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Reprinted with permission from
Orion Afield, · autumn 1998; Community Economics, Saying No to Globalization
This article originally appeared in Orion Afield, published by The Orion Society, 195 Main Street, Great Barrington, MA 01230, 888/909-6568., ($30/year for 8 issues). The right to reprint this material applies only to its appearance here on Any further requests for reprinting this article must be made directly to Orion Afield.

plants for hours exchange
Robyn Bern accepts Ithaca HOURS for plants sold at a local street fair.

Printing Money, Making Change

by Susan Witt

ON MAY 30, 1998, the New York Times Metro Section carried a front-page story about Thread City Bread, a local currency issued in Willimantic, Connecticut. Within a few days CNBC, "ABC World News Tonight," "Voice of America," Fox News in Boston, Northeast Magazine, as well as several regional papers, TV and radio stations had swooped into Willimantic to interview selectpersons, bankers, and shop owners about their homemade money.

          Popular during the Great Depression of the 1930s when federal dollars were in short supply, local currencies are experiencing a revival in North America, but for new reasons. In the 1990s small towns and inner-city neighborhoods are discovering that local scrip helps to define regional trading areas, educate consumers about local resources, and build community. Willimantic joins the more than 65 different places in the United States and Canada where you can use colorful bills with names like Dillo Hours and Barter Bucks for anything from buying groceries to having your hair cut or your computer repaired.

          It started in 1989 when Frank Tortoriello, the owner of a popular restaurant in the southern Berkshires of Massachusetts, was rejected for a bank loan to finance a move to a new location. In a small community word spreads quickly. All of us at the E.F. Schumacher Society office frequented The Deli. We recognized that Frank had a committed clientele who could afford to take a risk to keep the cherished luncheon spot in business. So, we suggested that Frank issue "Deli Dollars" as a self-financing technique. Customers could purchase these notes during a month of sale and redeem them over a one-year period once The Deli had moved to its new location.

          Martha Shaw, 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 30 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 began to look like a movement.

          Paul Glover of Ithaca, New York, heard about Berkshire notes on the radio in 1991. He liked the idea of a hand-to-hand currency that let consumers support local businesses through pre-purchase of products, but he wanted to broaden the concept. Instead of each business issuing its own notes, why couldn't the community as a whole issue a local scrip? To learn how this might be done, he spent a week researching the history and theory of regional scrip at the E.F. Schumacher Library. He engaged in long discussions with one of the Society's 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 in 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, bookkeep, tutor, and dog sit. Most of these businesses are undercapitalized and underpublicized and would benefit from more customers. Paul asked various owners if they would agree to accept a local scrip for their goods and services. With nothing to lose, people signed up.

10 Deli Dollars note
The E.F. Schumacher Society dreamed up Deli Dollars to help a
local business raise money to finance a move to a new location.

          Everyone initially enrolled was "issued" 40 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 Ithaca's natural wonders, children, and famous persons. Heat-sensitive ink, high-rag-content paper, serial numbers, and embossing helped prevent counterfeiting. HOURTown, a free newsprint paper listing businesses that accept Ithaca HOURS, was printed, featuring stories of successful exchanges to draw in new participants.

          Behind the scenes, Paul is always at work to keep HOURS circulating. He finds out which businesses have too many HOURS in their till, then sits down with the owners to recommend ways of expanding their HOUR usage. Paul knows which carpenter among the HOUR traders does the finest carpentry work, knows if the farmer down the road has a reputation for delivering carefully washed lettuce, and knows if the guy with the rototiller will get the job done before the weekend.

          Largely as a result of this persistent attention to detail, $65,000 in Ithaca HOURS are in circulation today, representing several million dollars in trade. An informal advisory board, the Municipal Reserve, keeps an eye on scrip circulation, deciding whether and how more should be issued. There are 370 area businesses -- contractors, farmers, restaurants, movie theaters, masseurs, even 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 take partial payment in Ithaca HOURS. The message was loud and clear: nonlocals need not apply. Meyers explained that the winning contractor 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 Ithaca HOURS Hometown Money Starter Kit has inspired groups around the country, who have worked to develop currencies that are right for their particular communities. For Paul Glover and other visionaries of the movement, local scrip is much more than a device for revitalizing the local economy. it provides a direct way to respond to the alienation we experience in an expanding global economy, and to restore the possibility of regional economies based on social and ecological principles.

