It appears that George Washington may have some competition. No, it’s not Monopoly cash giving George a run for his money. Rather, it is local currency, a concept that a number of communities in the United States have adopted in order to stimulate local business and distance themselves from reliance on the nation’s economy.
Local currency dates back to the Great Depression, but has reemerged within the last 22 years. Unlike the dollar, which is loaned into existence and requires repayment with interest to a bank or financial institution, local currency exists to facilitate commerce within a community. It is not backed by the national government and is to be used solely within a small area. Supporters of the concept believe that it not only grows the local economy, but develops relationships and trustworthiness within the community.
The largest local currency in circulation began in Ithaca, New York. The idea of the “Ithaca Hour” was formulated during the 1991 recession as an attempt to sustain the Ithaca economy, promoting local economic strength and shifting economic power from federal and state levels to the local level. Since then, over 80 towns across the United States have followed in Ithaca’s footsteps by creating their own currency.
Local currency is, in fact, legal, although subject to some stipulations. City and state governments are not allowed to create their own currencies. Only private groups, such as organizations and businesses, can issue local currency. The currency can only be printed on paper and may not resemble the U.S. dollar; it cannot be coined or promoted as legal tender of the United States. Any income received in local currency must be taxed as if it were federal dollars.
While local currency may not be of use outside city limits, it is a way for residents to shop their local businesses rather than the large chains that are more concerned with the dollar than the community. Using local currency builds relationships and loyalty between consumers and business owners. In fact, printed on the Ithaca Hour currency is: “In Ithaca We Trust.”
Because local currency is printed on paper, citizens must use it personally as opposed to electronically. This promotes real transactions within the community and awareness of local producers and merchants. In turn, a community increases its social cohesion and appreciates the value of its local currency. The idea behind local currency is to encourage people to buy products and services in their neighborhoods, and keep the local currency within the community.
While the idea of paying for commodities in a currency unique to a particular area is attractive, there are some major drawbacks indicating that George Washington will come out on top.
For starters, a community must have dedicated citizens that are willing to handle the day-to-day operations of the currency. This is no simple task, as it is a full-time job and the equivalent of running a financial institution. These dedicated citizens, in turn, must still have an income to pay their bills with regular old dollars. This has led to the failure of many local currency systems due to the fact that volunteers have become overwhelmed with running a system that is not self-sufficient.
Another major problem with the survival of a local currency system is not having enough businesses to accept the local currency. A community has to facilitate connections for spending the local currency. If one business receives local currency, there have to be other businesses to spend the currency. However, the problem with local currency arises when it meets the mainstream economy. Unless the local currency is being spent at a farmer’s market or on a personal service, many businesses have to restock from suppliers from outside of the community.
There will always be a reliance on the U.S. dollar. Regardless of the success of a local currency system within a particular community, there will ultimately be certain items that must be purchased with the traditional dollar. The idea of creating and implementing a currency that encourages citizens to spend local can be a good idea in small doses. However, being one hundred percent dedicated to using only local currency is not a reality.
While George Washington won’t be threatened on a national basis, local currencies are trying to give him a run for his money. However, wouldn’t it be easier for people to buy local with George?
The history of the necktie is as rich and colorful as the patterns that adorn them. Designers, actors and royalty in the 1920s and 1930s left a distinctive stamp on the tie that gives the modern man the opportunity