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U.S. states start to print their own currencies
09.04.2009 Source: URL: http://english.pravda.ru/world/americas/107378-US_currencies-0
Many U.S. communities are creating their own currencies now. They try to help consumers and companies to fight the global financial crisis and the recession.
The idea, borrowed from the Depression era when the currencies were known as "scrip", is designed to boost local spending and keep money circulating within the community.
Typically, a group of businesses print a new currency which shoppers can then buy at a discount – typically one dollar will cost 90 to 95 cents – and spend at full value with participating companies.
Some of the currencies have been around for years but the recent economic downturn has encouraged others to follow suit. According to some estimates, there are now more than 75 local currency systems across the country.
Others include the Ithaca Hours in upstate New York and the Plenty in North Carolina.
Under US law, small communities can produce their own currency so long as it does not include coins and does not resemble federally-issued money.
The currencies are not a tax dodge as the income to participating businesses is liable to tax.
In Traverse City, Michigan, more than 100 businesses accept Bay Backs, among them restaurants, B&Bs, a doctor, accountant and even a tarot card reader.
Around $2 million worth of BerkShares – the most established local currency – is circulating in the Berkshires, a rural area in southern Massachusetts, telegraph.co.uk reports.
The beautifully-illustrated notes portray local "heroes", including the author Herman Melville, the artist Norman Rockwell and a tribe of Mohicans.
A good example of local currency at work is an experiment done in 1930’s in the city of Worgl, in Austria. It was time of the Great Depression; the small town of 4000 people had unemployment of 30%, with huge local government debt. In 1931, the city major ordered printing of 32,000 labor certificates, that carried a negative 1% monthly interest rate and could be converted into the Austrian currency at 98% face value. The new currency restarted a number of public projects mostly involving infrastructure and within a year the revenue of the local government rose from 2,400 AS (Austrian schillings) to 20,400, while the unemployment was virtually eliminated, all with no increase in prices. With the rest of Austria still gripped by the economic downturn, other communities followed with installing local currencies.
Naturally the socialist party of Austria wasn’t satisfied with the program and neither was the Austrian central bank, afraid of losing power over currency. As a result, the experiment was shut down, the unemployment went back up and the local economy caught up in deterioration with the rest of the country, examiner.com reports.
Local currency, on a much larger scale, is currently at work in the European Union. There are several countries within the Union that still use their own national currencies instead of Euro – the official currency in EU.
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Interesting. I had no idea that was being done in "real" towns, as the only place I've seen it used is in Mickey's kingdom with his Disney Dollars, but a great idea to keep local wheels spinning.
It would be really interesting to see a longer term perspective on it, and find out how much "real" (fiat) currency the local issue could displace. Anybody got any more info on that?
I don't think I have any more information to add. My wife has a cousin living in North Carolina and we were talking about the Plenty a few weeks ago at a family reunion. I'm sitting there thinking he better be careful and what kind of anti-government group has he joined. I guess as it turns out no problem. Wherever he is in N.C. it seems as these are fairly well accepted and getting used more and more.
That makes me all warm and fuzzy inside. Oh wait, I just threw up a bit in my mouth. That feeling has now passed.
In my community we use something like this, although they are more like gift certificates. About 50 merchants participate, and you can by the certificates from any of the merchants, from the Chamber, from the Welcome Center, and several other places. And they can only be used at participating merchants.
It's not as heavily used as we would like, but it keeps dollars local, they make great gifts, and it forces people to use local merchants.
Scores in NYC used to do this also. They're gone now so it's not worth anything anymore.
GREAT BARRINGTON, Mass. — It looks like Monopoly money, but the colorful currency created by collaborators in the western Massachusetts town of Great Barrington is legal tender.
The creative cash is called "BerkShares," a play on words, referring to the mountainous region called the Berkshires, where businesses and citizens have come together to support each other in these tough economic times.
Asa Hardcastle, the president of BerkShares Inc., says the unique bills can be picked up at local banks. For every 95 cents, consumers get a dollar's worth of BerkShares, which can be used to purchase goods and services at participating local shops. So far, 400 businesses have signed up.
"Local currency helps to keep the money flowing between friends and neighbors, local businesses, which helps everybody to have a better life," Hardcastle said, sipping on a cup of joe bought with BerkShares.
They're not alone. From Detroit to North Carolina to upstate New York, at least a dozen communities are trying to encourage people to buy locally, creating their own currencies.
In the Berkshires, the bills are printed on the same paper as U.S. currency and by the same company — Crane & Co., based in the Berkshires town of Dalton, Mass. They feature local artists, heroes and historical figures and come complete with individual serial numbers, making them a tough target for counterfeiters. The program is made possible through private grant funding.
Roughly 2.3 million minted BerkShares have circulated through the community since the program's launch in 2006.
Matt Rubiner, owner of Rubiner's Cheesemongers & Grocers, stands behind the local currency.
"Philosophically, it's very much along the lines of the foundations that we set up our store under. Supporting local, sustainable producers. Keeping the community local wherever possible and so, when the BerkShares came along, that was right up our alley. We really embraced it," Rubiner said.
His shop takes special effort to buy local products and support local dairy farmers.
"We begin to feel we can take care of ourselves maybe a little bit better," he said "Maybe it does bind us a little more closely."
Customer Heather Fisch stopped by Rubiner's to try a slice-of-the-day, saying she's a big supporter of BerkShares.
"I think it's nice to have a constant little reminder that we're a community and we're in it together," Fisch said. "It's kind of like a Great Barrington pride moment. I'm a citizen of Great Barrington. Here's my BerkShare."
Historically, it's not a new phenomenon. Local communities printed their own currency during past recessions, as recently as the 1980s. During the 1860s, local banks printed money. New England's mills often paid their employees in scrip, a system of payment that could only be used at a company store or in the local town.
Robert Bench, a senior fellow at Boston University and former National Bank supervisor, says local currency efforts have proved successful in the past, helping to encourage consumers spend close to home.
"I think it brings out the community spirit that's in everybody's self conscience," he said.