Publications / Local Currencies in the 21st Century Conference

The Fantasy of Gold and the Survival of Life

I am enormously honored to be here, especially to follow a pioneer like Tom Greco, from whom I have learned a very great deal. It also makes me humble. There are people in this audience whose currency kept nearly six million people alive during the Argentinian crisis. There are people who run time-dollar projects and who have been able to transform people’s lives. It hardly seems right that I’m speaking and they’re listening.

I believe that this conference marks not just a critical moment in the complementary currencies movement but a key moment in the history of money itself.

I’m going to talk about London, the euro, and The Wizard of Oz, though not necessarily in that order. And I’m going to do what everyone warns you never to do—talk about American history to an audience of Americans. I hope you’ll forgive my inevitable inaccuracies.

The kind of money we use is almost never discussed in mainstream life, but there was a time more than a century ago when it was almost the central issue for American politics. It was the primary plank of the now defunct Populist Party, which managed to link southern and midwestern farmers together with the big cities of the midwest in a campaign for money based on silver, rather than the less plentiful gold.

The party’s tenets were put together in Omaha in 1892 by Ignatius Donnelly, a man who had previously devoted his life to the discovery of Atlantis and to proving that Sir Francis Bacon was the author of the plays attributed to Shakespeare. Here is Donnelly in the Omaha Declaration: “The newspapers are largely subsidized or muzzled, public opinion silenced, business prostrated, homes covered with mortgages, labor impoverished and the land concentrating in the hands of capitalists. The urban workmen are denied the right to organize for self-protection . . . , a hireling standing army, unrecognized by our laws, is established to shoot them down, and they are rapidly degenerating into European conditions.” It’s enough to send a shiver down the spine—European conditions, ugh. Very modern, isn’t it?

I mention the Populists because one of their most enthusiastic activists was an unsuccessful Chicago journalist called Frank Baum. It was Baum who gave us The Wizard of Oz, which is a coded diatribe against money based on gold. “Oz” is, of course, the way we designate weight in gold.

You probably remember that Dorothy sets out on the Yellow Brick Road, wearing the Witch of the East’s magic Silver Shoes, changed to red in the Judy Garland film. Nobody understands the power of these shoes: “All you have to do is knock the heels together three times and command the shoes to carry you wherever you wish to go,” she’s told. In the end the Wonderful Wizard, the personification of the gold standard, is revealed as a fraud, hiding behind a curtain, desperately twiddling with levers.

The Populists didn’t succeed. They were undermined by the adoption of Free Silver by the Democrats in the person of the great orator William Jennings Bryan, who, incidentally, at the end of his life was prosecutor at the Tennessee Monkey Trial in 1925. But at the 1896 Democratic Convention, Bryan brought his acceptance speech to a crescendo by raising his arms above his head and then slowly lowering them into the shape of a cross, with the words: “You shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.”

Bryan lost the 1896 election, and twice again, which must be some kind of record. But this was a speech that inspired a generation, portraying gold as an instrument of torture weighing people down, the very basis of sin, and an object of veneration that’s turned against them because there simply isn’t enough money for life. Most of us don’t raise issues like this anymore.

My parents live in a little village in England called Nether Wallop. It’s easy to imagine: thatched roofs, retired major-generals, Labradors. A generation ago it managed to boast two shops, a post office, two pubs, a butcher, a village policeman, a doctor, a district nurse, and only a couple of miles away a railway station connected to a massive local rail network. That was during the impoverished years of the 1940s. Now, when we are incomparably “richer,” all that’s left is one pub and a very occasional bus.

The conventional reasons for this—low taxes, over-regulation, fat cat salaries—don’t really explain why, despite unprecedented prosperity, it seems so hard to afford the simplest public services of health, post, and education as well as the life that goes with them. Why aren’t politicians asking about this? Well, I’ll mention two reasons.

First, the critique of money creation for most of the 20th century came from the political right. It was Roosevelt’s opponent Huey Long, assassinated in 1935, who exemplified the idea of money reform in the early 1930s. In England, the social credit movement regarded itself as part of a wider reform movement that wanted a strong central state, so much so that they marched in the 1930s, a bit like the Blackshirts but in this case as the Greenshirts. The Greenshirts emerged as a breakaway movement from the Boy Scouts. How a breakaway from the Scouts could transmute into a militaristic organization dedicated to currency reform is another story. That’s the first reason: Money reform seemed tinged with fascism.

