| barter systems | <– Date –> <– Thread –> |
From: Kieran Roe (kroe cap.gwu.edu)
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| Date: Wed, 9 Mar 1994 22:18:45 -0500 (EST) | |
Mother Earth News
August, 1993
SECTION: No. 139 ; Pg. 32; ISSN: 0027-1535
LENGTH: 3499 words
HEADLINE: The ultimate barter: a currency based on time-hours is a boon to
a rural community; Ithaca, New York; includes related article on
creating a local currency for barter purposes and examples of how people
have used time-hours for bartering
BYLINE: Silver, Michelle
BODY:
Tough times, it seems, have been with us for years. Many of us have
been hit pretty hard. That's why Paul Glover, a resident of Ithaca,
New York, decided to do something about it. Two years ago he came up with
a supplemental currency called HOURS, and here's how it works. Each HOUR
is equivalent to one hour of time, or $ 10, which is the local county's
average hourly wage. Also available are 1/4 HOURS ($ 2.50), 1/2 HOURS ($
5), and 2 HOURS ($ 20), all printed from a small shop in town. You can buy
all the goods and services you need just like you can with the U.S. dollar.
You can even use HOURS to go to the movies or to enjoy some fine dining.
The best news and worst news about Paul's HOURS is the fact that they
are worthless outside of Ithaca. As a result, they circulate within
the community, improving the city's economic flow and encouraging
participants to put their faith in each other rather than the almighty
dollar. As the Ithaca HOUR plainly states, "In Ithaca We
Trust."
Anyone can participate. For one dollar, residents become members and
receive four HOURS automatically. Ithaca Money, the local newspaper
established and published by Paul, lists all of the members, their phone
numbers, and the services or goods they are either offering or seeking. If,
say, Ellen needs a carpenter and sees John's carpentry listing, she'll call
him and they'll negotiate the amount of HOURS he'll be paid. When John's
done, he may take his hard-earned HOURS and purchase a few evenings of
baby-sitting time from Susan. With over 700 goods and services to choose
from, there are few necessities that members won't find.
Excited to see it for ourselves, MOTHER staffers headed up to
Ithaca to witness the exchange system firsthand. After just one weekend
we found that, although some kinks still need to be worked out, the
currency is quite impressive overall. We saw, for example, a hotel manager
take in six HOURS from a couple, which he in turn used to pay a
landscaper. We watched a restaurateur use the HOURS he earned from
customers on Friday night to purchase fresh produce at Saturday's Farmer's
Market. We even whiled away the HOURS ourselves, using the four HOURS Paul
sold us to negotiate for three loaves of fresh bread, honey, cider, and a
beautifully handcrafted wooden cutting board. Mostly what we saw in
Ithaca were dozens of community members who addressed each other by
first name, joked around, and negotiated for each other's goods and skills.
Not a bad weekend.
So, after gathering a book's worth of information, we decided the best
way to show you how it works is to have Paul address the questions most
frequently asked about HOURS. We also provide a guide for setting up a new
currency and comments by Ithaca's biggest financial resource--the
community members who are making it happen. valued less than mental work,
and that male work is valued more than female work. But we all need each
other to make Ithaca function. Everyone's honest hour of labor has
the same dignity.
Usually one hour of labor is worth one HOUR, but some people have rare
skills and might want anywhere from one and a half to five HOURS for their
hour of work. Eventually, the Ithaca HOUR list may bring so many
skills into the local market that rare skills become less rare, and more
affordable. Even so, a dentist must collect several HOURS for each
work hour because the dentist and receptionist and assistant are working
together, using equipment and materials that they must pay for with
dollars. Someone might want more than an HOUR for one hour of tough ditch
digging. Baby sitters getting $ 2/hour would do better to accept a 1/4
HOUR, though tending children is a big responsibility and perhaps worth
more. Ask for what you think you deserve and give good service.
Can dollars and HOURS be used together?
