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Money
02.14.06, 12:00 PM ET New York -
The dollar has some competition in Traverse City, Mich. The contender =
is the=20
Bay Buck, a colorful currency launched last fall. To be sure, it isn't =
about to=20
replace the dollar anytime soon. And at Wal-Mart Stores =
and=20
But Bay Bucks can be used to pay for real goods and services, just = like=20 dollars can. And supporters say that using Bay Bucks promotes the local=20 economy.
Bay Bucks are a local currency--one of a handful circulating in the = U.S.,=20 including Burlington Bread, Ithaca Hours and, soon, BerkShares in = Massachusetts.=20 Besides being fun to trade and talk about, these currencies are meant to = circulate near their home base, not to be ferried off to corporate = headquarters=20 in Arkansas or Seattle.
Local currencies are an old idea. Thousands of them were used during = the=20 Great Depression, according to Bernard Lietaer, author of The Future = of=20 Money and a former currency trader who helped implement the euro. = They're a=20 subset of a grouping called complementary currencies, which also = includes=20 airline frequent-flier programs.
At present, local currencies don't affect the conventional = economy--our=20 dollar economy--much, because they have such limited circulation. Only = $12,000=20 worth of Bay Bucks have been issued, for example, compared with some = $700=20 billion worth of dollars. But the point of local currencies is also to = boost the=20 value of resources, such as local labor, that are undervalued in the = dollar=20 economy.
So are these things legal? Lewis Solomon, a law professor at George=20 Washington University and author of a book about local currencies, says = local=20 currencies are legal with some stipulations, including that they have to = be=20 printed (not coined) and that local money cannot resemble dollars.
By most accounts, local currencies resurfaced in the U.S. in 1991 in = Ithaca,=20 N.Y. Then-resident Paul Glover, now living in Philadelphia, says many of = his=20 neighbors were unemployed or underpaid, and he was looking for a way to = fatten=20 their wallets. He and a group of supporters created the Ithaca Hour, = each one=20 equal to either $10 or one hour of work.
Glover hoped Hours would encourage local spending, thus stimulating = the local=20 economy. Say you purchased something from a local store using an Hour. = In turn,=20 the store would have to pay that Hour to a local supplier or an = employee. A=20 professional charging $60 per hour for his or her services could choose = to=20 charge six Ithaca Hours, or, if he needed some greenbacks, $30 plus = three Ithaca=20 Hours.
The first printing was 2,250 Hours, or the equivalent of $22,500. In = the=20 beginning, a few dozen neighbors signed on. Glover systematically gave = out Hours=20 to people who agreed to accept Hours in return as payment for goods or = services.=20 They printed the names of businesses accepting Hours in a newsletter, so = residents would know where to spend their new money.
"A lot of my work in the first few years was facilitating connections = for the=20 spending of Hours," says Glover. In other words, if a business received = an Hour,=20 there had to be somewhere to spend it.
Now Ithaca has six denominations. There is the Hour, the two Hour, = the half=20 Hour, the quarter Hour, the eighth Hour and the tenth Hour. More than = $100,000=20 worth of Hours have been issued.
The cash itself features pictures of a local waterfall, a steamboat, = children=20 and animals. "Money is a powerful cultural tool," says Glover. = "Therefore,=20 rather than dead presidents, our money has images of local monuments of=20 nature."
To discourage counterfeiters, Hours are printed on good-quality paper = and=20 have faint graphic elements that are hard to reproduce. Every Hour is = stamped=20 with a serial number. Being accepted only locally is itself a deterrent. = In=20 Ithaca, it wouldn't be too hard to trace a faked Hour to its source. = "You=20 wouldn't get very far before somebody would figure it out," says Stephen = Burke,=20 president of the Ithaca Hours board. He says forging an Hour is = considered a=20 felony. And by the way, an Hour is taxable.
Residents and curious tourists can exchange dollars for Hours at a = used=20 bookstore in town. Alternatives Federal Credit Union keeps Hours in its = teller=20 drawers and lets customers use them to pay fees. Several hundred = businesses=20 accept Hours, though they may set limits. Ithaca's cooperative food = market=20 accepts only $5 worth of Hours per transaction--that way, it doesn't = take in=20 more Hours than it can spend.
Following Ithaca's lead, Madison, Wis., launched an Hours program. So = did=20 Corvallis, Ore. The Burlington Currency Project in Burlington, Vt., is = issuing=20 Burlington Bread, a similar currency. Although Bread is not yet as = widely=20 accepted in Burlington as Hours are in Ithaca, a major hurdle was = cleared in=20 2003, when Gardeners Supply Co., a local outfit that generates $60 = million in=20 annual sales, agreed to accept Burlington Bread for up to half the = sticker price=20 of every purchase. The next step is getting the city to accept Bread for = taxes=20 and other city services and to use Bread to partially fund development = projects,=20 like a local bike path.
Not everyone sees the point of made-up money in the modern world. = Local=20 currencies have closed or gone dormant in California, Florida and Kansas = in=20 recent years. Forty miles away from Burlington, in Montpelier, Vt., = supporters=20 of Green Mountain Hours couldn't sign on enough businesses to make the = program=20 work. "The problem is, it intersects the mainstream economy in so many = places,=20 there are a lot of hurdles to overcome," said Steven Gorelick, program = director=20 for a nearby nonprofit. Even the town's new-age gift store, he found, = had=20 suppliers mainly from outside the region.
In progressive but cynical Brooklyn, N.Y., Brooklyn Greenbacks = circulated for=20 five years before petering out in 2001. "The demand really is there," = says Craig=20 Seeman, a Brooklyn producer and editor, who supervised the project and = had=20 hundreds of people using Greenbacks. But organizing everything was a = full-time=20 job, and the organizers needed to pay their rent in plain old dollars. =
But hopes for community cash run deep. "I'd just love it if there = were a New=20 Orleans currency," says Susan Witt, executive director of the E.F. = Schumacher=20 Society, a Massachusetts nonprofit that promotes local currencies. If a = local=20 currency were used to pay for rebuilding, the money would go to people = who would=20 spend it elsewhere in the community. "It would keep the redevelopment of = that=20 important city with the residents of that city."
New Orleans Notes, anyone?
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