For Paul Glover, what is happening in a small retail store in downtown Ithaca, New York, is the realization of a decades-long dream. It all began when he was forty-three years old, biking around town organizing social justice and ecology-related campaigns. Glover came up with the idea of creating a local currency for Ithaca that would displace cash. That concept is flourishing at a small store.
Sunny Days of Ithaca offers visitors a large selection of books, art, music, postcards, and specialty foods. Instead of paying with money, customers use something called “Ithacash.”
Ithacash is the town’s new local currency, first introduced in August 2015, and Sunny Days was one of its inaugural members. But it was inspired by an earlier currency created by Glover, one which succeeded for a while but then lost, er, currency. By the time Ithacash came around, with its sleek website and smart social media campaign, Glover’s hair had turned gray, and he had moved to Philadelphia. Why did one alternative flounder and why is the new local currency catching on? The answer to that question is crucial for anyone hoping to build a sustainable alternative economy.
Local currencies—also called complementary, community, or alternative currencies—exist alongside legal tender. While nobody is required to accept them, they create a way for people to easily trade with one another without depending on banks. They also give communities more control over money and investment. The economic value represented by these currencies stays within the local communities in which they circulate.
Some local currencies are based on the amount of time a person works. Others involve barter or mutual credit systems, where the currency is a means of facilitating trades between parties. And others, like Ithacash, are convertible: one Ithaca dollar equals one U.S. dollar. Some of these exist as physical bills, but the trend is toward digital formats. At Sunny Days of Ithaca, a customer who wants to pay with Ithacash merely sends a text message to complete the transaction.
About 100 businesses have signed up to accept Ithacash so far. Sunny Days co-owner Todd Kurzweil notes that taking in a currency that only a limited number of businesses accept presents a challenge. But he thinks it’s a good idea to be in on the action.
“We want to receive [Ithacash] with a smile on our face, just like when we go in to spend it somewhere,” Kurzweil says. “We want people to feel like it has a comparable value to U.S. currency in that people feel good about taking it, as well as spending it.” Some vendors accept large payments partially in Ithacash. Kurzweil says almost half of his catering bill for an upcoming event will be paid in Ithacash.
While Ithacash is a new endeavor, the idea of local currency is old news in Ithaca. Twenty-five years ago, thanks to Glover, a different local currency made its way through the city and left an enduring legacy.
In 1991, Glover conceived of an alternative currency called Ithaca Hours, while renting a room from a friend, Margaret McCasland. Her daughter, on a home visit from college, mentioned a deli owner in Massachusetts who created a currency, Deli Dollars, to fund renovating and moving to a new location. After the move, customers redeemed Deli Dollars for food.
Already interested in local economies, Glover latched onto the idea. He paid a local printer $200 to produce the first batch of Ithaca Hours and the printer accepted partial payment in the form of the Hours he had just printed.
“I created a prototype, printed out some copies, and waved them at people, saying, ‘This is going to be money. We’ll trade it with each other. Sign up here,’ ” he says of those early days. A few people he approached agreed to try it out.
In the beginning, Glover says, “People could just decide in conversation what they wanted in exchange for an hour of effort.” But he soon realized that people were assigning drastically different values to their time and settled on a rate of $10 per Hour, which at that time was a living wage in Ithaca.
Glover also created a newspaper, Ithaca Money, with space to sell ads. It later developed into a monthly publication called Hour Town that contained a directory of businesses that accepted the currency. People who listed a service in the paper received two Hours in return. He received a few grants, the first of which came from Ben & Jerry’s.
Glover was the currency’s “singular networker” in its early years, “walking and biking around town and speaking with people and listening to people.” But community enthusiasm grew to play a large role. Attendees at a monthly potluck turned into an advisory board, and local supporters introduced the currency to new enthusiasts.
“We had planted a dramatic flag on behalf of local economy and the various purposes and benefits of the local economy, and pretty much everybody in town was sympathetic,” Glover says. “There was initial skepticism, of course, and even ridicule, but gradually, these were replaced by a respect so broad that it spanned the political spectrum.”
Glover used grant money to hire his friend and landlord McCasland to facilitate retail relations, which often meant helping people who accepted Hours find ways to spend them. Most businesses, she recalls, were pleasantly surprised by the myriad ways in which they could use the new currency. Among the earliest adopters were movie theaters and restaurants—businesses hurt when people cut back on inessential spending during recessions, like the one in those post-Gulf War years. Eventually, professionals such as doctors, dentists, and lawyers also joined.
By 1997, Ithaca Hours was flourishing. According to Glover, thousands of people used this new currency and about 500 businesses accepted it. Some landlords took Hours as part of rent payments. Ithaca Hours also issued microloans, typically of ten to 100 Hours each. A local financial institution, Alternatives Federal Credit Union, even accepted Hours as part of loan and mortgage payments.
Glover went on to help start a new project: the Ithaca Health Alliance, a health co-op for the uninsured that, of course, accepted membership fees partially in Hours. But his new commitment pulled him away from the currency project. McCasland took over publishing Hour Town and, along with the rest of the board, tried to keep the system running. But, as she explains, “They were volunteers with lives. It wasn’t the same as Paul on his bicycle, running around, checking on people.”
“There were a few places that just amassed large quantities of Hours and had trouble getting rid of them,” says Deirdre Silverman, then Alternatives Federal Credit Union’s director of community programs. Eventually, it set a policy against holding more than $5,000 in Hours at a time. Silverman says one strategy for depleting the stock was giving Hours to employees as bonuses, but that plan backfired when some employees used their Hours to pay off their own loans.