The second reason is that shortage of money isn’t really the problem. If you flooded the world with the modern equivalent of William Jennings Bryan’s silver money, we know exactly what would happen to it. Like the Wicked Witch of the East appearing in a whoosh of wind, it would shoot into the City of London and Wall Street. And there still wouldn’t be enough where it’s really needed. That seems to me to be the key problem and the reason why the old money-reform movements won’t work any more.


The great economist John Maynard Keynes called gold a “barbarous relic.” If you look at the price of it, especially these days, you can imagine that the days of gold have gone for good. Yet we are as much in thrall to the gold mind-set as we ever were, as much in awe of money as Dorothy ever was as she approached the Emerald City. And of course the euro isn’t the Gold Standard, although it sometimes sounds a bit like it because it’s about stability of value, about strong money. But the economists behind the euro makes the same mistake as the Wizard of Oz: they really believe in objective values and that somehow these values can be reflected everywhere the currency circulates.

In the year of the Monkey Trial, the year that Bryan died, the British Chancellor of the Exchequer, Winston Churchill, described a system of international currencies which “vary together, like ships in harbour whose gangways are joined and who rise and fall together with the tide.” It sounds beautiful, but this was a description of gold standard money on the eve of the world’s return to it. It was a famously disastrous decision, instrumental in bringing about the Great Depression and therefore the Second World War.

The fundamental problem at the heart of the euro, and of any single currency based on the idea of objective value like gold, is this: single currencies tend to favor the rich and impoverish the poor. They do so because changing the value of the currency and varying the interest rate, for example, is the way that disadvantaged places are able to make their goods more affordable. When you stop them from doing that, you trap whole cities and regions, including the poorest people in the poorest places, without their being able to trade their way out.

Now of course the US has one currency, present company excepted. So does Britain. But if we’re honest about it, we know that hasn’t been satisfactory either, because central banks set their interest rates to favor the big cities. In my country, we have interest rates set to suit the City of London, while the manufacturing regions of the north struggle as best they can. Across Europe, the effects will be all the worse.

That’s the danger of the euro as presently arranged, and don’t underestimate it. It means success for the cities that are already successful; it also means a real struggle for the great reviving cities like Liverpool and Warsaw.

Different cities, different communities value different aspects of life. And single currencies are not the universal measuring rods they claim to be. Take, for example, the suburb of East Dulwich, near where I live. If you want a nail in a peculiar shape or a weird kind of screwdriver, then you can’t go wrong in Lordship Lane because there are so many hardware shops there. They’ve been there longer than anyone can remember, and most are staffed by ancient enthusiasts who know absolutely everything anyone could possibly want to know about plastering, emulsion, and brass screws. But they’re an endangered species. A plan to build a hardware superstore on one of the last remaining bits of green nearby will probably strip Lordship Lane of this particular specialty. And although the balance sheets in the city will probably show a big gain, we locals will have lost something.

Why don’t these aspects of wealth show up in the figures? If money is supposed to reflect people’s preferences, why doesn’t it reflect the preferences of the locals? There are lots of reasons, of course, but one is that the yardstick the global players use, which is an international currency like the pound or the dollar, doesn’t measure fine-mesh local wealth. There’s also the problem that, apart from a few communities benefitting from people in this room, they’re all we’ve got.

The thing is that in a modern economy, even in a modern city, there’s really more than one economy at work, and big currencies don’t suit them all. Take the sheer diversity of London. We all of us, from nurses to currency traders, have to get by using the one currency, the value of which is decided by tens of thousands of youthful traders on Wall Street and in the City.

That’s fine for the international economy, for the financial services sector. But there’s another economy in London and New York, which feeds off the pickings from under the rich table but isn’t necessarily part of it. It’s the economy for the rest of us—those aspects of life which have nothing to do with financial services. The international economy brings in executives from all over the world, whose employers will pay their expenses no matter what, forcing up the value of London homes beyond anywhere else in the country and pricing London services beyond those of the other economy.

Thus, London struggles to employ nurses or teachers or bus drivers, who can’t afford to live there, with the result that the basic services suffer. It’s the same in New York and so many other cities. Worse, London’s rich economy threatens to drive out the poor economy completely. You can see the same thing happening in offshore financial centers where financial services have priced everything else into oblivion. In places like Jersey in the Channel Isles, it’s like the transgression of a cuckoo invading the nest of a different species. Jersey’s offshore status has made it rich, and yet there isn’t any longer a Jersey agriculture sector to speak of, and the tourist sector is well past its prime. Why? Because nobody but bankers can afford to live and work there.

