Local currency: getting things done when things fall apart

When the established institutions won't help you, you go around them. You seek help from the people you know. Because there's no other choice. Economic collapse isn't the only time this is true. It's just life.

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In the late 1980s, Frank Tortoriello had a problem. His world wasn't falling apart, but he faced a real problem none the less. He ran a deli in Great Barrington, Massachusetts. He wanted to move his business to a larger location, and to do that, he needed $4,500. So he did what you're supposed to do. He applied to the local bank for a loan. They said no. Normally, that would have been the end of it. The other banks would probably say no as well. Maybe Mr. Tortoriello could have turned to family members for a helping hand.

He decided to do something else. Something I never would have thought of in that situation. He printed his own money.

I'm not kidding.

I am, however, oversimplifying. Frank Tortoriello had his new location all picked out and ready to go. He just needed money for the move. So, he issued "Deli Dollars" to pay for it. He issued notes -- printed slips of paper just like currency -- with a face value of ten dollars. But they weren't dollars, because that would have gotten Frank thrown into the rape dungeon archipelago of the U.S. prison system. Instead, his Deli Dollars were designed by a local artist, emblazoned with the image of Frank and his deli staff being carried by town citizens to the new deli location, cooking all the way. Frank signed each note himself to prevent counterfeiting. He planned to distribute them to his customers; each ten dollar note would be redeemable in ten dollars worth of products at the deli's new location when that location opened. Here's the brilliant part. Frank sold these notes over a 30 day period to his customers, for eight U.S. dollars each. In other words, he gave his customers in Great Barrington, Massachusetts a 20 percent discount on deli products, to be applied once his new location opened.

In the 30 day sale of Deli Dollars, Frank raised $5,000 in U.S. currency. Customers bought his notes happily, because of his local reputation for being an insanely hard worker. And a good man. His neighbors knew that the deli would rise again and they'd get to redeem their Deli Dollars in deli food a few months hence. During the sale of Frank's temporary local currency, the town went nuts with excitement. How could it not? What he was doing was so inherently cool, people couldn't help being excited. They won't give me a bank loan? Fine! The hell with 'em! I'll make my own money! Hah! As it turned out, the bankers who had turned down Frank's original loan request were among those who bought his Deli Dollars. Sometimes, justice does indeed triumph. Not by force, but by the ridiculous, Field of Dreams-y power of hope. And of Cool.

Frank successfully moved to his new deli location. And he paid back all of the citizens who had loaned him money. As one description of Frank's endeavor put it: "Frank repaid the loan, not in hard-to-come-by federal notes but in cheese-on-rye sandwiches."

Frank Tortoriello's Deli Dollar note

(from the E.F. Schumacher Society, via the National Science Foundation)

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My tendency as a writer is to ramble on about sweeping global events, pondering gigantically large physical and social trends. It all points toward the big picture getting very dark. But again and again, I keep asking myself the question once posed to me by a friend: even if you're right, what the hell am I supposed to do about it? 

What are we, as individuals, supposed to do? What can we realistically accomplish, not only on our own but with the help of family, friends, neighbors, coworkers, churchgoers, local business owners? These are the people who matter most in our lives. They aren't headlines or video images from far away. They are people with names we know, faces we see every day.

As I write for this blog, I find a theme emerging in my thinking: we can't rely on established power structures to help us get through mounting economic and ecological stress. By "established power structures" I mean: governments at all levels; the two major political parties; large corporations and financial giants. These entities should all be regarded, I'm coming to believe, as obstacles and adversaries first, helpful instruments in everyday life second. We should begin looking for local alternatives to them, for services and resources we've long obtained from huge national and international institutions like Wal-Mart, Bank of America, the federally-funded state highway department, and the political parties that run the whole mess (mostly according to the dictates of corporate campaign donations).

We will continue dealing with all of these entities, because in many cases we have no choice. If you really need to help yourself or your loved ones by getting a much-needed cheap electric gizmo at Megalo-Mart, or standing in line at a Big Government office to sign up for unemployment checks and food stamps, go for it. But we shouldn't delude ourselves that the institutions pulling the strings on those services have our best interests at heart. Neither should we expect big box stores and government programs to continue forever. In all likelihood, economic and ecological stress will worsen within a decade, and perhaps much sooner, to collapse on an epic scale (even more epic, I mean, than what we see today). As the collapse unfolds, big institutions dominating the U.S political, legal, and economic system will have little interest in helping what used to be the middle class, which by then will be reduced to vast legions of the unemployed, debt-ridden, poverty-stricken, sickness-addled, and homeless. Government and big business will not help them. And remember: "them" will be us.

Or so the signs indicate to me. Perhaps I'm wrong. Maybe, as conditions worsen, the U.S. economic and political elite will rediscover social conscience and activist government in the service of economic equality and opportunity. It's happened before. The cruel robber baron capitalism of the late nineteenth century eventually yielded to technocratic progressivism and the New Deal, both sterling twentieth century examples of capitalism saving itself. I'm betting this will not happen today. Corporate funded Democrats are planning to dismantle Medicare and Social Security while allowing basic public services, like bridges, roads, schools, libraries, electric power stations, and public health facilities to rot. This happens in large part because Democrats rig the economic game to favor their corporate benefactors, while waging a metaphysically expensive global war that yields precisely zero material benefit to American society, except for those with jobs or investments in the military-industrial complex. Republicans follow the same policies even more ruthlessly, fueling merciless economics and perpetual war with the fires of race hatred and religious extremism.

Maybe these two parties and their gigantic, system-spanning institutions left over from prosperity will turn out to be helpful in the coming era of collapse. More likely, though, we'll be on our own.

Like Frank Tortoriello and his deli in Great Barrington, Massachusetts, back in the day. 

* * * * *

Today, Great Barrington is home to a thriving local currency, the BerkShare, which far surpasses Frank's humble Deli Dollars in scope and ambition. Berkshares are real money. They are printed locally, on wallet-sized paper notes, in face values up to 50 dollars. More than 365 local businesses accept them as legal tender for goods and services. More than two million dollars worth of BerkShares circulate in the community. They are redeemable in U.S. dollars at 13 local bank locations, at an exchange rate of one BerkShare equal to ninety five cents in federal currency. This last point is what makes BerkShares -- or any local currency -- perfectly legal. In the 1970s, the U.S. Treasury Department was asked about the legality of an experimental local currency begun by a New Hamsphire economist. Said a Treasury bureaucrat: ""We don't care if he issues pine cones, as long as it is exchangeable for dollars so that transactions can be recorded for tax purposes."

Since Berkshares are redeemable only in the Great Barrington area, they promote local spending and local jobs. Experience and empirical evidence suggest that local businesses promote healthy local economies, much more so than giant Megalo-Mart box stores and national chains. This article in Time magazine provides a good overview of how the process works. Local businesses keep money in the community, where it can provide for the community's real needs. Spending money at Megalo-Mart, by contrast, goes mostly for the well-being of distant owners of a vast corporate behemoth. And they, it is well documented, have spent many a decade trying to strangle local businesses around America. To a large extent, they succeeded. But don't worry, what goes around comes around, at least in this case. In a few years, crippling oil prices will strangle global supply chains and just-in-time delivery. Brachiosaurus-sized box stores will not be quite so feasible to operate under those circumstances. Local businesses will have to step into the void left by their extinction. Local currencies can help them do it. 


We're going to need such creative, unconventional, local responses as the larger economy disintegrates. They are possible, and they are already underway. Time to pick up the pace, though. The hour is getting late.