3. LETS, HOURS or Both? 3.1 LETS and HOURS LETS requires that members register accounts, while HOURS systems do not. From here the fundamental differences originate. LETS members can create as much credit as is required at the time of an exchange, regardless of their account balance (see 2.2 Monetary Tools, Loans). Community members who use HOURS are limited, at any one time, to the amount of notes they have in their possession. They can, conceivably, obtain an interest-free loan from their local HOURS bank, however, this must be planned in advance of the transaction and there is always the possibility of being turned down. Through members¹ accounts, LETS administrators are able to track the impact of the system as well as levy fees which are used to support administrative costs such as printing, transportation, etc.. The creators of HOURS have sought to avoid both the administrative costs themselves and the taxation that is necessary to support them. HOURS systems sacrifice the ability to monitor and tax for the anonymity and freedom from taxation which freely circulating notes afford. It is perhaps not coincidental that the attitudes towards central regulation inherent in the systems reflect similar views towards state intervention in their respective countries of origin.23 The implications of this difference in attitude for system administration are important. While both systems require the creation of an Œoffers/requests¹ bulletin, LETS further requires that all transactions be recorded and that periodic updates of individual members¹ accounts be distributed. This places additional time and resource demands upon administrators and/or volunteers. The desire for efficient management of these accounts precipitated the creation of LETS software. All but one of the systems interviewed in Canada was using QLETS24. In the UK most LETS use mLETS or an adapted version of it.25 Problems with both QLETS and mLETS software were universal and varied from dissatisfaction with output to complete frustration caused by a system crash. The general consensus, however, was that the software is improving and crises are becoming less numerous. Manchester LETS will start using a new software program developed by LETSolutions. Talents and Noppes have developed their own software. In every instance, LETS practitioners indicated that, at various times, staff had been overwhelmed by the administrative load. Several individuals in North America held the belief that HOURS systems require fewer administrative resources and had gone so far as to consider converting to HOURS. This characterisation, on the part of LETS participants, of HOURS systems as Œlow-tech, low-input¹ should be tempered by the fact that HOURS systems require the creation and management of a durable form of currency. As earlier mentioned, LETS administrators are able to debit members¹ accounts and credit a central account to pay for needed services in the community currency. Further revenue, both in community currency units and federal dollars, is generated through the sale of advertising space in the Œoffers/requests¹ bulletin. This latter method is the only option available to HOURS administrators. While both systems have been successful in raising an adequate amount of community currency, most groups, not surprisingly, reported a shortfall in federal currency. In almost all cases, fund-raisers and charitable donations played a crucial role. National currency is required to reach the point where systems can be self-propelled‹to pay a part-time salesperson to increase small business participation, for example. But until systems play a more significant role in the economic affairs of a community, it has proven difficult to find the necessary funds. The requirement for LETS members to register an account plays a further role in system growth. To register, new members must make contact with a group which may (or may not) be stigmatised in the community. Alternately, existing members have to expend precious time and resources in outreach activities. HOURS systems involve lower barriers to entry; community members can participate simply by opting to receive their change at the bakery in HOURS, and then spending it at the barber. This appears to be a more natural way of defining the boundaries of a trading community. Their closer resemblance to conventional currency makes HOURS notes more easily understood and used by both individuals and organisations. In contrast, the Œinvisible accounting¹ system employed by LETS can be difficult for new members to conceptualise. However, as easily as HOURS are traded, so they are easily left in a drawer (like jars of pennies) with no way for administrators to revive them. The evidence concerning growth potential is by no means conclusive. Of the systems visited by the author, only one has achieved trading volumes which are significant in terms of the larger economic picture.26 LETS systems which have enjoyed rapid growth periods have subsequently been plagued by administrative problems leading to a marked decline in trading volume and membership. 