Complementary Currencies/BoK EN - Stamp Scrip

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General Description

Stamp Scrip was emergency currency issued by cooperatives, associations, municipalities, companies and ordinary citizens during the financial and economic crisis of the 1930’s. They re inspired by the ideas of the economist Silvio Gesell. The unique aspect of stamp scrip is that it is free of interest. Instead most stamp scrip is characterized by a demurrage; a fee for hoarding money. Usually it means that, with predetermined intervals, a stamp should be bought and attached to the scrip in order for the scrip to remain valid. In some cases stamp scrip looses its entire value after a predetermined period of time. Stamp scrip usually circulated within small communities of households and businesses, complementary to the national currency. Especially the United States, Germany and Austria witnessed the emergence of stamp scrip such as the ‘Wära’, ‘Arbeitswertscheinen’ and the Chicago Recovery Certificates.


The purpose of stamp scrip was to revitalize economic activity by providing an alternative means of payment during the Great Depression. Because of the crisis people tended to hoard their money with the result that money was short in supply. In addition the purpose of stamp scrip was to speed up economic activity by introducing a demurrage on this alternative means of payment. Contrary to conventional money, stamp scrip is imbued with this mechanism that discourages the hoarding of money and speeds up its circulation. After all no interest is received on savings, and demurrage actually encourages spending.

Design Criteria

Support Medium

Just as ordinary 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 Wära. In case of the Wörgler schillings (Arbeitswertscheinen) the nominal values included 1, 2 and 5. In all cases coins were not in circulation.

Function (medium of exchange, store of value, standard of value)

The ultimate function of stamp scrip was exchange rather than saving. The absence of interest made saving pointless and an expiration date or demurrage stimulated spending stamp scrip. For Wära paper money to remain a valid means of payment, one had to affix a stamp at the cost of 1% of the face value in ordinary currency monthly. With a fee for holding the money, the Wära consequently inhibited an incentive to be spent rather than to be hoarded, as was the case with conventional currency. It should be noted that many stamp scrip in the US differed from the German-Austrian stamp scrip. In many systems, stamps were affixed on a transaction basis, rather than a time basis. This unintentionally stimulated hoarding rather than discouraging it (Gatch 2006: 10; 28; 29). The Gesellian idea behind stamps is off course to implement a ‘tax’ on hoarding money speeding up circulation, and not to increase the tax burden with additional sales or procurement of goods and services (Fisher & Cohrssen 1933, Ch III). Moreover, because both parties in a transaction do not have an interest in affixing a stamp to the scrip, they might have omitted it altogether. Hence, these American stamp scrip suffered a design flaw.

With regard to the standard of value, stamp scrip was usually denominated in national currency. One Wörgler schilling represented one national Schilling for example. Larkin Merchandise bonds at a nominal value could be exchanged at Larkin outlets for products worth 1 dollar. Wära seems to be the exception to the rule as it was denominated in physical units of coal. The amount of coal every Wära represents unfortunately remains unclear.

Issuing procedure

The majority of stamp scrip was either issued on the basis of conventional currency (Wörgl) or the products private companies produced (e.g. Larkin Merchandise Bond, Wära). In Wörgl, a loan amounting to 40.000 Schillings at the Raifeissenbank served as a collateral for the Wörgler Schilling brought into circulation. In case of Schwanenkirchen Wära was redeemable for coal from Max Hebecker’s coalmine. Caslow’s Recovery Certificates are the exception as they turned out not to be backed at all when Caslow’s promise to accept them for advertisement appeared to be false. In most cases the money was brought into circulation by paying worker’s salaries. In case of Schwanenkirchen, in total 60 employees received loans of which two-thirds in Wära and one-third in Deutschmark (INWO). With Wära backed by coal, Wära was inflation-free money as opposed to the previously inflation-plagued Reichsmark. In Wörgl, employees of the municipality were paid half in stamp scrip and half in official currency (Greco 2001; 66). Also Larkin Merchandise Bonds were issued in the form of salary. The exact proportion of Bonds in total salary is unfortunately unknown.

