A banknote with a monthly upkeep cost
Freigeld—German for “free money”—was an experiment in demurrage, a charge for holding money over time. Its notes did not simply lose purchasing power in the market: to keep a note valid, its owner had to attach a paid stamp at set intervals. Without the stamp, the note could no longer be used as ordinary payment.
That turned waiting into a visible expense. A person who kept cash in a drawer faced a choice: pay to preserve the note’s validity, or pass it on by buying something, paying a worker, or settling a bill. The stamp did not force anyone to spend, but it made holding the currency less attractive than holding conventional cash.
The idea behind the penalty
The design targeted a problem that can arise during a slump. If households and businesses expect conditions to worsen, they may delay purchases and keep money idle. That caution can reduce sales, incomes, and hiring, making the slowdown harder to escape. Freigeld’s supporters hoped that a cost attached to idle cash would encourage money to circulate instead.
The charge was not a tax on every transaction. It applied to keeping a note valid, so money could move from hand to hand without each exchange requiring a stamp. In principle, that distinction rewarded circulation rather than simply penalizing trade.
What the stamps could—and could not—do
A stamp system could make the incentive concrete, but it could not guarantee that people would buy useful goods or that businesses would invest. Spending depends on what is available, what people can afford, and whether they expect future income. People might also try to avoid the charge by switching to other forms of money or storing value in goods.
The striking feature was how directly the policy put an economic theory into people’s hands: the note itself reminded its owner that keeping money had a price. Instead of relying only on interest rates or appeals to confidence, Freigeld tried to change the everyday calculation made at the moment someone chose whether to spend or wait.
