Mr. Cohrssen), "Schwanenkirchen and other towns where Wära have provided the life blood of economic activity are on the dole again."

As to the spread of Wära through Germany, not more than 20,000 Wära circulated at any one time. Yet it was said, during 1930-31, that 2 1/2 millions of people handled it. Accordingly, many observers believed that the amount issued was far greater than it was.
So much for Schwanenkirchen and Wära.


WÖRGL

Compared with the Bavarian village of Schwanenkirchen, the Austrian town of Wörgl is a large community. It has about 4300 inhabitants of whom, however, 1500, in 1931 - 32, had lost their jobs; for, in and about Wörgl a number of factories had closed their doors. Taxes, therefore, were in arrears, and the town itself was almost as "down-and-out" as these 1500 of its inhabitants.

The Mayor of Wörgl, (Unterguggenberger by name) organized a Local Relief Committee, not so much to give charity as to produce jobs.
But who or what was to produce the good Austrian Schillings that would pay for the jobs? This mayor with long name was not disposed to help anybody at anybody's expense. In fact, he was shrewdly and very properly resolved that the town should be one of the beneficiaries of anything that was done. In the first place, out of the new jobs, the town would get new roads and other municipal improvements and repairs long overdue. In the second place, by getting money into the pockets of the workers, it might well hope to recover from those pockets some of the back taxes. But to pay wages in order to recover a part of the wages would hardly be profitable; nor would the imposition of new taxes for the sake of wages for the sake of old taxes be a very good swap.

Herr Unterguggenberger had watched the Schwanenkirchen Wära experiment with intense interest. The solution of the Wörgl situation pointed to Stamp Scrip. The town would issue it, with the consent of the workmen and of a sufficient number of the merchants and also of the local savings bank. The bank was to hold the guarantee fund (in the form as previously described of a bookkeeping transaction). There was to be no final redemption; and the stamps, at 1 per cent per month, were to be sold by the town, and the proceeds used, not for propagating the idea but for the enlargement of the town's welfare work. But though there was to be no final and complete redemption, every holder of the scrip was to have the privilege of redeeming it at the town treasury or at the local banks at any time; but for such redemption a service: charge of two per cent had to be paid. As the stamp was only 1 per cent, the disadvantages of redemption at 2 per cent were, at any given moment, greater than the probable disadvantages of going on at 1 per cent. Redemption, therefore, was not likely to hurt the circulation of the scrip. Moreover the banks and the town were to re-issue any that was redeemed.

And so it worked out in practice.

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.

According to plan, on August 1, 1932, 32,000 Schillings' worth of the scrip (equivalent to about $4500) was issued, in denominations of 1, 5 and 10 Schillings. This amount was later found to be in excess of the actual need, and instead of following an "inflationary" policy, only about l/3 of the issue or less was kept in circulation through re-issues, the rest remained with the city. This showed great wisdom on the part of the municipal administration, as it kept the purchasing power of scrip at par with regular Schillings.

The scrip was called "Wörgl Certified Compensation Bills." The monthly stamps (affixed to the face of the scrip) were named "Relief Contribution Stamps," and each unit of scrip was super-scribed, "They Alleviate Want, Give Work and Bread."(4)
What were the results?

For the following information I am indebted to a Geneva economist, Hermann Scheibler,(5) who went to Wörgl on my behalf and questioned the mayor and the bank and some of the merchants and workmen.

Soiree of the local merchants, like some of those in Schwanenkirchen, had begun by refusing to accept what they regarded as a bizarre substitute for real money; but seeing it circulate and seeing the city employees patronizing the merchants who took it and banked it, the skeptics forced by considerations of competition once more decided to "climb on the band wagon." Soon everybody accepted it without hesitation, because everybody else accepted it. The only cases of permanent refusal to receive the scrip are the post office and the railroad, both of which are government institutions with interests primarily outside of the vicinity where the scrip is supposed to circulate.
The attitude of the Austrian Government has not been hostile.

As to the rate of turnover, the mayor reports that the amount of the first wages paid has returned to the city 20 times a month.
The other facts are contained in a report which the mayor of Wörgl made to the Tyrol state government, January 1, 1933
Taxes had been in arrears from 1926 to 1931 as follows (year by year):

21,000 Schillings
26,000 "
28,000 "
31,000 "
61,000 "
118,000 "

But after the scrip was issued, not only were current taxes paid (as well as other debts owing the town), but many arrears of taxes were also collected. During the first month alone,(6) 4542 Schillings were thus received on the arrears. Accordingly, the city not only met its own obligations but, in the second half of 1932, executed new public works to the value of 100,000 Schillings. Seven streets aggregating 4 miles were rebuilt and asphalted; twelve roads were improved; the sewer system was extended over two more streets; trees were planted and forests improved, and permanent jobs were given to from 30 to 50 of the 1500 unemployed; but probably a powerful influence has been exerted to prevent any increase of unemployment, by keeping business active.

In these benefits, the local banks shared. Up to the date when the scrip was issued (August 1, 1932) withdrawals at the local Reifeisen Bank had exceeded deposits for an entire year; in the first and last months of the said year, the excesses of withdrawals over deposits were: August 1931, 44,362 Schillings; July 1932, 12,355 Schillings. But in August 1932, the first month of the Stamp Scrip, the balance turned the other way by 6591 Schillings, notwithstanding the fact that August is generally considered the poorest month of the year. (7)

On January 1, 1933 Wörgl (which is an Alpine town) had under construction a new ski jump and a water basin for the Fire Department. The mayor says that the scrip has fulfilled all promises, and thinks it should be adopted nationally. At all events, a neighboring city of 20,000 inhabitants, was, at last reports, considering the introduction of scrip within its borders, under the advice of the mayor of Wörgl and of a University Professor of economics, and the Wörgl experiment has begun to attract somewhat general attention in Austria. As conclusion to this report Mayor Unterguggenberger stated: "The Stamp Scrip of Wörgl will have historic significance, because it has kept its promise to provide 'work and bread.' It has, in fact fully satisfied all our expectations."

Gesell's book may be downloaded in PDF format here: [link to www.geokey.de]
 
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