THE HINDU
Online edition of India's National Newspaper
Sunday, September 30, 2001

Community currencies
In the town of Totnes, in South England, you can buy goods and
services with Acorns instead of the conventional pounds sterling. The
Acorn is a local currency that does not take the form of either coins
or bank notes. Acorns change hands when a cheque is written out by a
member of the Totnes LETSystem.
For example, Marcea Colley is a local resident who has earned Acorns
by selling baskets, teaching basket-making and running a bed and
breakfast facility. In turn she has used those Acorns to pay for
plumbing repairs, pruning of trees in her garden, baby sitting and
buying things like yoghurt and bread.
In the South of France there is a network of community currency groups
called Grain of Salt. Every fortnight this network has a big party.
People gather to trade things and services. Someone may be selling
cheese or fruits and buying hours of plumbing, haircuts or sailing.
These exchanges take place not in the conventional French Francs but
in the local currency created and operated by groups in the network.
This is just one of thousands of community currency networks now
operating in countries across North and South America, Europe,
Australia and New Zealand. These networks tend to flourish during
times of recession when many people find themselves either under-
employed or without a job. Local currencies are also a way of trying
to recreate the sense of community that is otherwise lacking in many
industrialised countries.
A local currency cannot leave the community it serves, so it ensures
connections between people exchanging skills, goods and services,
writes Michael Linton, a Canadian who designed the first Local
Exchange Trading System (LETS) back in the early 1980s. LETS is one of
several forms in which local currencies have emerged.
Interestingly, the origin of the word community is in the Latin words
for gift and coming together or among each other. Thus community,
literally, means to give among each other. The word community
initially referred to the material organisation of a self-contained
economic entity like a monastery.
In the age of globalisation, a self-contained community-based local
economy may be impossible. But local currencies are one way in which
people are able to partially protect themselves from the vagaries of
economic trends determined by distant and amorphous forces. Local
currencies are also a response to an anomaly which afflicts many free
market societies and is most starkly manifest in the U.S.. The last
ten years have generally been a boom period for the American economy.
Yet there is reportedly not enough money for basic facilities like
education, health care and pensions for the elderly.
Thus one of the leading books on local currencies is called Time
Dollars: the new currency that enables Americans to turn their hidden
resource - time - into personal security and community renewal. Ralph
Nader, the leader of the American consumer movement, calls the Time
Dollars an organised, inflation-proof currency that can provide as
constant, as powerful, as reliable a reward for decency as the market
does for selfishness.
This is how Time Dollars work. A person earns credits by providing a
service to others who are part of the network, like a car-ride to the
market or doing minor home repairs or baby- sitting. This credit, or
Time Dollars, are then used by that person in exchange for a service
or product he or she may need.
In the words of Edgar Cahn and Jonathan Rowe, authors of Time Dollars,
this is a money that is almost anti-money. It provides a practical way
to restore and validate trust; and it makes community institutions,
rather than corporations and government, the nexus of this trust. Now
that we have trusted gold and governments and plastic and computer
blips, is it really so outlandish that we try to trust our neighbours?
Community currencies, also called Local Currency, come into being when
a community finds that conventional money is in short supply. By
inventing their own local money, or token of exchange, the community
is able to ensure that skills, services and goods keep going around
thus creating livelihoods for more and more people. There's no limit
to the different ways in which these currencies can work and several
models are now in operation.
One of the most famous such models operates in the town of Ithaca, on
the east coast of the U.S., and was described in an earlier article in
this column. The Ithaca Hour is a printed paper currency which has
become a valid token of exchange for much of the town's population. It
is now accepted by 300 local businesses and has the backing of the
local chamber of commerce. One local bank even pays its staff's
salaries partly in Ithaca hours. Paul Glover, the founder of the
Ithaca Hour, calls such currencies the community magic act.
Local currencies have been common throughout history, emerging
whenever a community needs to protect its internal economy from
outside disturbances such as war or depression. Several systems sprang
up in the U.S. and in Europe during the economic slump of the 1930s.
For example, in 1930, the owner of a small bankrupt coal mine in
Bavaria started paying his workers in coal instead of the German Mark.
Since it would be cumbersome to cart coal all over town for every
purchase, the mine owner issued a local currency which was redeemable
in coal. This system was reportedly so successful that by 1931 this
Freiwirtschaff, or free economy movement, had spread through out
Germany and included about 2000 corporations. But soon the German
Central Bank asserted its monopoly on currency creation and prohibited
the experiment.
However, in 1932 the Austrian town of Worgl repeated a similar
experiment to achieve full employment. Again the success was copied by
hundreds of communities but later stopped by the Austrian central
bank. It is estimated that during the 1930s about 400 cities and
thousands of communities in the U.S. launched some form of local
currency. But eventually these were all prohibited in favour of a
centralised currency creation and banking system.
Even today the mainstream media and economists tend to refer to these
community currencies as funny money implying that it is not as real as
the conventional dollars, pounds or pesos. John Turmel, a Canadian
politician and local currency activist, suggests that if a community's
local currency is called funny, then it would be more appropriate that
the conventional currency is called sad money. For both moneys are
based on the same collateral and the only difference is that the funny
money doesn't inflate since its backed up one-to-one with collateral
while the tearful money does lose its value over time because of its
usury which is truly not funny.
The success of such phenomenon is not easy to judge using conventional
standards of growth. For example, the Totnes LETSystem is the earliest
one in Britain but still remains very small. In early 2001 it had
approximately 400 members. But one reason for this, as Marcea Colley
points out, is that once people are linked to each other they often
trade without formally recording the transaction in the LETS register.
So while formally they appear to have dropped out, the concept is
still working for them. Community currencies open up many promising
possibilities for the future. First, for the people who benefit from
them it is a happy, and not funny, money. Second, all these
experiments feed into the complex challenge of working towards
economic systems that are humane and non-exploitative.
David Korten, the author of a book called The Post-Corporate World:
Life after Capitalism, suggests that live at a time when our very
survival depends on rapid innovation toward the creation of living
economies and societies. Such innovation depends on vigorous community
level experimentation supported by the creative energies of
individuals everywhere.
Note: Those seeking how to details of such systems can access many
different versions by doing a search for local currencies or community
currencies on any search-engine on the Internet.
RAJNI BAKSHI

--
John C. "The Banking Systems Engineer" Turmel, Author of the UNILETS
interest-free time-based currency United Nations C6 recommendation to
Governments in the http://www.un.org/millennium/declaration.htm
http://www.cyberclass.net/turmel / http://www.medpot.net 613.632.2334