The Wörgl experiment was ended by paper, and most of the paper survives in the archive of the town’s Heimatmuseum, where Gebhard Ottacher read it for a Vienna thesis that became a book in 2007. What follows is the sequence of letters and orders as he gives it, with the passages he quotes. The translations from the German are mine; the dates are his.

July 1932: the nuisance

On 21 July 1932 the Innsbruck branch of the Austrian National Bank read in a local newspaper, the Neueste Zeitung, that the Wörgl council had resolved to issue free money. It reported to the bank’s directorate in Vienna on 22 July. The directorate passed the matter to the federal finance ministry the same day, and the same day the ministry’s Kerschagl telegraphed the governor of Tyrol that this issue of money tokens was to be stopped “with all speed” and a suitable inquiry opened. On 23 July the bank’s head office wrote to its Innsbruck branch that through the government “steps have been taken to put a stop to this nuisance”. The German is wegen Abstellung dieses Unfugs; Unfug is the word for mischief, a nuisance, something not to be taken seriously. The first note was paid out on 31 July.

August 1932: the district officer

Under the Tyrolean municipal code the body that supervised a commune was the district office, the Bezirkshauptmannschaft, at Kufstein, and the district officer was Janetschek. On 9 August 1932 he gave the provincial government his view of the scheme. He could not see in the planned issue of labour certificates an issue of emergency money that would infringe the bank’s privilege, “since it is not a generally used medium of exchange which every person in the commune must accept at face value, but rather the introduction of a kind of cashless payment,” and he called it an attempt deserving of recognition. On 19 August the mayor and a delegation that included an industrialist who presided over a chamber of commerce, Peter Westen, and the Swiss journalist Fritz Schwarz were received in Vienna by the minister of education, Anton Rintelen, who showed, Schwarz says, full understanding for the theory. In September the government of Liechtenstein wrote to Wörgl for information. On 27 October the Innsbruck branch reported to the bank, on the word of a confidential informant, that the notes were still circulating.

January to March 1933: the prohibition and the appeal

On 5 January 1933, on instruction from the federal chancellery, the district office at Kufstein issued its decision, a Bescheid: by issuing certificates “made out to the bearer and used in commerce as tokens of money”, the commune of Wörgl had infringed Article 122 of the statute of the Austrian National Bank, and under section 207 of the Tyrolean municipal code, which obliged the district authorities to set aside resolutions of communes that broke the law, the issue was forbidden.

Article 122 was part of the statute annexed to the federal law of 14 November 1922 that completed the founding of the National Bank, while the League of Nations was reorganising Austria’s finances after the inflation; the statute had the force of law under the third section of that act, and the first section of the act reads, in full: “Neither the federation nor the provinces nor the communes may issue paper money.” The article itself, as Ottacher gives it, made it an offence for anyone to issue without authority “banknotes or other orders made out to the bearer, or non-interest-bearing debt instruments, which could be used in commerce as tokens of money”, on pain of a fine of ten times the value issued and not less than 10,000 schillings. A letter from an official in the justice ministry to the chancellery, cited by Gabriel Kuhn from Thomas Wendel’s thesis, underlined the word könnten, could be, twice: not only a second money was forbidden, but anything that could serve as one.

The town’s appeal to the provincial governor went in on 18 January 1933. In the council’s view there could be no question of a breach of the bank’s privilege, “since the labour certificates are restricted to the circle of persons taking part in the relief action, and lack all the marks of a token of money (cover values, general usability, compulsory acceptance and so on).” The Wörgler Nachrichten of 21 January carried the headline “Free citizens, or serfs of the National Bank? The issue of the Wörgl labour certificates is to be forbidden! Job creation in Austria forbidden by law.” On 22 February the governor’s office rejected the appeal: “This decision is final.” On 7 March the council resolved unanimously to take the case to the Administrative Court and retained a Vienna lawyer, Hans Hollitscher. On 31 March the district office restated the ban and pointed out that a complaint to the court had no suspensive effect.

April to July 1933: the court, the bank and the chancellery

Hollitscher’s complaint reached the court on 27 April 1933. It argued that the certificates were “nothing other than a voluntarily assumed and voluntarily paid municipal levy for the purposes of poor relief, not even imposed on all members of the commune”, and that under a decree of 1918 the competent authority for such matters was the finance ministry, not the chancellery. Muralt, who was in Wörgl in April and wrote his account in early May, recorded that “since the beginning of May the further paying-out of shrinking money has had to be stopped on the order of the district office,” and that the appeal to the court, without suspensive effect, was the commune’s last hope. Ottacher says the works programme went on, now illegally, with the notes already out.

