Counter Currencies

Counter Currencies
In the midst of an ugly recession, alternative currencies are getting a second look — and some of the most successful models are right in our backyard
By Stefene Russell
February 2009
St. Louis Magazine

When Argentina's economy collapsed in 2001, the country went through five presidents in less than two weeks. Bank accounts were frozen; the peso plunged. But the crédito — a local barter scrip — flourished. Buenos Aires was soon overflowing with trueque clubs, where cashless Argentinians traded shoes for cabbages, hand-knit scarves for pirated DVDs. As 46-year-old Irma Gonzales explained to Time in 2002: "If you don't have any money, this is the only way to survive."

It's hard to imagine the recession reducing Market Street to market stalls, though it's definitely expanding the barter economy — including the use of what are called complementary currencies. New York's Ithaca HOURS, a time-based local currency established in 1991, saw a noticeable increase in circulation last year; so did St. Louis' own M.O.R.E. (Member Organized Resource Exchange) Time Dollars, which are issued through Grace Hill Settlement House. Though Ithaca HOURS have a larger circulation —

900 small businesses accept them — the M.O.R.E. exchange is a pioneering program that has been around for three decades and is considered a national model.

"We went to Madison this year — TimeBanks USA had a big conference there," says Grace Hill's M.O.R.E. director, Rose Beaver. "We spoke at the workshops. And we do get people coming in from everywhere and taking tours, just basically to sit with us and ask us questions about how it's working. We have arranged to take visitors to neighbors' homes to observe one-on-one; we've done that quite a lot."

What visitors see, simply, is Grace Hill's mission statement in action: "Neighbors helping neighbors." A retiree watches kids for a swing-shift mom, who in turn picks up medicine or rakes leaves for someone who's housebound. A team of people weatherizes a house; its occupant pays off that balance by reading to kids at a neighborhood center. Time Dollars are just a tracking method, albeit a rather sophisticated one — at one point, Grace Hill mailed out Time Dollar letters, similar to a bank statement (though the system is now completely online, at gracehill.org). People can also spend Time Dollars on goods at neighborhood centers with Time Dollar stores, which are stocked with clothing, toiletries, cleaning supplies and even toys (nice new ones, Beaver emphasizes). Unlike the swift, impersonal I'll-trade-you-that-moped-for-my-Xbox transactions of Craigslist, Time Dollars do more than preserve cash: They weave neighborhood connections that are as tough as steel-mesh fabric. And just as important, they recognize the value in watching a toddler, bagging leaves or spending time with an isolated, elderly neighbor — even if the market doesn't.

Though digital Time Dollars are less of a headache and have helped Grace Hill track usage (last year, their annual report recorded 22,743 exchanges — since one Time Dollar is valued at minimum wage, that's equivalent to $151,241), managing director Betty Marver, who has watched the program unfold since its inception, says the paper statements were a great litmus test.

"We had neighbors coming in with letters, furious," she says. "There was a line outside of [the Time Dollar coordinator's] office. I was worried; but I looked in her office, and she was so happy. I said, 'They're all mad at you! Why are you happy?' She said, 'It's working! They care!' And I said, 'Wow! You're right!' So she solved their problems and corrected them; what's more, we discovered neighbors were finding ways to exchange services beyond what we'd thought of."

As the program expands and grows more sophisticated — Grace Hill hopes to set up a foundation that can loan up to 1,300 Time Dollars for business start-ups — what really guarantees the currency's success is its utility: It simply patches the gap between unmet needs and untapped resources in communities that have lots of both.

"A community currency only works if you have a community to serve," agrees Nathan Brown. Brown is the administrator of ELMs (Exchange Local Money), a community currency created by Dancing Rabbit Ecovillage in Rutledge, Mo., near the state's northeast corner. "That's why I think our community currency has been so successful," he says. "It took some work and some creative thinking to get it circulating, but now it's just as good as dollars."

In fact, Brown says, they can boast of something that he's pretty sure no one else in the world can: They have members who pay all their expenses with ELMs. (This is why other systems like Ithaca HOURS are often referred to as complementary currencies.) The 10,000 ELMs currently in circulation are used in a fairly complex manner: The community has even used them to extend interest-free lines of credit to Dancing Rabbit LLC, to help pay mortgage payments or support the vehicle co-op. Unlike the community's original currency, which used physical bills as well as checks, ELMs are equivalent to dollars and are traded entirely online ("It's just like using PayPal to send somebody money," Brown explains).

Brown, who spent his last year of college working on a pilot LETSystem (Local Exchange Trading System) in San Antonio, Texas, says that a local currency is as much of a mind game as "real money"; it doesn't work if people don't believe they can spend it in useful ways. Brown would love to expand ELMs outside Dancing Rabbit, but admits this will be challenging: Rutledge Garage, which works on the village's cars, spends most of its money nationally, and the Mennonite family that grows their produce doesn't have a computer. So he's moving cautiously. ELMs have been in existence for about two years, and he doesn't want to start from scratch again.

