Cash, Credit or BerkShares?

Metroland - Nicole Klaas - Residents of southern Berkshire County are doing away with the green and
making room in their wallets for crisp, colorful BerkShares, a new regional
currency that’s being used as part of an effort to encourage local
consumerism. For about two months now, community members have been able to
use BerkShares instead of federal dollars to purchase goods and services
from nearly 200 participating businesses.

“There’s already a culture of supporting locally owned businesses and
locally made products,” said Susan Witt, administer of BerkShares Inc., the
lead organization for the project, and executive director of the E.F.
Schumacher Society, a co-sponsor of the endeavor. “The BerkShares are just a
tool to make that kind of support more visible and make it easier for
citizens to remember to shop locally, because with BerkShares in their
pockets, they can’t go online to shop or at stores outside the region.
They’ll have to go down to their Main Street businesses, which takes more
time, but builds community and links us more closely to the people of our
region and the products of our region.”

BerkShares are available in denominations of 1, 5, 10, 20 and 50, and can be
purchased at five participating banks for a 10-percent discount<90 federal
dollars will buy you 100 BerkShares. While their primary intent is to
promote the local economy, BerkShares also celebrate local figures,
landscapes, and the work of local artists, which are depicted on the
colorful bills. Approximately 333,000 BerkShares currently are in
circulation.

Louann Harvey is president of the Southern Berkshire Chamber of Commerce,
another co-sponsoring organization, as well as a loan officer at Berkshire
Bank, one of the participating banks.

“I can tell you at the bank every third customer that comes into the bank is
purchasing BerkShares,” she said. “It’s unbelievable.”

The BerkShares Web site, berkshares.org, lists almost 200 businesses
currently participating in the project. Merchants represent numerous
industries, including retail, entertainment, legal services, and much more.
New businesses are being added to that list weekly, said Witt. BerkShares
also often are accepted by businesses not named as official participants.

Each business defines its own restrictions and rules about using the
currency, but typically BerkShares can be used interchangeably with federal
dollars.

“It has been incredible,” Harvey said. “People are so excited because what
we’re all about is trying to keep people here spending money locally. We
[the Chamber of Commerce] have 544 member businesses, and if we can keep our
local people shopping with our local merchants, it just makes for very happy
members.”

The BerkShares project, while unique to the Berkshire region, is one piece
of a larger local-currency movement.

The E. F. Schumacher Society, which is based in Great Barrington, Mass., has
been involved with the regional-currency concept since the organization was
founded in 1980. The nonprofit is designed as an educational organization,
promoting issues of social and environmental sustainability such as local
currency. In 2004, the organization convened an international conference
about local currency at Bard College, which drew people from around the
world.

According to the organization’s Web site, local currencies were used widely
in the United States during the early 1900s. Today, there are a handful of
active local-currency projects in the United States, as well as three
projects in Canada and one in Mexico. The specific operation of each local
currency varies from project to project.

BerkShares are somewhat distinct from other projects in that they are backed
by federal dollars. When a business or individual chooses to cash-in their
BerkShares, they again take them to one of the five participating banks. The
10-percent discount that applied to the consumer’s initial purchase of the
BerkShares is subtracted from the total cash-in value, so, if a business
owner deposits 100 BerkShares, he or she will receive $90 in return.

When consumers purchase BerkShares from a participating bank, the 10-percent
discount is designed to serve as incentive for them to spend more in the
local community, explained Witt. “Ideally, what will happen is the increased
volume of trade will make up for that 10-percent loss [that business owners
incur when they cash in their BerkShares], but if the merchants respend
that, then they don’t take any loss.” This serves as a form of incentive for
businesses to recirculate the BerkShares within the community rather than
trade them in for federal dollars.

The BerkShares project, as currently designed, will cease after one year. In
June 2007, the organizational co-sponsors will meet with bankers, merchants
and citizens groups to gather feedback, Witt said.

If the various community constituencies indicate they’d like the BerkShares
project to continue, it can be extended. The summer expiration date,
however, provides an opportunity to adjust the program, Witt said. For
example, the 10-percent incentive could be reduced to 5 percent, or a
debit-card option could be instituted, she suggested.

If the residents and businesses choose to shut down the program, community
members would have three months to redeem the BerkShares for federal
dollars. Any difference between what was put in circulation and what was
cashed in would be donated to charity.

Neither Witt nor Harvey expects merchants and residents to be ready to end
the program any time soon, however. “We’ve printed 860,000 worth of
BerkShares, so we expect to grow and we are ready for growth,” Witt said.