Publications / Article

Printing Money, Making Change: The Future of Local Currencies

Published in Autumn 1998 issue of Orion Afield.

On May 30, 1998, the New York Times Metro Section carried a front page story about Thread City Bread, a local currency issued in Willimantic, Connecticut. Within a few days CNBC, ABC World News Tonight, Voice of America, Fox News in Boston, Northeast Magazine, as well as several regional papers, TV and radio stations had swooped into Willimantic to interview select persons, bankers, and shop owners about their homemade money.

Popular during the Great Depression of the 1930s when federal dollars were in short supply, local currencies are experiencing a revival in North America, but for new reasons. In the 1990s small towns and inner city neighborhoods are discovering that local scrip helps to define regional trading areas, educate consumers about local resources, and build community. Willimantic joins the more than 65 different communities in the United States and Canada where you can use colorful bills with names like Dillo Hours and Barter Bucks for anything from buying groceries to having your hair cut or your computer repaired.

It started in 1989 when Frank Tortoriello, the owner of a popular restaurant in the Southern Berkshire region of Massachusetts, was rejected for a bank loan to finance a move to a new location. In a small community word spreads quickly. The Berkshires are also home to the Schumacher Center for a New Economics. All of us in the office knew the Deli; we ate lunch there and recognized that Frank had a committed clientele who could afford to take a risk to keep the cherished luncheon spot in business. We suggested that Frank issue Deli Dollars as a self-financing technique. Customers could purchase the notes during a month of sale and redeem them over a year’s period after The Deli had moved to its new location. Martha Shaw, a local artist, donated the design for the notes which were dated and read “redeemable for meals up to a value of ten dollars.” Frank sold ten-dollar notes for eight dollars and in thirty days had raised $5,000. Over the next year, Frank repaid the loan, in sandwiches and soup, rather than hard to come by federal dollars. Berkshire Farm Preserve Notes, Monterey General Store Notes, and Kintaro Notes soon followed in what looked like a movement.

Paul Glover of Ithaca, New York, saw the media coverage of the Berkshire notes and liked the idea of hand-to-hand currency that let consumers support local business through pre-purchase of products, but he wanted to broaden the concept. Instead of each business issuing its own notes, why couldn’t the community as a whole issue a local scrip? To learn how this might be done, he spent a week doing research on the history and theory of regional issue of scrip at the Schumacher Center Library, and had long discussions with one of its founders, Robert Swann, who has spent a lifetime promoting local currencies.

Back in Ithaca, Paul talked to those who were running small businesses out of their homes. As is typical in rural areas, many people support themselves not with one $25,000-a-year job, but with five $5,000-a-year cottage industries. They bake pies, repair lawn mowers, do landscaping, paint houses, bookkeep, tutor, and dog sit. Most of these businesses are undercapitalized and underpublicized and would benefit from more customers. Paul asked the owners if they would agree to accept a local scrip for their goods and services. With nothing to lose, people signed up. Everyone initially enrolled was “issued” forty dollars worth of local scrip, denominated in units of hourly labor. Each HOUR note was valued at ten federal dollars, a fair hourly wage for the region. Paul printed several denominations of HOUR notes with pictures celebrating Ithaca’s natural wonders, children, and famous persons. Heat-sensitive ink, high rag-content paper, serial numbers, and embossing helped prevent counterfeiting. HOURTown, the free newsprint paper listing all businesses accepting Ithaca HOURS, focuses on successful trading stories to draw in new participants.

Behind the scenes, Paul is always at work to keep HOURS circulating successfully. He finds out which businesses have too many HOURS in their till, then sits down with the owners to recommend ways for them to expand their HOUR usage. Paul knows which carpenter among the HOUR traders does the finest carpentry work, knows if the farmer has a reputation for delivering carefully washed lettuce, and knows if the guy with the rototiller will get the job done before the weekend.

Largely as a result of this persistent attention to detail, $65,000 in Ithaca HOURS are in circulation today, representing several million dollars in trade in local scrip. An informal advisory board, the Municipal Reserve, keeps an eye on how the scrip is circulating and whether and how more should be issued. There are 370 area businesses—contractors, farmers, restaurants, movie theaters, masseurs, the local credit union—that now accept partial payment in Ithaca HOURS. In fact, when bidding the contract for improvements to their new offices, Bill Meyers, the president of Alternatives Federal Credit Union, specified that the contractor must take part payment in Ithaca HOURS. The message was loud and clear: non-locals need not apply. Meyers explained that the winning contractor then became, of necessity, a promoter of Ithaca HOURS to subcontractors, further accelerating trade in scrip and adding new businesses to the growing list of participants. The use of local scrip gives a positive advantage to small, locally-based businesses, which recirculate the wealth they have generated back into the community.

