Complementary Currencies In

National Commonwealth Group: Complementing + compounding local economic development Complementary Currencies A time-tested way to create jobs and increase purchasing power. Complementary currencies have “The government isn’t the only workers. Merchants, farmers, and community a long history reaching back to entity allowed to issue money. groups have created their own money, too. ancient Egypt. Today around Private citizens and businesses “Each of these examples of private money arose to serve purposes that were not well 1 can too, and throughout U.S. 5,000 are in use worldwide. served by government-provided money. Spain alone has over 400. We history, they often have.” These purposes include having a currency suited for making small purchases, having a highlight a few historical and This clearly affirms National Commonwealth medium of exchange in remote locations, and Group’s most fundamental premise that we contemporary examples where having a means of exchange during financial citizens can legally create our own money panics.” complementary currencies and use it to address our own needs. have supplemented national In the last section titled “Private Money in The article goes on to describe conditions the Internet Age”, the author states, “With currencies to address local in the U.S. from the 1800s to the 2000s, advances in information and communication stating, “The list of those who have issued needs. technology—not the least of which is the private money in the United States is long. ability to embed a wafer-thin computer Besides state and national banks (that is, chip into the equivalent of a credit card—it banks established by state or federal charter), 1 HISTORICAL EXAMPLES seemed certain that a new form of private transportation suppliers such as canal, money, “electronic money,” would arise as turnpike, and railroad companies have issued an alternative to paper money and coins in The United States money. Coal mining and lumber companies everyday transactions. The Federal Reserve (FED) is tasked with have issued money, often called scrip, to pay managing the U.S. monetary system and therefore one would be hard pressed to find a voice with greater authority. In its article Private Money in our Past, Present, and Future published by the Cleveland Federal Reserve, the FED acknowledges the validity of complementary currencies and provides a number of historical examples. The article starts with the statement: 1 Complementary Currencies — Creating Jobs and Increasing Prosperity National Commonwealth Group: Complementing + compounding local economic development “. At this point, they are merely new ways purchase stamps to place on the back of the The article points out that many to make payments. However, it is probably paper currency that acts rather like a tax on of the U.S. stamp scrip programs naïve to believe these means will not develop the use of the money. into new forms of money. Undoubtedly, too, during the Great Depression were there will be new voids in the future that will This FED article Stamp Scrip: Money People modeled on two highly successful Paid to Use published by the Cleveland require new forms of money. Perhaps these examples in Europe, one in voids will be filled by innovations in money Federal Reserve explains that often the provided by the Federal Reserve. But the driving force behind the use of stamp scrips Germany and the other in the town private sector might also jump in and fill was a shortage of national currency cash (as of Wörgl, Austria. them, too.” in Puerto Rico). Schwanenkirchen, Germany Just two years after this article was written, The article goes on to state that, “Stamp the private sector introduced Bitcoin and scrip was issued by municipalities, civic The Bavarian town of Schwanenkirchen is digital money began to really take off. organizations, business organizations, and among the best examples of the Wära, a scrip individuals. Municipalities issued stamp scrip currency introduced throughout Germany Stamp Scrip as a source of revenue. The Great Depression in 1926 as a free economy experiment. It Throughout the history of complementary caused an erosion in taxpayer income, an was introduced by Hans Timm and Helmut currencies in the U.S., one particular increase in taxpayer delinquency rates, and Rödiger, who were followers of German variant called Stamp Scrip was used more even tax strikes in some communities. All of theoretical economist Silvio Gesell. The Wära than any other. Stamp Scrip is a type of these took their toll on municipal revenues. is comparable to current models of local currencies. complementary currency where users have to Municipalities could make up the shortfall by making purchases In Schwanenkirchen, the new owner of a small and paying workers bankrupt coal mine started to pay his workers with stamp scrip. in coal instead of Reichsmark. He issued the Civic organizations Wära as a local scrip which was redeemable issued scrip to in coal. The bill was only valid if a stamp for promote employment the current