Yes. For example a clock selling for $ 15 might be offered for 1 HOUR
plus $ 5. For an hour of rare labor one might offer 1-1/2 HOURS plus $
2.50. And so on.
What prevents HOUR inflation?
There are many more trading opportunities than HOURS issued. The Barter
Potluck plans to watch demand grow and will distribute HOURS gradually.
How many HOURS were printed?
In October 1991, 1,500 1 HOUR notes and 1,500 1/2 HOUR notes were
printed. Then 6,750 1/4 HOURS were printed in March 1992. That's a total of
3,937.5 HOURS, with a face value of $ 39,375. Each note has a serial
number.
Who prints and issues HOURS?
Decisions to print and issue HOURS are made by those who attend Barter
Potlucks. Anyone who advertises their willingness to accept HOURS may vote.
They decide how many HOURS will be sold at $ 10 each to obtain dollars for
printing HOURS. They decide which denominations will be printed. They
decide how many HOURS will be paid to new sign-ups and for renewals, and
they make HOUR grants. HOUR notes are signed by Patrice Jennings, a
member service representative at Ithaca's Alternative Federal Credit
Union, and are also signed by Victoria Romanoff, a local historic
preservationist. Our intention is to stimulate the creation of jobs and to
expand Ithaca's economy, paying special attention to ecology and
social justice.
What prevents counterfeiting?
HOURS are
printed on heavy colored recycled paper, with a second color overlay. Also,
red serial numbers are stamped deeply and can be felt.
Since the HOUR is $ 10, won't it sink if the dollar goes down?
Our plan is to gradually develop a catalog of HOUR prices, which will
eventually allow the HOUR to serve independently of dollar values.
Is barter income taxable?
Exchanges of nonprofessional goods and services are not taxable.
Exchanges of business goods and services, however, are taxable. The "fair
market value" of goods and services received is calculated by the
barterers. I should mention that Ithaca HOURS does not record
transactions, so barter value must be reported by the barterers.
Are Ithaca HOURS legal?
They are a form of scrip often issued during money shortages. They are
not illegal; the government's main concern is tax collection.
Meet Community HOURS Users:
Dave Wharton, Professor of Economics at Cornell University
When Paul was in the early planning stages of setting up the HOURS
system, he came up to Cornell looking for someone to talk to about it. So
he and I sat down and started talking about the philosophy and logistics of
the system, as well as some of the economics.
I think that to a certain extent, Ithaca HOURS extends the
economy to people who are marginally or fully on the fringe of
society--people without money to disperse. I'm not quite sure why you can't
sell your services for dollars if you can sell them for HOURS, but for some
reason there are people who seem to get left out of the dollar network.
Most important, HOURS help develop a sense of awareness and trading among
community members. In a sense, increasing the multiplier in a local
economy--encouraging spending of any form in a local economy--encourages
money to stay within the community.
Dollars vs HOURS
Ultimately, there's some kind of insulation that a local trading
mechanism can provide. If our entire banking system collapsed, there would
still be this
mechanism, and we wouldn't have to resort to pure barter. So there's
that protection. But right now the HOUR is tied both implicitly and
explicitly to the dollar. If we have gradual inflation of the dollar, and
everyone keeps taking an HOUR for $ 10 worth of work, there will be the
same kind of inflation for the HOUR. So eventually I would hope that it
could stand on it's own, but I think it takes a long time for that faith in
the system to occur.
One of our concerns right now is how quickly we should let the supply
of HOURS grow. The constraint on that is similar to an inflationary. We're
just beginning to monitor the volume of the transactions, and we don't have
a formal network to measure our analogous figures and data. We know that
we must increase the money supply over time to facilitate transactions, and
we do that through grants and loans. So, there are similar functions to
what our regular government would do. We also have the same constraints--we
can't increase the money supply too fast or inflation will happen. People
will get just too many of these things and they'll have to raise the price.