IN A SIMPLE BARTER ECONOMY, production methods are highly visible. The value of the carrots we offer in trade is directly linked to memories of hoeing in the garden, of building the compost pile, and of waiting for the rain after planting. And though our understanding of the cord-wood for which we are bartering is probably not as detailed, still we have seen our neighbor's progress as he split and stacked the wood from the ash tree. Barter transactions link us inextricably to a particular place and time.

          Money, for all its many obvious advantages, introduces an element of abstractness into the process. This was less so in the past, when real goods were used as currency, or to back or denominate units of currency. Value was still derived from the amount of labor applied to natural resources. When a Tibetan herdsman traded a brick of tea (once used as currency in Tibet) for his lamb, he could picture tea brewing in a bucket over a fire in a yurt, and could imagine the days it took to cultivate the tea plant on its mountainside plantation and the hours spent bending to gather the tiny new tea leaves. He could compare in his mind the value of a generalized brick of tea to that of the lamb in his arms.

Tom Hidas displaying Valley Dollars           Most of today's national currencies are no longer commodity-based. They are pegged to each other, or tied in a vague way to the general productivity of their country of origin. At the end of the twentieth century, money has become altogether abstracted from our daily experience. We talk of earning six percent interest, but have no picture of "what our money is doing tonight" -- whether it is building wheelbarrows in Brazil, growing corn on chemically fertilized land in Iowa, or making shoes in a crowded factory in Thailand.

          One of the crucial tasks of the new century will be to shape our economic system so that environmental and social safeguards are built into its design. Theoretical knowledge of poor working conditions and toxic dumping will not necessarily stimulate a change in consumer habits. When we can picture manufacturing processes clearly, because they're familiar, and involve our community's human and natural resources, we'll then be compelled to demand secure conditions for workers and nonpolluting methods of production.

          By intentionally narrowing our choices of consumer goods to those locally made, local currencies allow us to know more fully the stories of items purchased -- stories that include the human beings who made them and the minerals, rivers, plants, and animals that were used to form them. Such stories, shaped by real life experience, work in the imagination 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 for cultural renewal.

THIS MULTILAYERED NATURE of local currencies has captivated and energized an informal network of practitioners who regularly communicate via e-mail and articles, and who convene periodically at conferences, where they share successes, problems, and new ideas. The 1996 and 1997 Decentralist Conferences sponsored by the E.F. Schumacher Society drew a strong showing of activists from around North America. Pioneers of the movement came to give workshops -- people like Paul Glover, Diana McCourt and Jane Wilson, founders of Womanshare in New York City, and Tim Mitchell and Gurunam Kaur Khalsa of Valley Trade Connection in Massachusetts. George Washington University law professor Lewis Solomon provided legal expertise (to the frequently asked question, Are these currencies legal?, the answer is, yes), and Australian businessman Shann Turnbull explained how local currencies can be used to finance appropriately scaled businesses in developing countries. Informal discussions lasted late into the night, as participants struggled over such practical questions as how to determine the optimum amount of scrip in circulation.

          In February of 1998 in San Francisco, Jim Masters of the Center for Community Futures held a conference that introduced social service organizations to the possibilities of integrating local currencies into their programs. Jim, who has been working with government-funded social service agencies since the Johnson Administration, felt intuitively that in a time of collapsing public budgets, local currencies offer a powerful and creative tool for building sustainable communities. The conference brought representatives of social service groups from Chicago to Honolulu together with local-currency activists and experts in nonscrip programs of local exchange. Edgar Cahn spoke of how Time Dollars, which are issued by nonprofit organizations to those providing volunteer services, could be utilized to foster a climate of neighbor helping neighbor. Canadian Michael Linton explained the Local Economic Trading System (LETS), which has no hand-to-hand scrip but rather uses a centralized computer to keep track of exchanges. (See page 23 for more about both of these models.)

