The pervasiveness of monetary plurality in
economic crisis and wars
Wilko von Prittwitz und Gaffron and Georgina M. Gómez
Currencies found and currencies made?
During periods of economic, social and political demise, empirical evidence shows a
recurrent pattern of monetary plurality. Of course, not every crisis in the history of
human kind has triggered the diversification of means of payment, but the link
between chaotic socio-economic contexts and monetary plurality needs further
scrutiny around the question of who creates means of payment and how a particular
thing becomes acceptable as money. What is the relationship between money and
crisis? To what extent is this connection indissoluble?
This chapter explores the relationship between contexts of socio-economic demise
and the experimentation with monetary plurality. Our motivation behind these
questions relates to the incredible diversity of means of payment, the actors that
launch them, and the ways in which they started and ended. The currencies are
probably as varied as the crisis that embedded these episodes of monetary plurality.
We propose that the emergence of means of payment during episodes of severe crisis
cannot be understood only as devices to solve temporary emergencies. Instead, we
contend that they sometimes represent attempts to re-build the world and introduce
changes that could live beyond the crisis, in line with the aspirations and ideals for a
different future. While the emergence of means of payment, most of the time at the
local level, is mostly the consequence of severe distress, some of them have also
represented attempts to re-organise political, social and economic life in a different
direction. The chaotic socio-economic backgrounds hence provide a ‘window of
opportunity’ in a political sense (Kingdon, 2003) for experiments that propose longer
We review a handful of cases in which the proliferation of complementary
currencies emerged bottom upwards in contexts of severe distress. This chapter results
from the collaboration with a numismatic that spent hundreds of hours doing archival
work and analyzing the artistic and symbolical features of currency. Moreover, it
represents an effort to approach money from the material reality of currencies, as
objects that structured the interactions of humans in chaotic periods even when their
entire worlds seemed unstructured. We seek to connect the physical objects, namely
local notes and means of payment, with the contexts in which they were issued and
the agents that may have used them.
We present monetary plurality as a temporary but ubiquitous solution in the
context of war, hyperinflation and depression. In other cases, however, the context
supported the experimentation with alternative monetary conceptions and had longer
time-horizons. We depart from the basic principle that unknown money was better
than no money at all, which meant that socio-economic demise supported the
exceptional dissemination of monetary innovations that in normal circumstances
would attract just a faithful few. The need for means of payment triggered social
experimentation with currencies at the local level and, most importantly, expanded
their public acceptance and circulation. Some historical currency circuits reviewed in
this chapter were extremely vulnerable in terms of their legality and acceptability,
while others evolved within institutional sophistication and lasted in time.
7.2 Historical emergencies and money
The historical experience of the last century offers a broad variety of periods in which
local or complementary currencies were used, normally in situations of economic
collapse or financial scarcity (Schuldt, 1997; Greco, 2001; Kuroda, 2007).
Complementary currencies are created contingently by communities in an effort to
facilitate exchange and income generation based on local identity. Their purpose is
normally not to disconnect from the national monetary system, but to complement it,
adjust it or adapt it (Leyshon and Thrift, 1996; Ingham, 2002; Ingham, 2004). A
severe disruption of the national monetary system, however, disputes the notions of
mere adaptation and complementation because in such cases actors may become
bolder and dare into deep re-invention of money to re-establish a chain of payments or
to protect local identity, or a combination of both.
Across history, we find a myriad of episodes in which emergency situations have
created windows of opportunity to pursue adaptation and invention at the same time.
Critical contexts seem to have weakened the limits between what is strictly allowed or
tolerated by nation states and their sovereign monetary systems, which have
sometimes allowed complementary currencies to emerge (Greco, 2001; Blanc, 2012).
Economic agents turned to more reliable, more accessible or more abundant monies,
whether foreign, privately issued or local.