On 12 June the Innsbruck branch wrote to the directorate that the mayor’s propaganda “could have unpleasant consequences, since individual Raiffeisen banks are apparently beginning to flirt with the idea of the said person”. On 16 June the bank wrote to the finance ministry that it should intervene more energetically to prevent the action spreading further and should obtain the immediate withdrawal of the Wörgl certificates without regard to the proceedings before the Administrative Court. On 20 June the Vienna daily Der Tag reported the mayor’s address to about 170 mayors from across Austria: “The plain words of the Tyrolean mayor did not miss their effect,” and a number of those present, of all parties, resolved to form an action committee to demand from the government the authority to issue shrinking money, should the court decide against Wörgl. The parliament had not sat since March. On 5 July the chancellery instructed Tyrol to have the notes withdrawn at once. On 10 July it filed its nine-page answer to the court, which called the action “highly dangerous efforts of an inflationist nature”, which, “even if in the single case they may under some circumstances be of no consequence, would by their general application and imitation be capable of producing the most unwelcome phenomena.”

On 24 July the chancellery issued a general decree (Zl. 184.179-6), printed in the newspapers from 22 August, against the communes that were following Wörgl’s example with “shrinking money, emergency money and the like”: the increase in such issues “compels us to take energetic steps against the further spread of this mischief”, it said, so that the dangers to the currency might be forestalled in time. On 27 July the district officer at Kufstein ordered the withdrawal of the notes by 10 August. On 6 August the mayor wrote asking for the end of the month. The town’s own date for the end is 15 September 1933, “after the authorities in Vienna and Innsbruck had threatened to send in the police”; the mayor’s own report gives 1 September.

The others

Kirchbichl, the next commune, with about 3,000 people, had issued the Wörgl notes under its own control stamp on 1 January 1933; the district office stopped it on 20 April. Ottacher’s table of the communes that followed reads: Wattens, resolved 23 June 1933, forbidden 15 November; Liezen in Styria, 5 May, forbidden 23 August; Lilienfeld in Lower Austria, 7 July; Imst in Tyrol, resolved 24 July 1933, forbidden 25 July. Hopfgarten market and country, Brixen and Westendorf had voted in principle and were waiting for the court. On 4 September 1933 the Social Democratic Volkszeitung of Innsbruck, the paper of the mayor’s own party, approved the ban: since the finance ministry could not make exceptions, “the city of Vienna could just as well issue shrinking money on the very largest scale,” and “to prevent such a disruption of the money economy the chancellery had to intervene energetically and forbid the issue of the shrinking money.”

The court’s judgment of 18 November 1933, case A 504/33, is printed in the court’s own reports for that year at page 345, and the court has put an account of it on its website for its 150th anniversary, with two passages from the reasons. The newspapers of 18 to 20 November add that the province filed no reply and the chancellery’s Sektionsrat Schima appeared for it; that the gallery was so full that for the first time in the court’s history admission had to be restricted, with foreign journalists and the Munich economist Karl Diehl among those present; and that in giving the reasons the president said that the contested order was the district office’s under section 207 of the municipal code, that the notes had been orders to the bearer actually used as tokens of money, that the issue of paper money by communes was expressly forbidden so that no permission could ever have been given, and that “the concept of compulsory acceptance does not belong to the inner essence of a banknote”, since the Wörgl money had been treated as money by a large part of the population and taken and spent again by people outside Wörgl. The page contains two slips, which the file corrects: it gives the denominations as 1, 5 and 20 schillings, and the charge on redemption as 5 per cent. The notes were 1, 5 and 10, and the charge was 2.

Sources

• Gebhard Ottacher, Der Welt ein Zeichen geben: Das Freigeldexperiment von Wörgl 1932/33, Kiel 2007, from his Vienna thesis of 2001, pp. 53 to 59 and the list of unprinted sources at pp. 78 to 80. Every letter and order above, with its date, and the text of Article 122. silvio-gesell.de
• Bundesgesetz vom 14. November 1922, BGBl. 823/1922, on the amendment of the law founding the note bank, first page, for the first section’s wording. alex.onb.ac.at
• Verwaltungsgerichtshof, “Das Wörgler Schwundgeld”, in the court’s 150th-anniversary series, for the case number, the president and the two quoted passages. vwgh.gv.at
• Der Tag, 22 August 1933, p. 10 (the decree of 24 July); Neues Wiener Tagblatt, 18 November 1933, p. 25; Salzburger Chronik, 20 November 1933, pp. 2 to 3; Allgemeiner Tiroler Anzeiger, 20 November 1933, p. 8, on ANNO, read from the page images and translated by me. Tiroler Anzeiger, 20 November 1933, Salzburger Chronik, 20 November 1933
• Alex von Muralt, “Der Wörgler Versuch mit Schwundgeld”, Ständisches Leben 6, 1933, for the note on the order of early May 1933. tauschkreisrohrbach.files.wordpress.com
• Gabriel Kuhn, “Das Wunder von Wörgl”, Gaismair-Jahrbuch 2008, for the justice ministry’s underlined “könnten”. lefttwothree.org