Richard Reisch, Der Kampf um das Wörgler „Gemeinde-Schwundgeld“ (1933)

Richard Reisch’s journal article examines the Wörgl municipal currency experiment through a critical reading of the promotional pamphlet Die Rettung Österreichs; das Wörgl Beispiel. Its central distinction is between the experiment’s apparent practical achievements and the monetary theory invoked to explain them. Reisch disputes the claim that depreciating money possesses an independent power to overcome unemployment, yet credits Wörgl’s mayor with mobilizing confidence, civic solidarity, and tax compliance. His argument moves from the experiment’s legal and political setting through its financing and economic mechanism to a qualified proposal for permitting regulated local trials.

The opening frames enthusiasm for Silvio Gesell’s monetary doctrines as a symptom of overly monetary explanations of the economic crisis. Wörgl’s experiment had encountered Austria’s statutory reservation of note issuance to the Nationalbank; Reisch reports that a definitive administrative-court decision was still pending. The dispute had acquired wider political importance because other municipalities supported Wörgl, some threatening to disclaim responsibility for public order if its currency were prohibited. He treats comparisons with Tyrol’s struggle against Napoleon and denunciations of international high finance as agitation that obscures the actual distribution of costs.

Reisch distinguishes the two parts of the promotional pamphlet. He dismisses Dr. Sonderegger’s exposition of Gesell as failing to address established scholarly objections, concentrating instead on Hans Burgstaller’s account of implementation. Introduced in July 1932 under Mayor Michael Untergugenberger, the certificates were issued in denominations of one, five, and ten schillings against equivalent banknote deposits. They financed emergency-work wages and circulated through local purchases and municipal tax payments. Holders paid a monthly stamp charge of one percent; conversion into banknotes incurred a further two-percent charge. Burgstaller reported that an issue reaching at most 12,600 schillings had accompanied 102,200 schillings of public works, improved tax receipts, and substantial repayment of arrears.

Reisch challenges the inference from these results to the currency’s efficacy. A provincial contribution and subsidies from productive unemployment relief helped finance the works; the latter subsidies were not quantified. Tax-arrears payments supplied another substantial source. Moreover, the banknotes backing the certificates were deposited at interest and lent onward by the savings bank. The experiment therefore expanded circulating purchasing media rather than merely replacing existing money. Reisch calls this a small inflation and insists that immobilizing the backing notes would both prevent duplication and secure redemption liquidity.

His next conceptual move is to redescribe depreciation as taxation:

Dem Schwundgeld haften denn auch alle Nachteile einer Umsatzsteuer an: Insbesondere muß es zu einer Erhöhung der Preise führen, die sich namentlich in den einen längeren Zeitraum und wiederholte Umsätze erforderlichen Produktionen bemerkbar machen würde.

English translation: Depreciating money accordingly also carries all the disadvantages of a turnover tax: in particular, it must lead to an increase in prices, which would become noticeable especially in production processes requiring a longer period and repeated transactions.

The monthly charge and redemption levy become, in this reading, an awkwardly collected municipal turnover tax whose incidence depends on contingencies. Reisch predicts that its burdens would be especially consequential in longer production chains and export trade. An arrangement tolerable within a small locality thus cannot establish the desirability of depreciating money as a general currency.

He then contests the premise that hoarding is the principal obstruction to recovery. Money withheld from business expansion, he argues, generally enters savings institutions and returns to economic activity, albeit chiefly through short-term lending. Reluctance to undertake long-term investment is, for him, an appropriate response to a crisis caused by excessive productive expansion and credit misuse. Compelling expenditure risks purchases of unnecessary goods and discourages saving:

Nicht auf das rasche Geldausgeben, sondern auf eine möglichst vernünftige Verwendung des Geldes durch dessen rationelle Aufteilung auf Konsum und wohlüberlegte Investitionen kommt es an, zu welch letzteren aber Ersparnisse unentbehrlich sind.

English translation: What matters is not spending money quickly, but using it as sensibly as possible through its rational allocation between consumption and carefully considered investments, for which savings are indispensable.

This defense of prudent allocation supplies the article’s alternative to the advocates’ emphasis on circulation speed. It also reverses their political rhetoric: the pressure to spend falls on local residents, not international financiers, since caution during a crisis extends across social groups.

Nevertheless, Reisch does not dismiss Wörgl’s achievements. Instead, he relocates their explanation:

Wenn dem Loblied auf das Wörgler Schwundgeld gegenüber also auch sehr erhebliche Einschränkungen gemacht werden müssen, so beweist der Fall immerhin wieder sehr deutlich, daß das wirtschaftliche Leben in hohem Maße von psychologischen Momenten abhängig ist.

English translation: Thus, although very substantial qualifications must be made to the hymn of praise for Wörgl’s depreciating money, the case nevertheless demonstrates once again very clearly that economic life depends to a high degree on psychological factors.

Apart from the additional monetary expansion, he maintains that ordinary banknotes could have supported the same works and payments had residents shown equivalent cooperation. Untergugenberger’s achievement was to awaken confidence in collective self-help. Acceptance of the certificates, willingness to bear their implicit tax, and especially repayment of overdue municipal taxes mattered more than the threatened loss from holding them.

The conclusion consequently permits a narrower policy possibility than the opening polemic might suggest. Reisch doubts whether Wörgl’s local solidarity can be reproduced everywhere, but considers legally authorized experiments worthwhile under safeguards. Such currency would remain supplementary, confined to small municipalities and subordinate to an intact general currency. The article’s significance lies in this separation of monetary doctrine from institutional practice: it rejects the claimed cure while recognizing that an experiment can organize cooperation and mobilize resources without validating its proponents’ explanation of success.