Local Currency Article

["David Spitzley" <dspitzle@gw.wash.k12.mi.us>]

I know that there's some interest within COG about alternative
currencies.  This article about Ithaca, New York's local currency is
making the rounds on some Green Party mailing lists, so I thought I'd
pass it along.  While it isn't precisely an ownership strategy, I'll
note that it does anchor economic power within a particular community,
and it also provides one method for lifting credit constraints on
capital acquisition (note the mention of capitalizing businesses).  I've
sent some questions to the author; his e-mail is listed at the end of
the article.
-----------------------------------------------

Creating Community Economics with Local Currency 
by Paul Glover 
Here in Ithaca, New York, we've begun to gain control of the social
and
environmental effects of commerce by issuing over $105,000 of our own
local paper money, to thousands of residents, since 1991. Tens of
thousands of purchases and many new friendships have been made with
this
cash, and millions of dollars value of local trading has been added to
the Grassroots National Product. 
We printed our own money because we watched Federal dollars come to
town,
shake a few hands, then leave to buy rainforest lumber and fight wars.
Ithaca's HOURS, by contrast, stay in our region to help us hire each
other. While dollars make us increasingly dependent on transnational
corporations and bankers, HOURS reinforce community trading and expand
commerce which is more accountable to our concerns for ecology and
social
justice. 

Here's how it works: the Ithaca HOUR is Ithaca's $10.00 bill, because
ten
dollars per hour is the average of wages/salaries in Tompkins County.
These HOUR notes, in five denominations, buy plumbing, carpentry,
electrical work, roofing, nursing, chiropractic, child care, car and
bike
repair, food, eyeglasses, firewood, gifts, and thousands of other
goods
and services. Our credit union accepts them for mortgage and loan
fees.
People pay rent with HOURS. The best restaurants in town take them, as
do
movie theaters, bowling alleys, two large locally-owned grocery
stores,
our local hospital, many garage sales, 55 farmer's market vendors, the
Chamber of Commerce, and 300 other businesses. Hundreds more have
earned
and spent HOURS who are not in the HOUR Town directory. 
Ithaca's new HOURly minimum wage lifts the lowest paid up without
knocking down higher wages. For example, several of Ithaca's organic
farmers are paying the highest commmon farm labor wages in the world:
$10.00 of spending power per HOUR. These farmers benefit by the HOUR's
loyalty to local agriculture. On the other hand, dentists, massage
therapists and lawyers charging more than the $10.00 average per hour
are
permitted to collect several HOURS hourly. 
But we hear increasingly of professional services provided for our
equitable wage. 
Everyone who agrees to accept HOURS is paid one HOUR ($10.00) or two
HOURS ($20.00) for being listed in the HOUR Town directory. Every
eight
months they may apply to be paid an additional HOUR, as reward for
continuing participation. This is how we gradually and carefully
increase
the per capita supply of our money. Once issued, anyone may earn and
spend HOURS, whether signed up or not, and hundreds have done so. 
HOUR Town's 1,500 listings, rivalling the Yellow Pages, are a portrait
of
our community's capability, bringing into the marketplace time and
skills
not employed by the conventional market. Residents are proud of income
gained by doing work they enjoy. We encounter each other as fellow
Ithacans, rather than as winners and losers scrambling for dollars. 
The Success Stories of 300 participants published so far testify to
the
acts of generosity and community that our system prompts. We're making
a
community while making a living. As we do so, we relieve the social
desperation which has led to compulsive shopping and wasted resources.

At the same time Ithaca's locally-owned stores, which keep more wealth
local, make sales and get spending power they otherwise would not
have.
And over $10,000 of local currency has been donated to 60 community
organizations so far, by the Barter Potluck, our wide-open governing
body. 
As we discover new ways to provide for each other, we replace
dependence
on imports. Yet our greater self-reliance, rather than isolating
Ithaca,
gives us more potential to reach outward with ecological export
industry.
We can capitalize new businesses with loans of our own cash. HOUR
loans
are made without interest charges. 
We regard Ithaca's HOURS as real money, backed by real people, real
time,
real skills and tools. Dollars, by contrast, are funny money, backed
no
longer by gold or silver but by less than nothing- $5.5 trillion of
national debt. 
Ithaca's money honors local features we respect, like native flowers,
powerful waterfalls, crafts, farms and our children. Our commemorative
HOUR is the first paper money in the U.S. to honor an African-American.

