Buy local via Frogtown Dollars

Ithaca is famous worldwide for creating a local currency called Ithaca Hours, which encourages people to shop locally owned businesses — more than 500 now accept the colorful bills, which are issued in various denominations of the value of an hour’s work at the prevailing wage. By using the local currency, Ithaca residents make sure their money supports their own community.

Over 900 participants publicly accept Ithaca HOURS for goods and services. Additionally some local employers and employees have agreed to pay or receive partial wages in Ithaca Hours, further continuing our goal of keeping money local.

Tough times, it seems, have been with us for years. Many of us have been hit pretty hard. Paul Glover, a resident of Ithaca, New York, decided to do something about it. [In 1991] he came up with a supplemental currency called HOURS ...

... and here's how it works. Each HOUR is equivalent to one hour of time, or $10, which is the local county's average hourly wage. Also available are 1/4 HOURS ($2.50), 1/2 HOURS ($5), and 2 HOURS ($20), all printed from a small shop in town. You can buy all the goods and services you need just like you can with the U.S. dollar. You can even use HOURS to go to the movies or to enjoy some fine dining.

The best news and worst news about Paul's HOURS is the fact that they are worthless outside of Ithaca. As a result, they circulate within the community, improving the city's economic flow and encouraging participants to put their faith in each other rather than the almighty dollar. As the Ithaca HOUR plainly states, "In Ithaca We Trust."

Anyone can participate. For one dollar, residents become members and receive four HOURS automatically. Ithaca Money , the local newspaper established and published by Paul, lists all of the members, their phone numbers, and the services or goods they are either offering or seeking.

For the currency to work, participants must be willing to put their faith in each other and realize that everyone's hour of labor has the same dignity.

Decisions to print and issue HOURS are made by those who attend Barter Potlucks. Anyone who advertises their willingness to accept HOURS may vote. They decide how many HOURS will be sold at $10 each to obtain dollars for printing HOURS. They decide which denominations will be printed. They decide how many HOURS will be paid to new sign-ups and for renewals, and they make HOUR grants.

HOUR notes are signed by Patrice Jennings, a member service representative at Ithaca's Alternative Federal Credit Union, and are also signed by Victoria Romanoff, a local historic preservationist. Our intention is to stimulate the creation of jobs and to expand Ithaca's economy, paying special attention to ecology and social justice.

HOURS are printed on heavy colored recycled paper, with a second color overlay. Also, red serial numbers are stamped deeply and can be felt.

Our plan is to gradually develop a catalog of HOUR prices, which will eventually allow the HOUR to serve independently of dollar values.

They are a form of scrip often issued during money shortages. They are not illegal; the government's main concern is tax collection.

Create a Local Currency in Your Community By Paul Glover, creator of Ithaca Hours

Although local currency is lots of fun, it's also lots of work and responsibility. Here's a step-by-step summary of how we got started in Ithaca and how we're expanding.

1. Design the money. By law, your cash must be obviously different from a dollar, and of a different size.

2. Sign up participants. Show prototypes of your money to people who might be willing to appear in the first published list. Tell them this will be real money, backed by real people, real tune, real skills and goods. Tell businesses that local money stimulates spending by those otherwise too poor to purchase, promotes locally owned small businesses, and keeps wealth in the local economy.

3. Design your fast barter newspaper.

4. Sell display ads by showing sample pages of your newspaper to businesses.

5. Print the money. Use colors. Our 2 HOUR note ($20) is printed on locally made 100% cattail paper with a watermark, and we use soy ink. Serial numbers convert the paper into money.