Cost recuperation

The costs of operating and managing stamp scrip are negligible. No tracking of transactions is involved. The costs of printing stamp scrip are low as well; because of high velocity of stamp scrip there’s no need for large numbers of banknotes. The costs for running stamp scrip is unfortunately unknown, and even an educated guess would be risky as most stamp scrip existed for barely a year. Costs however were recuperated internally by means of the demurrage paid for the use of stamp scrip. At predefined dates, the bearer of a note had to buy stamps at the organization of issuance to keep the scrip valid. The scrip contained for example 52 squares; each representing one week carrying a specific date on which a stamp needs to be attached. The scrip was an invalid means of payment without the stamps attached on the dates that expired. Receivers of notes verify if the notes are attached. If they don’t, they have to pay for the stamp themselves in order to pass on the notes.

Once again there exists a remarkable difference between US and European stamp scrip. US stamp scrip was designed to be self-liquidating whereas European scrip was designed to circulate indefinitely. Most American scrip could be exchanged for ordinary currency once an a-priori determined amount of stamps were acquired. For example: in order for a Recovery Certificate to be redeemed for 1 dollar, 54 stamps had to be affixed on the scrip at a cost of 2 cents per stamp (Greco 2001: 59). It means that in total one pays 1.08 dollar; 1 dollar to back the scrip and 8 cents to pay for the organization. Self-liquidating scrip can actually be perceived as a community loan that needs to be paid for in 54 installments. The European ‘Gesellian-style’ demurrage stamp scrip on the contrary, was not designed in a way to be redeemed for ordinary cash after a specific period of time (Greco 2001: 68-69). One was obliged to pay 2 cents stamp tax a month on every Wära in possession. Once all stamps were attached to the scrip, one simply exchanges the scrip for a new empty one with new dates on it. Hence, one Gesellian-style demurrage scrip infinitely delivers income for the issuing organization and to a far larger extent than most American scrip does. The income by far exceeded the costs for running the organization. The additional income was therefore often perceived as a tax income, subsequently spend on the provision of public services.

Implementation and Origin

Already in 1815, the isle of Guernsey, one of the UK Channel Islands, issued its own currency. The Guernsey experiment with issuing local money became known as the Market House Scheme. After the Napoleonic war, the Channel Islands suffered a severe lack of money. It resulted in a collapse of the agrarian economy. The administration faced bankruptcy, as it was heavily indebted and tax revenue decreased drastically. It also had obligations to pay interest to the banks of London, and those often recalled loans overnight. At the same time, the story goes, there was poverty amongst plenty; the materials and manpower were available, but sufficient money to make transactions possible were absent. Hence, almost no public services could be provided. Borrowing money from private banks would cost a stumbling 17 percent interest (Sherwood 2010). The governor of Guernsey decided to have the Island print its own money, complementary to the Pound Sterling and issue it to citizens carrying out public works. The money issued was free of interest, leading to substantial savings for the Guernsey government. The notes were characterized by a ‘sell by date’ giving the bearer the right to exchange a Guernsey note for ordinary Pound Sterling at a predefined date. Tax income was to pay for the exchanging. The government gradually spend Guernsey notes worth 80.000 into circulation. In just 10 years, the Guernsey economy flourished; roads, windmills, sea defenses, schools and a Market House were constructed (Deutsche Wirtschafts Gemeinschaft 2010). Full employment and pricestability were achieved as well. Moreover, Guernsey freed itself from the powerful banks of London; it no longer had any debts and interest to pay. The banks of London perceived Guernsey currency as a threat to their vested interests. They started complaining at the Privy Council arguing that the Guernsey government exceeded its power by issuing notes (Birch 2008). In addition two banks settled on the island in 1827 and 1835. In order to regain monopoly on the issuance of money, they soon flooded the island with Pound Sterling to produce heavy inflation (Sherwood 2010). Panic arose and the national government intervened by limiting the issuance of Guernsey currency whilst the issuance of Pound Sterling could continue. Guernsey currency vanished shortly thereafter . As a consequence the banks were once again able to provide loans in pound sterling to the inhabitants of the Channel Islands, in order to receive interest.

