The following information has been archived from various web sites.The story of the Worgl Schillings is a PERFECT example of how a reform to the banking system ensures growth and is more stable then the current one.

 

It is also a perfect example to show how the private profit currency issuing banking cartels have long been attempted to stop us from having a secure monetary system.

 

Regional currency will mean that they loose their monopoly on printing money. They are awareTof their own scam. After Worgl successfully thrived in the great depression by making their own regional currency, the government and banks immediately tried to prevent any one else from liberating themselves.

 

Taken from - The Global ideas web site

 

There was a time when people were so convinced that the earth was flat, that the idea that it was round was inconceivable. Likewise today, the idea of a community or region issuing and using its own currency and running its own bank may seem just inconceivable.But it has happened.

 

The Worgl Schillings


In the early 1930s the small town of Worgl in the Austrian Tyrol, suffering like every other town in Europe and America from the Great Depression, took the unlikely step of issuing its own currency.


Its burgomaster, Michael Unterguggenberger, faced an empty treasury, because the unemployed citizens could not pay their taxes; roads and bridges needed repair and parks needed maintenance, for which the town could not pay; and idle men and women earned no wages.


He recognised that all three problems could be solved if he could find the connecting link.

 

That link was money. The three problems coexisted because no one had any of it, and his simple solution was to create money locally.


He issued numbered 'labour certificates' to the value of 32,000 schillings, in denominations of 1, 5 and 10 schillings, respectively. These became valid only after being stamped at the town hall, and depreciated monthly by 1 per cent of their nominal value.


It was possible for the holders to 'revalue' them by the purchase, before the end of each month, of stamps from the town hall, in the process creating a relief fund.


'The small town of Worgl in the Austrian Tyrol, suffering like every other town in Europe and America from the Great Depression, took the unlikely step of issuing its own currency'


The depreciation not only encouraged rapid circulation, but also the payment of taxes, past, current and upcoming. These taxes were used to provide social and public services.


At the end of each year, it was required that the notes be turned in for new ones. No charge was made for the transaction if the required stamps had been affixed. Subject to a 2 per cent deduction, the town also undertook to convert the labour notes into Austrian schillings.


To facilitate this conversion at any time - and thereby provide a cover for the relief certificates - the trustees deposited at the local Raiffeisen Bank (credit union) an amount in Austrian currency equivalent to the issued local currency.


The money was loaned out to trustworthy wholesalers at 6 per cent interest. Interest thereby flowed back into the town treasury, yet further facilitating transactions with the 'outside' world.


Wages paid in the new money


The burgomaster put this money into circulation by paying 50 per cent - later raised to 75 per cent - of the wages of the town's clerical and manual workers in the new money.

 

The workers found that all businesses in Worgl accepted the currency in payment and at face value, and the notes returned to the parish treasury as dues and taxes. Economically, there was no inflation, and politically, the money was unanimously acceptable to all the municipal parties.

 

'Because it was a depreciating currency, it circulated with rapidity, boosting the local economy. Further, many paid their taxes in advance because it was financially advantageous'


Because it was a depreciating currency, it circulated with rapidity, boosting the local economy. Also, not only did people merely pay their current taxes in the currency, but also discharged their tax arrears. Further, many paid their taxes in advance because it was financially advantageous.


Apart from the obvious employment benefits, physical assets were created. These included improvements in the main street and its drainage system, street lighting, new road construction, manufacturing of kerb stones and drainage pipes, construction of a ski-jumping platform, and fencing and construction of a new water reservoir.


Although the Worgl money was unanimously accepted at the local level, there was great opposition from two centralist forces - the Tyrol Labour Party and the Austrian State Bank.


In both cases, there seemed to be the fear of the experiment spreading, for the idea was copied by the neighbouring town of Kirchbichel. The town monies were valid in both places. Other towns in the Tyrol also decided on issuing depreciating money, but did not proceed because of threats from the State Bank.


The experiment curtailed


Ultimately, the State Bank threatened legal proceedings and on September 1st 1933, the experiment was terminated.


