I had a deeper look at the Prosperity [Money Reform] website, mentioned before, and found a particularly clear story from a speech by David J. Weston. I hope he will forgive me for putting it here, but you can always follow the link to the source, if you prefer. It comes at the end of the interview, in which he responds in this way:

What are the key points that you like to emphasise?

"We should not preach at people. We need to use humour, analogies, stories, documented examples of currency successes, poems and music, graphics, cartoons, and the like. Replace Fear with Trust. Replace Greed with Generosity. Replace Despair with Hope. Never give up -- the first hundred years are the hardest! Question all assumptions. To think clearly is a political act. "

Here's the story:

In the town of Worgl in the Austrian Tyrol, there stands a bridge whose plaque commemorates the fact that it was built by debt-free, locally created money. This is just a small part of a significant experiment which transformed towns and whole areas out of poverty within 3 months and into prosperity within one year, when there was widespread unemployment in the national economy. In the early 1930s this small town (6000 pop.), was suffering like every other from the Great Depression. Worgl's Burgomaster, Michael Unterguggenberger, faced an empty treasury, because the unemployed citizens could not pay their taxes; there were roads, bridges, buildings and parks needing maintenance, for which the town could not pay; and idle men and women earning no wages. He recognised that all three problems could be solved if he found the connecting links. Those links were the key human information systems of money and a community-owned bank.

The three problems the Burgomaster outlined co-existed because no one had any means of exchange, and his simple solution was to create money locally, with the Town Hall as the bank. He issued numbered "certificates for services rendered" to the value of 32,000 schillings, in denominations of 1, 5 and 10 schillings. These became valid only after being stamped at the Town Hall, and depreciated monthly by 1% 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 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, such as for the payment of wages for the building of streets, drainage and other public works by men who would otherwise have been unemployed. During the first month, the money had circulated 20 times. Taxes were paid, unemployment reduced and local shopkeepers prosperous.

It enabled unemployed people not only to receive a local wage, but also to create useful public assets -- street repair, including a new drainage system, street lighting, construction of a ski jumping platform, bridges and a new water reservoir. The workers found all businesses in Worgl accepted the currency in payment and at face value, and the notes returned to the town treasury bank 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. Because it was a locally controlled bank, the politically ensured 'multiplier effect' helped to create and enhance the well-being of the local community.

It is observable that the more a pound can be circulated and recirculated within a region or community, the more economic activity will take place. In contrast to this is the 'extractor effect' of externally controlled currency and banking, whereby every pound that is extracted is, in effect, a pound lost to the region or community. In Worgl, people were able to pay their current taxes in the currency, and also discharge their tax arrears. Many paid their taxes in advance because it was financially advantageous. Apart from the obvious employment benefits, physical assets were created. Although the Worgl money was unanimously accepted at the local level, there was opposition from two centralist forces -- the Tyrol Labour Party and the Austrian State Bank. There seemed to be the fear of the experiment spreading, for the idea was copied by the neighbouring town, Kirchbichel. The town monies were valid in both places. Other towns in the Tyrol also decided on issuing depreciating money, but didn't proceed due to threats from the State Bank. The nearby town, Kitzbuehl, followed suit with a similar programme. A meeting of 200 Austrian mayors decided unanimously to follow the Worgl example. Prominent people, including Premier Daladier of France, visited and were enthusiastic. The end of the experiment.... it became clear that the financial interests of Austria and of Europe were afraid of this success spreading, as ultimately the State Bank threatened, and took, legal action against it. After a long legal battle, the Austrian Supreme Court decided in favour of the bank, and the innovation was prohibited. The idea spread to Bavaria and was also squelched there. On 1st September 1933, the Worgl experiment was terminated.

Copyright © David Weston