Depression Scrip Needs Research|
June 20, 2013
“It seems axiomatic that whenever a government fails to provide an adequate supply of currency or coin to maintain commercial trade, the people will step in to provide their own to fill the vacuum.” I wrote this for the book covering Depression Scrip prepared by Ralph A. Mitchell and myself and published in 1985. All the instances of locally issued scrip, in the United States or anywhere in the world, basically follow this axiom.
Two months ago in this column the discussion centered on Depression Scrip of the 1930s period from around the world. We were able to proceed through France at that time. Now we will start with Germany. (Note: In searching for information on the Internet there was some excellent data found especially pertaining to the towns of Schwanenkirchen and Erfurt. Selected parts of that data are presented in this German section.)
The known German issues are mostly from earlier in 1931; the Reichsbank was not happy with their issuance and called a halt to such private currency episodes late that year (see below in the wära and Erfurt stories). Following are the several instances I know of; more may well exist.
Wära notes of Germany
In Erfurt there were some people who came up with their own attempt at applying some of the principles of Silvio Gesell’s “Shrinkage Money” ideas. Two individuals named Hans Timm and Reinhard Rödiger invented the word wära, coming from the words währung (“currency”) and währen (“to last”), in the sense of “lasting” or “stable.” One wära corresponded to one reichsmark.
Each wära bank note had a monthly demurrage fee (like a tax) of 1 percent of its nominal value. This fee could be balanced by the acquisition of demurrage stamps of 1/2, one, two, five and 10 wära-cents (one cent was equal to one reichspfennig).
On the back of the wära bank note was a series of printed fields with dates, where the demurrage stamps could be attached. The idea of this measure was to make the currency worth more to the holder if it was spent sooner rather than later. If held, the face value would decrease unless the stamps were bought and pasted in place on the back. Wära was the first money that “used itself up” and which did not make the owners richer, the longer they kept it.
City of Erfurt
A private wära test by inventors Rodiger and Timm had been conducted, apparently with a good measure of success. After these preparations, they founded the “circulation agency” in Erfurt in October 1929—almost coinciding with the Black Friday stock market crash in New York City, and the coming of the Great Depression.
The system became fairly widely adopted. By 1931, more than 1,000 businesses from all over Germany were members of the agency. Wära bank notes were available in denominations of 1/2, one, two, five, and 10 wära. Wära exchange stations were opened in several cities, where reichsmark currency could be exchanged for wära bank notes. “Wära accepted here!” was an advertisement found on numerous shop display windows. But the government would have none of it; the wära system of private scrip was suppressed by the Reichsbank on Oct. 30, 1931.
City of Gera
Gera issued a note valued in “tauscher” or trade in 1931. Its value shrank weekly with the passage of time, so that if it was spent earlier in its life it was worth more in trade. This system is apparently based on some of the ideas of “Shrinkage Money” promulgated by noted economist Silvio Gesell (1890-1935). Later in this column, we will dwell more on his teachings and some of the note samples he produced.
One strange note I came across some time ago is this 500 million mark inflation note originally issued on Sept. 1, 1923 and overprinted vertically at right for 10 reichsmark, good until July 31, 1933. The issuer’s sponsor appears to be Werbe-Kaiser, which translates roughly to Kaiser advertising. There are also several separately numbered lines of text on back that appear to be regulations about how this note was to be used. The exact nature of the use of this piece is not known to me. Kaiser is a major medical insurance office that offers its services in a number of countries.
City of Pasing
Apparently for a number of months in 1931 and 1932, the city of Pasing issued little booklets of commodity notes in series, each valued at one mark in foodstuffs and other things. I am not sure such small square pieces would have actually circulated, but two are known with dates of February and March 1932.
Town of Schwanenkirchen
There was a small coal mine that went bankrupt in this small Bavarian town, so the owner, Max Hebecker, started to pay his workers in coal instead of reichsmark. He issued a local wära scrip, which was redeemable in coal. As with the other places where the wära was issued, the bill was valid only if a stamp for the current month was applied to the back. This demurrage charge prevented hoarding of money, and workers paid for their food and local services with the wära.