The tradition of monetary plurality has a long history, as evidenced by plenty of
examples in which monetary plurality raised or resurged in episodes of severe crisis
that provided these windows of opportunities. In Medieval Europe, ‘siege certificates’
(Pick, 1978: 41) are one of the oldest surviving samples of ‘emergency money’ in
modern Europe, and were issued by town hall councils in Europe as needed. During
the siege of cities, metallic money supply was often impossible to sustain, so the local
authorities along with municipal authorities of the city administration and, more
frequently, the respective military commanders would issue siege certificates. Spanish
siege certificates circulated as currency during the siege of the Spanish fortress of
Granada’s Alhambra by the Moors in 1483, for example. In 1574, Leyden (currently
Leiden, the Netherlands) was besieged by the Spaniards, and coins were stamped on
cardboard (the covers of Catholic Church books) instead of precious metal, which was
unavailable, and thereby creating complementary paper ‘siege money’ embedded in
the political sentiment of the event.
Note of the siege of Lyon, France (16th century)
Other examples of complementary currencies issued during conflicts other than
sieges were in Spain by the Catalan villains during the war of the reapers (1640–
1652), or the ‘Billets de confiance’ issued in France (1791–1793) during the French
Revolution. There are also some surviving examples of notes issued during the
French-German War of 1879–1871, Russian pieces printed on leather in Dorpat
(1814, 1818 and 1831) and emergency money (Notgeld) issued in Austria (1848–49
and 1859 to 1869), Poland (1848–49 and 1860–1865), and Germany (for instance, in
Kaiserslauten in 1870–71). Italy (1866–1875) had such large amounts of emergency
currencies that, according to Pick (1978), ‘they are not completely catalogued’. They
also existed in the Americas, for example in Brazil (1895–1896), where the communal
and private emergency issues were meant to alleviate the shortage of small change.
Pick (1978) maintains that there were up to 500 different Brazilian types of
emergency currencies, some with positive interest rates. During the civil war in the
United States, the Southern States issued the so-called ‘Broken Bank Bills’ (1861–
1865), which were emergency currencies used in times of socio-economic demise.
The issuance of complementary currencies in emergency situations was quite
common and Pick’s work (1978) shows us a myriad of similar examples of currencies
during wars and other catastrophes.
With the development of the capitalist system, monetary transactions became more
widespread and paper money became more important, so gradually more central
banks were set up around the world. Central banks were one of the strongest
institutions to pursue the unification of currencies per country in the 20th century.
However, monetary plurality did not end with the dissemination of central banks. In
times of economic demise, cash often became scarce and the amounts and varieties of
emergency currencies continued to grow, as evidenced by the First and the Second
World Wars. In the First one, we can not only find large amounts of emergency
currencies in Germany (1914–1923), Austria (1914–1921), but also in smaller
amounts during the civil war in Mexico (1913–1915). Pick (1978) has documented
approximately 120 Dutch emergency notes from the First World War that may have
inspired other countries to issue small amounts of emergency money, including
Finland, Luxembourg, Italy, Montenegro, Rumania, Sweden, Turkey and Hungary.
During the Second World War, emergency currencies were strictly forbidden in all
occupied territories by the German troops, and only some extremely rare Dutch,
Norwegian, Polish and Yugoslavian notes can be found (Pick, 1978).
Emergency currencies were mostly fiat or paper money with no backup, although
some issuers were able to obtain metals and minted coins as collateral. They were not
only issued in domestic, foreign or historical currency (for example Peseta Silver
Certificates, Gold Mark, Gold Dollar) but also as a claim for local goods such as
grain, sugar, wood and other products depending on the region in which they were
issued. In addition, materials such as porcelain, cardboard, leather, pressed carbon,
wood, velvet or linen were used as more durable substitutes than paper. In 1923, for
example, the newly built aluminium mills in Teningen and Singen (Germany) issued
emergency stamps from printed aluminium foil (Pick, 1967). It would be too long to
detail all complementary currencies that circulated during emergencies and research
on many of these experiences is still pending. The examples given so far suffice to
substantiate that when societies face crisis and war, emergency currencies have been
ubiquitous and often more trusted than official money managed elsewhere by
authorities that appeared too remote and aloof from the alarming daily realities on the
Peseta silver certificate
Historical complementary currencies were used in extreme emergency situations as
means of payment and mediums of exchange, and sometimes as units of account.
