This year the BerkShares, Inc. website experienced a major surge in traffic—39,000 hits a day in January, up from 6,000 the previous year. The sudden spike is a testament to the burgeoning interest in local currency—particularly during tough economic times.
BerkShares are paper notes first issued in 2006 in the southern Berkshires region of Massachusetts. Over two million of the notes are circulating today. One hundred BerkShares can be purchased for $95 at one of five local banks, and exchanged at the same rate for dollars—and they have the same purchasing value as dollars. This gives consumers an incentive to keep the notes in circulation and shop locally in the 400 neighborhood businesses that accept them. “At the moment we’re a very sophisticated ‘buy local’ program,” says Susan Witt, cofounder and administrator of BerkShares, Inc., “But the potential to move to an independent currency is built in.”
Other communities and transition towns across the U.S. are issuing their own paper money, too. Ithaca Hours in New York, the Plenty in North Carolina and Madison Hours in Wisconsin are among the flourishing local currencies helping to spur neighborhood economies. Traded for local goods and services, the paper notes help support jobs and businesses in the community; They also tend to circulate more than dollars, boosting sales at shops and restaurants that accept them. A local currency has cash value so must be exchanged in person, and the colorful paper scrips depicting local heroes or landmarks often spark conversations and bring communities together by increasing interest in town affairs.
Ithaca Hours, first issued in Ithaca, New York, in 1991, are valued at $10 or one hour of work, but, unlike BerkShares, cannot be exchanged for federal dollars. In the 1990s, thousands of Ithacans used Hours, which were accepted at about 500 businesses, including a medical center, says founder Paul Glover. About 200 businesses accept Hours today.
And even though BerkShares are traded in 400 stores and restaurants, the notes still represent a small part of the local economy. But Witt says: “In the short term it’s about educating people about local economies. In the long term, it’s transforming the institution of money. We’re not there yet. But everyone knows what BerkShares are.”
Advancing community loans in BerkShares is the real goal. One downside of local currency purchased with dollars is that it does not help people without cash. Local currency loans, approved by the community, could, since they would be based on trust and character rather than collateral. Such loans could also establish local crafts to make items, such as furniture, currently imported into the region.
But establishing a local money system isn’t easy, and many have tried and failed. “In the late 1990s there were many replicas of Ithaca Hours,” says Witt. “But many of those have closed.”
The Plenty (Piedmont Local EcoNomy Tender), originally minted in 2002 and based on the Ithaca Hours, suffered “circulatory failure.” The local food co-op ended up with most of the notes, but its suppliers wouldn’t accept them. Reissued in 2009 on the BerkShares model, the Plenty can now be purchased from a local bank for $1 each. Six thousand of the notes are currently in circulation. The Humboldt, on the other hand, issued in 2003 in Eureka, California, also valued at $1, was retired in January 2011 due to lack of community interest.
A networker is key. Glover, who managed Ithaca Hours from 1991 to 1999, spent a lot of time promoting and troubleshooting Hours circulation. Educational and informational advertising such as an e-mail newsletter, newspaper and blogging and hosting events have also helped boost circulation.