-----Original Message-----
From: E.F. Schumacher Society [mailto:efssociety@...]
Sent: Monday, May 31, 2004 5:28 AM
To: ecoplan.adsl@...
Subject: Vibrant Downtowns

Dear Eric Britton

When they heard of the E. F. Schumacher Society's June 25th conference
"Local Currencies in the Twenty-First Century," the editors of Berkshire
Trade and Commerce (btac@...) asked for an essay on the subject for
their June issue. The request came simultaneously with the sad news of
the loss of a local banker to cancer. Gene Hannon was one of a legion of
people working quietly to strengthen their own regional economies. The essay is
meant to honor that intent wherever it occurs.

Your comments are most welcome.

Susan Witt
Executive Director
E. F. Schumacher Society
140 Jug End Road
Great Barrington, MA 01230 USA
(413) 528-1737, www.smallisbeautiful.org

* * * * * * * * * *

Time to Rekindle Local Currrency Concept

from Berkshire Trade and Commerce, June 2004

By Susan Witt

Those of us living in the Southern Berkshires realize how lucky we are to
have the complex of locally owned stores and restaurants that help shape
our community. Main Street hums with activity. Consumers know that Great
Barrington shops are unique to the Berkshires; a welcome change from the
monoculture look and products of franchises. Visitors are surprised by
the originality; regulars are proud and loyal patrons. The owners and clerks
and chefs and waitpersons are our neighbors and friends. We sit on school
boards together, gather at town meetings, and stroll past each other on the
River Walk. Our youth prefer to spend free time on Main Street rather than at
the mall. They experience and contribute to the vibrancy of our "downtown."

Part of what has led to this successful local entrepreneurship is an
informed citizenry who understands that keeping dollars local supports
the cultural, environmental, and social fabric of the Berkshires. They ask
for locally grown food at restaurants; they make weekly visits to the
farmerąs market as a household ritual; and they hire local professionals before
distant impersonal firms.

Another factor in the success of our local businesses is the plethora of
still locally owned and managed banks in the Berkshires. With all of
the changes in regulation and the consolidation in the banking industry, a
handful of local banks remain in our region‹an important resource for
the health of our Berkshire economy.

One of those quintessential local bankers, Eugene Hannon, died at the
end of April. He was an active member of the Southern Berkshire Chamber of
Commerce, a member of the Great Barrington Rotary Club, an advocate for
affordable mortgages for first-time homebuyers, and a champion of
lending opportunities for the growing Hispanic population. I have my own
favorite memories of Gene relative to the development of a local currency for
the Southern Berkshires.

In 1989 Frank Tortorelli, the owner of the popular Great Barrington
Deli, turned to Gene for a bank loan to renovate a new site for his
restaurant. Bank regulations were getting tighter. Frank's figures didnąt
compute, and Gene had to turn him down. Frank then came to the SHARE loan
collateralization program that I managed at the time and asked for help.
We told him that he didnąt need our group of local investors because he
already had a strong customer base and he should turn to them for a loan through
pre-sales. What emerged were "Deli Dollars." Frank sold each Deli Dollar
Note for $8, redeemable for $10 worth of Zonker Harris and other
colorfully named sandwiches once the new space was open. He raised $5,000 in 30
days, repayable not in hard-to-come-by federal dollars but in product. The
Deli Dollars were dated over a year's time so they would not all come due the
first month of operation and so cause a cash-flow problem. Frank had
structured his own loan repayment schedule.

Gene Hannon was one of the first to buy a set of Deli Dollars. A loan
for Frank's Deli wasn't bankable under current national standards, but this
local banker knew that Frank's community credentials were excellent.
Frank would be there to make the sandwich when the note was redeemed.

Berkshire Farm Preserve Notes followed, jointly issued by two farm
stands, Taft Farms and the Corn Crib. A head of cabbage replaced the head of
George Washington. The logo read "In Farms We Trust" rather than "In God We
Trust." We had created a "Berkshire Farm Preserve Note" rather than a "Federal
Reserve Note." And we all had fun doing so.

In May of 1991 the Deli Dollar was front page news in The Washington
Post with a story of "Yankee Ingenuity." ABC, CBS, NBC, CNN, and Tokyo TV all
traveled to the Berkshires for prime-time stories of these Berkshire
currencies. Gene had to tell and retell on camera why he couldn't make
the loan but would support the Deli by purchasing Deli Dollars. In the
process he became a spokesperson for our small local businesses.