Other materials were used as reserve of value because metals and other reliable
currencies were kept for hoarding and, hence, disappeared from the system. In all the
cases of social and economic emergencies described in this chapter, the mechanism of
allocating the different functions of money to different currencies is recurrent, and
confirms that the four inseparable functions that define money, at least in theory, have
been repeatedly separated in practice.
7.3 Emergency currencies after the World Wars
The two World Wars in the 20th century provided the crisis context for emergency
monetary plurality. The terms emergency currencies, emergency script, crisis money,
Notgeld (currency of need in German), municipal notes, emergency script, military
and obsidional coins and paper money (in besieged locations) denote that these are
temporary currencies that circulate during a social, political and economic demise. In
general, emergency currencies take the functions of national currencies temporarily.
After the First World War, several localities and private issuers in Germany,
Switzerland and Austria coined emergency currencies to ameliorate the effects of the
economic crisis caused by the conflict and hyperinflation, although they were never
formally authorised by the government or the national banks. During the conflict, the
central empires had issued great amounts of paper money without collateral in bullion
to cover the costs of the war, which was a cause of the hyperinflation. Municipal
authorities decided to promote bartering in small localities to facilitate trade, and
some gradually issued vouchers that could be used as means of payment. They had a
fixed face value in regular money and they were meant to replace within their
localities the hyperinflationary national notes that were not performing the function as
means of payment. The local alternative notes became known as Notgeld, and
circulated in low amounts within restricted geographical areas. Most of the metals
normally used for minting, such as silver, bronze and copper, were required in the war
effort, so coins were missing. Moreover, people kept these metals as reserve of value,
which aggravated their availability for currency.
While some emergency currencies were simple papers that circulated as small
means of payment, other notes had colourful and elaborate designs in an effort to
increase the appeal and acceptability of these currencies. Some included expiry dates,
details of the territory in which they were valid or the types of payments for which
they were acceptable, such as public utilities. The emergency currencies were
guaranteed by the local governments or the local savings banks, so their circulation
was restricted to the city where they were issued. Many of these notes, in fact, bear
the warning that they are only valid within the limits of the district and for
transactions with the local government.
The post-war economic demise severely affected businesses. Several retailers and
industries also issued their own emergency currencies that circulated as internal
means of payment within a particular sector or client network. The notes were
guaranteed by their own capital funds, in a context in which regular money was scarce
and lost value rapidly due to hyperinflation (Diessner, 2012). Commercial banks
issued low denomination notes, too.
As hyperinflation in Germany worsened, an unthinkable proliferation of
complementary currencies followed. Although such currencies were tolerated, they
were not formally authorised by the central banks. They circulated because the public
accepted them in practice despite their lack of formal legality. The papers multiplied
not only in number but in purpose and coverage as well. The denominations of the
emergency currency notes increased and passed the hundred, thousand, million and
eventually billion marks. At the same time, the quality of the scrip paper decreased in
order to save on its production costs. In the beginning of 1923, hyperinflation in
Germany was out of control and some emergency notes abandoned the mark as unit of
account. They were denominated instead in specific goods such as a certain amount of
wheat, barley, wood, sugar, or coal; these were called Wertbeständige in German,
which translates as ‘fix value notes’.