I doubt most HOURS participants are worrying about an inflation right
now. I don't think we've issued too many yet so there's no sense of
pressure really in the consciousness of the people. But then, I don't
think this relationship is in the consciousness of Americans in regard to
the overall economy either.
We do think about having a collapse or how the system could fail every
time that we take hedging positions in investments. And with Ithaca
HOURS, we try to find the balance of protecting ourself from the exposure
while still engaging the community. So our banking board has said we are
going to set a total dollar limit of HOURS that we can hold on hand at one
time.
We accept Ithaca HOURS based on certain designated, fee-based
services. Our credit union starts out by saying that some people are
dollars rich and other people are time rich. Time-rich people have accessed
Ithaca HOURS through the use of their skills and time. These people
may have overdressed their checking account because they don't have the
cash there. So we've allowed Ithaca HOURS to cover transaction fees
that time-rich people wouldn't necessarily have the dollars to pay for.
These include fees for mortgage applications, business loans, overdrafts,
and membership.
As for the the HOURS we take in, we use them to pay for services at the
bank. The printer accepts them and so do the people who do repairs on the
building and who mow the lawn. We also use them to register for advertising
events and we try to encourage others to accept them. One of the most
popular uses for HOURS is offering them as bonuses. There's something
different about giving an employee a $ 50 bill versus a 1 HOUR note. When
you put an extra $ 50 in someone's paycheck, they often use it to pay off
a bill. When you give
someone extra HOURS, they do something special with it.
The best thing I can say about the HOURS is that they really empower
people. My little daughter saw me using an Ithaca HOUR and said
"Daddy, didn't you just print this thing out? How can it work?" The fact
is, somebody simply prints out federal dollars too, but nobody ever thinks
about that. Dollars are so much a part of our psyche that we don't ever
question it. What could be more empowering than printing your own money?
Anna Steinkraus, Littletree Orchards
I've been bartering since Paul started up the HOURS system in 1991, and
I accept HOURS for my apples and cider down at the Farmer's Market every
weekend. The clientele who use HOURS is small right now--about 2% of my
customers--but it's definitely building.
At first I was skeptical of both accepting them and using HOURS. I
didn't know how others would respond to them, but it's definitely been
positive for us and a good promotion for our business. I also think the
more ways we make our goods available to people at the market, the better.
I've gotten to know a whole bunch of nice people I never would have met if
it hadn't been for HOURS.
The only problem that I see with the HOURS is that there is still some
confusion right now. For instance the HOURS are based on certain
increments. So sometimes you have to give change back but there's nothing
small enough in HOURS. If they don't have dollars or change, it can get
confusing. Also, too many people right now are nervous that the bottom will
just fall from under the system and they'll be left with nothing. At this
point, people just need to be shown that they can trust HOURS--they must
have faith in the currency. I would like to believe that it'll grow and
have a strong local impact.
Linda Blossom, reading/math tutor
I think the HOURS system works very well. You've got a lot of old
hippies here in Ithaca, as well as many young new hippies. There are
so many countercultures in every age group, plus cross cultures with all of
the universities here. What the system has to do now is come out of the
alternative community a little more.
I think it's starting to--I looked the other day and saw a listing in
Ithaca Money of a lawyer that I know, as well as a dentist. The
system is definitely starting to get more mainstream. It was also
especially hard in the beginning when people didn't have a lot of HOURS and
none of us wanted to let go of them. But as long as people have a way to go
around and use the HOURS for
necessities
after accepting them, then the currency will make sense and it'll
work.
In Ithaca you have so many people working for themselves, doing
everything from massage to painting to auto repair. This was probably the
best community to try it out in. In Ithaca people are making money
with their own skills and their own wits. We've got a lot of people who are
self-employed here. When you're working for yourself, you look for any way
you can to save money. Even by just using HOURS, you're saving money
because you usually don't go out and spend the HOURS frivolously.
