BerkShares: investing in community
by Cate Montana
Perhaps the greatest task of concerned citizens in the twenty-first century is to reclaim responsibility for the consequences of our economic transactions - personally, institutionally, and in public spending. BerkShares.org website
GREAT BARRINGTON, Massachusetts - Southern Berkshire's largest town, Great Barrington sports a population of 7400 people and serves as the economic hub for a number of nearby hill towns. Known for its historical yet fashionable shopping district, its fine restaurants, and local recreational attractions, the town draws a fair tourist trade year-round. It's Main Street was the first in the United States to have electric lights. Just past the town hall is a monument commemorating the site where the first slave was freed before the Civil War.
But Great Barrington's claim to fame is not just historic. Today, thanks to the local E. F. Schumacher Society www.schumachersociety.org, the Great Barrington Chamber of Commerce and all four of its locally owned banks, Great Barrington and the rest of South Berkshire County have their own local currency, the BerkShare.
One of three complementary currencies in the United States that uses paper notes valued in federal dollars, BerkShares give bearers a 10% savings over using those federal notes. People wanting BerkShares go to one of ten local bank branches and for $90US purchase $100 in BerkShares which can be used at 280 South Berkshire County participating businesses, plus an estimated 300 additional businesses and service providers that accept them.
"I get my car fixed with BerkShares. I've bought plane tickets with BerkShares. I get my hair done in BerkShares," says Susan Witt, executive director of the E. F. Schumacher Society and the lead developer of the project. "My seamstress, the woman who occasionally works in the garden, the woman that prunes my apple trees - they all accept BerkShares."
The cost advantage of using BerkShares rather than shopping electronically, using ATMs, or debit and credit cards is clear. Not only does the bearer of BerkShare notes start off with a 10% head start on all purchases, they don't have to pay out transaction fees, ATM fees, or the often exorbitant interest rates often charged by credit card companies. And that's only the beginning.
Because they are a local currency and can only be used locally, BerkShares stay in the community. So far $1 million in BerkShares has been printed and circulated in South Berkshire County. And so far, despite the added headaches of monitoring and administrating a dual currency system, all four local banks distributing the currency are encouraging widening its use throughout the rest of Berkshire County. Why? It's good for local businesses.
No, not the big, bland, box stores. It's good for Chubby Bunny Farm, a family run CSA that raises herbs, peas, beans, strawberries, and supplies home raised organic poultry and pork. It's good for Matrushka's where people can buy handmade toys and children's books. It's good for Baldwin's Hardware, the oldest family owned hardware and paint store in the Berskshires, founded in 1864.
It's also good for Thriving Planet Counseling and Education, B&B Landscaping Excavation, and Simon's Rock College of Bard where talented local students can enter college after the 10th grade. From dentists and acupuncturists, to septic tank cleaning services and dog groomers, using BerkShares ensures that local money stays local rather than flying out of town to pump up the coffers of major corporations on the other side of the country - or in Japan, Saudi Arabia, or China.
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Designed and crafted by local artists, each BerkShare note bears the face of a different beloved regional icon on the front: the indigenous Mohican Tribe of Stockbridge is commemorated on the $1 note; scholar, historian, sociologist, and founder of the civil rights movement Dr. W. E. B. Du Bois is found on the $5 note; local agriculturalist Robyn Van En, co-founder of the very first community supported agriculture (CSA) project in North America graces the $10 bill; Herman Melville the famous American author is on the $20; and Norman Rockwell, one of the most popular American artists of the 20th century and a local hero of the Berkshires, is featured on the $50. Local landscape, town and garden scenes embellish each note on the reverse sides.
Based in a history of abundance
Money has an interesting history. Barter systems and local and regional currencies - whether the trading vehicle was shells or wooden tokens - were the norm hundreds of years ago. There was no such thing as inflation because these money systems were unlimited and free flowing. As much "currency" was created as was needed. In contrast, our current system of federal dollars is tightly controlled and designed with scarcity and competition in mind.