Hebecker paid two-thirds of the wages in wära and one-third in reichsmark so that employees had money for public authorities and local shops that did not accept wära. At information meetings, Hebecker tried to convince business people to accept wära-bills, but they were skeptical. Then he set up a company canteen at the mine and purchased goods for daily consumption only from businesses that were members of the Wära-Exchange Society in other locations. Soon local business people realized how much revenue was being lost, so they offered to accept wära also.
More than 50 newspapers reported about the “Wära-island in the Bavarian Forest” and the “Wära-Wonder of Schwanenkirchen.” The use of this scrip was so successful that soon the so-called Freiwirtschaft (free economy) movement had spread through much of Germany. It involved more than 2,000 corporations and a variety of commodities backing the wära.
Inevitably, the government authorities took notice of events in Schwanenkirchen and tried to do away with this experiment. Since the wära was not actually a currency or money in the legal sense, but only a means of exchange or trade, at first the courts were unable to do anything to forbid it. It was not until Emergency Laws were passed on Oct. 30, 1931, which declared the wära to be emergency money that it could be prohibited by law.
This ruling brought to an end the experiment that had started out in such a hopeful and positive manner after only 1 ½ years. Unemployment again became rampant in the area of Schwanenkirchen. But the “Freigeld” experience could not be hushed up completely. Other places tried similar experiments. It is reported that there were attempts in Austria, Switzerland, France, Spain and the United States.
City of Ulm
The wära notes from Ulm are patterned closely after those from Erfurt, in terms of value and general use. Their circulation was curtailed along with similar issues discussed in preceding paragraphs.
The Royal Borough of Kingston-upon-Thames had considered issuing municipal notes in 1932 of 10 shillings and one pound to pay employees’ wages, and that such notes were to be negotiable only in the borough. Models were prepared and shown, but the idea was rejected by the town council. An illustration of a model is shown.
As far as is known, no other place in England contemplated issuing any emergency notes during this period. There is a proposed issue by “H.M. Currency Office” for 10 shillings under the ephemeral “Currency Act 1933-Jan. 1, 1934.” It was to have dated spaces on back for 12 halfpenny stamps to be affixed. This issue never took place.
The only depression period issue I have ever come across from Italy is a series of “good-fors” from Il Banco di Napoli and dated from 1932 to 1935. These are interest-bearing pieces each has its calculation of interest on plain back. Denominations I am aware of include 1,000, 2,000, 5,000, 10,000 and 20,000 lire. All are perforated cancelled with ANNULATO across face. Every example I have seen comes from the city of Trani, a seaport of Apulia, southern Italy, on the Adriatic Sea, in the new Province of Barletta-Andria-Trani, I have searched the Internet but was unable to find any background on this issue whatsoever.
Another important fact is that there appear to be absolutely no other banks in Italy that felt constrained to issue anything even remotely similar to these. Perhaps it was a locally difficult situation that caused such pieces to be made. I have seen no literature on this issue, nor have I had a chance to discuss it with any Italian specialists.
A single piece of what seems to resemble some sort of scrip issue from Liepaja is known; it is dated April 5, 1931. I am not sure of the face value of this note, and I have no data of any kind relating to it. If anyone can assist in this regard, I and no doubt many readers as well would be very grateful.
In my 1985 book, I included as many scrip pieces from Mexico as I knew of. The total number of recorded issues in that publication is four from the 1930-1933 period, 12 from 1935 and 30 from 1943. A good many, but not all, are illustrated. A few additions and a correction to the book listings follow.
San Luis Potosi State-1934
The catalog indicates all known issue dates are in 1935. The illustrated one-peso note does not have any 1935 date stamped. Its issue date is thus considered to be the printed date under the main heading—Aug. 1, 1934.
Cia. Arrendataria de la
Cerveceria Juarez, S.A.