The economist Silvio Gesell experienced the same problem Guernsey had faced, when traveling to Argentina at the end of the 19th century. Argentina experienced a severe economic crisis. Although supply and demand was there, the money as an instrument to facilitate exchange was absent. Gesell became increasingly interested in the role of money circulation in economic prosperity. In his book ‘The Natural Economic Order’ (Gesell 1918) he came up with the idea of ‘demurrage’; a fee for holding money . With (positive) interest there’s a tendency for money to be hoarded rather than to be spend, especially during recession when economic prospects are bleak. The result is an increasing scarcity of money for facilitating transactions. This in turn hinders economic activity often turning depression into recession. Gesell argued that no interest should be paid on savings as it slackens the money circulation. On the contrary, money should depreciate over time, just as the goods it represents. By implementing a demurrage, the circulation of money is increased as possessors are inclined to spend the money as soon as possible or to lend it in order to pass the demurrage onto the debtor. Gesell referred to this type of money as ‘Freigeld’ (interest-free money). The ideas of Gesell show similarities with his colleague on the other side of the Atlantic. In 1911 the American economist Irving Fisher of Yale University already emphasized the importance of the velocity of the circulation of money when introducing his famous equation MV=PT. According to his equation the quantity of Money multiplied by the Velocity of circulation equals average Price levels multiplied by Trade volume.

The ideas of Gesell where implemented in Germany, Austria and the US with the Great Depression of the 1930’s . The 1929 stock market crash was followed by economic distress and unprecedented rates of unemployment. The Weimar Republic and the United States were hit hard by the recession. After the First World War, the Weimar Republic had unbearable obligations under the Treaty of Versailles to pay for war reparations. In an attempt to wipe out war debts, the German government deliberately printed money creating a loss of confidence in the Mark. The notorious hyperinflation of 1923 that resulted from this policy, expressed itself in employees needing wheelbarrows to collect their payment. Getting loans from the US government (the Dawes Plan 1924-1928 and Young Plan 1929) reduced the need to print money. With the introduction of the Rentenmark by Hjalmar Schacht as new president of the Central Bank, the hyperinflation eventually halted. Then by 1929, US loans to Germany were suspended with the outbreak of the financial crisis. German obligations to pay for WW I reparations were only suspended by 1932 at the Lausanne Conference. With more protectionist policies (e.g. Smoot-Hawley Tariff Act) global trade, and German exports in particular, decreased. With decreasing demand, prices fell and deflation became fact. In the early 1930s, money was hoarded and in short supply (Greco 2001:63). Again economic prospects looked grim.

Against this background of monetary instability and economic distress, the Freiwirtschaft (free economy) movement emerged in 1919 (Fisher & Cohrssen 1933: Ch IV). Between 1926 and 1931 the Wära experiment was introduced. In 1929, after three years of preparations, Helmut Rödiger and Hans Timm applied Gesell’s ideas by founding the Wära Exchange Association (Wära Tauschgesellschaft). The Wära Exchange Organization was a service organization offering its own currency. The name of the newly invented currency ‘Wära’ has been derived from the German words Ware (goods) and Währung (currency) (Greco 2001: 63). In 1931, Wära was brought into circulation in different towns of Germany, with Ulm and Erfurt becoming one the first clients of the Wära Exchange Association. Wära was also used in Norden and the nearby island of Norderney (Germany) by Hans Trimborn and Dr. Nordwell (Wikipedia 2010a; 2010b). The village of Schwanenkirchen (Germany) however is the most famous for implementing the Wära because of greater scale and larger impact.