Western nations have created the rat race out of The Scarcity Principle. In the U.S., Federal notes are printed and supplied by a central banking system called the Federal Reserve. Greenbacks are purchased by the United States government from the bank - at interest - and then carefully supplied to the nation in fits and starts, depending upon the perceived economic health of the nation by the Federal Reserve Board and its chairman.
Although it's called the Federal Reserve, the Federal Reserve actually has nothing to do with the U.S. government. Rather, the Federal Reserve is a private corporation that lends money to the U.S. government, thus controlling its money supply. As of this writing, the total U.S. federal public debt is $8,888,522,656,747.96 - almost 9 trillion dollars. Much of this is interest the government owes to the Federal Reserve Bank.
Few people think about the national debt and stop to wonder how a government can be in debt to itself - because of course the answer is it can't... unless it gets its money from an outside source. The history of how the United States government moved from its own sovereign coinage system to one run by a centralized international banking cartel is long and ugly (read The The Unseen Hand
In contract, complementary currencies have a bias towards abundance. Instead of having to involve the Fed in every transaction — and using money that requires being paid back with interest — complementary currencies create value within a closed local system. Most contemporary complementary currencies are based on units of labor, often called HOURS systems. The most famous hours based system in the U.S. is Ithaca Hours www.ithacahours.com. Some currencies, like the Liberty Dollar www.libertydollar.org, are backed by silver and gold. One of the most prominent systems is LETS, www.gmlets.u-net.com Local Exchange Trading System, a trading network supported by its own internal currency.
Historically, complementary currencies have existed alongside centralized currency - which is why they are called complementary rather than alternative currencies. Local currency was used for labor and local transactions, and the national or centralized currencies were used for long distance and foreign trade. Local currencies were unlimited and unregulated. Centralized currency, on the other hand, needed to retain value over long distances and periods of time, so it was based on precious and scarce resources, such as gold.
During the Renaissance, nations deliberately moved to centralize power over their citizenry, and most local currencies were outlawed. Since then, centralized banking-backed currencies have encouraged competition over collaboration, protectionism over sharing, and fixed commodities over renewable resources. Hence, the rat race was born.
Habit patterns
Since BerkShares were released in September 2006 they have become more and more popular, with approximately one third of the local population asking for BerkShares rather than dollars at the local banks. However, considering their value and the fact that their use has proven to assist and strengthen the local economy, Witt and the other creators of BerkShares are surprised they are not used more.
"I was always a big cash user myself, partly in respect for the local businesses themselves," says Witt. "I never wanted to give stores credit cards because then they'd have to pay a fee. But most people aren't using them instead of credit. They just kind of switched their cash habits to BerkShares. They're buying their coffee in the morning, their sandwich at lunch; tonight's groceries, but not the week's groceries; the presents for the neighbor's kids, but not for their own kid. It's the small items they're using them for."
Statistically, the people using BerkShares the most are those in the poorest and the richest segments of the population. The poorest people recognize their savings value and use them as much as possible. It's helping make a difference in their lives, because the 10% savings makes some items assessable that otherwise might not have been. But, as Witt points out, this population segment is also less bought into existing monetary systems. "They're more flexible and sort of bigger would risk takers," observes Witt. "And the wealthy, they use them in part because they have deep concerns about the fragility of the current monetary system. They're sort of experimenting with an alternative."
All in all BerkShares are a moderate hit. But the habit of plastic is seductive. "People are theoretically supportive," says Witt. "They talk about how BerkShares are a bit inconvenient, so they're still using their credit cards. I have to say we're lazy and complacent as a nation. We're very comfortable right now, so we can watch a lot of things falling apart and talk about change but not actually change our habits. If we're really going to challenge or create reform or create new models it's going to take a lot of work. It looks very successful but it should be more so."
For more information, go to www.berkshares.org
