Local Money Buys and Sells to Energize Local Economy
Shade Gomez wants his adopted hometown to flourish. He uses the local currency.
Instead of greenbacks, one-tenth of his paycheck comes in multicolored scrip bearing the oath “In Ithaca We Trust.” He can pay his rent with it, eat out, go bowling, pick up groceries, even buy a car.
“You only spend it at places also committed to the local economy. It makes me feel really good knowing the money stays right here,” said Gomez, who works at the GreenStar whole-foods co-operative.
It’s been almost five years since Ithaca Hours money went into circulation. Creator Paul Glover, a community economist with a background in city management, wanted to do something about an “all messed up” economy that, he said, has turned Ithaca into “a city full of window shoppers.”
The money he designs and prints is accepted by 280 businesses and at least 1,300 individuals here ranging from lawyers, midwives and computer consultants to bookkeepers, basket weavers and belly dancers. So far, 5,500 Hours have traded hands in multiple transactions valued at about $2 million.
The idea itself is spreading.
To satisfy a flood of inquiries, Glover has mailed a Hometown Money Starter Kit, complete with bartering rules and samples of his five denominations, to 500 communities from Hawaii to New England to Kazakhstan.
Of those, at least 25 have started local currencies, ranging from small-town Hardwick, Vt., to Kansas City, Mo., to a middle-class neighborhood in Takoma Park, Md.
“We have created money with a boundary around it and this expands the local supply of money and strengthens community ties,” Glover said.
In an Ivy League college town with one of New York’s highest rates of working poor--people who work full-time but are still eligible for food stamps--the system also is designed to elevate the minimum wage.
Each Ithaca Hour is worth $10, the average hourly pay in surrounding Tompkins County. But people can charge as much as they want for their time.
“We’re lifting up the lowest paid, but we’re not knocking down the higher paid--they are entitled to charge multiples of an Hour per hour,” Glover said, noting that earnings from Hours are taxable.
Those who agree to advertise goods and services in his newsletter, Ithaca Money, are paid two Hours. Every eight months, they can apply for a bonus of two more Hours, enabling the money supply to grow slowly but steadily.
The biggest advertised category is “food"--home-baked pies, bread-making lessons, the Farmers Market. But offerings run from tarot reading, tutoring and tax returns to child care, bed-and-breakfast and bricklaying. A federal credit union accepts Hours for mortgage and loan fees, and an auto dealership recently jumped on board.
Glover hopes to enlist hospitals and the gas-and-electric utility and open a job-creation and trading center called Hour Town. Through a governing board called Barter Potluck, 743 Hours in interest-free loans and grants have already been issued to small businesses and nonprofit groups.
Glover, 48, runs Ithaca Hours from his home near the Cornell University campus.
Barter currency is legal under federal law as long as it doesn’t look like dollars and each bill is worth at least $1. It works especially well in places where many people are unemployed or underpaid, Glover said.
“The biggest corporations have been abandoning America as they seek lower labor costs, leaving behind millions of people whose skills are no longer profitable to these corporations but essential to the life of the community,” he said.
Ithaca’s money is intended to complement the U.S. economy, not compete against it, Glover said.
“Just as healthy bodies need several kinds of nutrition, healthy economies need several kinds of money. And labor-denominated money can fill a growing void in the human heart of the world economy.”