Answer to Question #189479 in Economics for NICHOLE

Question

What global event was the Austrian city Wörgl reacting to? [K] (200 Words)

Answer 1

Silvio Gesell was a supporter of the nationalization of the land and the abolition of interest on loans.

Gesell believed that the "natural economic order" that ensures the circulation of money is an order in which money becomes a paid public service, the so-called "money with a negative interest",

when the current owners of money are obliged to regularly transfer a certain small amount to the state, as a payment for the right to use the money of the state

emissions.

Free Currency Experiment at Wörgl

The first practical application of Gesell's views was an experiment in 1932 in the Austrian town of Wörgl with a population of 3,000. As a result of the experiment, a bridge was built in the city, the condition of roads was improved,

investment in public services. It was at this time when many European countries were forced to struggle with rising unemployment, the unemployment rate in

Wörgle decreased by 25% over the year. When more than 300 communities in Austria became interested in this model, the National Bank of Austria saw this as a threat to its monopoly.

and banned the printing of free local money. Despite the fact that the dispute lasted a very long time and was considered even in the highest courts of Austria, neither Wörgl nor other European communities were able to repeat this experiment.

The economic miracle of Wörgl

There lived in the small Austrian town of Wörgl one railway worker, more precisely, a steam locomotive driver, who in 1931 was elected the mayor, the Burgo-Mister. His name was Michel Unterguggenberger and he was born into the family of a land-poor peasant in Tyrol. At the age of 12, he was forced to leave school and go to work as an assistant at a sawmill to help the family. But he did not want to stay as an assistant for a long time, and at the age of 15, he became an apprentice to a mechanic in the city of Imst. At that time, the apprentice paid the master for training and Michel had to save a penny for penny, he paid part of the amount later, being already an apprentice. After working as an apprentice for several years, he went on a journey to expand his knowledge and see new countries. His path lay across Lake Constance to Vienna and further to Romania and Germany. So, on his travels, the artisan Mikhel, who was interested in everything, got acquainted with the first forms of the working community: the trade union and the consumer association.

At the age of 21, Michel Unterguggenberger goes to work on the railroad and is sent to the Wörgl junction. Despite doing a good job and striving to do what was assigned to him as best as possible, he does not get promoted because he is a Social Democrat and a trade union activist. In 1912, the union sent him as a representative to the personnel committee of the Austrian State

Railways, to the group "Locomotive brigades of the Innsbruck section". At the end of the First World War, he was elected as a district leader, then as a deputy

the burgomaster and in 1931 he became burgomaster of the city of Wörgl with all its 4216 inhabitants.

 

Dozens of books and hundreds of studies have been written about the global economic crisis of the 1920s and 1930s. It was a time of dire need

unemployed, which largely helped Hitler to come to power in Germany.

In 1930, 310 railway workers worked at the Wörgl junction station, in 1933 there were only 190 of them! Unemployed people fell asleep on their former colleague

whom they chose burgomaster, asking for help. But what could he do? Unemployment was on the rise not only among railroad workers. There were no large factories in the city, and small firms in the city and its districts were falling apart before our eyes;

the number of recipients of unemployment benefits increased. In addition, the number of people who were cared for by the kitchen for the underprivileged increased; in 1932 there were 200 of those “excluded from the tax roll”.