In 1932, in the midst of the Great Depression, the small town of Wörgl in Austria successfully experimented with its own local currency (in the form of a stamp scrip) ... They not only re-paved the streets and rebuilt the water system and all of the other projects on Mayor Unterguggenberger’s long list, they even built new houses, a ski jump and a bridge ... every one of the schillings in stamp scrip created between 12 and 14 times more employment than the normal schillings circulating in parallel. (Source)

I would like to understand better what made the currency successful. The article offers this short explanation:

Because a stamp needed to be applied each month (at 1% of face value), everybody who was paid with the stamp scrip made sure he or she was spending it quickly, automatically providing work for others.

What does it mean to "apply a stamp each month"? Does the scrip lose 1% of its face value every month? Is that the incentive for spending? Isn't that economically the equivalent of a normal currency with high inflation? Why was this experiment so successful, and if it truely was, why haven't we seen more experiments like it?

  • $\begingroup$ I can only think of the Monopoly board game (collect money every complete turn). In fact, the computing worlds has similar simulation, i.e. in-game virtual currency, virtual task/supply and virtual demands. $\endgroup$ – mootmoot Feb 21 '17 at 13:42

It was successful because it combined three things at the same time.

Firstly, it increased available currency at a time when currency was scarce for any but the rich - so everyone was more solvent.

Secondly, it had a negative interest rate, so the encouragement was to spend quickly.

And thirdly, it was a local initiative, and belonged to the town, at a time that was particularly introspective - isolationist, even.

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  • $\begingroup$ If it was't a local initiative would have failed? $\endgroup$ – Alfonso Nishikawa Jun 11 '17 at 22:39

From German Wikipedia

Monatlich musste eine Marke zu einem Prozent des Nennwertes der Note gekauft und in ein dafür vorgesehenes Feld auf der Vorderseite des Geldscheins geklebt werden, um ihn gültig zu erhalten.

Which means a stamp had to bought each month at 1% of the face value of the scrip and pasted on the back of the scrip to make it valid.

You are correct to point out that this incentivizes spending just like an inflationary environment.

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