The Ithaca Hours Hometown Money Starter Kit has inspired groups around the country, each working to develop currencies that are right for their particular communities. For Paul Glover and other visionaries of the movement, local scrip is much more than a device for revitalizing the local economy. It provides a direct way to respond to the alienation we experience in an expanding global economy, and restore the possibility of regional economies based on social and ecological principles.


In a simple barter economy production methods are highly visible. The value of the carrots we offer in trade is directly related to our memories of hoeing in the garden, of building the compost pile, and of waiting for the rain after planting. And though our picture of the cordwood for which we are bartering is not as detailed, still we probably have seen our neighbor as he split and stacked the wood from the ash tree. Barter transactions link us inextricably to a particular place and time.

Money, for all its obvious advantages, introduces an element of abstractness into the economic process. This was less so in the past, when real goods were used as currency, or to back currency or denominate units of currency. Value was still understood in terms of the amount of labor applied to natural resources. When the Tibetan herdsman traded a brick of tea (once used as currency in Tibet) for his lamb, he had a picture of tea brewing in a bucket over a fire in a yurt, and could imagine the days it took to cultivate the tea plant on its mountainside plantation and the hours of bending to gather the tiny new tea leaves. He could compare in his mind the value of a generalized brick of tea to that of the actual lamb in his arms.

Most of today’s national currencies are no longer commodity-based. They are at best pegged to each other, or tied in a vague way to the general productivity of the country of origin. At the end of the twentieth century money has become altogether abstracted from our daily experience. We talk of earning 6% interest, but have no picture of “what our money is doing tonight”—whether it is working to build wheelbarrows in Brazil, grow corn on chemically fertilized land in Iowa, or make shoes in a crowded factory in Thailand.

One of the crucial tasks of the new century will be to so shape our economic system that environmental and social safeguards are built into its design. Advocacy for better working conditions and nonpolluting methods of production will certainly play a part in this reshaping, but theoretical knowledge by itself will not necessarily stimulate a change in our consumer habits. Rather, we need to be able to picture the manufacturing processes so clearly that we are compelled to demand secure conditions for the workers, and to restore the waters poisoned by toxic waste.

By intentionally narrowing our choices of consumer goods to those locally made, local currencies allow us to know more fully the story of items purchased, stories that include the human beings that made them and the minerals, rivers, plants and animals that gave of their substance to form them. Such stories, formed from real life experience, work in the imagination to foster responsible consumer choices and re-establish a commitment to the community. In this sense, local currencies become a tool not only for economic development but for cultural renewal.


This multilayered nature of local currencies has captivated and energized an informal network of practitioners, who regularly communicate via e-mail and articles and who attend conferences where they share successes, problems, and new ideas. The 1996 and 1997 Decentralist Conferences sponsored by the Schumacher Center at Williams College drew a strong showing of activists from around North America. Pioneers of the movement were there to give workshops—people like Paul Glover, Diana McCourt and Jane Wilson, founders of WomanShare in New York City, Tim Mitchell and Gurunam Kaur Khalso of the Valley Trade Connection. George Washington University law professor Lewis Solomon, provided legal expertise (to the frequently asked question, are these currencies legal, the answer is, yes), and Australian businessman Shann Turnbull explained how local currencies can be used to finance appropriately scaled businesses in developing countries. Informal discussions lasted late into the night, as participants struggled over such practical questions as how to determine the optimum amount of scrip in circulation.

In February of 1998 Jim Masters of the Center for Community Futures held a conference in San Francisco that introduced social service organizations to the possibilities of integrating local currencies into their programs. Jim, who has been working with government-funded social service agencies since the Johnson administration, felt intuitively that local currencies are a powerful and creative tool for building sustainable communities, especially in a time of collapsing public budgets. The conference brought representatives of social service groups from Chicago to Honolulu together with local currency activists and experts in non-scrip programs of local exchange. Edgar Cahn spoke of how Time Dollars, which are issued by non-profit organizations to those providing volunteer services, could be utilized to foster a climate of neighbor helping neighbor. Canadian Michael Linton explained the Local Economic Trading System (LETS), which has no hand-to-hand scrip but rather uses a centralized computer to keep track of service exchanges.

The social service providers were especially attracted to the job-creating potential of HOUR systems. However as managers of large organizations, they know what it entails to sustain a successful program. They wondered how a local currency system could support professional management to oversee long-term operations. A significant part of discussion time at all three conferences was devoted to this question, and to the related one, how to involve more mainstream businesses in trading in a regional scrip? The future direction of the local currency movement will be shaped by developments in these areas.

The small home-business owners who first enroll in the HOUR programs may be the folks most in need of a revitalized local economy, but they lack the income margin to pay the management costs for such a system. The co-ordination for most HOUR programs has for the most part been carried out by volunteers. As a result while they are often showered with media attention, the majority of local currency systems do not have the staff and financial capability to meet their full potential.