          The social service providers were especially attracted to the job-creating potential of HOUR systems and had lots of questions. As managers of large organizations, they know what it takes to sustain a successful program. They wondered how a local-currency system could support professional management to oversee long-term operations. All three conferences devoted a significant amount of discussion time to this question, and to the related one, how to involve more mainstream businesses in regional scrip trading. The future direction of the local-currency movement will be shaped by developments in these areas.

          The small home-business owners who first enroll in HOUR programs may be the folks most in need of a revitalized local economy, but they lack the income margin to pay for the management these programs require. The co-ordination for most HOUR programs has been carried out by volunteers. As a result, while they are often showered with media attention, the majority of local-currency systems do not have the staff and financial capability to meet their full potential.

          Some local-currency systems issue a small percentage of the total amount of scrip in circulation to make a token payment to administrators. Ithaca HOURS keeps a tight cap at five percent. But as a general policy, issuing for administrative purposes can jeopardize the soundness of the issue. Administration is more appropriately paid from fees for service. Other local-currency groups are being formed as programs of existing organizations, using administrative structures that are already in place. In Calgary, Alberta, for example, the Bow Chinook Barter Community formed out of a committee of the BCBC accepts HOURS Arusha Centre and has received substantial organizational funding from the Calgary United Way, which views the program as a means for creating jobs. Other groups are looking to affiliate with established local economic-development organizations.

          Several large social service agencies have embraced local currencies as in-house projects, since changes in federal welfare laws are forcing them to find employment for clients. Unwilling to take single mothers from their homes and place them in low-paying fast-food service jobs, the agencies use local currencies to develop opportunities for home businesses, thereby keeping neighborhoods healthy and mothers at home when their children return from school. In Philadelphia, Resources for Human Development, a nonprofit organization contracted to distribute state and federal government assistance funds, has invested significant time and resources to issue Equal Dollars (see page 27). In North Carolina, Suzanne Kinder coordinates the DEPC Dollar program of the Down East Partnership for Children. Clients are paid for work at a number of nonprofit organizations in DEPC Dollars, which can be spent for donated food, clothing, toys, and other items in the DEPC store.

          While these agencies have been effective, they are constrained by federal tax code to serve only their low-income clientele. If they wish to continue building support for the newly formed businesses created through their efforts, they will need to evolve their local-currency programs to include the banking community, main street businesses, and professional service providers. Ultimately it will take a coalition of nonprofit groups and for-profit businesses working together to form the kind of regionally based, democratically structured organization that can provide long-term management of a local-currency program. In such a model, administrative costs would be paid from membership fees. Broad usage of scrip would assure that wealth is recirculated within the community where it is generated, supporting a diverse group of regional producers. Several groups are already laying the groundwork for these developments.


ITHACA HOURS' Hometown Money Starter Kit explains the steps necessary to set up and maintain a local currency project. It includes the book Hometown Money, forms, samples of Ithaca's own currency, information on laws and procedures, and various articles about local currency. Send $25 to the address below. (Outside the U.S. please send $35 by international money order.) An Ithaca HOURS video is also available for $17, or $15 with purchase of the kit. A Spanish-language video is $12.

Box 6578, Ithaca, NY 14851, 607/272-4330,,

The E.F. SCHUMACHER SOCIETY publishes Local Currency News which lists active local-currency groups in the U.S., Canada, and Mexico, as well as Local Currencies: Catalysts for Sustainable Regional Economics, by Robert Swann and Susan Witt. Both can be found online and are also available by mail. In addition, the Society maintains the E.F. Schumacher Library, which contains a wide selection of literature on local currencies, and is also searchable online at the Society's website.
140 Jug End Road Great Barrington, MA 01230 413/528-1737,,


Building Sustainable Communities:
Tools And Concepts For Self-Reliant Economic Change
Essays by C. George Benello, Robert Swann, and Shann Turnbull, edited by Ward Morehouse, 2nd revised edition. Contains a section on "Community Currency and Banking." Croton-on-Hudson, NY: Bootstrap Press, 1997.