"All it takes is for people to lose faith in the system, and it collapses," Brown notes. "Not because there's anything wrong with the system, but because of the loss of faith itself. I want to make sure that doesn't happen when we expand outside the community, because anyone holding onto ELMs will lose a lot of buying power — which is the same thing that's happening in the U.S. dollar economy right now."

That loss of faith is exactly why there may be a more mainstream adoption of systems like LETS, the barter exchange network Brown worked with in Texas. Founded in 1982, LETS has flourished in England, South Africa and Australia but hasn't caught on to that degree in the U.S. — yet. Though LETS is technically not tax-exempt like M.O.R.E. Time Dollars (whose users are 70 to 80 percent low-income), their aims are similar: to use money to strengthen, rather than weaken, community bonds; to tap into resources that are undervalued by the market; to help retain wealth for local economies.

CES (Community Exchange System) is an online global network of local exchanges (www.ces.org.za) that offers free software to anyone who wants to start an exchange; it's even branched into social networking, at communityexchange.ning.com. Of course, that doesn't exempt an administrator from the truly hard part of establishing a local trading network peopled with users willing to actively trade on a regular basis. Even in Australia, where LETS has a long and robust history, the listings are chock-full of charming, but not always useful offerings like quince paste and didgeridoo lessons — and of course, it's the basic, necessary services (car repair, dentistry, haircuts) that keep an exchange functioning.

In St. Louis, Webster Groves residents David and Alexandra Wechsler have already taken the initiative to set up the St. Louis Community Exchange (stlcommunityexchange.com) through CES. At press time, SLCE had 34 active users. (I signed up, too, in order to use the software and really figure out how CES works.) David Wechsler, who worked with LETS creator Michael Linton directly when setting up the exchange, says Linton told him that things usually don't "hit critical mass" until the roster is at about 100 users and that the process usually takes about a year. Wechsler is cheerful and optimistic, though — he thought he would have to create something from scratch before discovering CES. "It's completely free, anyone can start an exchange — you can have 10 different exchanges within St. Louis, and they could all trade with each other through this centralized model," he says. "And I really liked that it allowed you to trade globally, where you could mow someone's lawn over here and then travel to Australia and stay in a bed-and-breakfast." (In fact, Wechsler notes that there's a CES user who traveled the globe, favor by favor.) And just like ELMs and Time Dollars, CES exchanges have the ability to be pooled and used in ways that push them far beyond the traditional dis-for-dat barter between two people.

"Not only can you list yourself as being from a subarea, like the Hill," Wechsler says, "but you can have a Hill group, with a message board, and do trades as a group. So you have the Lions Club trading with the Hill, and the Hill Association gives them a venue and food; then the Lions Club turns around and gives to the community in a really big way."

There's probably no one in the bistate area who's pondered alternative currencies longer than Bob Blain, who maintains the educational site hourmoney.org. A professor emeritus in sociology at Southern Illinois University Edwardsville, Blain began giving lectures in the 1970s about the illogical nature of our current money system. "We produce things all over the world, and they are all measured very precisely using the same standards," he says. "But money doesn't have the equivalent of a meter stick." The beauty of local currencies, he says, is that they naturally lead people to the same epiphany he had years ago: "When people start using them, they have to make a decision about the unit. When they face that, as babes in the woods, and ask, 'What are we gonna use?' the correct answer comes to mind naturally: time." Indeed, the local currencies that have prevailed — Ithaca HOURS, Time Dollars, LETS — all have that in common. But Blain says that righting a global economy that's in the midst of a terrifying St. Vitus' Dance is a job that's too large for local currencies.

"The metric system's global. Why does it work? It works because everyone has access to a meter stick," Blain says. "We've got to get the larger economy right, not just the United States'. It has to be global. That's why I keep coming back to using the hour as the money unit." As he points out, the "center of gravity" for exchange rates is work time; instituting a global, hourly currency would equalize overvalued currencies (the dollar) with undervalued ones (the Chinese yuan). Similarly, it would close the gap between CEOs and workers. Of course, there are still folks who benefit from the present system; during the boom years, when more people were benefiting, there was no reason for people to investigate alternative money systems. But if the economy continues to falter, that may change.

"The current crisis has everyone paying attention," Blain says, "and asking some deep questions, because all these experts don't seem to know what's going on. If they were firemen in a forest fire, they'd be telling you, 'Hey, we've got a fire. Look at it — it's over there, it's really burning hard.' Then you ask them, 'Hey, how are we goihttp://www.blogger.com/img/blank.gifng to put it out?' 'Well, I don't know, it's going to take a while. We need more equipment. Uh, we'll see, it might take a year, maybe two years.' What? They can't tell you," he chuckles.

Whether hour money becomes the world's euro anytime soon, Americans' increasing use of barter and community currencies — even if it's the result of decidedly nonphilosophical things like growling stomachs or mounting medical bills — may shock us into some interesting culture shifts. After all, it's been a while since we've walked out of our houses, stepped out of our cars, looked around and realized how much we really need each other.