|
Print your own:
Using Local Currencies as a Tool For Building Local Economies
Frank Tortiello, owner of the popular Deli on Main Street
in Great Barrington, turned to S.H.A.R.E. when the bank refused him a loan
to move his restaurant to a new location. S.H.A.R.E. helped Frank see that
he had the answer to his problem in the loyalty of of his own customers.
S.H.A.R.E. suggested that Frank issue Deli Dollars as
a self-financing technique. The response was overwhelming--not only did
The Deli raise much needed capital, but other business started printing
up their own versions of "Deli Dollars" and the national press
picked up the story and helped raise the possibility of small regional
currencies as a tool for economic development within small regions.
The BerkshireWeb, with the E.F. Schumacher Society, of
South Egremont, is launching a series of pieces on tools for economic development
that are particularly useful to more rural areas like the Berkshires.
The following is an excerpt from a white paper on local currencies.
Local Currencies:
Catalysts for Sustainable Local Economies: Part I
by Robert Swann and Susan Witt
E.F. Schumacher argued in Small is Beautiful: Economics
as if People Mattered that from a truly economic point of view, the most
rational way to produce is ìfrom local resources, for local needs.î
Jane Jacobs, one of todayís foremost regional scholars, re-emphasized
Schumacherís point through her analysis of healthy region as one
creating ìimport-replacingî industries on a continuing basis.
A well-developed regional economy which produces for its own needs is possible
only when control of its resources and finances lies within the region
itself. At present, the ownership of land, natural resources, and industry
and the determination of conditions for receiving credit have become increasingly
centralized at the national level. Now all but a few large urban areas
find that their economic resources are controlled from outside the area.
The banking system is one of the most centralized institutions of the
economy and one of the largest obstacles to strengthening regional economies
and the communities within them. Yet centralized banking is only a recent
invention. The customs of borrowing and lending and money-printing grew
up over generations in towns and rural communities to form what we now
call our banking systems. These banking systems were small-scale, regional,
and decentralized. Paper money was made standard, or national, in 1863
in order to raise funds for the fight against the Confederate States, but
it was not until 1913 that a central system became formalized with the
Federal Reserve Act. Centralized banking and control of money called for
large banks and wealthy investors who could put together huge, unprecedented
sums of money. These banks in the money centers, with their industrial
customers, could pay a higher interest rate to depositors than could the
smaller banks, and these smaller, rural banks began sending their deposits
to the large cities. The national currency made money more fluid and allowed
rural dollars to support urban industrial growth. And the rural creditors
were pleased with this arrangement until a local farmer couldnít
secure a loan because a Chicago bank was paying his bank twice the loan
rate or until a New York bank closed and carried off the savings of a small
town.
A national currency facilitated the industrialization of The United
States, which in turn created many jobs; however, the centralization of
the monetary system has served as well to centralize the benefits of the
system.
The effect on small farmers and rural economies has been devastating.
The on-going ìfarm crisisî is a dramatic manifestation of
what is really a monetary crisis that began in the deep depression of the
1870ís and 80ís and was codified in the Federal Reserve Act.
Credit for small-scale farming and small rural businesses that are a part
of the farm community had dried up long before the Depression of the 1930ís,
and the United States government had to create the Framerís Home
Administration in order to help replace - with tax money - some of the
rural capital that had been lost to the large cities.
The ìhousing crisisî is also in part a monetary crisis.
Investors place money in land as a ìhedge against inflationî
which drives land and housing costs higher. High prices for land are a
major factor in the present shortage of affordable housing and take home-ownership
out of the reach for the majority of Americans.
The local and decentralization banking systems of 150 years ago had
the advantage of diversity. The failure of a local bank - even a New York
bank - was still a local failure, and its costs were internalized. But
today we are facing the failure of an entire system. Consider the billions
of dollars paid by the national deposit insurance system to bail out the
Savings and Loan industry. And recall the billions more were added to the
national debt in order to bail out large banks when developing countries
were defaulting on their loans. These systematic failures are bound to
occur where economic control in the form of local money-control and banking
systems have been centralized, has been given over to serve the heedless
demands of growth.
to be continued...
info@berkshireweb.com
|