September
2001
Ithaca:
The Buck Stops Here
By Tracy VanStaalduinen
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Instead of the faces of long-dead politicians,
this currency depicts lizards and waterfalls. But it’s not play
money—it’s the Ithaca HOUR, and it’s alive and well
after first being introduced in this upstate New York community a decade
ago.
With the dollar deeply engrained in the American consciousness, an
alternative currency may seem a little odd—and perhaps, illegal—but Ithaca,
dubbed “America’s most enlightened city” in 1998 by
the Utne Reader, is far from the only place in the country with its
own
money. Towns and small cities in 21 states as well as in other countries,
including Canada and Austria, have been exercising their right to develop
their own money as a means of keeping wealth in the community.
Local currencies were common during the Great Depression, when the
federal money supply was short. Today, as the global economy continues
to expand
amid protests, more and more people are realizing that local currencies
can keep a community’s wealth circulating within it. For Ithaca,
the HOUR has reduced dependence on imports, increased spending power
and boosted local businesses in ways that would never have taken place
dollar-wise.
Since the currency’s launch, in 1991, Ithaca’s residents have
used their unique spending power to show a lack of interest in supporting
chain stores that take their dollars out of the community to distant
corporate headquarters. Wal-Mart was driven out of town by 1995; bookstore
chain B. Dalton closed down its Ithaca store after locally owned-and-operated
Autumn Leaves Bookstore opened on the Commons, Ithaca’s pedestrian
mall.
Paul Glover, longtime Ithaca resident and developer of the prototypical
HOUR, is proud to say there are no chain stores on the Commons, and
only a handful on the outskirts of town. “As more unique and local
restaurants opened on the Commons, even McDonald’s closed,” he
said.
Show Me the Money
There are several different ways to get HOURS. You can buy them
or ask to be given them in change at any store that accepts them. When
you advertise your own business or services in the publication HOUR
Town, a listing of local businesses honoring the currency, you get two
HOURS, the equivalent of $20. A committee oversees the number of bills
in circulation; currently about 8,500, or $85,000 worth.
About 500 businesses currently accept HOURS; each is able to choose
what percentage of a transaction can be purchased with them. In addition
to most of the stores on the Commons, HOURS are accepted at the public
library, Cayuga Medical Center and the Alternative Federal Credit
Union. Some landlords will even accept the money for rent payments.
Glover, 54, refuses to accept sole credit for coming up with HOURS,
giving a nod to his “community’s need and pioneer spirit.”
When Glover, who has a degree in City Management, began studying the
local economy in 1989, the national economy was in recession. He found
that Ithaca itself had an “acute need for extra money to finance
new businesses and jobs.”
Around the same time, small-scale local currencies in South Dakota
and Massachusetts were finding their way into the media, and it wasn’t
long before the initial batch of HOURS were drawn up and gradually distributed.
They were soon covered by the local media, and by 1996 were popular
enough to be featured in the Wall Street Journal and the New York Times,
as well as in a segment on “Good Morning America.”
Like the dollar, the HOURS are a legal form of currency with watermarks
and serial numbers; they are actually more difficult to counterfeit
because they are multicolored. Unlike the dollar—which, according
to the Web site ithacahours.com, is “backed by less than nothing—$5.5
trillion of national debt”—HOURS’ value is based on
hours of labor.
“We’re encouraging people to regard one another as fellow
laborers, not just paying them the lowest you can get away with,”
Glover explains. “When HOURS are offered, the question on the table
is, ‘Are my hours of labor worth more or less or the same as yours?’
People ask each other about the relative value of one another’s
labor, so that the value of labor is no longer merely a decimal abstraction
but a social agreement.”
The name ‘HOURS’ itself was chosen for the currency to remind
people that they create money’s real value, with their time, skills
and energy. Glover says: “By calling our money ‘HOURS’ we
are reminding people that we are fellow workers rather than random
winners and losers scrambling for spare dollars.”
Glover estimates that millions of dollars worth of transactions have
taken place in Ithaca since the HOUR was introduced. He says the mere
existence of the bills and people’s willingness to accept them
has increased awareness of the benefits of local spending, even when
transactions are made with dollars.
“By spending HOURS, people have made connections with local supplies,”
Glover explains. “Because they have learned to shop in the Ithaca
HOURS network, they will rely on local suppliers often, even when they
do not have Ithaca HOURS.”
Taking it to the Next Level
The success of the HOUR has carried over into another project, the
Ithaca Health Fund. The program got off the ground in 1997 after Glover
conducted an informal survey, the results of which showed that few Ithacans
had dental coverage and 37 percent had no health coverage at all. Those
that did have coverage were not satisfied with the services they were
receiving through standard insurance policies and the price they were
paying for it.
“As with Ithaca HOURS,” Glover said, “as we establish
a track record and prove that it works, we expect that this could replicate
throughout the country and eventually recapture, for every local economy,
the money which currently leaves town to enrich HMOs whose executives
are getting bazillions of dollars a year, while Ithacans’ teeth
rot.”
Currently the Fund has about 300 members. The annual cost for coverage
is $100 (payable in both dollars and HOURS), and as more people join,
the list of health care providers accepting the policy continues to
expand.
What’s Next?
In another ten years, Glover hopes that the city will have “the
capacity to issue far more HOURS more readily to make large loans without
charging interest. We’d be able to make very large loans to accomplish
community benefits for which investor dollars are not available.” Some
ideas Glover has in mind: Buying land for organic farming use, in turn
increasing the local food supply and further reducing dependence
on imports, and reducing energy usage by installing solar- and wind-generated
systems throughout the city.
“In the long run,” Glover says, “we could do a lot of
heavy lifting with local currency on behalf of environmental and social
benefits: food, fuel, housing, health care. Everything can be done better
with local currency, which is not profit-driven.”
To learn more about the Ithaca HOUR or to order a starter kit to
develop your own local currency, visit www.ithacahours.com.