Goldmark Freistaat Preussen 1.05 = 1/dollar USA
The emergency currencies were generally conceived as surrogates for the regular
money for a temporary period. Towards the end of 1923, inflation was curbed and a
new national currency was introduced, so the usage of emergency currencies was
gradually abandoned or the public stopped accepting them. Diessner (2012) estimated
that emergency currencies were definitely withdrawn by 1924. Notgeld was
associated with hunger and calamity, and these notes were not popular among the
general public. Eventually they were left as toys for children to play with because
they had no real value. Others were burnt by the thousands, as colourful but worthless
paper. Notgeld was precisely what its literal translation indicates: the money of an
emergency situation. It appeared in a vacuum of monetary regulation in which local
agents resorted to extraordinary measures to support their daily livelihoods and the
local economy, until the economic and social system could recover. Today, however,
Notgeld has gained both commercial and academic interest, since the demand for
local paper money has increased enormously not only by collectors and for academic
research, but also by curators who purchase them for museums worldwide.
Notgeld could, of course, also be military money, for example, the sadly famous
Concentration Camp Notes (Lagergeld), and the post First and Second World War
banknotes. Pick (1978) mentions issues in Germany, France, Japan and Austria, for
example, those of the Allied forces in Germany (Aliierte Militärbehörde 1945–1948),
which were put into circulation by the allied military authorities of the occupied
territories for the civil populations. They were made by the USA in collaboration with
private printing houses like Forbes Boston and the Bureau of Engraving and Printing.
Allied military bond
The 20th century offers an enormous amount of complementary emergency
currencies and other vast amounts of forms of money such as International Military
Payment Certificates, Obsidional and Military Banknotes, Banker´s Drafts, Liberty
Bonds, Exchequers in the UK or US Treasury Bonds, and the Schatzanweisungen (in
German), known also as War Bonds (Kriegsanleihen), which still have to be
classified. As in Germany, emergency currencies were prohibited in countries like
Holland by the occupying troops; Pick (1978) mentions around 500 different Dutch
currencies, which ‘were withdrawn and are extremely rare today’. We can find similar
amounts of emergency currencies in Norway issued from April to October 1940, as
well as in Poland and Yugoslavia. The merchants in Denmark avoided the prohibition
issuing notes called ‘Frimaerkepenge which were small printed cartons’, according to
Pick (ibid.). A stamp had to be adhered just like on the so-called Spanish ‘Sello
Moneda’ (1936–1939). Miró Agulló (2008) classifies 114 different Spanish
Apart from these emergency currencies, there were other international paper
monies issued and it may be difficult to clearly determine which of these could be
considered emergency currencies. Pick (1978) also notes that after 1911 a vast amount
of banknotes of communal and military origin circulated in China. After the war was
declared by Japan, Americans were forced to leave the Philippines and as often
happens in times of war, they took with them large amounts of cash, so the population
was forced to issue emergency currencies to maintain all payment transactions.
Following a quote by Pick (1978), we have found a rare catalogue by Neil Shafer
(1974), ‘Philippine emergency and guerrilla currency of World War II’, in which
Shafer stated that,
[a]s a result of the war, in 1941 currency from the United States for the Philippines
has basically disappeared. The Philippines was a U.S. territorial possession. In
dire need for a circulating currency, Philippines President Quezon the
establishment of emergency currency boards in the provinces to print notes,
with most of the currency being produced while the Philippines was under
Japanese occupation. These notes served as tangible symbols of resistance and
eventual victory. They were really necessary as a currency and most were
legally issued by the currency boards. Yet, there were perils in circulating the
notes, as the Japanese sometimes tortured and killed those caught with such
notes in their possession.
Mindanao Emergency Currency Board (USA)
After the Second World War from 1945–1955, and as a consequence of political as
well as economic developments, many more countries issued emergency currencies.
Pick (1978) mentions Indonesia, Israel, Italy and Hungary. The banknotes of Italian
Banks from 1975–1976 (Assegni Circolari and Assegni Bancarie) still circulate today
and show that even in current times emergency currencies circulate.