The village of Schwanenkirchen was confronted with massive unemployment when the local coalmine ceased operations in 1929 as result of the great depression. After two years, Max Hebecker, the owner of the coalmine, got a loan of 40.000 Reichsmark. He used the entire loan to buy Wära stamp scrip from the Wära Exchange Association and subsequently reopened the mine in 1931 (Greco 2001: 64). The miners reluctantly accepted to be paid for in Wära after guarantees that it could be spend at local stores or exchanged for a fixed amount of coal at the mine (Lietaer 1999: 125). Local stores were initially hesitant to accept a new type of currency as well. Nevertheless, the shopkeepers, confronted with the reality that merchandise was consequently bought at shops that did accept the new currency, eventually started to accept the currency too. Additionally, they simply had no choice than to accept Wära as customers didn’t have ordinary currency to spend (Fisher & Cohrssen 1933: Ch IV). With the monthly fee for holding Wära, miners and shopkeepers tried to quickly get rid of their salary. Everyone was eager either to spend or lend the Wära. It means that Wära passed from hand to hand much faster than ordinary Reichsmarks. Secondly, as spending Wära was restricted to local inhabitants and businesses only, Wära remained within the confines of the community. Ironically it was the success of the experiment that also caused its end. In October 1931, the German Government passed a law prohibiting the issuance of stamp scrip. The village of Schwanenkirchen consequently returned to economic stagnation.

Nevertheless, the miracle of Schwanenkirchen soon found its successor in neighboring Austria on 5th of July 1932. The town of Wörgl faced high unemployment, unpaid taxes, debts and bankruptcies of local businesses. At the same time, the municipality, with merely 40.000 Austrian schilling cash in hand, had yet a substantial list of social and public services to be provided (Lietaer 1999: 126). By the initiative of mayor Michael Unterguggenberger ‘Arbeitswertscheinen’ (Labor Certificates) were introduced. These became to be known as Wörgler Schillings or, because of the demurrage, Schwundgeld (Shrinking Money). The municipality, lacking ordinary money and almost facing bankruptcy, started to pay its employees half in Reichsmark and half in Wörgler Schilling (Greco 2001: 66). The municipality had negotiated that local shops would accept the Wörgler Schilling with the 40.000 Australian Schilling as a guarantee. It meant that the further one was from the town of Wörgl, the less likely there was a possibility to receive or spend Wörgler Schillings. Hence, Wörgler Schilling was local money. Nevertheless, more and more shops in in the vicinity of Wörgl spontaneously started to accept Wörgler schillings to attract clients, knowing they could spend it at other shops themselves. Hence the acceptance of Wörgler Schillings geographically started to spread like an oil spill.

Irving Fisher had paid close attention to the developments in Schwanenkirchen and Wörgl. He became one of the main proponents of scrip in the USA and wrote a handbook titled ‘Stamp Scrip’ (1933). The miracle of Schwanenkirchen also received attention through numerous publications in newspapers. Fisher’s colleague Hans Cohrssen for example, published an article in The New Republic. Fisher perceived stamp scrip as the ultimate means to alleviate the chronic shortage of money and to solve the economic and financial crisis. On behalf of his efforts and expertise he tried to convince Franklin Delano Roosevelt and the Congress to have the government introduce stamp scrip nationwide (Lietaer 1999: 128; Champ 2009: 37). This might be surprising, but it should be noted that the Americans had quite a lot of experience with complementary currencies several times in history; during the civil war (1861-65) and the panics of 1819, 1833, 1857 and 1907 (Gatch 2006: 4). Roosevelt ultimately changed course (partially under the pressure of the private banks) and with the ‘New Deal’ of 1934 emergency currencies became prohibited.

The first American stamp scrip system of the Great Depression was introduced by Charles Zylstra in Hawarden, Iowa (Gatch 2006). The Hawarden stamp scrip became a precedent for subsequent stamp scrip in other regions of the USA.

Winfield H. Caslow’s ‘Chicago Recovery Certificates’ was one of the most famous (or actually notorious) stamp scrip issued. Caslow’s advertisement company paid its employees’ salary in stamp scrip, which on their turn recruited merchants to accept the scrip as means of payment. Although the charismatic Caslow succeeded to make his Recovery Certificates widely accepted, the project eventually failed. Greco (2001: 60) and Gatch (2006) both point to the over issuance of scrip (approximately 1 million dollar worth of scrip) and the fact that Caslow was unwilling to redeem the issued scrip or to spend stamp revenues on the redemption of scrip. That means that Caslow actually created money out of nothing and received labor without providing anything in return.

