The benefits of buying locally would be multiplied if done with money that’s minted locally.
That’s the thinking behind a growing number of “community currency” experiments in Vermont and elsewhere. Their names are as varied as their mechanics: there’s Middlebury Money, Bristol Bucks, the now-defunct Burlington Bread, and an as-yet-unnamed initiative in Putney.
All have been inspired to some degree by Ithaca Hours in upstate New York, launched 20 years ago, and by BerkShares in western Massachusetts, which has nearly 3 million units in circulation. And these successful initiatives in turn look back to the issuance of scrip by some U.S. localities during the Great Depression, when federal dollars disappeared as banks closed and as economic activity seized up.
Now the create-your-own-currency movement is taking the statewide stage in Vermont. Michael Fisher, a Democratic representative from Lincoln, outlined his proposal for a Vermont “companion currency” at a March 31 House Commerce Committee meeting in Montpelier.
The aim, Fisher explained, is to stimulate the Vermont economy and lessen the state government’s reliance on Wall Street creditors. A currency known as Vermont Dollars would be introduced and maintained by a nonprofit corporation. It would issue $1 million worth of the new money and lend it to the state, which would in turn use Vermont Dollars to pay a portion of the salaries of state employees.
Fisher assured the committee that such a system would be entirely legal. He noted that the federal government forbids other entities from producing coins but not bills.
“I have to acknowledge,” he told his colleagues, “that we’re not ready to pass H.361. It goes a little too far and a little too fast.”
Which is why Fisher’s bill authorizes the Agency of Commerce and Community Development to accept a projected $50,000 private grant for a consultant study of how Vermont Dollars might work. That aspect of the legislation will likely be approved this session, Fisher says. And he’s got a source for the $50,000 lined up: his father’s Resources for Human Development agency, a multistate nonprofit based in Philadelphia.
Robert Fishman (whose name differs from his son’s) spoke to the committee by phone regarding his organization’s introduction in 1998 of its own currency, Equal Dollars. One of its key objectives, Fishman said, is to actualize the value of resources that cannot be exchanged for U.S. dollars. He offered the example of dented cans of food and surplus produce that would be dumped in landfills if not salvaged for distribution through payment of Equal Dollars. Fishman cited a federal government estimate that as much as 40 percent of the food grown in the United States does not reach consumers.
Isn’t there a potential problem with counterfeiting? Fishman acknowledged that's a possibility. A one Equal Dollars bill was in fact found recently to have been counterfeited — “which we took as a compliment,” Fishman said. “It showed that someone cared enough, that it’s becoming popular enough, to warrant counterfeiting.”
The design of the notes could be made more difficult to duplicate if they come to circulate more widely, he added.
More immediate impediments will face Vermont Dollars, State Rep. Fisher conceded. “I anticipate some pushback just because this is so outside the box,” he said in an interview after the committee meeting.
One potential — and perhaps unexpected — opponent is Daniel Hoviss, the main catalyst for the effort to establish a local currency in Putney.
“I’m a little dubious” about the Vermont Dollars proposal, Hoviss says. “The whole point of local currency is to keep it in a local community. And a local currency Vermont Dollars is not.”
In addition to philosophical objections, Hoviss is “leery” of a statewide currency because it might bring down the wrath of the feds. Vermont Dollars “will force at the federal level some issues that could put the kibosh on all local currencies,” Hoviss said.
Amy Kirschner, the final director of the now-defunct Burlington Currency Project, agrees that Vermont Dollars could prove problematic in some ways.
But, she adds, “we can’t answer those questions now because we don’t know enough” about how such a scheme would work.
Creation and maintenance of a local currency can be “extraordinarily complicated,” Kirschner warns. She speaks from the experience of having sought, unsuccessfully, to salvage the Burlington Bread initiative, launched about 15 years ago. “Organizational problems” doomed the Queen City’s local currency, she says, noting that “we kept changing the way it worked, which made things confusing.”
One major unresolved issue, Kirschner recounts, was the tendency of Burlington Bread to pile up at a few food-related enterprises, such as Muddy Waters coffeehouse and Sugar Snap caterers, which had no way to recirculate, and thus redeem, the currency.
BerkShares avoids such a dead end by operating on a notably simple basis. Five banks in the Berkshires region have agreed to sell 100 BerkShares for 95 U.S. dollars; the buyer can then spend those BerkShares at any of 400 participating local businesses, in effect receiving a 5 percent discount on a $100 purchase. The merchant then exchanges the 100 BerkShares at one of the banks for 95 U.S. dollars.
Kirschner is meanwhile overseeing a limited initiative in closed-circuit trade credits through the Vermont Businesses for Social Responsibility’s marketplace. About 100 VBSR members are exchanging goods and services with one another through a purely electronic mechanism, Kirschner says. “It’s working fine,” she reports.