Herr Hebecker Invents The Wara
US National debt $16,185,309,831.
Herr Hebecker, owner of a small bankrupt coal mine in Schwanenkirchen, Bavaria, decided in a desperate effort to pay his workers in coal instead of Reichsmark. He issued a local scrip--which he called "Wara"--redeemable in coal. On the back were small squares where stamps could be applied. A bill would remain valid only if the stamp for the current month had been applied. This negative interest charge was justified as a "storage cost." The workers paid for their food and local services with these Wara. For example, the baker had no real choice but to accept them, and convinced his wheat suppliers to accept them in turn. The process was so successful that by 1931 this Freiwirtschaff (free economy) movement had spread through all of Germany, involving more than 2,000 corporations and a variety of commodities as backing for the Wara.
By February the FED has cut the prime rate from 6% to 4% it expands the money supply with a major purchase of US securities then for a year and a half does almost nothing.
"Liquidate labor, liquidate stocks, liquidate real estate values will be adjusted, and enterprising people will pick up the wreck from less-competent people." - Andrew Mellon, Secretary of the Treasury
The Supreme Court rules that the monopoly U.S. Steel does not violate anti-trust laws as long as competition exists, no matter how negligible.
The first bank panic occurs later this year.
The stock market crash and banking collapse in the United States sparks a global downturn, including a second downturn in the U.S., the Recession of 1937.
Professor Kondratieff is arrested and sentenced to the Russian Gulag in Siberia
In November, the German Central Bank, on the basis of its monopoly on currency creation, prohibited the use of Wara, ending the free economy movement.
A second banking panic occurs in the spring.
Unemployment rises to 15.9%.
Great Britain and 40 other nations abandon the gold standard for currency in order to devalue their currencies and expand their money supply; Hoover and Congress refuse to do likewise.