6. Print the first newspaper and mail them with the agreed local currency payment to each pioneer participant.

7. Distribute the newspaper to the public.

8. Issue a press release to introduce the list and money to the larger audiences of TV, radio, and other newspapers.

9. Keep in touch, especially with those likeliest to earn the most money.

10. Call everyone on the list periodically to make sure phone numbers and listings are accurate.

11. Collect success stories when trading begins, and publish these.

Note: Further details of operation responsibilities are available in Paul's Hometown Money Starter Kit, which also includes forms, laws, barter articles, past and future issues of Ithaca Money, samples of Ithaca's HOURS, photocopies of depression-era scrip from your state or city, and more. Price is $25 from Ithaca Money, Box 6578, Ithaca, NY 14851.

[Toledo] is in pitiful financial shape, and I'm doing my best to help. Well, today I'm offering a suggestion in earnest. Toledo, let's print our own money.

Ithaca, N.Y., has been doing it for nearly 15 years, and no one's prosecuted them yet. They call their homemade currency an Hour, and it's valued at $10 - the average hourly Ithaca wage when they began in 1991.

Some 400 local Ithaca businesses now accept Hours, which is the point: Circulating city-specific scrip keeps local dollars local. When local businesses accept currency with only local value, that money changes hands within the community more frequently.

A study this summer by the University of Toledo's Urban Affairs Center gives some idea of how much impact this can have. Focusing on one locally owned business, Thackeray's Books, the study concluded that the Westgate store's annual impact on the Toledo economy is $5 million. (Note, though, that Thackeray's was among the study's financial contributors.)

Gbenga Ajilore, the assistant professor of economics who conducted the study, concluded that "more of Thackeray's revenues stay within the local economy through their use of local labor, local suppliers, and profit. In the case with a national chain, revenues stay within the community usually only through wages to employees."

Hometown money is one of those ideas that's so simple, you'd never think of it. By now, some 20 other cities around the country have taken advantage of Mr. Glover's good idea. (The Cleveland suburb of Lakewood is now considering it.)

I'm a big booster of buy-local economics. I once turned over this whole column to a description of "Ithaca Dollars," the creative effort by that city in New York state to keep its economic stream recirculating. That column, by the way, might hold my record for LDRI - Lowest Demonstrated Reader Interest - yielding all of maybe five e-mails and zero public discussion. Apparently, I alone found Ithaca's strategy compelling.

The Toronto Dollar project was started by a group of community-minded people with a dream - to build a healthier, more prosperous local economy that puts more spending power in the hands of people in need. You can help us make a difference by using Toronto Dollars. The Toronto Dollar is a local currency that benefits the community by:

• strengthening the local economy and supporting new businesses
• keeping your money working and circulating locally
• bringing decision-making back to the community
• creating new employment opportunities
• supporting community projects with the funds received from the 10% merchant contribution

• consumers exchange 1 Canadian dollar for 1 Toronto dollar through participating organizations or at the Toronto Dollar booth at the St. Lawrence Market (open on Saturdays)

• you spend Toronto Dollars as you would Canadian dollars at participating businesses. There is a registration fee of $25 for new businesses.

• the 10% solution: each time a Toronto Dollar is purchased from Toronto Dollar Inc, 90 cents is deposited in a reserve fund and 10 cents goes to the Toronto Dollar Community Projects Fund

• businesses can spend the Toronto Dollars for services or products at other businesses, hire part-time staff or they can redeem their Toronto Dollars for 90 cents
  

Lakewood, Ohio may become one of about two dozen communities in the Ithaca_hour country to adopt a local currency. Councilman Denis Dunn is proposing Lakewood Dollars, based off of the Ithaca Hour that has circulated throughout Ithaca, New York since 1991. According to Dunn: "It will allow residents to make purchases based on civic pride to support local business...[and to] keep spending in Lakewood."

****NEW BUSINESS****

19. Communication from Councilmember Dunn regarding Lakewood Dollars. (Pg. 29)

Motion by Mr. Dunn, seconded by Ms. Madigan, to receive, file and refer to the Committee of the Whole.

