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Your Own Money

By David Boyle  
David Boyle reports on a project in New York State that is bringing businesses and the community back together.

While the micro-credit revolution is changing the way some people do business in the South, businesses in the North are giving their customers a kind of computerized micro-credit in order to keep them coming back for more. Some Northern communities are being even more radical and are setting up their own, alternative, currencies.

While Britain's politicians are all agonizing about whether or not they will join the single European currency, there is another completely different currency revolution going on around the world. Just as Europeans thought they would all be using one currency from Scandinavia to Spain, a whole range of organizations are issuing their own.

Supermarkets, airlines, and petrol stations alike are doing it. Tesco, Safeway, and Sainsbury's, three of the UK's largest supermaket chains, all issue their own 'points' to encourage customers to shop regularly only with them.

A whole range of businesses award 'Air Miles' instead of setting up their own scheme; the Air Miles can then be spent on an ever-burgeoning array of goods and services, including air travel. You can even use supermarket points to buy Air Miles! Points and Air Miles have now become a valuable commodity in themselves; Northwest Airlines sell blocks of Air Miles at a discount to charities, which split them up and trade them on at a profit. At one stage Northwest was paying for their worldwide public relations contract in Air Miles, and they still use them to pay many of their suppliers.

These reward systems all use information technology to encourage people to behave in certain ways. Supermarkets may, for example, offer double points for new products to encourage customers to try them out, or they may use the same incentive to shift slow-moving stock. Meanwhile, the store is keeping track of exactly what each customer is buying, analysing their purchasing habits and assessing which incentives lead customers to buy the products that the supermarket most wants to sell. These systems run parallel to the new computer currencies like DigiCash or the corporate currencies, linked to unit trusts, which track the share price of major corporations. As the futurist Alvin Toffler explained, money is now a kind of pure information, shifting from credit card to computer screen in tiny electronic blips.

Similar ideas are now popping up all over the world. There are now regional scrip (printed unofficial money) systems like australs in Argentina, SOCS in Scotland, or tlalocs in Mexico. There are computerized community barter systems like LETS in the UK, Green dollars in Australia and New Zealand, Banco del Tempo in Italy and SEL systems in France.

A Bright Idea Pays Off

One community which has been flexing its right to create its own money more than most has been Ithaca in upstate New York, home to Cornell University and featuring a concrete town centre and some magnificent downtown gorges created by skyscrapers where Tarzan films were shot a generation ago. Ithaca has skipped the intermediate idea of computerized currencies and have gone ahead and printed its own.

Like many similar-sized towns on both sides of the Atlantic (Ithaca is a medium-sized university town), the earnings and spendings of people in Ithaca are increasingly siphoned away by distant utilities and big corporations, making the local economy more and more dependent on businesses over which they have no influence. One chain, Wal-mart, recently beaten off by local campaigners from opening a store in Ithaca, sends all its takings from all its local stores to Arkansas overnight.

This is an environmental problem too. A dependent local economy with too little cash is unable to produce and grow local goods, which are replaced by food that is trucked in, possibly from thousands of miles away. People already living on the economic margins are even more marginalized. The local currency, 'Ithaca Hours' has been introduced to keep local money circulating locally, to encourage local farmers and businesses, and to provide an income for local people thereby reducing dependency.

And it seems to be working. Hours are accepted in 300 local businesses, and have the enthusiastic backing of the Chamber of Commerce and the mayor, who accepts them for meals in his town centre restaurant. One local bank pays its staff partly in Hours, and you can pay your bank charges with them too.

Growing On Trees

The notes include the radical slogan 'IN ITHACA WE TRUST', a play on the slogan that appears on US banknotes, and caused a stir when they recently graced the Wall Street Journal and the front of the New York Times Magazine.

The residents of Ithaca are certainly convinced. 'We wouldn't eat out if it weren't for Ithaca Hours,' a divorced mother of two told Wall Street's financiers. 'It feels terribly good.'