Military payment certificate
Other forms of military and emergency currencies and coupons are still used
worldwide in the military camps of deployed armies. Private companies supply paper
money and local people are recruited for labour, for example, Bosnians working in the
PX in EUFOR (European Union Force) military camps in Bosnia-Herzegovina. In our
research, we have found military payment certificates, phone cards, credit products, as
well as gift cards, food coupons and web based exchange. Perhaps the most famous of
them is the military star exchange and clearance outlet, where we can also find petrol,
tobacco and alcohol among other army and air force products, food coupons and
exchange services for the United States Department of Defence organisation, that
operates the retail stores at U.S. Army and U.S. Air Force bases and posts all over the
7.4 Depreciating currencies in Europe during the
During the inter-war period, the emergency situation lasted longer than the term
‘emergency’ would suggest. The German government eventually managed to get
hyperinflation under control in 1923 and withdrew most of the local emergency
currencies, but the Great Depression hit the country a few years later and the economy
collapsed again in the 1930s. The ideas of the Argentine-German economist Silvio
Gesell attracted the attention of a number of intellectuals as they searched for
alternative explanations and solutions to the extraordinary economic demise. In
relation to monetary innovation, in a posthumously published book, Gesell (1958)
developed the principle that money should be exposed to depreciation to discourage
hoarding and what he considered non-productive generation of income.
The concept of money that loses its value through time has been known in French
as demurrage, in German as Schwund- or Schrumpfgeld and in English as shrinking
or depreciating money. The application of a negative interest rate, as Keynes (1976
) later called it, represented a penalty on its hoarding. In other words, if people
decided to retain the currency instead of using it for subsequent payments, they would
suffer a loss of value equal to a negative interest rate and eventually the complete loss
of its value on the date announced on the scrip itself. The intention behind the
principle of shrinking money is to increase its circulation velocity to feed the chain of
payments of goods and services, in order to stimulate production and exchange in the
local economy. The idea of depreciating money was that the currency runs to the next
transaction. This type of money is at odds with saving but during the Depression the
priority of economic agents was to be enable consumption and, as a result, production
and employment. Gesell conceived depreciation of money as a means to discourage
its hoarding outside the circular flow of goods and services. He was convinced that
one of the main causes of economic crises was the withdrawal of money from the
economic circuit due to speculation or what John Maynard Keynes would later refer
to the problem of ‘liquidity preference’. Gesell believed that people would be pressed
to spend shrinking money as means of payment because if they hoarded it, they would
have to pay for its depreciation.
The French economist Pierre-Joseph Proudhon (1840) made a somewhat different
argument a few decades earlier. Proudhon objected that products like meat, fish or
fruit perish in time, while currency does not. The difference in perishability between
food and money, Proudhon argued, gave money holders an ‘unfair’ advantage over
producers of food, and this difference led to exploitation because producers may have
been obliged to reduce the prices of their perishable goods in order to obtain money
that maintained its value through time.
Fisher (1934) attributed the concept of shrinking money to Gesell and investigated
its early experimentation around the time Gesell died in 1936. Two friends of his,
Hans Timm and Helmut Rödiger, decided to implement the system in Erfurt,
Germany, in October 1929 and launched the Wära Exchange Society, a name that
combines the German word for ‘commodity’ (ware) and ‘durable’ or ‘resistant’, also
used as ‘unit of value’ (Währung). The Wära Exchange Society expanded across the
country and after a while it had offices in all the main cities including Berlin, Bonn,
Hamburg, and Cologne. The society issued vouchers to be used as means of payment
among the members of the exchange group (Tauschgesellschaft) and the currency
included the names of its directors, Timm and Rödiger, as responsible signatories of
the notes (Lindman, 2011). At the back, the vouchers had a table with 24 spaces
where users were required to stick a stamp at the beginning of each fortnight. Keeping
the scrip at the end of the fortnight meant having to add a stamp, so hoarding it
worked as a penalty on the person that prevented the voucher from ‘running to the
next transaction’, and at the same time it worked as an incentive to keep money
demand at the minimum. Stamps costed 0.5 percent of the value of the voucher, so the
notes would depreciate at a rate of 12 percent a year. If members failed to pay the
stamp, the vouchers were simply not accepted in exchange for goods and services.