In an analysis, Unterguggenberger concluded that depreciating currency fulfils the functions of money much better than unvarying nationalised currency. He noted that no difficulties or complaints had arisen in making payments in the new currency or in affixing stamps, and that the local currency was accepted by all businesses very shortly after starting the project.

 

He also suggested that, not only did it work at the town level, but it could also be applied in larger entities including regions, provinces and the state.


Although the experiment was terminated in Austria, it was noted and tried elsewhere. In Canada, for instance, the government of the Province of Alberta set up a provincial depreciating currency in the mid-1930s in the form of Prosperity Certificates.


The 'danger' of its success prompted the central government to ban it.


What lessons?


What lessons can be learnt? First and foremost, that there is nothing sacred about the 'national' money with which we grew up.


Money - as information technology, metal chips, paper slips and electronic blips - is what people will accept in payment for goods and services and taxes.


'It was the fact that the community or regional money could be used to pay taxes, and also exchanged for familiar national currency, that made it acceptable and successful'


If they will accept community or regional money, then it is as good as Ls or $s or Dms. It was the fact that the community or regional money could be used to pay taxes, and also exchanged for familiar national currency, that made it acceptable and successful.

 

'A depressed community in an apparently hopeless situation found a way of ending the seemingly insoluble problems of unemployment'


The most important lesson, however, is that a depressed community in an apparently hopeless situation found a way of ending the seemingly insoluble problems of unemployment, local decline and lack of a reliable tax base, symbiotically through the use of community-owned currency.


The prime candidate for the cause of community and regional decline is the centralised banking and money system. By definition, 'national' money is political.

 

The banks are also political in as much as they make policies to siphon off local wealth and value into their central financial vortex.

 

'The centralised banks collect money from the regions in a nation and invest in a booming area'

 

This vortex is well described by Myrdal's 'cumulative causation effect.' The centralised banks collect money from the regions in a nation and invest in a booming area, creating a further boom, which demands more national money from the regions, which creates...

 

Conversely and concurrently, the communities and regions are deprived of their wealth - via the national money - to feed the voracious appetite of the centre. Even if some of that money is re-imported into the community or region, it is as externally controlled capital.

 

In the process the communities or regions lose control of their economy, and also their political systems, becoming dispensable 'Regions of Sacrifice'. Scotland is a prime example.


A duplication of the process is now evolving in the push for a European central bank and a single European currency.


From observation and experience, there is no doubt that the European Monetary System will be used to enhance a corridor of centralised financial power running from London to Zurich and connected to the other major financial centres of Europe, including possibly Moscow. The centralisation of power has always created problems, and its abuse comes as no surprise.


The appropriate decentralisation of power, known as the Principle of Subsidiarity, can and should take place. This principle states that the priority for decision-making and action-taking should be at the most decentralised level possible. Only when those decisions and actions impinge upon the well-being of the next larger communities or regions, should those too have an influence.

 

'It will require authorisation to be given to local and regional governments to create their own currency in the form of non-interest bearing local bonds to be used as money'


In practical terms, it will require authorisation to be given to local and regional governments to create their own currency in the form of non-interest-bearing local bonds to be used as money.


Community Barter

 

In discussing these ideas, it is also important to understand the difference between community currency and community barter systems.


A community barter system - like the LETSystem, which is not community currency - is usually based on voluntary organisational sharing of information about goods and services available from individuals in an area. The accounting is usually based either on time or the nationalised currency (pounds, dollars, etc).

 

Such a system has three basic weaknesses:

 

- It tends to be limited in scope to a handful of dedicated practitioners, usually in largely rural or semi-rural areas.


- It does not cater for transactions outside the community.


- It encourages hoarding, rather than the circulation of wealth and energy, and can only expand by recruiting new producers - there are no 'built-in' inducements to encourage the circulation of goods and services.


A community currency, on the other hand, can be used by anyone in the community as a 'means of payment' for any commodity or service.