In 2000, when the credit union received a 3,000-Hour, or $30,000, interest-free loan to cover 5 percent of construction costs on a new building, it couldn’t convince any vendors to accept Hours as payment. None of the money was spent on construction costs. The credit union paid $15,000 back to Ithaca Hours, in Hours, and then struggled to spend down the other $15,000.
Ithaca Hours continued—and still technically exists today—but without Glover’s constant presence, the currency gradually fell out of use. Still, its track record of success, however temporary, has helped inspire alternative currencies elsewhere.
In western Massachusetts’s Berkshire County, people had been experimenting with various forms of local currencies for years. The Deli Dollars that triggered Ithaca Hours originated in Great Barrington, a Berkshire town of about 7,000 people.
Great Barrington is home to the Schumacher Center for a New Economics, a nonprofit named after economist E.F. Schumacher that promotes alternative forms of democracy and economies. The center had been playing around with the concept of alternative currency since its founding in 1981. It began with a microcredit program called Share, which used U.S. dollars to help businesses that couldn’t qualify for bank loans. Deli Dollars arrived in 1989, followed by Berkshire Farm Preserve Notes in the early 1990s. Two local farms came together and issued their own currency to finance start-up costs for their spring harvests. The notes could be redeemed once produce was ready.
In 2006, the region’s latest and current version of local currency came into being. BerkShares can now be purchased at three participating banks at a rate of $95 per 100. They can be redeemed for one dollar each, and even traded back in for dollars at the banks. About 400 businesses are currently registered to accept BerkShares.
BerkShares now has a grant from the Netherlands-based DOEN Foundation to see how far it can expand and to begin investing in local production. “We want to see how BerkShares can be a tool to start new businesses in the Berkshires that are making new products here,” currency director Alice Maggio explains. “Basically, we’re calling it import replacement.” Starting a BerkShares loan fund is one potential outcome.
In California’s Bay Area, another local currency is evolving through a different model. Founded in 2012, San Francisco’s Bay Bucks is a business-to-business barter system that facilitates trades between its approximately 300 member businesses. When one business in the network makes a purchase from another, the former receives a debit and the latter, a credit. The system is currently open only to businesses, not individuals, and participation includes an initial joining fee, a monthly subscription fee, and a 6 percent commission on trades. But there are benefits to offset these costs.
“What this allows is a faster flow of money through the local economy because there’s no incentive to hold on to it,” says Aaron Fernando, a Bay Bucks employee. “It doesn’t bear interest and it just sits there. You might as well trade it.”
The currency also bolsters the local economy during times when people are hesitant to spend actual money on nonessentials.
When developing its model, Bay Bucks looked beyond national borders to Europe, where local currencies are much more prevalent. The Bristol Pound and the Brixton Pound, alternative versions of the British Pound created in the last decade, are two recent examples of local currency.
In Switzerland, an alternative currency has a far longer history. Located in Basel, the Banque WIR has been issuing its own currency, the WIR, since 1934. One WIR equals one Swiss franc. About $2 billion worth of WIRs are traded every year, mostly by the small businesses that comprise the majority of WIR’s 70,000 business members. Research has shown that the WIR helps keep the Swiss economy more stable than those of its European neighbors. The French city of Nantes recently created its own currency based on the WIR.
In Ithaca, where Hours have all but disappeared, Ithacash is now looking to make a name for itself. But it is a very different currency. Hours were known for their physical design. Ithacash is solely digital. Hours sought to promote a living wage. Ithacash aims for simplicity in transactions. And Ithacash has one privilege that Hours was never afforded: hindsight.
Ithacash was created by Scott Morris, who came to Ithaca in 2012 to help revive Hours. Morris broke from Hours after disagreements with its board and decided to move ahead on his own. He started by addressing what he saw as a major reason for the decline of Hours: not paying someone to be the currency’s professional networker.
Glover’s departure—first from the day-to-day operations of Hours and then from Ithaca itself—sparked the decline, proving just how imperative his presence and constant work were to the currency’s earlier popularity. In the end, a currency centered around community need was too tied to one person to exist in his absence, despite broad local support.
Ithacash, on the other hand, has yet to peak, let alone fall, and is still building local support. So far, there has been less community involvement with Ithacash than Hours once experienced, but Morris is still working on combining the best traits of Hours with new innovations. He particularly emphasizes the role of ease. Complicated calculations with denominations like quarter-Hours turn people off.
When alternative currency works, “you can weave what I like to describe as a more beautiful social tapestry: bringing together community, creating relationships, building trust,” says Morris. Ithacash has not yet reached its goals or the level of recognition that Hours once enjoyed. But Morris hopes it can create a more sustainable, community-driven economy.
Stephen DeMeulenaere, founder of the Complementary Currency Resource Center, which provides research on alternative currencies around the world, sees the transition from Hours to Ithacash as part of a larger picture of shifting reasons for local currencies in the United States. As he explains, “I see the systems now being much more business-oriented in terms of small business owners especially. I’m not talking about corporations here but community revitalization and promotion of independent local businesses.”
One of the keys to the success of Hours—and one of the attractions of local currencies worldwide—was that it fundamentally shifted how people thought about money. While some in Ithaca may be disappointed by the fall of Hours and skeptical about giving another form of local currency a chance, many are still keen to challenge how trade, production, and money typically operate.
“[Hours] touched a nerve because money is so pivotal,” says Glover. “It decides who wins and who loses, who lives longer and who dies younger, who eats well and who’s hungry. Control of that money needs to be returned to people.”
Rebecca Nathanson is a freelance journalist in New York.