A more successful and flawless design was the Larkin Merchandise Bond issued in New York. The Larkin Company owned multiple chain stores in New York. It used merchandise bonds to pay its employees with a guarantee they could spend them at any Larkin outlet in the US. The scrip only disappeared after ordinary currency became more widely available by the end of the crisis.

Impact and Significance

Size and Growth

In Germany the Wära Exchange Association was largely responsible for the growth of stamp scrip. Stamp scrip in Germany and Austria however was short-lived when the central bank prohibited the issuance of stamp scrip and emergency currencies altogether. 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, Ch V). Actually hundreds of stamp scrip programs were active in the US between 1932-1934 (Gatch 2006: 8). The Bureau of Foreign Affairs estimated that over 400 emergency currencies were in circulation by February 1933 (Lowd 2001; Ch3). Especially Roosevelt’s proclamation of a national ‘bank holiday’ in March the same year, 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 instrumentalities were in circulation (Willis and Chapman 1934: 15 in Gatch 2006:1). In most cases the number of participants ranged from a few hundred to a few thousands, usually a substantial segment of the inhabitants of small towns and villages.

Nonetheless, many stamp scrip programs suffered problems as well, with the result that many if not all of them had difficulties to survive. Gatch (2006: 31) describes how in the US, the most significant problem had to do with the exchange of scrip for goods and services. Many vital commodities could only be bought using ordinary currency. The demand, and worth of the scrip tended to depreciate as result of the ability to spent scrip only on a limited variety of products (Gatch 2006: 31).

There was however a more important additional factor responsible for the vanishing of stamp scrip projects. This was essentially the slow recovery of the economy in the wake of World War II. Loren Gatch (2006: 31; 35) describes it as follows: “The 1930s showed that when people needed money, they made it themselves. Yet they also abandoned local money when the standard monetary economy revived. (…) The quantity and quality of the labor power backing the scrip suffered from the chronic readiness of group members to leave, when work for conventional money became available. Even well run enterprises (…) entered rapid decline when employment for money—either in the private economy, or through government support programs—became available to their members. Modern local currency will succeed only if it makes possible economic exchanges, and provides social benefits, that would otherwise not have existed, or which are underprovided by the [conventional] money economy”.

Together with the legal prohibition on ‘emergency currencies’, these factors eventually contributed to the disappearance of most stamp scrip in the countries of Europe and the USA before the outbreak of World War II. The idea of depreciating money only shortly revived after World War II. British economist John Maynard Keynes had strongly supported Gesell’s ideas on money and demurrage (Lietaer 2010). In the 1940’s he proposed to introduce a new type of currency ‘the Bancor’ to facilitate international trade. Central to the Bancor would be the taxing of national account surpluses to stimulate international trade. The proposal was notwithstanding, widely neglected and an alternative monetary order was created with the Bretton Woods conference of 1944 making the dollar the world currency.

So, despite astonishing growth and emergence of stamp scrip in a short period of time, most stamp scrip came abruptly to its end as result of a prohibition on the issuance of stamp scrip. Nowadays, stamp scrip in its traditional form barely exists. Regiogeld is however often perceived as the successor as it resembles most features of stamp scrip.

Achievements and Impediments

In the short period of its existence, stamp scrip had proven to be very successful. The results of implementing Wära were for example remarkable. With increasing economic activity, the entire community eventually revived from stagnation, debts were paid and prosperity pervaded. The news about the miracle of Schwanenkirchen spread to various parts in- and outside Germany, to be copied elsewhere. In Wörgl the effects resembled those of Schwanenkirchen; decreasing debts, decreasing unemployment and increasing prosperity. Much of the received Wörgler Schillings were used to pay taxes, tax arrears as well as taxes in advance when townspeople ran out of things to buy (Weston 2010). During the first month alone 4500 schillings were received in arrears (Greco 2001: 66). 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). Even French Prime Minister Edouard Daladier was attracted to pay a visit to the ‘Wonder of Wörgl’. 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 Arbeitswertscheinen (Greco 2001: 66). The banks referred to their monopoly rights on issuing money, making the Austrian judiciary to decide to prohibit stamp scrip. The immediate cause was the gathering of 170 representatives of neighboring towns and villages interested to follow Wörgl’s example (Lietaer 1999: 127). Kitzbühl, a town in the vicinity of Wörgl, had already copied the experiment by January 1933. Thus, on November 21st 1933, the Wära project came to an end and plans to implement stamp scrip in other municipalities were suspended (Lietaer 1999: 508). Together with the miracle of Schwanenkirchen, the ‘Wonder of Wörgl’ fell eventually into oblivion with the outbreak of World War II.

