Stamp Scrip
Description
Mira Luna:
"Unlike bank-issued Clearing House certificates, it did not rely on the backing of bank deposits for its value. Nor, unlike tax anticipation bonds, did it rely on the tax-raising powers of local governments. Instead stamp scrip is a form of community-generated credit, whereby a payment levied on the use of the scrip builds up a fund to redeem the scrip. In practice, stamp scrip took the form of certificates to which a special stamp had to be affixed each time the scrip was used (transactions-based scrip, championed by Charles Zylstra), or every week or month (time-based scrip, as advocated for by Silvio Gesell and later by Irving Fisher). Some issuers of stamp scrip opted for a hybrid scheme, whereby the stamp needed to be affixed every time the certificate changed hands, or on each stamping date if it had not already been used.
Gesell’s original idea was to discourage the hoarding of money by causing it to depreciate in value if it were not used. Putting the stamp on restored the certificate to its face value. The money collected from the sales of the stamps could then be used to fund the redemption of the scrip.
The stamp money was therefore self-liquidating, in that the use of the certificates themselves generated the money for their ultimate redemption. Gesellian stamp scrip was first used in Wörgl in Austria and Schwanenkirchen in Bavaria in the early years of the Great Depression as a way of paying workers when cash was no longer available. In the latter case, a coal mine was reopened, and the workers paid with special certificates, that needed to be stamped. The result was that the local economy was reinvigorated, as the certificates circulated rapidly around the town." (http://trustcurrency.blogspot.com/2009/12/microfinance-without-finance-self.html)
History
Mira Luna:
"Stamp scrip appeared in the United States first in Anaheim, California in January 1932. After decidedly mixed results in California, the idea caught the public imagination when Zylstra’s Plan was launched in the small Iowa town of Hawarden in October 1932. As a means of providing relief for the unemployed, the businesses of the town agreed to accept certificates in exchange for goods and services, giving 97c of value for a dollar certificate. The remaining 3c was used to purchase a special stamp, which was affixed to the back of the certificate. The certificates would be given to unemployed family men in exchange for labour on make-work projects of value to the community snow removal, road repair and so forth. The men could then use the certificate to buy necessities for their families.
The grocer receiving it could then use it to buy goods or services from other businesses, or pay his light bill or his employees, or perhaps prevail upon his customers to take the certificate as part of their change. The Hawarden scheme was very successful, largely as a result of the publicity it received, which attracted visitors to the town who not only injected money into the local economy, but also often took away a piece of the scrip as a souvenir, or even paid face value for a redeemed example. As a result of the publicity and its apparent success, the Hawarden Plan was widely copied, sometimes with modifications, both in Iowa and further afield
Both varieties of stamp scrip (transactions-based or time-based) have their drawbacks. Transactions-based schemes tended to suffer from slow circulation of the certificates: the issue in Pella, Iowa, circulated at a snail’s pace, and even four years after its introduction, many certificates had not completed the 36 transactions necessary for their redemption[vi]. Time-based scrip speeded up circulation – but led to a rush, rather like a game of musical chairs, when the stamping hour came around. It was usually merchants who were stuck with the cost of stamping each week. Perhaps best was the hybrid scheme, used in towns such as Rock Rapids and Mason City. Here a stamp was required for each use, or, if the scrip hasn’t been used, on a particular date. This reduced the incentive to hang on to the scrip, and tended to reduce the “musical chairs” effect." (http://trustcurrency.blogspot.com/2009/12/microfinance-without-finance-self.html)
More Information
See the article on more contemporary Local Scrip Money