The Wära vouchers were redeemable for Reichsmarks at any time, but with a charge
of two percent of the value. This implied that the group had to keep a permanent
reserve fund of Reichsmarks to face claims, but it increased the stability of the
By 1931 the Wära vouchers were accepted in about a thousand shops and small
businesses across the county. Members included, for example, dairy producers,
bakeries, print shops, barbers, small restaurants and shops selling furniture, flowers,
books and bikes. Joining the society may not have been their first choice, but they
were persuaded by the scarcity of the national money. They gradually formed an
economic circuit in which money would flow along the circuit rapidly, including
workers that received the vouchers as partial payment for their work. While the notes
served the purpose of facilitating local production and trade, the Wära notes were
never endorsed by the Central Bank of Germany, like it had happened before with the
post-war local emergency currencies.
The experiment with the Wära got significant public attention in relation to the
economic recovery of Schwanenkirchen, a small town in Bayern (Schuldt, 1997). A
mining engineer bought the local bankrupt coal mine in an auction and found it
impossible to raise the working capital to set it to work again. He then contacted the
Wära Society which lent him 50,000 units of complementary currency. The engineer
hired 60 workers willing to accept the complementary currency for up to 90 percent of
their wages. Local shops were reluctant at first to accept the rather unknown currency
but eventually they consented because they were severely affected by the recession at
the time – local money was better than no money at all, they reasoned. Their suppliers
and producers accepted them too, and eventually the vouchers circulated back to the
engineer and coal mine owner in exchange for coal. The circuit was hence completed.
All members tried to buy goods with the Wära as quickly as possible in order to avoid
paying the stamp for the scrip.
Werner Onken (1983: 68, quoted in Schuldt, 1997: 36) described Schwanenkirchen
as an ‘island of prosperity in the Bavarian woods’. The monetary innovation and a full
account of the Wära appeared in several national newspapers. The idea of shrinking
money was not well known at that time and few people actually understood it well. It
ran contrary to the deflationary policies that the government implemented to curb
hyperinflation (Cohrssen, 1932). Irving Fisher claimed that 20,000 Wära circulated in
Germany between 1930 and 1931 and 2.5 million members used them, which the
author considered rather exaggerated (Fisher, 1934: 22). However, not everyone was
so positive about the Wära and in October 1931, the Central Bank prohibited the
issuance and circulation of any means of payment that were not official, on the
argument that these complementary currencies would cause inflation. In accordance
with the new regulation, the Wära scrip stopped circulating immediately, the coal
mine closed and Schwanenkirchen fell back into recession.
Experimentation with money, however, did not end with the prohibition of the
German Central Bank. The Depression did not end and other villages were ready to
design similar bottom-up monetary institutions in an attempt to recover their local
economies. The owner of the coal mine in Schwanenkirchen had a fluent
correspondence with a friend in Austria, who became the major of the village of
Wörgl, Austria, and started another experiment with a complementary currency. In
1932, the mayor of the Austrian town of Wörgl, Michael Unterguggenberger, was
inspired by the Wära and decided to use it in a modified way: a public works
programme funded by complementary currency. Unterguggenberger observed that
with the Depression, local unemployment was soaring and the municipality was
almost bankrupt and heavily indebted to a bank in Innsbruck. With the support of the
constituency and the local council, the major of Wörgl launched a plan of public
works that was financed with the complementary currency issued by the local
The currency, circulated as scrip and a stamp of one percent of the value of the
voucher, had to be paid at the beginning of each month. The aim of the stamp was to
encourage users to spend them rapidly instead of storing them, following the idea of
the circular flow. The Wörgl money was also redeemable for the official schillings at a
discount of two percent. Public servants received half of their wages in
complementary currency which was later increased to 75 percent. Shops and local
firms accepted it because they believed it increased their turnover (von Muralt, 1934)
and the city government also received them as payment for local taxes. Businesses
were naturally not thrilled at the prospect of losing one percent of their income at the
end of the month or two percent if they wanted to redeem it for official money, but the
emergency money was better than facing the Depression. Von Muralt (1934: 51)
reports that businesses were appreciative of the scheme in the context they were
facing in 1932.