The only limit to the expansion of its circulation is its acceptability, so it encourages all forms of economic activity. If suitable provision is made for 'convertibility', it can facilitate transactions with people and organisations outside the community, and indeed encourage community 'import replacement'.


Also, of course, communities may agree - as they did in the Tyrol - to accept each other's currency at par.


Workable now?

 

The example of Worgl suggests several prerequisites for success:

 

- The currency be accepted by local government and other 'official' organisations in payment for taxes, rents, licences, etc, and be used by them for their own local payments.


- It must be exchangable into national currency, though some deterrents to conversion - a discount on face value, perhaps - may be needed to prevent the whole issue from disappearing from circulation.

 

- It is essential to encourage the circulation of community money and to discourage 'hoarding', through automatic depreciation.


The demise of the Worgl experiment has its lessons, too. It will be necessary to amend the present situation under which only the state - English or European - can issue money - pounds or ECUs - as legal tender. Otherwise the issuers of community currency, and perhaps even its users, will face state sanctions.


It will also be necessary to persuade workers that they are not being cheated if part or all of their pay is in community currency.


The experiment is surely worth trying, and the growing strength of the regional movement in Britain and Europe suggests that there would be political support in many places for such initiatives. -Source 


Taken from - The alternative money tribe web site


The year was 1932; the world was gripped by the greatest economic depression that it had ever known. One man in a small town decided to try something new to help the people of his community. In doing so the town made economic history. The town was Worgl in the Bavarian province of Germany. To understand the Worgl experiment you have to understand the man behind it. The towns mayor Michael Unterguggenberger.


Michael Unterguggenberger

 

Michael was born into an old Tyrolean peasant family. He lived the life of a poor European without falling into the mental trap of heavy blue-collar work. He apprenticed himself to a master mechanic. After apprenticeship he became a journeyman mechanic. At the age of twenty-one he had his first post at the Worgl railway station. His striving for social justice jeopardized his personal advancement. In taking a stand for his fellow workers as a trade union man, he was not promoted any higher. In 1912 he was elected representative for the union of Innsbruck Rail Engineers in the committee for personnel. Yet to the officials of the Austrian Railroad network he was seen as the person who represented the concerns of the workers against the moneyed interests of the railroad. Later Alex von Muralt would write that Michael Unterguggenberger always stressed that he was not a Marxist.


Wörgl


Worgl was a small town that had grown rapidly in the early 1900’s. Then came the crash of 1929, which quickly spread, into Europe. Michael was town councilor, he soon became deputy mayor. In 1931 he was elected mayor of Worgl. As mayor he had a long list of projects he wanted to accomplish. Projects like repaving roads, street lighting, extending water distribution across the entire town and planting trees along the streets. But in the midst of the depression out of the towns population of 4,500, 1,500 were without a job and 200 families were penniless.

 

Silvio Gesell


Michael read and re-read “The Natural Order” by Silvio Gesell. He talked with people in the town and convinced the members of the Worgl Welfare Committee to hold a session on July 5, 1932. In this session he gave a short summary and then proposed a “Distress Relief Program”. He stated that slow circulation of money is the principal cause of the faltering economy. Money as a medium of exchange increasingly vanished out of working people’s hands and accumulates into the hands of the few who collect interest and do not return it back to the market. He proposed that in Worgl the slow-circulating National Bank currency would be replaced by “Certified Compensation Bills”. The council would issue the Bills and the public would accept the Bills for their full nominal value. Bills would be issued in the denominations of 1, 5 and 10 shillings. A total issue of 32,000 Worgl “Money Bills” was printed and put into circulation.


Worgl Money


On July 31, 1932 the town administrator purchased the first lot of Bills from the Welfare Committee for a total face value of 1,800 Schillings and used it to pay wages. These first wages paid out were returned to the community on almost the same day as tax payments. By the third day it was thought that the Bills had been counterfeited because the 1000 Schillings issued had already accounted for 5,100 Schillings in unpaid taxes. Michael Unterguggenberger knew better, the velocity of money had increased and his Worgl money was working.


