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Judith D. Schwartz:

"Author and urban activist Jane Jacob’s work was one inspiration for the monetary experiment called BerkShares—considered the best-designed and most successful local currency in the United States, with more than $2.4 million-worth passing from bank to hand to till and around again since fall 2006. The attractive paper bills—one BerkShare is worth $1, but is sold into circulation for 95 cents—are accepted at more than 400 businesses in the Berkshire region of western Massachusetts.

Jacobs pointed out that national currencies cover such broad geographical areas that they provide no local feedback. The way our system is now, regions subsidize each other, and weaknesses are not corrected. Local currencies, however, have clear feedback loops so that trade and production imbalances can be addressed more quickly.

As Susan Witt, executive director of the E.F. Schumacher Society, explains, “Whenever a BerkShare must be returned to the bank [instead of recirculated], that means there is not a source or product available locally to fill that business’s needs.” For example, say a toy store finds itself stuck with the currency. This presents an opportunity for a local craftsperson to provide the store with wooden figures, games, or puzzles to be purchased with BerkShares.

Witt, co-founder of the BerkShares program, took to heart Jacobs’ belief that regional economies need their own currencies to grow and thrive. “Businesses are now trading with other local businesses, so that they’re sourcing their printing, accounting, and food products locally rather than out of the area,” says Witt. “People are getting off and back to the local bookstore and camera store. They like the personal exchanges and the ambiance, so they stay.”

The currency belongs to the community, Witt stresses. And its use has been a valuable exercise in community empowerment. “The use of BerkShares is educating people on the importance of supporting local businesses. With that comes a sense of empowerment—that people can make positive changes in the local economy. The fact of BerkShares raises questions like: Can we issue currency that is not backed by the U.S. dollar? It’s prompting people to think about other ways of thinking about money.”

On a recent visit to Great Barrington, Massachusetts, I purchased Berkshares at Lee Bank and spoke to Branch Manager Paula Miller, who expressed enthusiasm about the currency. “Customers love it. We’ve gotten to know other businesses better,” she said, adding that it’s always fun when clients recognize the work of local artists who designed the bills. “It makes it a little more real.” (


Nancy Roof interviews Susan Witt in detail about the experience, and future, of BerkShares [1]:

"Q: The BerkShares currency is fundamental to establishing a model of a self-sufficient and sustainable regional economy. Please tell us more about the BerkShares program that has received such wide acclaim.

BerkShares has drawn extraordinary media attention because the global financial system has failed us. The idea of a local community taking responsibility for its own economic future is captivating, and the press zoomed in on it.

We’re now at stage 25 of 50 stages of the BerkShares program. BerkShares are currently exchanged for federal dollars at 13 branches of 5 local banks. The 13 branches essentially give us 13 storefronts to interface with the public. It’s easy for the shopkeepers because that’s where they normally do their banking. Easy convertibility means that if shopkeepers have more BerkShares than they can find places to spend them, they can be converted back to federal dollars, so it gives the shopkeepers confidence to sign on. About 2.6 million BerkShares have gone out from the banks, but that is a very small part of our economy with its 19,000 year-round residents.

There have been debates about the Berk- Shares program because it raises a bunch of questions. Should you support the local economy or not? Should you support local business or get the best deal online? The conversations have been hot. I mean, really hot—fisticuffs! I’ve been told: “Susan, you’re putting a fence around the local economy by saying that we can trade only within it. I don’t want any fences! I want to be able to shop wherever I want, any time, day or night!”

Although a local currency certainly opens certain possibilities, it also does limit trade to those in a face-to-face transaction. It’s cash. It’s a decision to have a conversation. It’s slow money — inconvenient, some would say. Well, we respond, “The war in Iraq is inconvenient too.” What do we have to do to create the type of economy that can sidestep the necessity of such global conflict? As we move in that direction, it will challenge what we think of as inconvenient.

Our financial habits are deeply ingrained. They’re subconscious. To make the effort and break out of the patterns, to take responsibility for our financial transactions — that’s huge.

In some ways, it’s a new paradigm. But in other ways, isn’t it a return to an older model of currency in the US?

Oh, definitely. This country was founded on a system of regional currency. In the 1800s, every commercial bank issued its own currency. Local bankers knew what was appropriate for funding. They knew the guy who was asking for a loan and if he could repay it or not.

