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How to Start a Local Natural Money Circle

As Conceived

E. C. Riegel and Silvio Gesell




Local Natural Money Circle Objective:
To establish a sound money unit with a constant purchasing power within a local group of traders to so promote a more efficient circulation of money and thus increase business and customer loyalty among the group.

How It Will Start:
The ideal entity to commence a money circle is a group of traders on one street or those operating within a given “farmers” market or “flea” market.

 There should not be competition of services within the group so formed.

Natural Money Issue:

It is important to keep things simple. The issuance of printed money negates the need for excessive back office administration as is the case with trading exchanges and barter groups.


The group agrees the level of “credit” it will issue among itself and prints up its own uniquely designed money. Ideally this money should have a stamp of recognition on the back in a different color.


This money is then divided equally among the traders for issuance to customers as an incentive to trade among the participating group.


The names of those accepting the circle’s money should be freely advertised locally.


Backing For the Local Money:

As E.C. Riegel, the great monetary theorist pointed out, money can only be issued by someone who can provide goods or service in return so giving it value.


Thus it is the faithful goods and services provided by the traders in the money circle which backs the money issued.


Therefore the traders who issue the money, to increase each other’s business and gain customer loyalty, must have faith in each other. They must limit the level of money issued with due regard to their ability to provide goods and services in good faith when the money is presented as tender.


In essence the money so issued is “pooled credit”.




The costs of printing, support and administration should be borne by each trader in direct proportion to the value of the money he/she issues.


Back-office matters:

Administration should be kept to a minimum.


The group agrees to meet once a month where all matters pertaining to mutual interest will be discussed.


All matters should be agreed to on the basis of one vote per issuing business.


All agreement must be on the basis of total consensus including the decision to admit new parties to the money circle.


Chairmanship of the circle should be on a strict six month rotating basis. Minutes of the meeting should be kept by the chairman or by someone so appointed by him/her on a voluntary basis.


It is anticipated that the group should modify and improve the workings of the money circle as their experience of money and its potential to expand their business and community grows.


Natural Money Examples:

The Austrian town of Worgl:
On July 5th 1932, in the middle of the Great Depression, the Austrian town of Wörgl introduced a complementary currency. Wörgl was in trouble and was prepared to try anything. Of its population of 4,500, a total of 1,500 people were without a job and 200 families were penniless. The mayor Michael Unterguggenberger had a long list of projects he wanted to accomplish, but there was hardly any money to carry them out. These projects included paving roads, streetlights, extending water distribution across the whole town, and planting trees along the streets.

Rather than spending the 40,000 Austrian schillings in the town’s coffers to start these projects off, he deposited them in a local savings bank as a guarantee to back the issue of a type of complimentary currency known as stamp scrip. The Wörgl currency required a monthly stamp to be stuck on all the circulating notes for them to remain valid, amounting 1% of the each note’s value. The money raised was used to run a soup kitchen that fed 220 families.

Because nobody wanted to pay the holding tax, everyone receiving the notes would spend them as fast as possible. The 40,000 schilling deposit allowed anyone to exchange scrip for 98 per cent of its value in schillings but this offer was rarely taken up. Of all the business in town, only the railway station and the post office refused to accept the local money. Over the 13-month period the project ran, the council not only carried out all the intended works projects, but also built new houses, a reservoir, a ski jump and a bridge.

The key to its success was the fast circulation of scrip within the local economy, 14 times higher than the Schilling. This in turn increased trade, creating extra employment. At the time of the project, unemployment in Wörgl dropped while it rose in the rest of Austria. Six neighboring villages copied the system successfully. The French Prime Minister, Eduoard Dalladier, made a special visit to see the ‘miracle of Wörgl’. In January 1933, the project was replicated in the neighboring city of Kirchbuhl, and in June 1933, Unterguggenburger addressed a meeting with representatives from 170 different towns and villages. Two hundred Austrian townships were interested in adopting the idea. At this point the central bank panicked and decided to assert its monopoly rights by banning complementary currencies [+].

The United States:
In the United States Irving Fisher analyzed the Wörgl case and published various articles about its success. More than 400 cities and thousands of communities all over the US started to issue a form of emergency currency, many of which were stamp scrip. There was a movement to issue a stamp scrip emergency currency nationwide. Senator Bankhead from Alabama presented a bill to the Senate on February 18, 1933 and Representative Petenhill from Indiana presented a bill to the House of Representatives on February 22, 1933.

The stamp scrips in the United States often had a high tax rate, sometimes 1 to 2% per week instead of 1% per month like in Wörgl. This undermined the confidence in the stamp scrip currencies. Irving Fisher approached the Undersecretary of the Treasury, Dean Acheson, to obtain support from the Executive branch for emergency scrip. Acheson asked the opinion of one of his Harvard professors, who advised him that the system would work but that it would imply strongly decentralized decision making, which he should check out with the President. President Roosevelt prohibited any use of emergency currency [+].

In 1956 a few people in Lignières-en-Berry started a revolutionary experiment. They issued vouchers of 100 French francs for 95 French francs. After one month the vouchers could be returned for 98 French francs. A notary saw to it that for each voucher 98 French francs were deposited into a bank account. If the vouchers were not returned, a stamp of 1 franc had to be bought to keep the voucher valid.

Many people took the money because there was three francs of profit to be made by buying vouchers for 95 French francs and returning them for 98 French francs a month later. By spending the vouchers for 100 Francs it was even possible to make a profit of five francs. People tried to spend the vouchers in the shops and the shopkeepers liked the currency because it brought them many additional customers, while it never did cost them more than 2% because the vouchers could be returned for 98 French francs. The shopkeepers also preferred to use the vouchers for the payment.

Most people did not return the vouchers but bought the stamps to keep them valid. From the income of the stamps the cost of buying returned vouchers for 98 French francs could be covered. It did not take long before the currency of Lignières-en-Berry had replaced the French francs. The vouchers spread quickly and the French authorities became alarmed. The vouchers became prohibited.

The British island of Guernsey has issued its own currency, and by doing so, Guernsey has demonstrated that inflation is caused by banks charging interest on money. In her book Web of Debt, Ellen Brown wrote the following:

In 1816 its sea walls were crumbling, its   roads were muddy and only 4 1/2 feet wide. Guernsey’s debt was 19,000 pounds.   The island’s annual income was 3,000 pounds of which 2,400 had to be used to   pay interest on its debt. Not surprisingly, people were leaving Guernsey and   there was little employment. Then the government created and loaned new,   interest-free state notes worth 6,000 pounds. Some 4,000 pounds were used to   start the repairs of the sea walls. In 1820, another 4,500 pounds was issued,   again interest-free.
  In 1821, another 10,000; 1824, 5,000; 1826, 20,000. By 1837,   50,000 pounds had been issued interest free for the primary use of projects   like sea walls, roads, the marketplace, churches, and colleges. This sum more   than doubled the island’s money supply during this thirteen year period, but   there was no inflation. In the year 1914, as the British restricted the   expansion of their money supply due to World War I, the people of Guernsey   commenced to issue another 142,000 pounds over the next four years and never   looked back. By 1958, over 542,000 pounds had been issued, all without   inflation.



Mr. Bart Klein Lkink.

The Natural Economic Order by Silvio Gesell, 1929.



E.C. Riegel

“Flight from Inflation”



Christopher M. Quigley

“The Monetary Theory of E. C. Riegel”



E. C. Riegel

“A New Approach to Freedom”







(C) 11th. May 2012 Christopher M. Quigley


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