With the plan, the financial situation of the local government in Wörgl recovered
significantly as income generation through taxation increased with the depreciation of
the currency, and the payment of arrears was allowed with the complementary
currency because the inhabitants became eager to get rid of it by paying taxes.
Unemployment fell at the same time as it was increasing in the rest of Austria; more
inhabitants accepted getting part of their wages in complementary currency. Their
labour was used to improve local infrastructure, such as the sewage system.
The notes carried a 1932 Wörgl ‘manifesto’ written on the back, significantly titled
‘An Alle’ (to all, in German). The translation of the text in the notes reads as follows,
Slowly circulating money has caused unprecedented needs among millions of
workers around the world. The end of the economy has begun. It is time to act
with determination and prevent wreckage, so the economy can be saved and
humanity can avoid brutal conflicts and wars. Humanity lives on the exchange
of goods and services. Sluggishness in the circulation of money hinders such
trade, causing millions of persons of working age to lose their jobs and their
livelihoods. Circulation must be re-established to safeguard the livelihood of
humanity. That is the aim of the currency of the market town of Wörgl. It
reduces need, supports work and gives bread!’
(Punctuation marks in original; translation by the authors.)
‘Free money’ note with stamps
Several towns in the region around Wörgl, such as Kirchbichel, imitated the
experiment or expressed their intentions to follow. The complementary currencies of
Wörgl and Kirchbichel were accepted on equal terms in both towns, with the aim of
increasing the economic impact. The schemes attracted considerable international
interest, including from Irving Fisher, as will be explained in the next section. There
were many objections to the replication of the scheme across Tyrol and a number of
issues to reflect on, such as the increase in risk for retailers accepting the stamp scrip
for their sales while having to pay for supplies in regular currency. The scheme also
met strong opposition from the Central Bank of Austria, which feared that it would
lose control over the national monetary system if complementary currencies grew.
The bank subsequently prohibited the issuance and circulation of any currency in
Austria, other than its own.
The kind of monetary innovation of the Wära Society across Germany and the
Wörgl in Austria speaks of different intentions and aspirations to those that sustained
the Notgeld or emergency money after the post First World War period. While the
Notgeld appeared as an extraordinary and temporary measure in the context of demise
of the socio-economic system after a major war, the experiments with shrinking
money stem from a desire to implement and further develop the theoretical
elaborations of Gesell and a number of idealists that believed in reforming the
monetary and economic system by practicing them. In these last cases, the social
actors implemented a scheme at the collective local level that entailed a process of
joint reflection and setting of rules within their networks or localities. Examples of
these include the decisions on the amount of interest towards depreciation, the ways to
communicate them to outsiders, the agreements on the percentages of the wages that
would be accepted, and so on. In that sense, the shrinking money experiments are
expressions of efforts to institutionalise solutions at the local level that involve a large
number of agreements, negotiations, rules and mechanisms to enforce them. It seems
the aim was to reform the monetary system beyond the duration of the crisis, although
that context was used as a window of political opportunity (Tarrow, 1998; Kingdon,
2003) to test these alternative currencies.