Worgl money was a stamp script money. The Worgl Bills would depreciate 1% of their nominal value monthly. To prevent this devaluation the owner of the Bill must affix a stamp the value of which is the devaluation on the last day of the month. Stamps were purchased at the parish hall. Because nobody wanted to pay a devaluation (hoarding) fee the Bills were spent as fast as possible.


The reverse side of the Bills were printed with the following declaration: “To all whom it may concern ! Sluggishly circulating money has provoked an unprecedented trade depression and plunged millions into utter misery. Economically considered, the destruction of the world has started. - It is time, through determined and intelligent action, to endeavour to arrest the downward plunge of the trade machine and thereby to save mankind from fratricidal wars, chaos, and dissolution. Human beings live by exchanging their services. Sluggish circulation has largely stopped this exchange and thrown millions of willing workers out of employment. - We must therefore revive this exchange of services and by its means bring the unemployed back to the ranks of the producers. Such is the object of the labour certificate issued by the market town of Wörgl : it softens sufferings dread; it offers work and bread.”

 

Worgl Success

 

Over the 13-month period the Worgl money was in circulation, the mayor carried out all the intended works projects. The council also built new houses, a reservoir, a ski jump, and a bridge. The people also used scrip to replant forests, in anticipation of the future cash flow they would receive from the trees.


Six neighboring villages copied the system successfully. The French Prime Minister, Eduoard Dalladier, made a special visit to see the 'miracle of Wörgl'. 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.

 

 

One eyewitness report was written by Claude Bourdet, master engineer from the Zürich Polytechnic. "I visited Wörgl in August 1933, exactly one year after the launch of the experiment. One has to acknowledge that the result borders on the miraculous. The roads, notorious for their dreadful state, match now the Italian Autostrade. The Mayor's office complex has been beautifully restored as a charming chalet with blossoming gladioli. A new concrete bridge carries the proud plaque: "Built with Free Money in the year 1933." Everywhere one sees new streetlights, as well as one street named after Silvio Gesell.


 The workers at the many building sites are all zealous supporters of the Free Money system. I was in the stores: the Bills are being accepted everywhere alongside with the official money. Prices have not gone up. Some people maintained that the system being experimented in Wörgl prevents the formation of equity, acting as a hidden new way of exploiting the taxpayer. There seems to be a little error in that view. Never before one saw taxpayers not protesting at the top of their voices when parting with their money. In Wörgl no one was protesting. On the contrary, taxes are paid in advance; people are enthusiastic about the experiment and complain bitterly at the National Bank's opposing the issuing of new notes. It is impossible to dub it only a "new form of tax" for the general improvement of Wörgl. One cannot but agree with the Mayor that the new money performs its function far better than the old one. I leave it to the experts to establish if there is inflation despite the 100% cover. Incidentally price increases, the first sign of inflation, do not occur. As far as saving is concerned one can say that the new money favors saving properly so-called rather than hoarding money. As money lost value by keeping it at home, one could avoid the depreciation by depositing in the savings bank.


Wörgl has become a kind of pilgrim shrine for macro-economists from a variety of countries. One can recognize them right away by their learned expressions when discussing the beautifully maintained streets of Wörgl while sitting at restaurant tables. Wörgl's population, proud of their fame, welcomes them warmly."

 

The Central Bank

 

The Central Bank panicked, and decided to assert its monopoly rights by banning complimentary currencies. The case was brought in front of the Austrian Supreme Court, which upheld the Central Banks monopoly over issuing currency. It then became a criminal offence to issue “emergency currency”. Worgl quickly returned to 30% unemployment. Social unrest spread rapidly across Austria. In 1938 Hitler annexed Austria and many people welcomed Hitler as their economic and political savior.

 

Germany was headed towards WWII and with the aftermath of the war much of what happened in pre war Germany just like what happened during the war was suppressed by the world. Germany was being rebuilt in the West’s image. The Worgl experiment was relegated to history. -Source

 

Regional Currency

 

The Wörgl experiment that was conducted from July 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.Wörgl Experiment with Depreciating Money Mckeever Institute of Economic policy Analysis.