month was applied to the back of and various civic the note. This demurrage charge prevented projects.” (Note: Local hoarding and workers paid for their food and municipalities on local services with the Wära. Puerto Rico are hurting and our program will According to the FED article, “One could directly address their not have recognized Schwanenkirchen a few needs.) months after work had been resumed at the mine. The village was [prosperous], workers 2 Complementary Currencies — Creating Jobs and Increasing Prosperity National Commonwealth Group: Complementing + compounding local economic development and merchants were free from debts and a currency, Worgl reached full employment. note that, “There was work for all, with new spirit of freedom and life pervaded the The key was stamp scrip. The speed that favorable working conditions and abundant town. Had Herr Hebecker used his 40,000 money changed hands (14 times higher than time for family, community, and personal Reichmarks instead of Wära, his efforts would the national currency) helped keep local pursuits. This epoch was also characterized have inevitably resulted in failure; the money businesses afloat and, in time, brought back by significant advancements in science, would have circulated through only one or the town’s lost jobs. technology, education, literature, music, arts, two hands, each person retaining as much as craftsmanship, and more.” possible and hoarding it because of the hard The residents of Wörgl not only re-paved the times.” streets and rebuilt the water system and all of In addition, the citizens were directly the other projects on their mayor’s long list, responsible for building more than 1,000 The use of this scrip was so they even built new houses, a ski jump and cathedrals in Western Europe, alongside a bridge. The experiment was so successful 350,000 churches and several thousand large successful that by 1931 the (while it lasted) that it became known as the abbeys. so-called Freiwirtschaft (free “Miracle of Wörgl.” Approximately 200 other economy) movement had spread towns throughout Europe wanted to replicate what Wörgl did – until the Austrian central through all of Germany. It involved bank panicked and shut the program down. more than 2,000 corporations and Unemployment soared right back to previous a variety of commodities backed levels, work on civic projects came to a halt the Wära. In November 1931 the and Depression conditions continued. German Central bank prohibited Europe in the Central Middle the use of the Wära. Ages Here we find a sustained period of financial Wörgl, Austria success based on local currencies spread throughout Western Europe. This Austrian experiment was such a success “This medieval building phenomenon is more that it gained worldwide attention (link 1, Chapter 6 from the book, New Money for a remarkable still,” say the authors, “ given link 2 and link 3.) Wörgl was the first town in New World by Bernard Lietaer (co-architect that there was no central authority, church or Austria that effectively managed to redress of the Euro) and Stephen Belgin details a otherwise, in charge of initiating or funding the extreme levels of unemployment caused 250-year period (1040-1290) of widespread the construction of these cathedrals. Contrary by the Great Depression. Before issuing its abundance throughout Western Europe that to popular belief today, these structures own currency, Wörgl suffered from more can be directly attributed to the extensive were neither built by nor belonged to the than 30% unemployment and ongoing use of local currencies. The authors church or nobility. Local nobility and royalty bankruptcies. Within weeks of issuing its 3 Complementary Currencies — Creating Jobs and Increasing Prosperity National Commonwealth Group: Complementing + compounding local economic development customarily did make contributions, but Chiemgauer, Germany these monuments were typically owned and The Chiemgauer is one of the largest of financed by the citizens of the municipalities Germany’s approximately 40 regional where they were built.” currencies. With another 36 in the pipleine, Those efforts initiated over 800 years ago are they are part of the Regiogeld (regional still providing financial returns today. Tourists money) network created to boost local flock to those cathedrals bringing with them economies, retain money in communities, money that they leave in the communities support local non-profits, and promote “buy they visit. Almost nothing in history has local” campaigns. provided a greater return on investment. WIR started in 1934 and now has Named after the region around the Chiemsee over 60,000 users (17% of Swiss lake in Bavaria, the Chiemgauer started in 2 CONTEMPORARY businesses) together responsible for 2003 in the town of Prien am Chiemsee. Both an annual WIR turnover of 1.5 billion a paper and digital currency, Chiemgauer EXAMPLES Euros. transactions are handled through accounts at local branches of several regional cooperative banks.

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