One of the core purposes of stamp scrip was to speed up the circulation of money and as such economic activity. Stamp scrip indeed circulated much faster than ordinary currency and is generally perceived as the cause for the economic revival of towns and villages using stamp scrip. Lietaer describes how in Wörgl there was merely 5500 schilling of stamp scrip in circulation, but in the 15,5 month the experiment existed, money circulated 416 times, equal to 2.547.360 schilling of economic activity (…). As a consequence investment in productive goods in Wörgl accounted for 219% more than the previous year (1999: 510). The same was true for the Larkin Merchandise Bonds. Approximately $36.000 was issued but because it changed hands 7 times before being redeemed, it was responsible for $250.000 worth of trade (Greco 2001: 61). In the US overall, the velocity of stamp scrip was estimated to be four times that of the dollar in normal times (Fisher & Cohrssen 1933: Ch V).


Arkel, Henk van & Camilo Ramada (2001) Poor because of Money. Utrecht: Strohalm Foundation. [1]

Birch, Toby (2008) The Guernsey Experiment. [2] Retrieved June 1, 2010.

Champ, Bruce (2009) ‘Stamp Scrip: Money People Paid To Use’, Community Currency Magazine, 2009 (May): 35-38. [3]

Deutsche Wirtschafts Gemeinschaft (2010) Freigeld bringt Freiheit und Wohlstand für alle. [4] Retrieved June 1, 2010

Fisher, Irving & Hans R.L. Cohrssen (1933) Stamp Scrip. New York: Adelphi Company Publishers. [5]

Gatch, Loren (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.

Gesell, Silvio (1918 3rd edition.) The Natural Economic Order (translation by Philip Pye, 1958). London: Peter Owen Ltd. [6]

Greco, Thomas H. Jr. (2001) Money. Understanding and Creating Alternatives to Legal Tender. White River Junction, VT: Chelsea Green Publishing.

Kennedy, Margrit (1995) Interest and Inflation Free Money: Creating an Exchange Medium That Works for Everybody and Protects the Earth. Permakultur Publikationen

Lietaer, Bernard A. (1999) The Future of Money: Creating new Wealth, Work and a Wiser World. Post Falls: Century Publishing.

Lietaer, Bernard A. (2010) A “Green” Convertible Currency. [7] Retrieved May 17, 2010

Lowd, Andrew (2001) Alternative Currencies in Theory and Practice; The Ithaca Model Examined in Northern California. M.A. Thesis, Stanford University. Retrieved June 1, 2010

Sherwood (2010) The Guernsey Market House Scheme [8] Retrieved June 6, 2010

Weston, David (2010) Depreciating community-owned currencies. Retrieved May 17, 2010 Wikipedia Germany (2010a) Regiogeld. [9] Retrieved June 1, 2010

Wikipedia Germany (2010b) Wära. [10] Retrieved June 1, 2010

INWO (2010) Initiative fur Natürliches WirtschaftsOrdnung. [11] Retrieved June1, 2010

Additional Readings:

Harper, Joel. W.C. (1948) ‘Scrip and Other Forms of Local Money’, Ph.D. Dissertation, University of Chicago.

Brown, Vernon L. (1941) ‘Scrip and Other Forms of Emergency Currency Issued in the United States During the Depression Years of 1931-1934" 2 Vols. M.A. Thesis, New York University