There’s a third economy in London as well, and it too is threatened because we don’t see it. The third economy isn’t really an economy at all: it makes up the crucial human transactions—without which nothing we do can be successful—of building families and neighborhoods, as well as looking after old people. Economists call this “social capital”; Edgar Cahn calls it the core economy, and market forces don’t apply here. Yet without it, the police can’t catch criminals, doctors can’t heal their patients, children can’t be educated, and the other economies can’t succeed. This social economy doesn’t appear in the GDP; politicians assume it’s inexhaustible, and so they ignore it. The problem is that single currencies—whether the pound, the dollar, or the euro—don’t accurately measure the needs and assets in these other economies.

That’s the key thing I wanted to say, so you can switch off now. Big currencies don’t measure very well. That’s true everywhere, not just in London. What they miss is ignored; then it’s forgotten. Big currencies represent gold-standard thinking. They condemn us all to walk around, like the people in the Emerald City in The Wizard of Oz, wearing tinted glasses which can recognize only what Wall Street says is important. Currencies are not just measuring systems then; they are eyeglasses as well. They are the way we see the world. If our currencies don’t value things, we just don’t see them, and then they disappear. If you measure only GDP, then the environment, human dignity, community, family are all driven out in the end. That’s what faulty measuring rods do, and currencies are measuring rods.

Monoculture money systems drive out other cultures, other species, other languages, other opinions, other forms of wealth. We can see this everywhere: the great harbors and rivers that have bustled for a thousand years are empty; the farming communities and fields of the world are covered with weeds; even the great corporations, whatever else we may think of them, shed all the real work until they are merely shells that just do financial services. There’s a great silence descending on the world.

Citibank’s profits last year were the largest of any corporation in history. Why should anyone invest in anything except financial services? These great shell corporations now control 28 per cent of the world economy but employ only a quarter of one per cent of its workforce. It is happening so slowly that we can barely recognize it. Money—big money—is pushing out life.

When we feel the hurricane of a trillion dollars a day blowing through the world, remember that it isn’t what it seems. The truth is, it reeks of decay, of death. We need new kinds of money that don’t drive out life, or else we are heading toward what Keynes called “a peregrination in the catacombs, with a guttering candle.” That’s why I say this failure of measurement, this blindness, is the real problem of money, and no amount of new ways of creating it by central banks is going to solve the problem.

Different people need different kinds of money which behave in different ways and value different assets. We all need different kinds of money for different aspects of our lives. If we don’t get that, some parts of our cities will be rich and some poor, some parts of our lives will be rich and some poor. That’s the issue, and it’s the real meaning of the Yellow Brick Road.

Oddly enough, the euro is slowly becoming a second currency in Britain. You can use it in the phone booths in London, for example; of course, that’s not enough. If we need a range of yardsticks, we need a range of currencies: Time Dollars to underpin the social economy; local currencies to keep money and resources circulating locally; regional currencies to provide low-cost finance to small business. Each of them gives value to assets and resources that the big currencies can’t see. Barter currencies, like trade pounds, can let us exchange unsold plane seats or hotel rooms or toothpaste in last year’s color when the market doesn’t recognize them as valuable.

Five million perfectly good computers are put into landfill in the UK every year. They still have value, but in pounds they’re worthless. Time banks can recognize their value and put them back into use. Martin Simon and I will be doing a workshop on time banks, so I won’t talk about them now. The point is that complementary currencies—and especially time dollars, which I am most familiar with—can give some value to all those assets that dollars don’t recognize: old people’s time, young people’s time, old computers, and much else besides. And they are being directed at the enormous weight of unmet need: loneliness, isolation, silence. Big currencies can’t do that because the messages they carry are too distant and too complex. Complementary ones can. In fact it’s happening already. All of you are testament to that.

We’ve gotten used to being on the cutting edge, but actually the business world is doing it already. Until recently Northwest Airlines used to pay its entire worldwide PR account in frequent flyer points. International barter exchanges have been successfully using electronic currencies called trade dollars. In fact, up to a fifth of world trade is now carried out in this way, and when local barter exchanges can’t immediately find what they need, they use an international currency called Universal to barter it from elsewhere. The business world is already using these currencies, and for precisely the same reason I want us to concentrate on them, because big currencies don’t measure their assets very well.

New currencies are in the ether such as the NU-Spaarpas in Rotterdam, where people earn credits on a smartcard for behaving in a sustainable way and the Friendly Favors website, now attracting 5,000 hits a month. Even the BBC broadcast a series of five short plays every day last week about people using LETS (Local Exchange Trading System). The one I listened to included a man who was trading his ability to make almost anybody pregnant!

To sum up: it’s all a matter of what counts. We have to escape from the old idea that money is one indivisible, totemic, semi-divine, golden truth that is issued from on high by an infallible Federal Reserve and handed down to a grateful populace.

