WIR - a cooperatively owned complementary currency
In 1934, more than a thousand people had gathered in a small Swiss town to hear a local councillor called Werner Zimmerman speak. After a religious ceremony, he started preaching ideas about “free money” and promised that the implementation of these ideas would eradicate poverty while unleashing tremendous scientific progress. While Zimmerman’s ideas did not live up to his promises, I presume they did exceed the expectations of most observers at the time. The speech sparked a series of events that a year later culminated in Zimmerman establishing WIR, a cooperatively owned barter club of small and medium-sized business owners that continues to grow to this day. Instead of using Swiss Francs to trade, the members of WIR issue their own currency and used it to trade with each other. A restaurant owner might pay a carpenter with the currency, who would use it to buy tulips from a florist, who would then spend the currency in the restaurant to buy a meal, etc. In the midst of the Great Depression, when banks restricted lending, WIR stood out as an attractive option and, by the end of the year, had grown from initial 16 founder-members to over 1,000 small businesses that offered 850 different goods and services.
The main theorist behind WIR was a German-French economist Silvio Gesell, who had quite a remarkable CV. For example, he had lived in Argentina, where he managed a successful dental equipment business while residing and helping run a vegetarian commune, before returning to Germany, where he served as the finance minister of the short-lived Bavarian Socialist Republic for exactly one week. He had ideas about how to radically reform the economic system using what he described as “free money and free land”, which influenced many of his contemporaries. For example, John Maynard Keynes described Gesell as “a strange, unduly neglected prophet.” and had an entire chapter about his ideas in the groundbreaking masterpiece “The General Theory of Employment, Interest and Money”.
Roughly simplified, Gesell was critical of usury and wanted to establish a banking system that would be dramatically different. A venture that was based on this type of thinking and stood as one of the inspirations for WIR was the Swedish JAK Bank, which is a rather peculiar firm in the industry as it charges no interest. The members of JAK earn points by having savings in the bank and can use the points to borrow money: neither savings nor loans have any interest attached to them. While JAK has not turned out as a successful WIR, it continues to operate with around 24,000 members in 2021.
Gesell, however, wanted to go even further: he sought to establish a form of money that, instead of earning interest, would “rot like apples” by having a negative interest rate. The intention was to discourage the wealthy from hoarding it while encouraging it to be spent and invested instead. This was how WIR first operated: it issued its own currency with a “tax” on the holding of the currency, which sought to accelerate circulation.
Later on, WIR abandoned many of Gesell’s core ideas and has come to resemble a more conventional bank, with one massive difference: it issues its own currency. Instead of “taxing” holders of the currency, it pays them interest. WIR can afford to do so by charging a small transaction fee and offering its members mortgages and business loans in its own currency with interest well below that of conventional banks.
WIR currently has more than 50,000 members - which add up to nearly one in five Swiss businesses, with the cooperatives symbol being a common sight in store windows next to VISA and Mastercard. Exchanges in WIR represent between 1- 2% of the Swiss GDP, with research showing that the cooperative has played a noticeable role in helping small and medium-sized businesses during periods of economic downturns and made the Swiss economy as a whole more resilient.