The above-named beer company issued two denominations of emergency notes drawn on its account at the Ciudad Juarez branch of the Banco Mercantil de Chihuahua, S.A. First is a 25 centavos on pink paper; next is a 50 centavos on gold paper. Both are dated Sept. 1, 1943. City of issue was Ciudad Juarez. This emission is new to the catalog listings.
La Camara Nacional de
Comercio de Guaymas
The Guaymas, Sonora National Chamber of Commerce issued this 50 centavos emergency note dated December 1943. Text on back indicates the reason for such an issue was to facilitate local transactions. This listing is another addition to the catalog.
The name of the issuer as listed in the catalog starts off with the incorrect word, “Compania.” The right word is “Cooperativa” as shown on the 10 centavos note.
Initially I thought the 1943 issues were just as important as any earlier emergency pieces, so I included all I knew of in the 1985 Depression Scrip book. At the time I believed that the 1943 pieces had resulted from a possible silver coin shortage caused by World War II, though I had no substantive proof of anything like that. More recently I have heard talk that the reason such notes exist has to do more with military contingencies rather than any sort of coin scarcity. Many more details need to be brought out (no surprise); I still believe that the 1943 issues are as worthy of inclusion as any of the others.
To my knowledge only a single issue has ever been located that could be some kind of depression-related scrip. It is a 25 zlotych dated Dec. 1, 1933, and apparently issued by the Ministry of Finance of the Polish Republic. It is different in appearance from every other regularly issued Polish note, yet it appears to be official in nature. If any reader can supply additional information on this issue, it would go a long way to help us understand more fully the importance of this piece.
A series of 500- and 1,000-lei 4 percent interest-bearing tax bonds titled Bon de Impozit was issued during the 1933-1934 period by the Romanian Ministry of Finance. Issue dates in 1933 and 1934 are found on the back at right. The law authorizing this issue is on the face with a date of April 8, 1933.
From their issue dates they certainly are depression-related, but their exact use and method of distribution is not known at this time. Their characteristics follow exactly the kind of pattern I look for when attempting to pinpoint Depression Scrip from various parts of the world. As with some others mentioned earlier, more specifics on the need for and use of these pieces is needed.
The Spanish Civil War was on in earnest during 1936, and a great many local issues of all kinds were made during that severe inner conflict. Yet there is possibly one of those issues that appears to be depression-related. The Ayuntamiento Constitucional de Montoro in conjunction with the local Popular Front Committee issued a five and 50 pesetas dated Aug. 24, 1936. The reason I think they might have something to do with the depression is that on the backs these notes have a list showing decreases in face value each week from Aug. 24 to Nov. 15, 1936. Such a list ties in exactly with Silvio Gesell’s ideas of how to make monetary instruments circulate more actively—by simply decreasing their value the longer they are held. I know of no other Spanish issue of this period with such a characteristic.
This town issued scrip in values of two, five, 10, 20 and 50 franken on Jan. 6, 1933. All are uniface and canceled with the word “entwertet” stamped on each piece. The issue did not last long in circulation, as there was official reaction against its use.
The only notes I know of consist of a two and five francs gold issue dated Oct. 14, 1936 and a similar two francs gold but dated Oct. 24, 1937, at Belgrade. Backed by the Ministry of Finance, their text indicates a tie-in with the stabilization of the Kingdom of Yugoslavia; their exact use is not known (as with a number of other issues cited here).
There also exists a type of smaller-size financial instrument that resembles a bond, issued by the government in the mid-1930s. Specifically I know of a 50 francs gold dated Oct. 14, 1934 and a five francs gold dated Oct. 14, 1935. Their exact relationship to any special circumstances existing in Yugoslavia during those troubled years, as with the first issue above, is not known at this time.
The economist Silvio Gesell has been mentioned a number of times throughout this study, also in the article of two months ago covering the earlier part of the alphabet. Next month we will discuss this individual at length and show a number of different note ideas he was sponsoring or that were made based on his “Shrinkage Money” conceptions.
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