Going green: Communities Make Their Own Currencies
The Associated Press - Rodrique Ngowi - Diana Felber brought her groceries to the
checkout and counted out her cash — purple, blue and green bills that
aremgood only at businesses in western Massachusetts.
Known as "BerkShares," the colorful currency is printed by a nonprofit group
to encourage people to spend close to home in the state's Berkshire region.
Customers who use the money also get a built-in 10 percent discount, since
they can get 100 BerkShares for just $90 at local banks.
"I like all the ideas about local," said Felber, a 64-year-old artist
shopping at the Berkshire Co-op Market. "I also like that it's a discount.
Who wouldn't like that?"
The BerkShares program is one of the most successful of its kind in the
country, and it is attracting attention as other communities look for ways
to insulate their economies from the deepening financial crisis.
Susan Witt, co-founder of the nonprofit Berkshire Inc., said her group
receives about three calls a day from other people interested in creating
So far, more than $2 million in BerkShares have circulated through 350
businesses since the bills were first printed two years ago. BerkShares
look similar to real money for good reason: They are printed on specialty
paper from Crane & Co., a local company that has been the sole provider of
paper for U.S. currency since 1879.
The bills come in denominations of 5, 10, 20 and 50 and feature portraits of
well-known local figures: a Mohican Indian, the original inhabitants of the
area; civil rights leader W.E.B. DuBois, who was born in Great Barrington;
community leader Robyn Van En, who died in 1997; Herman Melville, author of
Moby-Dick; and painter Norman Rockwell, who lived in Stockbridge.
National retail chains in southern Berkshire County have not signed up to
accept the currency, and BerkShares cannot be traded online with
out-of-state merchants, Witt said.
"I'd much rather take BerkShares than you giving me your credit card," said
Steffen Root, co-owner of Berkshire Bike & Board, citing card processing
fees. "I think that we can keep our money local, it's a good thing —
especially with our economy where it's going."
Interest in local currencies often spikes during a recession as communities
scramble to promote their businesses and curb unemployment, said Lewis D.
Solomon, professor at the George Washington University Law School and author
of "Rethinking our Centralized Monetary System: The Case for a System of
The U.S. Constitution prohibits states from coining their own currency, but
it is silent on local paper money. The courts have allowed private groups to
print complementary currency, provided it does not compete with federal
money and does not circulate beyond a limited area.
For accounting purposes, the Internal Revenue Service requires that income
received in BerkShares and other local currencies be declared in U.S.
The Massachusetts program is one of several local currency systems,
including those in New York, California, Kansas, Michigan, Oregon,
Pennsylvania and Wisconsin. One of the oldest is Ithaca Hours, which went
into circulation in 1991 in Ithaca, N.Y.
"If you have local networks, you can trade within them," said Paul Glover,
founder of the Ithaca program. Whether they are business, religious,
neighborhood or professional groups, "there is a capability within those to
trade without strict dependance on dollars."
Starting a local currency isn't cheap.
In the Berkshires, Witt's group spent $250,000 in grant money to pay for
research and development and to create the alternative financial system. The
group has made its research available for free online, hoping to help reduce
costs for other communities seeking to set up a similar program, she said.
The bills are traded an average of four times before finding their way back
to the banks, Witt said.
Not everyone is a fan of the local currency. Machal Snyder, a bookkeeper for
several businesses, said he stopped going to the bank to get BerkShares.
"I just started using my debit card for everything," he said. "I hate to
admit it, but I think that I have become a bit more about convenience."
Those concerns may be resolved by an expansion program that includes
branching into debit cards and offering loans to business startups, Witt
Shanace Sullivan said BerkShares help her support relatives tied to the
"A lot of my friends and family are people who work in the local trade, so
it's important for me that business stays in the area. And any business that
I have, I can try to keep it here," she said.