zd-cg.com/fuf.php Woergl Experiment with Local Currencies
The Wörgl experiment that was conducted from Jlu 1932 to November 1933 is a classic example of the potential efficacy of local currencies. Wörgl is a small town in Austria with 4000 inhabitants that introduced a local script during the Great Depression. By 1932 unemployment in Wörgl had risen to 30%. The local government had amassed debts of 1.3 million Austrian Shillings against cash reserves of 40,000 AS. Local construction and civic maintenance had come to a standstill. On the initiative of the town's mayor, Michael Unterguggenberger, the local government printed 32,000 in labor certificates which carried a negative 1% monthly interest rate and could be converted into schillings at 98% of face value. An equivalent amount in schillings was deposited in the local bank as cover for the certificates in case of mass redemption and earned interest for the government. The certificates circulated so rapidly, that only 12,000 were ever actually put into circulation. According to reports by the mayor and economists of the day who studied the experiment, the script was readily accepted by local merchants and the local population. It utilized the script to carry out 100,000 AS in public works projects involving construction and repair of roads, bridges, tanks, drainage systems, factories and buildings. The script was also accepted as legal tender for payment of local taxes. In the one year that the currency was in circulation, it circulated 13 times faster than the official shilling and served as a catalyst to the local economy. The heavy arrears in local tax collection declined dramatically. Local government revenue rose from 2,400 AS in 1931 to 20,400 in 1932. Unemployment was eliminated, while it remained very high throughout the rest of the country. No increase in prices was observed. Based on the dramatic success of the Wörgl experiment, several other communities introduced similar scripts.
In spite of the tangible benefits of the program, it met with stiff opposition from the regional socialist party and from the Austrian central bank, which opposed the local currency as an infringement on its powers over the currency. As a result the program was suspended, unemployment rose and the local economy soon degenerated to the level of other communities in the country.
The Wörgl experiment dramatically illustrates some of the common characteristics and major benefits of local currencies.
Society utilizes only a small portion of its resources and opportunities. Almost everyone has underutilized knowledge, skills and time that can be engaged productively. Most manufacturers and services have underutilized machinery or capacity. Complementary currencies are a creative means to enhance this untapped social potential.
Today there are over 2500 different local currency systems operating in countries throughout the world. One of the most prominent is LETS, Local Exchange Trading System, a trading network supported by its own internal currency. Originally started in Vancouver, Canada, there are presently more than 30 LETS systems operating in Canada and over 400 in the United Kingdom. Australia, France, New Zealand and Switzerland have similar systems. Time dollars, Ithaca hours and PEN exchange are among the most successful systems in the USA.