Some local currency systems issue a small percentage of the total amount of scrip in circulation to make a token payment to administrators—Ithaca HOURS keeps a tight cap at five percent. But as a general policy, issuing for administrative purposes can jeopardize the soundness of the issue. Administration is more appropriately paid from fees for service.

Other local currency groups are organizing as programs of existing organizations using the administrative structure already in place. In Calgary, Alberta, for example, the Bow Chinook Barter Exchange formed out of a committee of the Arusha Centre and has received substantial organizational funding from the Calgary United Way, which views the program as a means for creating jobs. Still other groups are looking to affiliate with established local economic-development organizations.

Several large social service agencies are embracing local currencies as in-house projects, as changes in federal welfare laws are forcing them to find employment for their clients. Unwilling to take single mothers from their homes and place them in low-paying fast food service jobs, the agencies use local currencies to develop opportunities for home businesses, keeping the neighborhoods healthy and mothers at home when their children return from school. In Philadelphia, Resources for Human Development, a non-profit organization contracted to distribute state and federal government assistance funds, has invested significant time and resources to issue Equal Dollars. In North Carolina Suzanne Kinder coordinates the DEPC Dollar program of the Down East Partnership for Children. Clients are paid for work at a number of non-profit organizations in DEPC Dollars which can be spent for donated food, clothing, toys, and other items in the DEPC store.

While these agencies have been effective in operating a limited local currency system, they are constrained by federal tax code to serving only their low-income clientele. If they wish to continue to support the newly-formed small businesses created through their efforts, they will soon need to evolve their local currency programs to include the banking community, Main Street businesses, and professional service providers.

Ultimately it will take a coalition of non-profit groups and for-profit businesses, working together, to form the kind of regionally-based, democratically-structured organization needed to provide long-term management of a local currency program. In such a model administration costs would be paid from membership fees. Broad usage of scrip would assure that wealth is recirculated in the community where it is generated, supporting a diverse group of regional producers. Several groups are already laying the groundwork for these developments.


In the Southern Berkshire region of Massachusetts, we are lucky to have a healthy local banking community with a strong record of community reinvestment and partnership. Of the six banks operating in the region, five remain locally owned. It was a Berkshire banker who came forward with a proposal to involve a broad segment of the established business community in the issue of a local scrip. The program would be based on a simple ten-percent discount note. Consumers would come to their favorite bank and purchase one hundred “BerkShares” for ninety federal dollars. As long as the BerkShares remain in circulation they would be traded at full dollar value, encouraging merchants to search for locally produced goods for their shops and thus opening new local markets for small home-based businesses. Bank involvement would make it easier for many businesses to begin trade in local scrip. At the end of the day merchants would simply deposit excess scrip at ninety cents on the dollar.

The increased volume of business brought about by a fully operational local scrip program would more than offset the ten-percent discount. With a significant base of participants, the system could charge businesses a yearly fee for service and so raise sufficient funds to pay for professional management. Home-based businesses might join in the local currency program at a different fee schedule. The system could be run by a committee of the non-profit Chamber of Commerce with representation from various sectors of the Berkshire community.

In Toronto author Joy Kogawa and merchant Susan Braun are spearheading a similar initiative that would combine the bank-issued ten-percent discount note with the HOUR model. The project has already won significant merchant support in the thriving St. Lawrence neighborhood.

The BerkShare and Toronto projects are just two examples of program innovation building on the compelling Ithaca model. In the future local currencies could be issued solely through the making of productive loans. Productive loans are loans resulting in new goods circulating in the economy in excess of the value of the loan itself, such as loans to a farmer for seeds in the spring generating a bountiful crop of fall vegetables. The interest rate could be zero percent, encouraging the development of small local manufacturing enterprises or renewable energy generating plants that currently are not economically competitive. Eventually a non-profit issuer could untie the local scrip from the federal dollar, establishing a local backing such as cordwood, or a basket of commodities—corn, soy beans, and wheat for instance—as was done in the experiment in Exeter, New Hampshire, in the seventies. In such a scenario, currency would retain a constant local value related to a natural resource and make visible once again the connection between the health of a local economy and the health of the land.

Such ideas, while not new, might have seemed utopian until a few years ago, when the HOURS programs and other alternative currencies began to gather momentum. Today when local currency activists get together, there is no mistaking the positive dynamic at work. The movement has all the energy, idealism, and mobility of young adulthood—still experimenting to find the right form, not afraid to take risks, able to alter direction as needed, and determined to change the economic system to reflect their deeply held social and environmental values.


Publication By

Susan Witt

Susan Witt is the Executive Director of the Schumacher Center for a New Economics, which she co-founded with Robert Swann in 1980. She has led the development of the Schumacher Center’s highly regarded publications, library, seminars, and other educational programs, which established the Center as a pioneering voice for an economics shaped by social and ecological principles. Deeply engaged … Continued

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