Local Currencies: Theory, History and Practices

Local Currencies:Local Currencies:

Theory, History, and PracticeTheory, History, and Practice

Local Currencies

Theory, History, and Practice

What is Money?What is Money?

What is Money?

a generally accepted means of exchange and a generally accepted means of exchange and measure of value.measure of value.

the official currency issued by a government the official currency issued by a government or national bank.or national bank.

legal tender.legal tender.

Theories of Currency

Theory of MercantilismTheory of Mercantilism

1500-17501500-1750 Land, labor, and capital began to be bought Land, labor, and capital began to be bought

and sold in marketand sold in market Rise of nation stateRise of nation state Zero Sum GameZero Sum Game Favorable balance of tradeFavorable balance of trade Accumulation of bullionAccumulation of bullion Government controlGovernment control

Theory of Classical EconomistsTheory of Classical EconomistsThe annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes, and which consists always either in the immediate produce of that labour, or in what is purchased with that produce from other nations.

Classical EconomicsClassical Economics

Adam Smith promotes “Laissez Faire” and Adam Smith promotes “Laissez Faire” and unequal distribution of income.unequal distribution of income.

Labor as the source of wealth of nations.Labor as the source of wealth of nations. John Locke demonstrates ecomomic activity John Locke demonstrates ecomomic activity

depends on quantity of money / velocitydepends on quantity of money / velocity David Hume describes interrelationships David Hume describes interrelationships

among balance of trade, the quantity of among balance of trade, the quantity of money, and the general level of prices.money, and the general level of prices.

History of Currency

Colonial Farms Self SufficientColonial Farms Self Sufficient

Country PayCountry Pay

Pa.Pa. Md.Md. Del.Del. Va.Va. N.C.N.C. Ga.Ga.

WheatWheat Flour Flour PeasPeas TobacTobac TobacTobac TobacTobac

RyeRye TobacTobac MaizeMaize T.NoteT.Note CornCorn CottonCotton

TobacTobac HempHemp FishFish PorkPork BulletsBullets

FlaxFlax PitchPitch WheatWheat

HempHemp TarTar CornCorn

PorkPork

HidesHides

Early American MoneyEarly American Money

WampumWampum Spanish Silver DollarSpanish Silver Dollar Massachusetts: Pine Tree, Oak, Willow Massachusetts: Pine Tree, Oak, Willow

Shilling (1652)Shilling (1652)

“Not worth a Continental”

Central Banking in USACentral Banking in USA 1789 Constituional Convention1789 Constituional Convention Whiskey Rebellion (1791-1794)Whiskey Rebellion (1791-1794) 1791-1811:1791-1811: First Bank of the United StatesFirst Bank of the United States 1811-1816:1811-1816: no central bank no central bank 1816-1836:1816-1836: Second Bank of the United StatesSecond Bank of the United States 1837-1862:1837-1862: Free Bank Era Free Bank Era 1863-1913:1863-1913: National Banks National Banks 1913-Present:1913-Present: Federal Reserve System Federal Reserve System

““Between 1781-1863 there were 30,000 different Between 1781-1863 there were 30,000 different currencies in circulation”currencies in circulation”

The Practice of Local Currencies

LETSLETS

Local Employment and Trading System Local Employment and Trading System local, non-profit exchange networks local, non-profit exchange networks ““Mutual or community credit”Mutual or community credit” Debit / credit ledger systemDebit / credit ledger system Popular British Colombia / EnglandPopular British Colombia / England

Ithaca HoursIthaca Hours

Inspired by 19Inspired by 19thth century R. Owen’s Hours century R. Owen’s Hours each Hour would be worth the equivalent of each Hour would be worth the equivalent of

$10 (average wage in county).$10 (average wage in county). Several million in circulationSeveral million in circulation Loans and Grants.Loans and Grants.

Berk-SharesBerk-Shares

Self-Help Association for a Regional Self-Help Association for a Regional EconomyEconomy

Tied scrip to a local commodity—cordwoodTied scrip to a local commodity—cordwood BerkShares are placed in circulation when BerkShares are placed in circulation when

citizens exchange federal dollars for citizens exchange federal dollars for BerkShares at any of the BerkShares Exchange BerkShares at any of the BerkShares Exchange Banks. (Exchange rate: .90 per Berkshare)Banks. (Exchange rate: .90 per Berkshare)

Other ModelsOther Models

WomanshareWomanshare Time DollarTime Dollar BBC TimebankBBC Timebank Barter GroupsBarter Groups Virtual exchangesVirtual exchanges

Deli DollarsDeli Dollars Woodland CLT Labor Woodland CLT Labor

CertificatesCertificates CCI Community CCI Community

Investment CertificatesInvestment Certificates