Inflation And The Coming Keynesian Crisis: The Story Of The Exeter Experiment
by Ralph Borsodi. In 1972 Ralph Borsodi, with the help of Robert Swann, established a commodity-based currency system that circulated in Exeter, New Hampshire. The book includes the story of their experiment. (Available from the E.F. Schumacher Society for $10 plus $3 postage and handling. See address at above.)

New Money For Healthy Communities
by Tom Greco, Jr. The author sees money as the "key element in any strategy to transform society" and offers a how-to manual for alternative currency and exchange systems. Tucson, AZ: Thomas Greco, Publisher, (PO. Box 42663, Tucson, AZ 85733), 1994.

Rethinking Our Centralized Monetary System:
The Case For A System Of Local Currencies
by Lewis Solomon. A professor of law at George Washington University, the author discusses the legal questions raised by the local issue of scrip and offers useful background material for local currency initiatives. Westport, CT: Praeger Press, 1996.

IN THE SOUTHERN BERKSHIRE REGION of Massachusetts, we are lucky to have a healthy local banking community with a strong record of community reinvestment and partnership. Of the six banks operating in the region, five remain locally owned. It was a Berkshire banker who came forward with a proposal to involve a broad segment of the established business community in the issue of a local scrip. The program would be based on a simple ten-percent discount note. Consumers would come to their favorite bank and purchase 100 "BerkShares" for 90 federal dollars. As long as the BerkShares remain in circulation they would be traded at full dollar value, encouraging merchants to seek locally produced goods for their shops and thus opening new local markets for small home-based businesses. Bank participation would make it easier for many businesses to begin trading in local scrip. At the end of the day, merchants would simply deposit excess scrip at 90 cents on the dollar.

Local scrip restores the possibility of regional economies based on social and ecological principles.

          The increased volume of business brought about by a fully operational local scrip program would more than offset the ten-percent discount. With a significant base of participants, the system could charge businesses a yearly fee for service and so raise sufficient funds to pay for professional management. Home-based businesses might join at a different fee schedule. The system could be run by a committee of the nonprofit Chamber of Commerce with representation from various sectors of the community.

          In Toronto author Joy Kogawa and merchant Susan Braun are spearheading a similar initiative that would combine the bank-issued ten-percent discount note with the HOUR model. The project has already won significant merchant support in the thriving St. Lawrence neighborhood.

          The BerkShare and Toronto projects are just two examples of programs building on the compelling Ithaca model. In the future, local currencies could be issued solely through productive loans, which introduce into the economy new goods whose value is in excess of the loan itself. A familiar example would be a farmer who receives a loan in the spring to purchase seeds that will yield a bountiful crop of vegetables in the fall. The interest rate for such loans could be zero percent, encouraging local manufacturing, plants that generate renewable energy, and other small enterprises that are not currently economically competitive. Eventually, a nonprofit issuer could untie the local scrip from the federal dollar, establishing a local backing such as cord-wood, or a basket of commodities -- corn, soy beans, and wheat, for instance -- as was done in Exeter, New Hampshire, in the 1970s. In such a scenario, currency would retain a constant local value related to a natural resource, making visible once again the connection between the health of the local economy and the health of the land.

          Such ideas might have seemed utopian until just a few years ago, when the HOURS programs and other alternative currencies began to gather momentum. Today when local-currency activists get together, there is no mistaking the positive dynamic at work. The movement has all the energy, idealism, and mobility of young adulthood -- still experimenting to find the right form, not afraid to take risks, able to alter direction as needed, and determined to change the economic system to reflect deeply held social and environmental values.

Susan Witt has been the executive director of the E.F. Schumacher Society since 1980. She founded the SHARE micro-credit program and administers the Community Land Trust in the Southern Berkshires. To reach the E.F. Schumacher Society see the box above.

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