The post First World War period in the German speaking countries in the 1920s, the
Depression in Central Europe and in the United States in the 1930s, and the Spanish
Civil War in the late 1930s, have severe social and economic crisis in common. While
sharply different in terms of causes, geography, duration and other characteristics, all
four were episodes in which institutions broke down. The social structures that
regulated how agents interacted with each other collapsed, together with the notions
of what was socially acceptable and what was not. The money institutions were not an
exception, as they ceased to be and do what was expected of them. So, who made
money? The variety of places and actors that started complementary currency systems
are as broad as the crises that embedded them and the aims they pursued. We tend to
find that the agents on the ground such as municipal governments, citizens’
organisations and business associations that ventured into issuing complementary
currencies to resolve immediate emergencies.
First and foremost, complementary currencies appeared as devices to resolve the
needs for money in the local economies. In all four cases, there was evidence of
hoarding metal bullion and other currencies perceived as more reliable. The retention
of money as reserve of value quickly affected the availability of means of payment to
perform trade. Stringent monetary policies to curb inflation and the need to use the
metals for the war effort further dried the circulation of money. Demand rose
significantly for small denomination notes that were most commonly used in daily
transactions and by low income segments of the population. The function of money as
means of payment hence collapsed, and the local solution of complementary
currencies emerged as punctual, small scale and temporary for daily transactions.
Complementary currencies apparently emerge first to fill in the gaps left by the
regular monetary system in terms of smaller denomination notes, implying that local
complementary currency systems are essentially low-denomination currencies.
However, this proposition would require further research.
The sequence in these cases suggests that the four key functions of money do not
necessarily fail at the same time. The function of unit of account apparently collapsed
last, and complementary currencies indicated their value in the established unit of
account (marks, pesetas, dollars, etc.). Only in the most extreme cases of the Spanish
Civil War did some of notes refer to essential goods and not include a fixed value in a
monetary unit of account; the local goods that sustained the reproduction of labour or
the labour born to obtain the voucher were used as unit of account to value those
notes. The sequence in which monetary plurality emerged and replaced the functions
of money suggests that the role as unit of account is the ultimate or most essential
function of money. In a discussion on John Maynard Keynes’ Treatise of Money (1976
), Geoffrey Ingham (2004) identifies the unit of account as the primary and
most basic function. In the cases referred to in this chapter, the replacement of an
official unit of account for a local unit of account rarely happened. When it did, and if
the monetary authorities had some capacity to react, the replacement of the unit of
account at the local level was interpreted as a serious contestation to monetary
sovereignty. At the same time, the issuers of the local currencies conceived their new
units of account as the foundations to build a different socio-economic system that
would free them from the central monetary authority.
While the widespread dissemination of complementary currencies can be seen as
the result of the chaos that prevailed during hyperinflation and war, their origins were
bottom-up efforts to recover economic order, or at least some sense of normality. The
creation of local money centres on organising exchanges, and can be analysed as an
attempt to re-configure institutions to sustain circulation and production when these
are interrupted. Agents identify the need for tools of economic organisation and
engage in the creation of institutions – monetary forms – that would perform that role.
The background of chaos supports the emergence and acceptance of complementary
currencies among groups that would normally not be open to such experimentation
because weak money is perceived as a superior solution than no money. In political
terms, the demise provided a window of opportunity to experiment and promote the
restructuring of the social and economic system, although to different extents in the
four cases. Experimentation with money has the political connotation of challenging
the prevalent economic system that regular money serves. In post-war Germany and
Austria, depreciating currencies were tied to Gesell’s anarchist ideas about the
‘natural order’ in which money should be exposed to loss of value like in the case of
agricultural products. In the case of the Spanish Civil War, the dissemination of
political ideas of autonomy by the Popular Front was even more evident. It later
translated into a competition between the two armies for the issuance of currencies
such as currencies of the fascist and currencies of the communist armies, which
defined the ‘enemy’s currencies’ depending on the point of view of the users.
Emergency notes are of great importance for local economies to climb out of social,
political and economic demise. Like other issues in contexts of war and demise, who
makes money becomes an area of contestation, because it denotes who enables
economic life by organising exchanges and also who provides social order.
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