Though the gold standard disappeared from the US in 1971, the attitudes lying behind The Wizard of Oz are with us still, and they are blinding us to our own wealth. But complementary currencies can reveal to us that even in the poorest places there are vast living assets—ideas, skills, time, even love—that can turn our ideas of scarcity on their heads. That’s why I say that this conference points towards a new future, and it isn’t down the Yellow Brick Road to pay homage to the Wizard. It means taking the power to create money back into our own hands. We can do it ourselves. Not by ourselves, but with one another. We can create the basis for the wealth we need.

The Populists put their faith in silver money that only a government could provide, but I think it’s the self-help message that’s really at the heart of The Wizard of Oz. When the people of Emerald City take their golden green-tinted glasses off, they find the place isn’t green at all, but it’s still full of riches they just hadn’t seen before. And they’re actually rather proud to be ruled by the Scarecrow. As they put it, “There’s not another city in the world that’s ruled by a stuffed man.” I’m not sure I agree with that one. I live in a country where the foreign minister is called Jack Straw. In the end, the Wizard very cleverly makes everyone think he provided them with brains, courage, and heart when they actually did it for themselves.

“How can I help being a humbug when all these people make me do things that everybody knows can’t be done,” asks the Wizard. “It was easy to make the Scarecrow and the Lion and the Woodman happy, because they imagined I could do anything.” There lies the conundrum. When it comes to tackling globalization or currencies, it’s just like in The Wizard of Oz. We can make the world the way we want it, not by waiting around for some wizard to fool us but only by remembering it’s something we’re actually doing ourselves.

Finally, I wanted to say something about what I think we should do next. Four things in fact.

First: Because there is no one right way, no perfect currency, we need to find a global way to hold together what we are doing without forcing it all to be the same.

Second: We need high-level political and economic backing. I know it’s difficult to find, but we need that kind of protection. And it is possible. I hope Edgar Cahn will be successful when he addresses a seminar of Tony Blair’s advisors at the end of September.

Third: We simply must be tolerant of the small differences in the ways each of us does things. Radical movements have a strange way of transforming those who are closest to you into your bitterest enemies, raising tiny differences in practice into major ideological divisions. I speak from the bitter experience of the fall-out of the LETS movement in England.

Fourth: We need more experiments, keeping in mind that we need to be ambitious. Joseph Chamberlain, the Mayor of Birmingham in the 1870s, used to tell people to “be more expensive.” We should do that, but we should hold it in balance with the other thing we need in order to make it simple to use the currencies. I don’t mean the back-office functions; they can be as complicated as you like, but actually using the money must be easy. Ambitious and easy: there’s a trade-off there, but we need them both. There’s another trade-off: They need to be fun. Using complementary currencies must not seem like work, yet they also need to target problems. That’s where the opportunities lie.

Complementary currencies are information systems that allow specific problems to be solved by surpluses elsewhere. The system in Curitiba in Brazil, for example, pays people in credits for recycling or bringing in rubbish which can be used on the buses. Surplus capacity is being used on the buses to clean up the city. We can do that, but it must be fun as well.

My wife, Sarah, at the New Economics Foundation, runs the London Time Bank network of thirty-five time banks across the city. She would be here too if it wasn’t for the fact that she is about to have a baby. In fact, I have my mobile phone with me in case I had to rush off during the speech. Since I’m responsible for bringing a new baby into the world, the state of it has become even more important to me.

It matters to me that a great silence is descending because of the money that is driving out life. Yesterday Dwarko Sundruni talked about John Ruskin’s Unto This Last, so I thought I would end with a quotation from it: “There is no wealth but life. Life, including all its powers of love, of joy, and of admiration. That country is the richest which nourishes the greatest number of noble and happy human beings; that man is richest who, having perfected the functions of his own life to the utmost, has also the widest helpful influence, both personal, and by means of his possessions, over the lives of others.”

There is no wealth but life. That should be the motto of our movement.


Publication By

David Boyle

David Boyle was a long-time fellow at the New Economics Foundation, where he has worked in various capacities since 1987—writing and editing, developing new projects, launching the time-bank movement in the UK, making recommendations on the future of money, advising on volunteering policy, and most recently participating in research on localism and the future of … Continued

Related Lectures

Inflation and Social Justice
Local Currencies Aiding Municipalities in Recovery
Democratizing Monetary Issue: Vision and Implementation in the Berkshire Region of the U.S.
What is a Work of Art in the Age of a $120,000 Art Degree? “Entrepreneurs of the Self” in the New Economy
Excerpt about Susan in Local Dollars, Local Sense