Philip White
In recent years, there has been a resurgence in localism in the foodie and environmentalist communities in the US, with farmers markets and specialty grocers the beneficiaries of those looking for locally-grown produce sold outside of Wal-Mart and its ilk, which typically favor the cheapest possible foreign fare. The trend makes sense for health reasons – not a shock that peaches from an orchard five miles away are more nutrient-dense and typically less pesticide-afflicted than those shipped from Central America – and for the local economy. Traders such as independent book stores and one-off coffee shops have also benefited from those who’d prefer to patron small businesses with whom they can build long-term relationships, rather than store #7680 of a huge multinational.
However, there is no doubt that “Main Street” as it’s often called here and “The High Street” in the UK has failed to halt the overall decline in number of stores and business volume that arguably began since the advent of the big box stores that accompanied the expansion of suburbia in the 1950s and 1960s.
To help turn the tide, some towns are introducing local currencies that encourage residents and merchants to spend their money with neighboring small businesses. In the US, these and other forms of financial exchange media that became known as “scrip” – including Larkin Merchandise Bonds and Caslow Recovery Certificates – were introduced during the Great Depression to alleviate the challenges caused by lack of cash flow. As many as 5,000 were in circulation by the mid-1930s. More recently, local currencies such as San Francisco’s Bernal Bucks, Great Barrington (Mass.)’s Berkshares and the Ithaca (NY) HOUR (also a payment system for labor there) have promoted local trading. These are typically introduced by groups of business owners and/or private citizens, and are not backed by city, state or federal government.
The latest area-specific currency in the UK is the Brixton Pound (B£) re-launched earlier this month after a more limited first issue in 2009. Several rural English towns, including Lewes, Stroud and Totnes have run similar schemes with mixed results, but Brixton, located in south London, is the first urban area to try it. Rather than replacing the pound, the B£ is a complementary currency, which is supported by the local council but not backed by the government. Companies or individuals can exchange pounds for the local notes in person or by electronically transferring money into the B£ Community Interest Company account, which they can only spend in independent stores within Brixton. For a limited time, those who do so will get a 10 percent bonus. To help publicize the initiative, Brixton notes are embossed with images of local celebrities, such as NBA star Luol Deng, WWII secret agent Violette Szabo and, most notably, David Bowie in his memorable Aladdin Sane album pose.
So what effect will the Brixton Pound have on the local economy and, beyond that, on the lives of those who live there? It’s worth noting that the area has been a hotspot for racial tension in the past 30 years, with riots in 1981, 1985, 1995, and, most recently, this past August. Brixton is blighted by high unemployment, crime and poor relations between the police and residents. So, in one sense, any proactive policy that involves residents in a scheme that boosts pride in their area and engages them with local businesses has to be positive. And organizers are adamant that widespread use will reduce Brixton’s environmental impact. But whether such a plan can truly reinvigorate independent merchants or is merely postponing their demise remains to be seen. What else can local communities do to restore profitability to their ‘Ma and Pa’ shops? How do such schemes fit in with broad-stroke localism/direct democracy plans that would enhance local government while limiting centralized control?
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4 comments:
How do scrip systems guard against counterfeiting? It seems to me that this would be a huge challenge.
Thanks for your comment, LD. This WSJ story http://online.wsj.com/article/SB124846739587579877.html states that "Historians say few scrip notes were counterfeited, in part because many didn't circulate long enough to get a racket up and running. There were a few attempts, though. In the late 1930s, two brothers from Superior, Wis., were charged with counterfeiting a local scrip.
Their defense: It wasn't real money to begin with, so how could faking it be illegal? The judge didn't buy it. They were convicted."
I admit to not being an expert in Depression era monetary policy, but like you, I think it would've been easier than the WSJ states because of the lack of watermarks and other security measures that typically adorn federal currency.
Darn it! Now you've made me lose the three hours I'm going to spend researching this.
You're welcome, PW! I know good and well that you wouldn't be researching it unless you really wanted to.
If modern scrip systems are in the form of electronic credit / debit cards that can be "loaded" with dollars, that could help prevent counterfeiting. But it seems that type of private paper currency would be difficult to protect against counterfeiting.
LD, stumbled across the website of the Brixton Pound printer: http://www.smith-ouzman.com/news34.htm
Looks like they're taking anti-counterfeiting measures including, to quote: "watermarked paper with embedded fibres, sequential serial numbering, ultraviolet (UV) ink which fluoresces under UV light, micro-text and hologram foil."
But I bet some of the others, particularly in locales without celebrities and PR reps to pull in extra investment into their currency experiments, do struggle with fraud.
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