It's been almost two decades since Paul Glover peddled around Ithaca's garage sales, inviting people to put up the bright yellow Ithaca Hours sign. "A bicycle," he said, "is essential for networking in Ithaca." He would stop to explain to buyers and sellers how Hours worked and offer up a few notes as samples. It was largely owing to this sort of personalized marketing that Hours were so successful in the 1990s.
When Glover left town, the alternative currency has gradually lost momentum. Ithaca Hours were especially hard hit when paper currency took a back seat to electronic banking. As the once abundant directory weaned, those businesses that still accepted Hours couldn't sustain a healthy flow. They received far more than they could distribute, so they accumulated backlogs until, as Greenstar Finance manager Asha Sanaker described it, they were "drowning in Hours."
In past years, Glover played the role of troubleshooter. "I knew where the money had gotten piled up, and I would go to those businesses, and sit down with them and review the ways they could spend Hours," he said. With Glover gone, stacks of Hours lie dormant in cash drawers of local businesses, but few are exchanged. These days, mention of Hours rings a bell, but often prompts brow furrows and straining memories.
Recently, a team of local businesses, nonprofit organizations and committed individuals have banded together to reinvigorate the flow of Hours through the Ithaca community. This effort involves re-envisioning the system to keep pace with advances in banking technology, developing a strong and effective marketing campaign, and expanding the directory of local businesses that accept and use Hours.
Combining the financial planning of the board, vision and market strategies of Local First Ithaca, and participation of independent businesses and dedicated individuals, president of the board, Paul Strebel says the plan is to "open the doors to a more robust system, moving Hours into the next century."
The idea of Ithaca Hours occurred to Paul Glover in the midst of the Great Depression of 1991, exactly 20 years ago. Development of a local currency in Ithaca was part of a broader effort to create a self-sustaining community that would resist the national recession. Hours were devised as a tool to shift economic power from the federal and state level to the local level.
"In 1991, a lot of people in Ithaca who had talent and time were not being used by the formal economy, and [Ithaca Hours] and the trading directory created a network that welcomed their skill," Glover remembered. "People were either unemployed, underemployed or malemployed. They had skills and passions they wanted to convert into livelihood, and while the classified ads and major employers didn't care about their special skills and passions, the Ithaca Hours network celebrated them."
The value of Ithaca Hours was based on the living wage which, at the time, was about $10 per hour. One Hour was equivalent to $10, a Half Hour to $5, and a Quarter Hour to $2.50. As a testament Ithaca's commitment to environmental sustainability, the bills were originally printed on local handmade paper and later transferred to a combination of cotton and hemp.
Support for this new local currency that valued the individual was immediate and overwhelming. Local businesses such as Cinemapolis, Toko Imports and the Alternatives Federal Credit Union signed on immediately to accept and distribute Hours. Within the first several months after Glover used the first Half Hour bill to buy a samosa at the Farmer's Market, hundreds of businesses joined the Ithaca Hours directory.
"Hours became a significant symbol of the community and our can-do spirit," Glover said. "They not only stimulated millions of dollars worth of local spending among local businesses, they also introduced thousands of Ithacans to one another as trustworthy resources."
So successful were Hours as the first United States bioregional currency that they attracted the interest of high-ranking government officials from all over the world. In 2001, Ithaca welcomed Beijing's Wen Tiejun, chief economist of the People's Bank's think tank, senior consultant of the State Information Center, chief of Economic Reform and director of Research for Rural Development. Concerned by the domination of U.S. dollars, Wen Tiejun considered Hours as a stable alternative currency that would protect China's economy in an unstable world.
Why Spend Locally?
Until the 20th century, most financial institutions were small and decentralized, involving direct exchange of goods and services or bartering with valuable metals. The banking system first came about during the medieval period, when goldsmiths charged a fee to store gold, becoming the first bankers.
In 1971, the United States got off the gold standard, so that paper money was no longer backed by anything of real value. Instead, its value came to depend on how much was in circulation and how much faith the people had in its value.
Operating independently from the government, the Federal Reserve dictates the amount of U.S. dollars in the economy at any point in time. The Fed, a seven-member Board of Governors, meets once every six weeks to decide how much money it should or shouldn't create. NPR correspondent David Kestenbaum equated the process of those meetings as "some eggheads in a room kind of just wav[ing] a wand." When the Fed creates too much money, there is the risk of the kind of inflation that contributed to the most recent financial recession. Furthermore, because money no longer represents anything of inherent value, the Central Banking System relies solely on people's faith.
At stake if the Central Banking system were to fail are countless jobs and living standards of people who have no control over the Fed's actions. It is a system that, at the height of the recession in 2009, allowed the Fed to make a profit of $47 billion while unemployment was a 16-year high.
Local currency is a means by which communities can combat this corporate grip on their lives - a way to shift economic power to the local level. "If the federal banking system were to collapse, Ithaca Hours would still be standing," Strebel said. Because it operates on the basis of direct exchange, its value is agreed upon by those people whose time and service keep it flowing. As long as a person has something of value to offer, he or she has access to community goods and resources of like value. "To put it simply," Strebel added, "community currency frees you from a scarcity of money."
Success stories for alternative local currencies can be told from communities all over the United States and around the world. In the Berkshire region of Massachusetts, for example, over 2 million "Berkshares" are circulating through more than 400 businesses and five banks. Future plans include checking accounts, electronic transfer of funds, and a loan program for small businesses.