Michael Turbacks, Owner of Turback's Restaurant
Our restaurant is successful and we've always had a wide range of
customers, from the president of Cornell University to the local folks in
town. What attracted us to the Ithaca HOURS was the fact that we
could bring in a whole new group of people--those with an alternative
lifestyle. When we started a year ago, we were in a recessionary time, and
this was a good way to help build up our business. We've also gotten to
show people that we're not a special occasion restaurant--we're an everyday
restaurant.
Right now, I'd say that at least one customer a night pays with HOURS,
and we've taken in several thousands so far. It's a fun way to do business.
When people call and find out we accept HOURS, you can practically hear
them smile over the phone. Plus, when I look in the register at night, an
HOUR seems far more attractive to me than a $ 10 bill. It's a real honest
money.
Create a Local Currency in Your Community
Although local currency is lots of fun, it's also lots of work and
responsibility. Here's a step-by-step summary of how we got started in
Ithaca and how we're expanding.
1. Design the money. By law, your cash must be obviously different from
a dollar, and of a different size.
2. Sign up participants. Show prototypes of your money to people who
might be willing to appear in the first published list. Tell them this will
be real money, backed by real people, real time, real skills and goods.
They'll each get the same quantity of local currency as advance payment for
being willing to accept it.
Tell businesses that local money stimulates spending by those otherwise
too poor to purchase, promotes locally owned small businesses, and keeps
wealth in the local economy. Tell everyone they're in total control of how
much they accept. Popular retailers should set a rate of acceptance (per
purchase) within what they expect they can re-spend, then gradually
increase acceptance of HOURS as the list grows. Collect a small sign-up
fee from everyone in order to print the money.
3. Design your first barter newspaper. Type up the stories and listings
(Computer database programs, such as Filemaker Pro for the Macintosh will
alphabetize entries automatically for you). Include a coupon inviting more
participation, and leave spaces in your layout for display ads.
4. Sell display ads by showing sample pages of your newspaper to
businesses. We now accept local currency for nearly the full price of ads.
5. Print the money. Use colors. Our 2 HOUR note ($ 20) is printed on
locally made 100% cattail paper with a watermark, and we use soy ink. Our
printer accepts up to 30% of the price for printing in money that he
himself prints. Serial numbers convert the paper into money.
6. Print the first newspaper and mail them with the agreed local
currency payment to each pioneer participant. Every note disbursed is
recorded by serial number, name of recipient, and date. Accurate records
are essential to accountability and credibility, and these records are open
to any participant on demand.
7. Distribute the newspaper to the public. You might publish the list
as an insert to a Pennysaver-like newspaper.
8. Issue a press release to introduce the list and money to the larger
audiences of TV, radio, and other newspapers. Invite more people to swap
their skills and goods and combine the meeting with Barter Potluck suppers
to discuss how things are going. Be sure to remind people that barter
income is taxable.
9. Keep in touch, especially with those likeliest to earn the most
money. Retail participants, to the extent of their popularity and
visibility, give special credibility to the currency. We therefore help
people with a big HOUR income to focus on ways of spending them--say, by
reading them the list, noting their selections, or providing them with
personalized Ithaca HOUR Shopping Lists for easy reference. When
they want to spend their HOURS for something not yet on the list, we try
to find what they seek.
August, 1993
Many of our business participants have become enthusiastic HOUR
spenders. They've even spent hundreds of HOURS with people not yet listed,
by offering HOURS as payment and then showing the newspaper.
10. Call everyone on the list periodically to make sure phone numbers
and listings are accurate. I pay people an HOUR per hour for this work.
11. Collect success stories when trading begins, and publish these.
-
barter systems Kieran Roe, March 9 1994
- barter systems Kieran Roe, March 9 1994
- barter systems Kieran Roe, March 10 1994
- RE: barter systems BARANSKI, March 14 1994
- RE: barter systems Fred G. Thompson, March 15 1994
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