Communities Printing Local Money

"Madison Hours," the local cash, has been around since May 6. Like U.S. dollars, Hours can buy food, coffee, garden help, haircuts, child care, pet care, computer lessons, acupuncture, books, and more.

"Hours are real money -- local tender rather than legal tender, backed by real people, real labor, skills and tools," says Paul Glover, the brains behind Hours in Ithaca, New York, where local currency has been circulating since 1991, serving as the model on which Madison based its currency.

"Dollars, by contrast, are funny money backed no longer by gold or silver but by less than nothing -- $5 trillion of national debt," Glover writes in an article on the Internet.

The multicolored Madison Hours come in one-hour, half-hour, and quarter-hour denominations, and about 1,140 Hours are currently in circulation. Each Hour is worth $10, the average hourly wage in Ithaca.

In that city, the Hour economy has over 1,100 participants and 5,700 Hours (worth $57,000) in circulation. Its founders claim the local currency has added about $1.5 million of local trading to their "Grassroots National Product."

In Madison, Hours' membership has reached 276 (including 35 businesses), and is growing by about 30 each month.

"It offers employment to those who are otherwise marginalized by our culture, like people who are too old or too young," says Camy Matthay, a 39-year-old Madison resident who offers what she calls "down-sizing assistance" in exchange for Madison Hours. Her services include helping people "de-clutter" basements and manage space in small, over-crowded homes.

"We printed our own money because we watched federal dollars come to town, shake a few hands, then leave to buy rain forest lumber and fight wars," says Glover.

His group has sold $25 "Hometown Money Starter Kits" to over 600 communities in 47 U.S. states. Because the value of local money increases as more people use it, enlisting new users is a major "monetary policy" of the group.

"Every time someone spends Hours you add more labor to the resources pool and add value with each transaction," Carpenter explains. "It's empowering in the sense that a community can create its own economic system which is less dependent on the larger national economy."

Unlike many countries around the world where governments have total control over issuing currency, local scrip is not illegal in the United States.

"Paper money in a denomination above one dollar is legal for Federal purposes," explains Lewis Solomon, a professor at the George Washington University Law School in Washington.

"There are no constitutional and statutory problems," adds Solomon, the author of a 1996-book, "Rethinking Our Centralized Monetary System: The Case For Local Currency."

The book argues a case for decentralizing the United States, emphasizing communities and self-supporting local economies as opposed to the present trends towards globalization of markets.

"One tool that can make that happen is local currency," says Solomon, an expert on corporate law and taxation.

Community economics, however, is more than printing a medium of exchange.

"Even where communities cannot print money legally, that should not stop the movement of empowering people to contribute to their communities economically by creating work for themselves," says Carpenter.

Local money has disadvantages: banks do not accept the currency, and it does not earn interest. Users are also forced to buy from only those stores and individuals that accept the currency, reducing options.

"I feel that there is a lot that the federal economy does not support in our lives," says Laura Lentz, a University of Wisconsin-Madison student. "Local currency is one way to start addressing those issues. I don't think it has all the answers, but it is an attempt to question certain things we tend to take for granted."

Lentz, a member of Madison Hours' planning committee, has used Hours to fix her car window, buy groceries, receive haircuts, a massage, and to pay off a debt.

"Even if the whole thing flops, I'm still proud that people are getting together at the potluck and talking about the issues," she adds.

Lentz and Matthay were among 30 others who discussed how their money was doing at the last Barter Potluck.

"The way money is used in society makes me unhappy," said Matthay. "It is not equitably distributed and people don't have equitable chances to earn it."

A motto, embossed on all bills, underscores the community-building ideal Madison Hours' users aim to foster: "In Each Other We Trust."