Local Currency, also known as “community currency, “complementary currency” and “time dollars”, is currency or “scrip” printed by a community for use only within that community. It is backed by the agreement of those using the currency to accept it in payment – part or full – for goods and services. This “value by agreement” is similar to the mutual trust that supports U.S. Federal Reserve Notes, except the agreement here is between friends and neighbors in a community – a much stronger bond.
A Historical Example
In 1932, the mayor of the Austrian town of Worgl decided to do something about the 35 percent unemployment of his constituency (typical for most of Europe at the time). He convinced the town hall to issue 14,000 Austrian shillings’ worth of “stamp scrip,” which were covered by exactly the same amount of ordinary shillings deposited in a local bank.
After two years, Worgl became the first Austrian city to achieve full employment. Water distribution was generalized throughout, the streets of the entire town were repaved, most houses were repaired and repainted, taxes were being paid early, and forests around the city were replanted.
It is important to recognize that the major impact of this approach did not derive from the initial project launched by the city, but instead had its origin in the numerous individual initiatives taken in the process of recirculating the local currency instead of hoarding it. On the average, the velocity of circulation of the Worgl money was about fourteen times higher than that of the normal Austrian shillings. In other words, on the average, the same amount of money created fourteen times more jobs.
In the United States
Local Currency was common in this country during the Depression when banks failed and many communities decided to create their own currencies as a way of increasing the local money supply and supporting local businesses and residents. Over 300 cities and thousands of communities and organizations issued emergency currency.
In other types of “communities”, similar self-printed currencies can be as varied as the “Disney Dollars” used at Disneyland and Disney World, and the Military Payment Currency (MPC) that was used by the U.S. military in Vietnam.
Currently Used Throughout the Country
One of the best known local currency programs is “Ithaca Hours”, which started in Ithaca, New York in 1991and has grown to the point where credit unions, restaurants, movie theaters, bowling alleys, grocery stores, the local hospital, farmers market vendors, and over 300 other businesses honor the currency. They are also used for plumbing, carpentry, electrical work, roofing, nursing, chiropractic, childcare, car and bike repair, food, eyeglasses, firewood, gifts, and thousands of other goods and services. Over 1300 individuals participate in the program, which has over $60,000 in circulation.
Today more than 60 communities throughout the United States have their own form of local currency, and hundreds of others are considering starting their own programs.
What is Local Currency?
Specifically it is printed currency, produced at a local print shop using paper, ink and printing techniques that are proven to protect against counterfeiting. Currency is generally printed as a standard “one-hour” denomination (usually the equivalent of a $10 federal reserve note). Other denominations including one/half-hour and one/quarter-hour are also printed. Local currency is considered legal by the federal government and is taxable income when traded for professional goods or services.
Local businesses and services agree to accept the local currency at a fixed rate, i.e. generally one “hour certificate” for an hour’s worth of labor, or $10 worth of goods. In Ithaca, for example, some professionals such as physicians or attorneys initially required two to three “hour certificates” for their time, but that attitude is changing and many now accept a one-to-one trade.
Advantages of Local Currency
One additional advantage to local currency, particularly in a tourist location, is that tourists will often purchase the currency and take it home as a souvenir. Since it is never redeemed for goods or services, its purchase actually ends up as a no-cost “cash transfusion” directly into the local economy. The Disney organization doesn’t publicize this little secret, but it’s delighted when tourists buy their little pieces of Mickey Mouse and Donald Duck paper and take them home without spending them.
The purchase of local currency by tourists – attracted by both the novelty of the currency and the beauty of its design motif – could bring significant dollars into the local currency program itself, helping to maintain the administrative side of the program and providing additional funds to local non-profit organizations.
Local currency, which invoves use of locally-printed money, is often confused with barter, which involves only goods and services and no currency.
How local currency can help solve the problems of unemployment, the environment, and community breakdown. The philosophy, history and potential for the 21st century.
Extensive information and resources on complementary community currency systems and local exchange networks
Complementary Currency Resource Center
Complementary /community currency movement worldwide including software, research, reports and resources.
E.F. Schumacher Society Home Page
Linking people, land, and community by building local economies. Named after the author of Small Is Beautiful: Economics As If People Mattered
E.F.Schumacher Society’s Local Currency Page
On community currency and other systems
Local currency in Ithaca, New York
Detailed information on the Ithaca community currency
Ithaca HOURS Online
Locally issued paper money from a well established community currency project in Ithaca, New York
Starter Kit for your own community
Hometown money book and samples of money
A trading network supported by its own internal currency. It is self-regulating and allows its users to manage and issue their own “money supply” within the boundaries of the network.
More on LETS
From Transaction.net ncluding links to communities using the system
Worgl Schillings, The
From Global Ideas Bank