'You see the money's value coming around again and again.' Paul Glover, the instigator of Ithaca Hours and the co-ordinator of the system, calls this the 'community magic act': they print their own currency and somehow it makes everybody better off. 'Hours is money with a boundary around it, so it stays in our community,' he says. 'It doesn't come to town, shake a few hands, and then wander out across the globe. It reinforces trading locally.' There are 6600 Hours in circulation, worth $10 per hour and they are available in denominations of l/8, I/4, 1/2, 1, and 2 hours. Thousands of people and 380 businesses have made local transactions since 1991 valued at about US$1.5 million equivalent to hundreds of jobs.

This is how it works. People and businesses advertise their services in the Hour Town directory. Every advertiser, large and small agrees to accept Hours, and in return they are issued with one or two Hours. After eight months, they can apply for another Hour as a bonus for continuing to participate. More currency is issued to local community groups, and some is loaned out interest-free which is reported in the paper to encourage repayment. Hour Town offers everything from accounting services to zipper repair and a great many basic necessities, such as food.

'We regard US money as funny money, underpinned no longer by gold and silver but by less than nothing by the 5.5 trillion dollar national debt,' says Glover. 'Ithaca Hours, by contrast, are backed by the skills and time of real people.' And following closely in Ithaca's footsteps are at least 30 other local currencies from Valley Dollars in Massachusetts to Ka'u Hours in Hawaii.

Do It Yourself

Of course, printing your own currency is never easy. Many people who do so are arrested, after all. As far as Ithaca is concerned, the critical success factors probably include:

Being able to boost confidence: Local currencies depend on confidence, and this has been critically important in Ithaca.

Outside funding for the organizer: Paul Glover's committed seven-day-a-week involvement has given Hours the boost they need, and has been done on marginal funding. Other systems have failed because the organizer was unable to make a living out of it to begin with.

A bank: Hours have their own bank in a second-hand bookshop in the city centre, which will exchange Hours for dollars.

Control of the money supply: Organizers have kept detailed records of how much money is in circulation, slowing its release when necessary and there is currently more demand for Hours than supply. There could be problems in the future if the money supply has to be reduced, because there are few methods of withdrawing it quickly.

Pulling the strings of the local economy: Somebody needs to be able to make the economic connections if the currency starts building up in the system without ever being spent.

Ithaca's problem is increasingly shared by towns on both sides of the Atlantic. Although traditional economists find it hard to accept, and government advisers seem blind to the difficulty communities can and do run out of cash.

Once the single European currency has become a reality for most of Europe next year, we can expect the problem to be even worse. It is already clear that one interest rate is unlikely to suit both the manufacturing and service sectors of a modern economy in one country like the UK the chances of the same interest rates suiting every community and every sector in all of Europe is extremely remote. And without being able to fluctuate the value of currencies against competitors, some countries are certainly going to lose out.

When they do so, economists are short on prescriptions of what to do about it, beyond funnelling funds into disadvantaged regions. It may be that Paul Glovers pioneering work in Ithaca provides part of a way forward and will inspire others to act before the crisis.

David Boyle is the author of Funny Money: In Search of Alternative Cash, due to be in publication by Harper Collins in January 1999, 23 Camden Hill Road, London SE19 1NX, UK. E-mail:

First published in Appropriate Technology magazine Vol.25 No.2 available from IT Publications, 103-105 Southampton Row, London, WC1B 4HH, UK. E-mail:

Ithaca Money provides a Hometown Money Starter Kit which explains step-by-step start-up and maintenance of an Hours system and includes forms, laws,articles, procedures, insights and samples of Ithaca's Hours. The kit costs $25.00 or $35 US from abroad, sent to: Ithaca Money, Box 6578, Ithaca, NY. 14851. Tel. 001 607 272 4330. A new 17 minute video is available for $17.00 or $25.00 from abroad ($55.00 for Kit and video from abroad). Credit cards accepted.

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