Sometimes there was fraud. The federal government required gold reserves to back up the local currency. The bank inspector would come to Bank A and say, “Let me see your gold reserves… Oh, yeah, there’s the gold. It’s all there… Now, how do I get to Bank B?” And he’d be told something like: “Out the door. Up the hill. Through the woods. Around the lake.” Meanwhile, out the back door and via the shortcut, the same gold was already on its way to Bank B. But a failure of one bank didn’t mean a failure of the system. The scale was small but diverse. You didn’t have the bank bailouts that we’ve just had—banks are now all tied together and are too big to fail. Essentially, as a people, we are now subsidizing large corporations.

The older complex system was more sustainable because there was more diversity, as any good biologist understands.

What is the future of BerkShares?

Interestingly, that also gets into the history of currency issue. The classic way that money is issued is for productive loans, and the classic productive loan goes to the farmer in the spring for seeds. As a community we create currency and issue it to the farmer for seeds because that $500 of new money will yield $10,000 of cabbage, carrots and basil in the fall. We’ll have a little bit of money chasing a large amount of produce. Our currency that we create as a community is going to hold value. That’s where we’re headed with BerkShares. At the moment, we’re just a very beautiful and sophisticated local coupon, but built in is the capacity to move to making productive loans that the community needs. At that point, it will be new money, not saved money, and we need not charge interest.

National currency, which is in some ways also a global currency, is issued by the government in cooperation with for-profit banks and that includes issuing for nonproductive purposes. If you issue for food, clothing and shelter you’re going to have a sound currency. But issuing for bailouts of the auto industry and the bank industry, financing wars in Iraq and Afghanistan, financing bureaucratic operations—none of those creates new products circulating in the economy. The purchasing value of the dollar goes down. We’re all paying for that deflated dollar.

We all have the power as citizens in our own community to issue currency on the basis that we choose: for basic goods, not luxury goods, for businesses that treat the environment and workers well. But we gave up having a choice for the convenience of a centralized system. It allowed a lot of industry to proceed that would not have otherwise, so I’m not against it. I’m for parallel currencies at the global and local levels. Global currency is needed, but let’s make it more disciplined through our own good example. If all of us worked in our own regions to create responsible currencies, then it would challenge the centralized system to issue currency more carefully.

People have forgotten the mechanics of currency issue. When the banker was the issuer of the currency, how money was issued was local knowledge. The board of the bank knew. The local businesses knew. The citizens knew. But we’ve given up this understanding because it is easier to let the government and the Federal Reserve decide how much money to put into circulation. Now we’re complicit in an economic system that is hurting the earth, our commons, our neighbors and cultures around the world. And what are we going to do about it? Would the fulfillment of the vision for BerkShares be an answer?

We have done our own thinking, and I can tell you where we want BerkShares to go; however, the end stage will have to evolve out of this local community. Our goal is to create a way to finance productive loans. We hope to develop a loan program in which the prime way of issuing money is through making no-interest productive loans from a non-profit community-based group (BerkShares, Inc.) that sets priorities for new local businesses. It means taking risks as a community. It might mean saying that we would really like to re-establish water power as a source of energy, so we get together as a community and ask whether we should issue money for this purpose. We may fail.

Failure means a devaluing of our currency. But if all of our other loans have been sound, then it’s not a huge devaluing. So do we take the collective risk? How are we going to determine the value of our sound loan currency? We are imagining not gold, not silver, but a basket of local commodities as a determination of value. A gallon of maple syrup, a bushel of Ted Dobson’s field greens, a quart of Sue Sellew’s goat cheese, a bushel of organic apples. We want our currency to represent the value of these tangible commodities. If you’re exchanging with BerkShares, then you know that a $20 BerkShares note is always going to get you a gallon of maple syrup. We would then need to have an exchange rate with federal dollars. That’s legally required because the federal government has to tax transactions in the local currency. But we assume that we can keep better value in our currency. For example, while our $20 BerkShares note continues to buy a gallon of maple syrup, it might eventually require $40 US dollars. That’s constant purchasing power, and value remains high.

