the plan for the future

The miracle of Wörgl

19 June 2018 (latest revision: 14 August 2021)

Wörgl stamp scrip
Wörgl stamp scrip

In 1932, in the middle of the Great Depression, the Austrian town of Wörgl was in deep trouble and prepared to try anything. Of its population of 4,500, a total of 1,500 people were without a job, and 200 families were penniless. 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, streetlights, extending water distribution across the whole town, and planting trees along the streets.1 2

Rather than spending the 32,000 Austrian Schilling in the town’s coffers to start these projects off, he deposited them in a local savings bank as a guarantee to back the issue of a currency known as stamp scrip. The Wörgl money required sticking a monthly stamp on the circulating notes to keep them valid, amounting to 1% of the note’s value.1 2 A businessman named Silvio Gesell had come up with this idea in his book The Natural Economic Order.

Nobody wanted to pay for the monthly stamps, so everyone receiving the notes would spend them. The 32,000 schilling deposit allowed anyone to exchange scrip for 98 per cent of its value in schillings. Hardly anyone did this because the scrip was worth one schilling after buying a new stamp. But people did not keep more scrip than they needed. Only 5,000 schillings circulated. The stamp fees paid for a soup kitchen that fed 220 families.1 2

The council carried out all the intended works, built new houses, a reservoir, a ski jump and a bridge. The key to this success was the fast circulation of the scrip money within the local economy, fourteen times higher than the Schilling. This increased trade and employment. Unemployment in Wörgl dropped 25% while it rose in the rest of Austria. Six neighbouring villages copied the idea successfully. The French Prime Minister, Édouard Daladier, visited the town to witness the 'miracle of Wörgl' himself.1 2

In January 1933, the neighbouring city of Kitzbühel copied the idea. In June 1933, major Unterguggenberger addressed a meeting with representatives from 170 different Austrian towns and villages. Two hundred Austrian townships were interested in introducing scrip money. At this point, the central bank decided to assert its monopoly rights by banning scrip money.1 2

In recent decades, similar local scrip currencies emerged all over the world. None of them was as successful as the currency of Wörgl. The reasons probably are:
  • There was no economic depression, and the economy could support interest, so introducing scrip money had little effect.
  • If scrip money is not widely accepted, people will exchange their scrip for regular currency if they see no use for it.

  • The payment of taxes in arrears generated additional revenues for the town council, which the town council spent on public projects. Once the townspeople had paid their taxes, they probably would have run out of spending options and exchanged their scrip for schillings to avoid paying for the stamps. That never happened because the central bank halted the project.3

    There are, however, a few important takeaways. The economy of Wörgl did well without more debt because the same money kept circulating. A negative interest rate induces people to spend the money they have. Hence, no new money has to be borrowed into existence to stimulate the economy. A holding fee makes negative interest rates possible as you do not have to pay it after lending out your money. For instance, lending out money at a negative interest rate of 2% can be more attractive than paying 12% for the stamps.

    It is fair to say that negative interest rates might have prevented the Great Depression or have ended it sooner. If there had been a holding fee on money, Adolf Hitler probably had not have come to power, and World War II might not have happened.


    1. The Future Of Money. Bernard Lietaer (2002). Cornerstone / Cornerstone Ras.
    2. A Strategy for a Convertible Currency. Bernard A. Lietaer, ICIS Forum, Vol. 20, No.3, 1990.
    3. A Free Money Miracle? Jonathan Goodwin (2013).