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Stamp Scrip

wära

Introduction

Stamp scrip was a group of complementary currencies launched during the financial and economic crisis of the 1930’s mainly in Germany, Austria and United States (which respectively had the Wära, Arbeitswertscheinen and Chicago Recovery Certificates). Inspired by the principles of economist Silvio Gesell, these currencies were generally issued by cooperatives, associations, municipalities and businesses and set to circulate locally. Stamp scrip was interest-free, and characterized by demurrage (a fee for hoarding money). In practice, this meant that at predetermined intervals of time, a stamp had to be attached to the scrip to maintain its validity.

Typical Purpose

The purpose of Stamp Scrip was to revitalize economic activity by providing an alternative means of exchange during the Great Depression. Because of the crisis people tended to hoard their money with the result that it was tremendously scarce. In contrast, stamp scrip sought to speed up economic activity though demurrage, which stimulated circulation and discouraged hoarding.

Examples

In Germany, the Wära Exchange Association was largely responsible for the growth of stamp scrip. However, the stamp scrip schemes in Germany and Austria were short-lived because the central banks prohibited their issuance as well as that of other emergency currencies. In the US, stamp scrip was introduced in towns and villages like Evanston (Illinois), Russell (Kansas), Rock Rapids (Iowa) Albia (Iowa), Granite Falls (Minnesota), Nevada (Iowa), Pella (Iowa), Magnum (Oklahoma), Eldora (Iowa), Jasper (Minnesota), Merced and Anaheim (California), Lexington (Nebraska), Enid (Oklahoma) (Fisher & Cohrssen, 1933). It turned out that hundreds of stamp scrip schemes were active in the US between 1932-1934 1. Roosevelt’s proclamation of a national ‘bank holiday’ in March 1933 was an even stronger stimulus for creating stamp scrip. As all banks were closed, no one was able to access their bank accounts. In total nearly one billion dollars’ worth of various stamp scrip were in circulation  2.

Gatch 3 describes how in the US, the most significant problem concerned their exchange for goods and services. Many vital commodities could only be bought with legal tender. The demand and value of the scrip therefore tended to depreciate as result of the limited variety of products one could spend them for 4.

There was however, another relevant factor at the root of the vanishing of stamp scrip: the slow recovery of the economy in the wake of World War I. This, along with the legal prohibition from central banks eventually contributed to the disappearance of most stamp scrip in Europe and US before the outbreak of World War II.

Although they existed only for a short period, the stamp scrip had proven to be very successful. For instance, the results of implementing Wära were remarkable. With increasing economic activity, the entire community revived from stagnation, debts were paid and prosperity pervaded. The success of Schwanenkirchen spread to various parts in-and outside Germany, inspiring similar initiatives elsewhere. In Wörgl the effects resembled those of Schwanenkirchen; decreasing debts, lower unemployment and increased prosperity. Much of the received Wörgler Schillings were used to pay taxes, tax arrears as well as taxes in advance when citizens ran out of things to buy (Weston 2010). During the first month alone, 4500 schillings were received in arrears 5. The municipality suddenly had means to invest in local projects such as the construction of roads and a bridge, repairs of the water distribution system and the building of a ski jump (Lietaer, 1999:126).  Although successful, it was once again the Central Bank, fearing the spread of community currencies that urged the Austrian Government to end the circulation of stamp scrip 6. The banks referred to their monopoly rights on issuing money, leading to the Austrian judiciary deciding to prohibit stamp scrip.  Stamp scrip became an example of illegal tender.

4. Typical Details

Stamp scrip in numbers

The US Bureau of Foreign Affairs estimated that over 400 stamp scrip schemes were in circulation by February 1933 7. In the US, most stamp scrip schemes had a number of participants ranging from from a few hundred to a few thousands, usually a substantial segment of the inhabitants of small towns and villages 8.

Function and Unit of Account

The clear function of stamp scrip was to act as a unit of exchange.

Issuance – backing

Just as conventional currency, stamp scrip was physical money in the form of banknotes. In case of the Wära, stamp scrip existed in nominal values of ½, 1, 2, 5 and 10. In case of the Wörgler schillings (Arbeitswertscheinen) the nominal values included 1, 2 and 5. In general, stamp scrip did not take form of coins. In most cases, stamp scrip was brought into circulation by paying worker’s salaries and issued on the basis of conventional currency or on products of private companies (e.g. Larkin Merchandise Bond, Wära).

References

  1. Gatch, L., (2006) Local Scrip in the USA During the 1930s: Lessons for Today?, Paper presented at the Conference on Monetary Regionalisation: Local Currencies as Catalysts for Endogenous Regional Development. Bauhaus-University Weimar, Germany, September 28-29, 2006.: 8
  2. Willis & Chapman, 1934: 15 in Gatch, L., (2006) Local Scrip in the USA During the 1930s: Lessons for Today?, Paper presented at the Conference on Monetary Regionalisation: Local Currencies as Catalysts for Endogenous Regional Development. Bauhaus-University Weimar, Germany, September 28-29, 2006.:1
  3. Gatch, L., (2006) Local Scrip in the USA During the 1930s: Lessons for Today?, Paper presented at the Conference on Monetary Regionalisation: Local Currencies as Catalysts for Endogenous Regional Development. Bauhaus-University Weimar, Germany, September 28-29, 2006.: 31
  4. Gatch, L., (2006) Local Scrip in the USA During the 1930s: Lessons for Today?, Paper presented at the Conference on Monetary Regionalisation: Local Currencies as Catalysts for Endogenous Regional Development. Bauhaus-University Weimar, Germany, September 28-29, 2006.: 31
  5. Greco, T. H. Jr., (2001) Money. Understanding and Creating Alternatives to Legal Tender, White River Junction, VT: Chelsea Green Publishing.: 66
  6. Greco, T. H. Jr., (2001) Money. Understanding and Creating Alternatives to Legal Tender, White River Junction, VT: Chelsea Green Publishing.: 66
  7. Lowd, A., (2001) Alternative Currencies in Theory and Practice; The Ithaca Model Examined in Northern California, M.A. Thesis, Stanford University. Accessed o 4 September 2013 at  <http://www.andrewlowd.com/thesis/>
  8. Lowd, A., (2001) Alternative Currencies in Theory and Practice; The Ithaca Model Examined in Northern California, M.A. Thesis, Stanford University. Accessed o 4 September 2013 at  <http://www.andrewlowd.com/thesis/>
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