WSJ & Time report on BerkShares local currency

August 2, 2009

Dear Friends,

BerkShares local currency for the Berkshire region is young, only three
years old as of September 29th, and still in its early stages of
development. It is still backed by federal dollars on deposit in local
banks, rather than backed by the productive capacity of the Berkshire
region. It is still tied in value one-to-one with federal dollars instead
of a floating exchange rate based on its soundness of issue in the local
region.

And yet BerkShares is receiving unprecedented national and international
media attention. In a failed global economy, the fact of a local currency
as strong as BerkShares poses the questions:

Who should issue currency? On what basis? And how is it valued?

The attention to BerkShares is helping us better understand the intricacies
of currency issue. As better informed citizens we can advocate for sounder,
fairer monetary policies at the national level – a topic, heretofore obscure
to us.

Yesterday Andy Jordan of the "Wall Street Journal" posted his video story on
BerkShares. You can watch it at http://www.berkshares.org.

On July 12th, "Time Magazine" printed Judith Schwartz' article on BerkShares
which you can read below.

Best wishes,
Susan Witt, Sarah Hearn, and Stefan Apse
E. F. Schumacher Society Staff
140 Jug End Road
Great Barrington, MA 01230, USA
http://www.smallisbeautiful.org

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http://www.time.com/time/magazine/article/0,9171,1908421,00.html

Local Currencies
by Judith Schwartz
"Time Magazine" July 12, 2009

With local economies flailing communities across the U.S. are trying to
drum up more action on Main Street. "Buy Local" campaigns are one way to go.
But many towns--from Ojai, Calif., to Greensboro, N.C.--are considering
going a step further and printing money that can only be spent locally.

Issuing an alternative currency is perfectly legal, as long as it is treated
as taxable income and consists of paper bills rather than coins. In the
U.S., where local currencies were popular during the Depression, the biggest
alterna-cash system is in Massachusetts' Berkshire County. Go to one of
several banks there, hand a teller $95 and get back $100 worth of
BerkShares, a nice little discount designed to reel in users. BerkShares are
printed on special paper (by a local business, naturally--a subsidiary of
Crane Paper Co., which has been printing U.S. greenbacks since 1879). And
since the program's inception in 2006, more than $2.5 million in BerkShares
have circulated through bakeries, vets' offices and some 400 other
businesses that choose to accept the colorful bills, which feature famous
former Berkshire residents, including W.E.B. Du Bois and Norman Rockwell.

What's the point of all this pretty, community-printed currency? Money spent
at locally owned companies tends to create more business for local
suppliers, accountants, etc. The New Economics Foundation (NEF), a London
think tank, compared the effects of purchasing produce at a supermarket and
at a farmer's market and found that twice the money stayed in a community
when folks bought locally. A study of Grand Rapids, Mich., released last
fall by consulting firm Civic Economics, concluded that a 10% shift in
market share from chain stores to independents would yield 1,600 new jobs
and pump $137 million into the area. "Money is like blood," says NEF
researcher David Boyle. Local purchases recirculate it, but patronize
mega-chains or online retailers, he says, and "it flows out like a wound."

Interest in cash alternatives has skyrocketed in recent months
BerkShares.org logged nearly 42,000 hits a day in April) as the recession
has encouraged more innovation. For example, a Vermont business association
is getting ready to launch a statewide cashless trading network. Ithaca,
N.Y., which has the nation's longest-running independent currency, agreed in
June to let people start using the 18-year-old bills to buy transit passes.

But how hard is it to manage and maintain these trade boosters? Ed Collom,
an associate professor of sociology at the University of Southern Maine, has
studied volunteer-run programs like Ithaca's and found that about 80%
failed, chiefly because of administrative burnout. That's why many newer
models, like BerkShares, are now set up as nonprofits, complete with
administrative support.

Beyond spurring local trade, alternative currencies build awareness about
the effect of consumers' choices. "It has started a conversation: Why local
currency? Why buy local?" says Oliver Dudok van Heel, who last fall helped
launch the Lewes pound to help a British town become more self-sustainable.

Local currency can generate customer loyalty, but not every business feels
as though it can offer a discount like the one built into BerkShares. "They
just aren't viable for us," says Beth Parsons, whose family owns a grocery
store in Lenox, Mass. But as a consumer, she likes the idea. Parsons
recently drove to a nearby town to buy some shoes instead of getting them
online. Afterward, she says, she passed a BerkShares sign "at the bank and
thought, 'Oh, I should've bought BerkShare bucks to save money on these.'"