Since the birth of Ithaca Hours as the first regional currency in the United States, regional dollars and hours have been exchanged in Calgary, California, Maryland, Colorado, Georgia, Louisiana and Indiana.
In a return to circulation, Ithaca Hours will be available as interest-free loans for startup businesses, currency for necessary goods and services, and payment for employees.
Work in Progress
The effort to revitalize circulation of Ithaca Hours within the community is being driven by a team of dedicated organizations and individuals. New projects include development of an online Time Bank that will oversee direct exchange of services, as well as a Local Electronic Transaction System (LETS) that will facilitate exchange of Hours by enabling online transactions.
A Time Bank system works on the same basic premise as any direct goods or work exchange program. Just as you might get on Craigslist or check the Greenstar community bulletin board to find a piano teacher or someone to help you plant your spring greens, you log onto the local Time Bank. You search the records for someone who is offering that skill and is available at a time that works for you. You agree on a date and time, and two days later, a skilled gardener is planting your root vegetables. The time that person spends in your garden is logged in the Time Bank as credit, which he or she can then use for whatever service he or she needs. Not only does such a system recognize the value of each individual's time and utilize his or her skills, but it also enables the development and strengthening of ties between members of the Ithaca community.
Also in the works is a Local Electronic Transaction System, which allows participants to trade goods and services online, using Ithaca Hours as currency. The Local Exchange Trading System works as a "barter network" on a full-scale community level, linking available resources with community members who need them. This way, as long as people are available to offer their skills, money is never in short supply.
Another possibility is a community service exchange, in which volunteer hours would be logged as credit that would then be matched in Hours donations to low-income communities by local community service organizations.
Partnering for Support
Most essential to the revival of Ithaca Hours is the participation and support of local businesses. In order for any one business to be able to sustain the flow of Hours, it needs to be able to exchange them with other businesses.
This is why the Ithaca Hours board has formed a tight partnership with Local First Ithaca, an alliance of independent, locally owned businesses, concerned individuals, and nonprofit organizations, whose chief aim is the development of a strong local community. Because the missions of both groups are so perfectly aligned, Paul Strebel calls it "A marriage made in heaven."
As part of the North American Business Alliance for Local Living Economies (BALLE), Local First aims to empower the local community by putting control of the economy into the hands of the people who participate in it.
Jan Rhodes-Norman, Local First co-founder, owner of Silk Oak silk-screen and co-owner of Ithacamade, said, "Community capital is foundational to a local living economy." Furthermore, she pointed out, "Studies have shown that when you purchase from a local business, far more money stays in the community, because of the rollover effect." For example, she continued, after the Saturday Farmer's market, vendors leave with a pocketful of local money. Over the next few days, they spend that money at Greenstar or to pay their mortgage, re-circulating it through the local economy. That money is rolled over a few times within the Ithaca community in what is called the multiplier effect.
As part of its commitment to economic empowerment, Local First is actively working to promote Ithaca Hours within the community. In addition to encouraging its own members to use Hours, the organization aims to increase the number of businesses that use them. In its partnership with Mouselink Media Service, which provides social media services to members, Hours are accepted as the monthly payment.
Also on board for Hours revival is Greenstar. Marketing Manager Joe Romano, who is collaborating closely with Strebel to reinvigorate the flow of Hours among local businesses. Most recently, Romano and finance manager Asha Sanaker worked with Alternatives Federal Credit Union, the Ithaca Hours board and Local First Ithaca to plan and execute the "Greenstar Market Giveaway." As Hours gradually fell out of circulation and fewer businesses accepted them, the balance of how many Hours the coop received and how many it could distribute was disturbed, Sanaker remembers.
The Giveaway was devised primarily as a plan to reduce Greenstar's Hours balance, but also served to promote Hours as an alternative currency as well as to raise money for Local First Ithaca. For each $10 a customer spent, he or she would be given one Ithaca Hour, which they could either accept for personal use or contribute to the donation box for Local First Ithaca, which was placed prominently by the register. During the three-day donation drive, Greenstar successfully distributed $33,310 in Hours, of which about $3,000 was donated to Local First Ithaca.
Greenstar has long been an essential partner in the success of Ithaca Hours. When the original co-op burned down in fall 1991, the same year that Hours were first circulated, the Farmer's Market was just closing for the winter. Committed to keeping locally grown and produced food accessible to the community, local vendors organized a mini-market at the Henry St. John School, where they agreed to accept Ithaca Hours. That market eventually grew into Greenstar Cooperative Market, which has been the only business which has consistently accepted and distributed Hours since they began.
Recipe for Success
A dedicated proponent of local currency, Greenstar's Joe Romano explains it best. The development of Ithaca Hours to their full potential requires a clear vision and strong character of the community. At its outset, such an investment requires high cost and provides low return. However, as it gains momentum and popular support, the cost goes down and the return goes up. It is at the crucial time before and after return surpasses cost that strong vision and firm character are essential to pull the effort through an inevitable period of popular doubt. It happened in the early 90s, and it can happen again.
Joe's faith in the vision of Hours and the character of the Ithaca community are unwavering and he has high hopes for Ithaca Hours. What is at stake, he believes, is the elimination of the "isms and phobias" that cause inequality and poverty in a community. "People know that if you can build a true community where all members are taken care of," he said, "then racism, hunger, sexism, and crime are taken care of too." He attributes the success of the Greenstar Coop itself to this popular understanding. "It's about sharing resources that naturally spring up from the needs of our community," he said.