In the summer of 1992 seventy Main Street businesses got together
through the Main Street Action program of the Chamber of Commerce to issue
BerkShares. During a six-week period BerkShares were given away to
customers
shopping in the participating stores‹one BerkShare for every ten dollars
of purchase. Every store signed the back of each BerkShare before it was
issued so that we could track the source. Then, during a three-day period in
the middle of September the BerkShares could be redeemed at any of the
participating stores. We attempted to have a standard redemption policy,
but the stores had differing needs. Most stores accepted BerkShares as
payment for 20% to 50% of the cost of any item. The Snap Shop on Railroad Street
understood that we were introducing a local currency that would benefit
the whole community and therefore permitted 100% redemption. Some lucky
folks collected enough BerkShares to purchase that long-dreamed-of new camera.

There was a spirit of festivity on Main Street and in the larger
community. Second-home owners called their year-round neighbors to say, "I can't
make it up for BerkShares weekend, so please go to my kitchen and on the
shelf over the sink you will find a stack of BerkShares. Get something nice
for your kids."

Over seventy-five thousand BerkShares went into circulation,
representing three-quarters of a million dollars in trade. Twenty-eight thousand
were used in a three-day redemption period‹a remarkable return on a give-away
item.

With that success in place, the BerkShare committee of the Chamber
called a meeting of banks to discuss issuing BerkShares at the holiday period. A
similar program was implemented in several prairie communities on the
Canadian border. In November these prairie banks launch a 0% interest
loan program for holiday shopping. The loans are made in a local currency to
insure that the purchasing remains local. The local money cannot be
spent at chain stores or for catalogue or Internet shopping. The banks and
merchants thereby create a local economic tool to encourage support of
small regional businesses. Local merchants redeem the notes at the
participating banks at 97 cents on the dollar, thus sharing the cost of the
program with the bank.

At the meeting it was Gene Hannon who said, "Why are we putting time and
energy into another short term issue? Why don't we just work for a
year-round local currency?" I remember asking him how he thought such a
program would work. He suggested a ten percent discount note. Consumers
would purchase BerkShares at participating banks for 90 cents each.
Participating merchants and producers would accept BerkShares at a
dollar equivalent in payment for goods and services. As long as the BerkShares
stayed in circulation‹for change, partial payment of salaries, and
purchase of goods‹they would keep full dollar value; however, when merchants
accumulated too many in their cash registers, they could redeem the
notes at their banks for 90 cents on the BerkShare.

Purchasing BerkShares would be a citizen's way of voting for local
businesses and keeping money local. Non-profits might purchase a $10,000
block of BerkShares for $9,000 and then sell them to their members at
full value as a way of fundraising and as a way of showing that a healthy
local business economy is deeply connected to a healthy arts, environmental,
educational, and social services community.

Gene Hannon's challenge to introduce a year-round local currency has
remained tucked in a draw since that meeting, but the E. F. Schumacher
Society is pulling it out and dusting it off in the face of the powerful
impact of the global economy on all local economies. The Society has
undertaken a campaign to raise first-year funding for such a program.
Much work is ahead. It will mean reconvening the business and banking sectors
for their input and advice as to how to shape such a program. It will
require the cooperation of concerned consumers.

In order to bring as many resources as possible together around the
history, theory, and practice of issuing local currencies, the E. F. Schumacher
Society is organizing an international conference at Bard College in
Annandale-on-Hudson, New York, titled "Local Currencies in the
Twenty-First Century," to be held June 25-27. Bernard Lietaer, Margrit Kennedy,
Edgar Cahn, Paul Glover, Richard Douthwaite, Thomas Greco, Michael Linton,
Mary-Beth Raddon, Michael Shuman, and other leaders in the local
currency movement will speak. The event is co-sponsored by many groups including
The Nation Institute, The Utne Reader, Acres USA, NOFA Mass, The Ecologist,
Coop America, The Orion Society, Investor's Circle, BALLE, CELDF, Center for
Community Futures, Institute for Local Self-Reliance, Resurgence, Time
Dollar Institute, Ithaca Hours, E Magazine, Dollars and Sense, New
Economics Foundation, Maine Time Dollar Institute, Hawthorne Valley Association,
and Chelsea Green Publishers. Honored guest Pete Seeger will close the event
on Sunday with a Local Food Fest and Concert.

Registration material is available through the E. F. Schumacher Society,
140 Jug End Road, Great Barrington, MA 01230, (413) 528-1737 and at
http://www.localcurrency.org.

Gene knew about the conference. I had hoped he would be well enough to
attend, but he knew it would be otherwise. He was a champion of the
strong, diverse local businesses that are at the heart of our Berkshire
community. He would have been pleased to see folks gathered together to create
new economic tools that would further support those businesses. Please join
us June 25th-June 27th.

* * * * * *
The E. F. Schumacher Society is a 501(c)(3) educational organization.
Membership is $50 per year. Donations are tax-deductible.