Users of BerkShares have circulated over two million of the local currency in the Berkshire economy since launch in September of 2006. The success of this initial stage of the program has enabled a strategic adjustment to the exchange rate between BerkShares and U.S. dollars. Now, 100 BerkShares can be purchased for 95 federal dollars (100B$ = $95).
This modification of the exchange rate will facilitate expanded use of BerkShares by the business community, providing more opportunities for citizens and businesses to recirculate the scrip before it is returned to a participating bank. The change is one of a series of planned enhancements, including extending the service area of the local currency to all of Berkshire County, BerkShares checking accounts, and BerkShares loans to businesses producing goods and services now imported into the region.
BerkShares has recently been featured in "Time," "Newsweek," and other national and international news media. Rodrique Ngowi's Associated Press story (see below) was reprinted in over 150 newspapers around the country and drew 56,000 hits to the BerkShares website in one day. The site averages 12,000 hits per day.
Increasingly, people are looking to BerkShares as a model citizen-initiated program for shaping a stable, localized, value-added economy as an alternative to a slumping national economy.
Berkshire merchants, restaurateurs, farmers, carpenters, auto mechanics, lawyers, service providers, and non-profit administrators are learning how best to use a local currency in their businesses. Berkshire bankers are streamlining their process to integrate BerkShares exchanges seamlessly with other banking functions. Berkshire residents are discovering new economic habits that expand their use of BerkShares and help them learn what their money is doing tonight. BerkShares staff and board are developing new ways to support BerkShares businesses. There is no blueprint for issuing such a robust local currency in the twenty-first century. Together our Berkshire community is writing the handbook.
All of this exploration and development is being conducted under intense media scrutiny, at a whirlwind pace, amid knocks on the door from other regions asking how it is done. The program carries sufficient depth in its conception, sufficient integrity in its application, sufficient vision for its future, to earn and meet such attention. We welcome the rapid unfolding and public visibility, simultaneously challenging and fitting. However to shape BerkShares into a local currency program that shines as a beacon of possibility for other communities, we are responsible for building organizational capacity equal to this opportunity. We estimate it will take an additional three years to complete the research and development phase of BerkShares and we must rely on grant support to fund these costs.
Donations to the E. F. Schumacher Society earmarked for BerkShares research and development can be made online at:
Thank you for your support,
Susan Witt, Executive Director
E. F. Schumacher Society
140 Jug End Road
Great Barrington, MA 01230
January 15, 2009
By RODRIQUE NGOWI
GREAT BARRINGTON, Mass. (AP)
Diana Felber brought her groceries to the checkout and counted out her cash — purple, blue and green bills that are good only at businesses in western Massachusetts.
Known as "BerkShares," the colorful currency is printed by a nonprofit group to encourage people to spend close to home in the state's Berkshire region.
Customers who use the money also get a built-in 10 percent discount, since they can get 100 BerkShares for just $90 at local banks.
"I like all the ideas about local," said Felber, a 64-year-old artist shopping at the Berkshire Co-op Market. "I also like that it's a discount. Who wouldn't like that?"
The BerkShares program is one of the most successful of its kind in the country, and it is attracting attention as other communities look for ways to insulate their economies from the deepening financial crisis.
Susan Witt, co-founder of the nonprofit Berkshire Inc., said her group receives about three calls a day from other people interested in creating local currencies.
So far, more than $2 million in BerkShares have circulated through 350 businesses since the bills were first printed two years ago. BerkShares look similar to real money for good reason: They are printed on specialty paper from Crane & Co., a local company that has been the sole provider of paper for U.S. currency since 1879.
The bills come in denominations of 5, 10, 20 and 50 and feature portraits of well-known local figures: a Mohican Indian, the original inhabitants of the area; civil rights leader W.E.B. DuBois, who was born in Great Barrington; community leader Robyn Van En, who died in 1997; Herman Melville, author of Moby-Dick; and painter Norman Rockwell, who lived in Stockbridge.
National retail chains in southern Berkshire County have not signed up to accept the currency, and BerkShares cannot be traded online with out-of-state merchants, Witt said.
"I'd much rather take BerkShares than you giving me your credit card," said Steffen Root, co-owner of Berkshire Bike & Board, citing card processing fees. "I think that we can keep our money local, it's a good thing — especially with our economy where it's going."
Interest in local currencies often spikes during a recession as communities scramble to promote their businesses and curb unemployment, said Lewis D. Solomon, professor at the George Washington University Law School and author of "Rethinking our Centralized Monetary System: The Case for a System of Local Currencies."
The U.S. Constitution prohibits states from coining their own currency, but it is silent on local paper money. The courts have allowed private groups to print complementary currency, provided it does not compete with federal money and does not circulate beyond a limited area.
For accounting purposes, the Internal Revenue Service requires that income received in BerkShares and other local currencies be declared in U.S. dollars.
The Massachusetts program is one of several local currency systems, including those in New York, California, Kansas, Michigan, Oregon, Pennsylvania and Wisconsin. One of the oldest is Ithaca Hours, which went into circulation in 1991 in Ithaca, N.Y.
"If you have local networks, you can trade within them," said Paul Glover, founder of the Ithaca program. Whether they are business, religious, neighborhood or professional groups, "there is a capability within those to trade without strict dependence on dollars."
Starting a local currency isn't cheap.
In the Berkshires, Witt's group spent $250,000 in grant money to pay for research and development and to create the alternative financial system. The group has made its research available for free online, hoping to help reduce costs for other communities seeking to set up a similar program, she said.
The bills are traded an average of four times before finding their way back to the banks, Witt said.
Not everyone is a fan of the local currency. Machal Snyder, a bookkeeper for several businesses, said she stopped going to the bank to get BerkShares. "I just started using my debit card for everything," she said. "I hate to admit it, but I think that I have become a bit more about convenience."
Those concerns may be resolved by an expansion program that includes branching into debit cards and offering loans to business startups, Witt said.
Shanace Sullivan said BerkShares help her support relatives tied to the local economy.
"A lot of my friends and family are people who work in the local trade, so it's important for me that business stays in the area. And any business that I have, I can try to keep it here," she said.
On the Net: BerkShares: http://www.berkshares.org
Ithaca Hours: http://www.ithacahours.org/
March 1, 2009