All this is going to require a lot of conversations in the community about money and how to responsibly issue it. We’ve already been approached by people asking for BerkShares to be printed for our local non-profits. No, the only way BerkShares should go into issue is for productive loans. I was also asked about a household that needed a new oven. No, that’s a consumer loan. An oven for the baker that could result in 50,000 loaves of bread feeding the community is one thing, but an oven for the individual household is to be purchased through savings. In the past, there were commercial banks and savings banks. Savings banks made the home mortgages, car loans and vacation loans—all consumer lending that is appropriately with interest because you’re borrowing someone else’s money. But productive loans involve the creation of new money, and interest should not be a part of that. Complex, yes, but in the past, citizens knew these things. Savings banks and commercial banks did two separate things. Now banking, insurance and all financial instruments are inappropriately put together in one institution. Messy. Confusing. We don’t know what money is anymore.

Rudolf Steiner advocated having money dated. When created, money would have a date on it and would disappear in value over time, just the way the products it creates disappear over time. Silvio Gesell was a famous Austrian who came up with the concept of buying stamps to keep dated money current. This encouraged generosity. If people were holding on to money that was getting old, they’d give it away. When there was something left over after they had purchased all of their goodies, they would give it away. Where? To the churches and synagogues, to the non-profits and science, to organizations that have people —let’s say the minister—who need payment now to go out and buy food for the week. Money would circulate and encourage that gift economy without federal taxes, just through the instrument of the money itself.

Q: I see. And I notice that you just used an example of buying the weekly groceries.

Food production and consumption must be strong drivers of an economy. What about regions that are not self-sufficient in producing their own food? With the movement towards urbanization—with 50% of the population living in cities today—that means transporting food into cities. And what about food sustainability, especially in the winter? It’s an issue that readily comes to mind because we have long cold winters here in the Berkshires.

There are people like Elliot Coleman in Maine who have come up with multiple ways of extending the growing season with small greenhouses and intensive planting.

The ideal is more neighborhood-level than industrial-level food production. We’ve got to look at how we can extend our season of local food by means of canning, freezing and other methods. We have to start thinking creatively around this.

A lot of things have to be put in place for sustainable local food production. First, you’ve got to have affordable access to land. Our community land trust is addressing that issue with housing and farming at the Indian Line Farm down the road, and the same method could be used for commercial spaces. Let’s say that you want a cannery.

What’s holding it back? An affordable site is part of it, but a group of community members working through a non-profit like a community land trust could get together and purchase the land and then lease the site, with no cost for the land, as long as that community purpose is being met. This means that if a new group took on the cannery, the land couldn’t be resold.

Only the building, the infrastructure, would be resold. So it would remain always affordable, with a one-time purchase of the land and its value.

Affordable access to credit that’s appropriate is also needed. Keeping with the cannery example, suppose a new group comes in that has never done canning before. Should the bank take the risk or not? Berk- Shares was created in part to be able to make no-interest loans in a local currency, with the community taking the risk. Appropriate credit that knows the local circumstances and involves the local people is important.

Finally, markets are important. Community Supported Agriculture (CSA)— the very first one was started on Indian Line Farm—is a way that consumers can get together and guarantee the farmer’s yearly operating costs. They each purchase a percentage of the farmer’s shares and thus form a guaranteed market. There was a terrible tomato blight last year, and shareholders got no tomatoes. Did they fuss and fume and ask for a refund? No. It’s part of the deal. They shared the risk with the farmers. If there were no tomatoes, then they got no tomatoes. You need that guaranteed market. A CSA organizes individual consumers. Adding institutional buyers would be even better. It would be incredibly powerful if we could organize the schools, insurance companies and nursing homes, for example, to contract locally with farmers.

All of us as concerned consumers need to look at every single one of our purchases and source them locally. It’s not enough to buy things from a locally owned shop—although that’s a first step in the right direction. We need to think about whether the goods in that shop are produced locally. We need to ask what we import to our region that could be produced locally. And we have to make it feasible to create that local economy.

A major debate in global economic circles is about how to have growth in the economy with limited resources. We want jobs for people, but that usually equates with more stuff. If you change to a system where you manufacture locally, it’s going to be in smaller batches. Smaller batches means more labor intensive. More labor intensive without more stuff. More labor intensive means more jobs. More jobs without more consumption, bringing production back locally and not having to ship goods over long distances. It’s about changing the consumption patterns." (

More Information

See the documentary by Alexander Oey 'Off the Grid'