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September 2001
Ithaca: The Buck Stops Here

By Tracy VanStaalduinen

 

 

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.

 


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