Mr. Dunn asked to clarify indicating that however the dollar is designed, and is not made to look like actual, federal sponsored currency that it is not illegal. He sated that there was a long history of communities wanting to retain wealth within their borders. He said it would not impede regionalism or globalism. He sated that that during the time of adjustment, when markets are creating efficiencies, Lakewood should bargain from a position of strength and retain as much wealth in the community as possible. He said that he did not think it would be prudent to have Lakewood dollars sanctioned by City government and that this was why he encouraged the Chamber of Commerce and members of Lakewood Alive to meet with Council to discuss the issues facing economic development and the merits of Lakewood Dollars. He stated this is one of many tools to make sure Lakewood was strong in the future.

Mr. FitzGerald asked if once the dollars were issued - if one Lakewood entity could use those Lakewood dollars to purchase something from another Lakewood entity. He asked how would sales taxes be collected.

Mr. Dunn responded this would be done in the same way it would be recognized in terms of receipts and accounts payable.

Mr. FitzGerald asked if the State would be would recognize he dollars.

Mr. Dunn responded that the profits from the transaction would be paid in Federal greenbacks, and wouldn't be paid in "Lakewood Dollars".

Mr. FitzGerald asked if the involvement or approval of the State would be necessary to have a local currency.

Mr. Dunn responded that if the Lakewood Chamber of Commerce offered this program that there would not be hesitation to exchange cash for Lakewood dollars; in an effort use Lakewood Dollars for goods and services. He stated that when it came time to file taxes, the taxes would be paid in Federal currency.

Mr. Seelie indicated it would be discussed further in Committee.

Motion adopted. All members voting yea.

So it is fitting that the artist's face adorns the 50 BerkShares note, one of five denominations in a currency adopted by towns in western Massachusetts to support locally owned businesses over national chains.

There are about 844,000 BerkShares in circulation, worth $759,600 at the fixed exchange rate of 1 BerkShare to 90 U.S. cents, according to program organizers. The paper scrip is available in denominations of one, five, 10, 20 and 50.

In their 10 months of circulation, they've become a regular feature of the local economy. Businesses that accept BerkShares treat them interchangeably with dollars: a $1 cup of coffee sells for 1 BerkShare, a 10 percent discount for people paying in BerkShares.

"BerkShares are cash, and so people have transferred their cash habits to BerkShares," said Susan Witt, executive director of the E.F. Schumacher Society, a nonprofit group that set up the program. "They might have 50 in their pocket, but not 150. They're buying their lunch, their coffee, a small birthday present."

The BerkShares program is one of about a dozen such efforts in the nation. Local groups in California, Kansas, Michigan, New York, Oregon, Pennsylvania, Vermont and Wisconsin run similar ones. One of the oldest is Ithaca Hours, which went into circulation in 1991 in Ithaca, New York.

About $120,000 of that currency circulates in the rural town. Unlike BerkShares, Ithaca Hours cannot officially be freely converted to dollars, though some businesses buy them. Stephen Burkle, president of the Ithaca Hours program, said the notes are a badge of local pride.

"At the beginning it was very hard to get small businesses to get on board with it," said Burkle, who also owns a music store in Ithaca. "When Ithaca Hours first started, there wasn't a Home Depot in town, there wasn't a Borders, there wasn't a Starbucks. Now that there are, it's a mechanism for small businesses to compete with national chains."

U.S. law prevents states from issuing their own currency but allows private groups to print paper scrip, though not coins, said Lewis Solomon, a professor of law at George Washington University, who studies local currencies. "As long as you don't turn out quarters and you don't turn out something that looks like the U.S. dollar, it's legal," Solomon said.

"The promise of this program is for it to be a completed circle," said Matt Rubiner, owner of Rubiner's cheese shop and Rubi's cafe. Some local farmers who supply him accept BerkShares, but he pays most of his bills in dollars. "The circle isn't quite completed yet in most cases, and someone has to take the hit," Rubiner said, referring to the 10 percent discount. "The person who takes the hit is the merchant, it's me."