Multi-colored HOURS, some printed on locally-made watermarked cattail
(marsh reed) paper, or handmade hemp paper, some with non-xeroxable
thermal ink, all with serial numbers, are harder to counterfeit than
dollars. 
Local currency is a lot of fun, and it's !egal. HOURS are taxable
income
when traded for professional goods or services. 
Local currency is also lots of work and responsibility. To give other
communities a boost, we've been providing a Hometown Money Starter Kit.

The Kit explains step-by-step start-up. and maintenance of an HOURS
system, and includes forms, laws, articles, procedures, insights,
samples
of Ithaca's HOURS, and issues of Ithaca Money. We've sent the Kit to
over
1,000 communities in 49 states and beyond, and our example has become
international. 
Ithaca HOUR Factsheet
Since 1991, we've issued over $85,000 of Ithaca HOURS (6,500 HOURS at
$10.00 per HOUR). Five denominations: 2 HRS, 1 HR, 1/2 HR, 1/4 HR, 1/8
HR. Includes a commemorative HOUR, the first paper money in the U.S.
to
honor an African-American. 
Thousands of people, including 400 businesses, have earned and spent
HOURS. 
They have made millions of dollars value of trades with HOURS,
representing hundreds of job-equivalents at $20,000 each. 
HOURS are thus real money-- local tender rather than legal tender,
backed
by real people, real labor, skills and tools. 
Most HOURS have been issued as payments to those who agree to be
published backers of HOURS, listed in our bimonthly directory HOUR
Town.
Every eight months they may send the coupon again to receive a bonus
payment-- which gradually and carefully increases the HOUR supply. 
11% of HOURS are issued as grants to community organizations. 60
nonprofits have received grants totalling over 1,000 HOURS ($10,000)
since we began. 
5% of HOURS may be issued to the system itself, primarily for paying
for
printing HOURS. 
Loans of HOURS are made with NO INTEREST CHARGED. These range $50-
$30,000 value. 
HOURS are legal. Professor Lewis Solomon of George Washington
University
has written a book titled "Rethinking Our Centralized Monetary System:
the Case for a System of Local Currencies" (Praeger, 1996) which is an
extensive case law study of the legality of local currency. IRS and
FED
officials have been contacted by media, and repeatedly have said there
is
no prohibition of local currency, as long as it does not look like
dollars, as long as denominations are at least $1.00 value, and if it
is
regarded as taxable income. 
HOURS are protected against counterfeit. They are multicolored, with
serial numbers. The 1995 Quarter HOUR and 1997 Eighth HOUR use thermal
ink, invented in Ithaca, which disappears briefly when touched or
photocopied. The 1993 Two HOUR note is printed on locally-made
watermarked 100% cattail paper, with matching serial numbers front and
back. The 1996 Half HOUR is 100% handmade hemp paper. Our District
Attorney has declared HOURS a financial instrument, protected by law
from
counterfeit. 
Benefits
HOURS expand the local money supply 
HOURS promote and expand local shopping, with an endless multiplier 
HOURS double the local minimum wage to $10.00, benefitting not only
workers but businesses as well, who find new and loyal customers. 
HOURS enable shoppers to afford premium prices for locally-crafted
goods
and for locally-grown organic food. 
HOURS help start new businesses and jobs 
HOURS reduce dependence on imports and transport fuels 
HOURS make grants to nonprofit community organizations 
HOURS make zero-interest loans 
HOURS stimulate community pride 
Long Range Plans
We have started an Ithaca Health Fund: nonprofit, locally-controlled
health financing, with HOURS as part of premium payment:
http://www.lightlink.com/healthfund. 
We intend to open a community economic development center called HOUR
Town. We'd look forward to being able to provide major funding to
community organizations and new business start-ups. We could fund
municipal projects like weatherization, transit, and so on. We could
purchase land to be retained in farms. 
To get the Starter Kit, send $25.00 (or 2.5 HOURS) or $35 U.S. from
abroad (international postal money order), to HOUR Town, Box 365,
Ithaca,
NY, 14851. 
Our English language video (17 minutes) is available for $17.00, or
$15.00 with the Kit ($40.00 for Kit and video). Spanish language video
(10 minutes) is available with Kit for $12.00. 
Credit cards accepted. Call (607) 272-4330 or paglo@lightlink.com. 
Maximum 1/4 HOUR (any community) accepted. 

     

 


David
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