A recent history of local currency
Submitted by hourexchange on Wed, 2005-04-20 01:18. ::
In May of 2002 Corvallis joined a growing number of communities in
The U.S. that are issuing community scrip. Local currencies, which were once popular during the Great Depression of the 1930s when federal dollars were in short supply, are experiencing a revival in North America, but for new reasons. In the last decade many small towns and inner city neighborhoods have discovered that local scrip helps define regional trading areas, educates consumers about local resources, and builds community. The Corvallis HOUR Exchange joins more than 65 communities in the United States and Canada where you can use colorful bills with names like Dillo Dollars or Tucson Traders.
It started in 1989 when Frank Tortoriello, the owner of a popular restaurant in the Southern Berkshire region of Massachusetts, was rejected for a bank loan to finance a move to a new location. In a small community word spreads quickly. The Deli was a popular lunch spot that had a committed clientele who could afford to take a risk to keep the cherished luncheon in business. It was suggested by the E.F. Schumacher Society that Frank issue Deli Dollars as a self-financing technique. Customers could purchase the notes during a month of sale and redeem them over a years period after The Deli moved to its new location. A local artist donated the design for the notes, which were dated and read redeemable for meals up to a value of ten dollars. Frank sold ten-dollar notes for eight dollars and in thirty days had raised $5,000. Over the next year, Frank repaid the loan, in sandwiches and soup, rather than hard to come by federal dollars. Berkshire Farm Preserve Notes, Monterey General Store Notes, and Kintaro Notes soon followed in what looked like a movement.
Paul Glover of Ithaca, New York saw the media coverage of the Berkshire notes and liked the idea of hand-to-hand currency that let consumers support local business through pre-purchase of products, but broadened the concept. Instead of each business issuing its own notes, he founded a system in which the community as a whole issues local scrip. To learn how this might be done, he spent a week doing research on the history and theory of regional issue of scrip at the E. F. Schumacher Library, and had long discussions with one of its founders, Robert Swann, who has spent a lifetime promoting local currencies.
Back in Ithaca, Paul talked to those who were running small businesses out of their homes. As is typical of rural areas, many people support themselves not with one $25,000-a-year job, but with five $5,000-a- year cottage industries. They bake pies, repair lawn mowers, do landscaping, paint houses, book keep, tutor, and dog sit. Most of these businesses are undercapitalized and underpublicized and would benefit from more customers. Paul asked the owners if they would agree to accept local scrip for their goods and services. With nothing to lose, people signed up.
Everyone initially enrolled was issued forty dollars worth of local scrip, denominated in units of hourly labor. Each HOUR note was valued at ten federal dollars, a fair hourly wage for the region. Paul printed several denominations of HOUR notes with pictures celebrating Ithacas natural features, children, and famous persons. Heat-sensitive ink, high rag-content paper, serial numbers, and embossing helped prevent counterfeiting.
Today the program has issued more than $66,000 of Ithaca HOURS representing several million dollars in trade in local scrip. An informal advisory board, the Municipal Reserve, keeps an eye on how the scrip is circulating and whether and how more should be issued. There are 370 area businesses/contractors, farmers, restaurants, movie theaters, masseurs, the local credit union, that now accept partial payment in Ithaca HOURS. In fact, when bidding the contract for improvements to their new offices, Bill Meyers, the president of Alternatives Federal Credit Union, specified that the contractor must take part payment in Ithaca HOURS. The message was clear: non-locals need not apply. Meyers explained that the winning contractor then became, of necessity, a promoter of Ithaca HOURS to subcontractors, further accelerating trade in scrip and adding new businesses to the growing list of participants. The use of local scrip gives a positive advantage to small, locally-based businesses, which recirculate the wealth they have generated back into the community.
Local currencies are legal, and like U.S. dollars a form of taxable income. The Federal Reserve and the Internal Revenue Service have no prohibitions on local currencies, as long as their value is fixed to the U.S. dollar, the minimum denomination is worth at least $10, and the bills do not look like federal money.
"HOURS help satisfy our need to live in a friendlier world: the more people you have personal exchanges with, the more people you can trust and rely on. And we cant buy trusted friends or neighbors at the mall." - Paul Glover
In a simple barter economy production methods are highly visible. The value of the tomatoes we offer in trade is directly related to our memories of hoeing in the garden, of building the compost pile, and waiting for the rain after planting. And though our picture of the cord of wood for which we are bartering is not as detailed, still we probably have seen our neighbor as he split and stacked the wood from the tree. Barter transactions link us inextricably to a particular place and time.
Money, for all its obvious advantages, introduces an element of abstractness into the economic process. This was less so in the past, when real goods were used as currency, or to back currency. Value was still understood in terms of the amount of labor applied to natural resources.
Most of todays national currencies are no longer commodity-based. They are at best pegged to each other, or tied in a vague way to the general productivity of the country of origin. At the end of the twentieth century money has become altogether abstracted from our daily experience. We talk of earning 6% interest, but have no picture of what our money is doing tonight, whether it is working to build wheelbarrows in Brazil, grow corn on chemically fertilized land in Iowa, or make shoes in a crowded factory in Thailand.
By intentionally narrowing our choices of consumer goods to those locally made, local currencies allow us to know more fully the story of items purchased, stories that include the human beings that made them and the minerals, rivers, plants and animals that gave of their substance to form them. This form of consumerism, formed from real life experience, works to foster responsible consumer choices and re-establish a commitment to the community. In this sense, local currencies become a tool not only for economic development but also for cultural renewal.
Since the local currency was launched in May 2002, over 200 Benton County residents and businesses have participated in the HOUR Exchange and benefited from the local currency that we create and control. As of March 2005, there are 986 HOURS in circulation helping to facilitate local trades and stimulate independent business adding an equivalent of $9860.00 to the local economy!
The HOUR Trader Skills Directory has allowed us to meet and hire each other, make swaps, and get paid for doing what we like to do. The list has grown to over 200 current listings.
The HOUR Exchange is governed by its membership by an elected Board of Trustees. Our program is managed by our Program Coordinator, Christina Calkins. Our vision is to be a model for community based economic systems that promote local commerce, fair wages, environmental responsibility, regional self-sufficiency, and neighborliness.
We invite you to join our network of individuals and businesses in creating a sustainable community economy. For information about the exchange contact Christina Calkins at 753-0595 or email hourexchange@peak.org
History excerpts reprinted with permission from Printing Money, Making Change: the Future of Local Currencies By Susan Witt, E.F. Schumacher Society, http://www.smallisbeautiful.org
This project follows the model set by the ithacahours.org founded in Ithaca New York, in 1991.