 

Other well-documented historical examples include
Emperor Norton's own currency
Prosperity Certificate
WARA (Germany, made illegal in October 1931)

-Source

 

 

Germans get by without the EURO

 

There will soon be 65 regional currencies in operation alongside the EU's, but the financial authorities are not worried yet, writes Ambrose Evans-Pritchard

 

Comment: UK's standoffishness on euro looks better than ever If you live in the Bavarian region of Chiemgau, you can exist for months at a time in a euro-free zone of hills and lakes with a population of half a million people. Restaurants, bakeries, hairdressers and a network of supermarkets will accept the local currency: the Chiemgauer.Notes are exchanged freely like legal tender. You can even use a debit card. Petrol stations are still a problem, but biofuel outlets are signing up. Dentists are next.

 

 

Another 49 regios are in the pipeline. They are outside the control of the political authorities, mostly run by activists, farmers, eco-enthusiasts, anti-globalists, and citizen committees.Some are rural, others circulate like underground money in Berlin and Bremen. Hamburg has two: the Alto and the Hansemark. Italy has its version in the Valchius Valley, in the Alps.

 

The phenomenon, not seen since the Great Depression, has left experts scratching heads at the Bundesbank. The mighty reserve bank, which issues euro notes and coins worth €146bn for a third of the eurozone economy, is relaxed about the risk of monetary anarchy. But it is sufficiently puzzled to publish a 63-page report probing the eruption of this movement.Entitled "Regional Currencies in Germany, Local Competition for the Euro?", it concludes that the tiny scale of this bizarre Schwundgeld - scrip, or specie - poses no threat to the orderly management of the euro system.The rise of the regios dates exactly from the abolition of the D-Mark, replaced in turn by a stateless technocrat currency ever further removed from local life.

 

Rather, the movement is a rejection of "capitalist globalism", pushed by idealists fighting to save regional cultures. The currencies are "luxury" scrip that flourish most in areas with the lowest unemployment. They offer users a "prestige gain" in their neighbourhoods, and a glow of good feeling.School teacher Christian Gelleri launched the Chiemgauer, with the help of pupils, as an experiment in January 2003 at a rate of 1:1 against the euro.Four years later, it spans two districts and is accepted by 550 shops, firms, and companies, including eight supermarkets and four co-operative banks. It has 40 issuing offices, and usage is expanding by 70pc a year. Monthly turnover is still a miniscule €135,000 (£88,000) - or rather C135,000.

 

The Chiemgauer is designed to lose 2pc of its value every quarter, generating a profit for the issuing body as shops claim back the euros. Some 60pc of the profit is used for local charities, sports clubs, kindergartens and such.Shops accepting the money take a loss of up to 5pc, akin to interchange fees paid when credit cards are used. "Merchants pay the cost, but they go along because they don't want to lose business," said Mr Gelleri.The idea stems from the century-old writings of Silvio Gesell, a German economist who believed that interest and rent charged on capital is pernicious.

 

He argued that usury aggravated economic downturns because the wealthy began to horde cash.Austria's Tyrolean community of Wörgl launched a scheme based on his theories, in 1932, reputed to have slashed unemployment at the height of the Depression. It was watched by Keynes and Irving Fisher, who saw a fast-depreciating currency as a possible answer to the 1930s "liquidity trap"."I came to the idea by studying Keynes and Fisher, but for us it is more a way to build regional strength. We're not enemies of Europe," said Mr Gelleri.The Wörgl experiment was declared illegal by Austria's central bank when a further 200 other communities launched copycat currencies, threatening the authority of the state. Though article 35 of the Bundesbank's founding law forbids the circulation of "quasi-currencies", the experiments are being treated as a harmless eccentricity.


However, they are a remarkable expression of people power, and a subtle threat to the established order. Would they be sprouting with so much energy if the Germans still had the D-Mark in their pockets? One suspects not.Reprint from telegraph.co.uk.

 

Alternative money and complementary currency