The U.S. economy might not be doing so well, but local economies are fighting back. To combat outsourcing of goods and services, and to keep revenue within the community, many areas have instituted their own alternative or complementary currencies, ditching dollars for alternative means of payment.
There are more than 2,500 different local currency systems around the world and more than one hundred in the United States. Local currencies began to appear in the 1960s and 1970s, but have recently been revived as part of the “buy local” movement. At a time when globalization is causing frustration among American business owners and workers who are losing money to outsourcing, community currencies are a way to bring economic control back to an area.
Alternative currency systems come in a variety of forms. Time hours are based on the idea of trading labor; what you pay for is time and the scrip is merely symbolic. Complementary currencies are usually used in addition to United States dollars (USD), and other community currencies are meant to completely replace USD in that area.
It is legal to issue a currency for limited local use in the United States, as long as the currencies correspond to a specific USD amount and do not resemble federal dollars to avoid confusion. The federal government considers supplemental currencies to be cash equivalent and they are taxable just like any other income.
What separates local currencies from federal cash is their restriction to a specific area, and the fact that they do not have any backing from a higher financial institution; their value comes solely from the faith and support of the people who use them.
Below are just a few examples of the many local currencies circulating in communities throughout the United States.
Ithaca Hours, Ithaca, NY
Ithaca Hours, which began circulating in 1991, were the first attempt at a local currency since 1972. Technically, the scrip is valued in hours, based on the trading of labor, but it’s essentially equivalent to one hour = ten USD, since $10/hour is the average wage for the area. A directory, published every couple of months, lists the goods and services available for Hours. There is an Hours bank, and in addition to purchasing goods and services, residents of the community can use Hours to pay rent and seek medical care at the local hospital.
Berkeley Bread, Berkeley, CA
The Bread program started in Berkeley in 1997. It is a select organization in which members apply to provide a good or service to the local community; in return, they are listed in a local directory and are issued paper currency called Bread hours. One Bread hour is equal to twelve USD. Currently, about 15,000 USD of Bread hours are in circulation.
BerkShares, Berkshires, MA
BerkShares, Inc. launched its alternative local currency for the Berkshires region of Massachusetts in September 2006. More than 350 businesses in Berkshire County accept the currency, and 2.2 million BerkShares have been issued from five different partner banks. The company describes BerkShares as a “tool for community empowerment,” and hopes to expand into checking accounts, ATM machines, and a business loan program.
Brooklyn Greenbacks, Brooklyn, NY
The Brooklyn Green Party initiated Brooklyn Greenbacks in the summer of 1997 as a response to the party’s perception that city government was working to draw the wealth out of poor communities. An alternative currency, they thought, allowed the community greater control over its economic density. One Greenback is equal to twelve USD, which is considered a living hourly wage in New York City. Greenbacks are printed in denominations of 1/8, 1/4, 1/2, and 1 Greenback; approximately $10,000 worth of Greenbacks have been issued.
RiverHOURS, Columbia River Gorge region, OR
In order to help local skilled people purchase the services and goods they need, members of the Columbia River Gorge region developed RiverHOURS as a complementary source of money in the community. They wanted money to keep circulating in the local area, fostering community trade with no “leakage” to “distant corporations.” One RiverHOUR is equal to 10 USD.
Madison Hours, Madison, WI
The Madison Hours Cooperative issues Madison Hours for circulation in and around Madison, WI. It’s a complementary currency, which means that most area transactions use a combination of Hours and USD. Whenever a new member joins the co-op, or a membership is renewed, more money is issued into the local economy. Members can list their offers and requests for trade online, although nonmembers are also welcome to use the currency.
Local currencies are a great way for communities to encourage their residents to buy local and to invest in their hometowns. With so much globalization and jobs being outsourced at an unprecedented rate, it’s important to remember how much is available right in your own backyard.