Herr Unterguggenberger Mayor of Worgl Decides To Do Something

1932

Austria

Herr Unterguggenberger, mayor of the Austrian town of Worgl, decided to do something about the 35 percent unemployment of his constituency (typicalfor most of Europe at the time). He convinced the town hall to issue 14,000 Austrian shillings' worth of "stamp scrip," which were covered by exactly the same amount of ordinary shillings deposited in a local bank.

After two years, Worgl became the first Austrian city to achieve full employment. Water distribution was generalized throughout, all of the town was repaved, most houses were repaired and repainted, taxes were being paid early, and forests around the city were replanted.

It is important to recognize that the major impact of this approach did not derive from the initial project launched by the city, but instead had its origin in the numerous individual initiatives taken in the process of recirculating the local currency instead of hoarding it. On the average, the velocity of circulation of the Worgl money was about fourteen times higher than the normal Austrian shillings. In other words, on the average, the same amount of money created fourteen times more jobs.

More than 200 other Austrian communities decided to copy this example, but in the US the president blocked the process. A legal appeal was made all the way to the Supreme Court, where it was lost.

USA

Unemployment rises to 23%.

Congress creates the Reconstruction Finance Corporation.

The Fed makes its first major expansion of the money supply since February 1930.

Congress passes the Federal Home Loan Bank Act and the Glass-Steagall Act of 1932.

Top tax rate is raised from 25 to 63 percent.

Franklin Roosevelt defeats Hoover in the fall election.

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