3.2 Hybrid Systems In system design terms, the most important feature of LETS is the ability of its members to create credit, while the greatest strength of an HOURS system is its ease of use. Is there a way to have our Œcommunity currency cake¹ and eat it, too? Guelph LETS and the Tlaloc bank attempt to unite mutual credit and interest free fiat, the former in a high-tech setting, the latter in the low- tech environment of Mexico City. Guelph LETS prints ŒGreen Dollar¹ notes which members can withdraw at a local business. The member¹s account is debited the face value of the notes while the corresponding credit is made to the central account. While Guelph LETS maintains a single central account, conceivably, for greater clarity, this ŒGreen Dollar Notes¹ account could be separated from the administrative account. In return for keeping a record of the serial numbers and names of recipients, the business which distributes the notes enjoys increased walk-in traffic. The goal of circulating Green Dollar notes in Guelph is to attract businesses with a trading format they are more accustomed to and to facilitate impulse/small trades. Larger transactions can still be phoned in to the administrator. One very important difference, however, between Guelph LETS and conventional LETS is the opening up of trade with non-members. As in an HOURS system, community members who wish to participate may do so without having to open an account. Trades between members and non-members (or non-members and non- members) are not recorded. After the initial entry described above, the notes will freely circulate until such time as they end up in the hands of a member who decides that they would like to deposit accumulated notes in their account. At this point, the member¹s account is credited the face value of the Green Dollars deposited and the corresponding debit is made to the ŒGreen Dollar Notes¹ account. These notes can, of course, then be re-circulated to another member who makes a withdrawal. The balance in the ŒGreen Dollar Notes¹ account (= total value of notes issued - total value of notes redeemed) is, theoretically, equal to the value of Green Dollar notes in circulation at any one time. One might wonder why a non-member would want to join a system they could participate in without having to go through the annoyance of registering and the additional requirement to pay taxes. Only by registering are participants able to create their own credit, either by withdrawing notes or by trading with a negative account balance. Account-holding members can also deposit accumulated notes. Furthermore, members are included in the Œoffers/requests¹ bulletin which provides an effective way to advertise one¹s goods or services. This added convenience does not come without the introduction of a few new wrinkles. Whereas previously a LETS administrator knew the exact volume of trading at any point in time, such calculations are now somewhat complicated. While transactions which are phoned in can be included on members¹ accounts, trades involving Green Dollar notes go unrecorded. Unlike imaginary accounting units, real paper notes get dog-eared, destroyed and lost. An estimate of the attrition of the notes supply needs to be made and a corresponding amount re-injected into the community through, for example, grants to social organisations. Finally, the creation of notes requires additional time and resources from administrators and/or volunteers. This further effort may be at least partially offset by a decline in the number of transactions which need to be recorded in individual members¹ accounts. Guelph LETS has minimised costs through the use of photocopied notes, rather than using off-set printing. Every solution brings a new problem, as this one may raise the spectre of forgery. It is important to note that the Green Dollar notes are unproven. The notes were first issued less than one year ago and the Guelph system is still very small in size, approximately 50 members. Recently, a Canadian government grant was given to Guelph LETS to hire a staff member to market the system to local business. The coming year should prove to be a litmus test both for Guelph LETS as a whole and for the Green Dollar trial. The Tlaloc Bank works along similar principles to Guelph LETS. Members are able to obtain sheets of Tlaloc notes (1 Tlaloc = 1 hour of social labour) which are debited to their account. These notes are signed into existence when first traded and, subsequently, signed on the back of the note by the receiving party for ten Œrounds¹ of trading. After the notes have been used in ten separate transactions, they must be returned to the central administrator to be exchanged for a new note of equal value. This can be done by either members or non-members. Presumably, the old note is either kept for accounting purposes or is destroyed‹it is not re-circulated. This raises two issues. First, does the necessity to retire the note after ten trades not add, unnecessarily, to printing costs? This seems particularly relevant in a low-tech setting. Secondly, are we introducing a precise method of measuring trading volume (value of notes retired multiplied by ten), which is, in fact, imprecise? Would it not be likely, for example, that the note, after receiving nine signatures on the back, is used perpetually without adding the tenth signature, in order to avoid the hassle of redeeming it? More research in Mexico should provide definitive answers to such questions. Whereas non-note transactions occurring between system members are phoned in to the administrator in the Guelph LETS system, members of the Tlaloc Bank use a system of paper receipts. Traders carry receipt books with them, and after each transaction fill out: * a receipt for the giver * a receipt for the receiver * a receipt for the central administrator which is dropped off at a collection box The manager of the Tlaloc Bank, Luis Lopezllera, reports low acceptance of the receipt system. It is the authors¹ opinion that the cumbersome routine of filling out a form in triplicate and the dissimilarity to more familiar cash trading are responsible for this fact. At least two other systems that the authors are aware of operate hybrid systems similar to Guelph LETS and the Tlaloc Bank. Talents, in Switzerland, prints notes which can be withdrawn from member accounts and used for trade with both members and non-members. Unlike Guelph LETS, the notes have a scrip (see 2.2 Monetary Tools, Demurrage). The Noppes system in Amsterdam has two kinds of notes; one for the Noppes markets and one which can be exchanged with the national currency. 3.3 Community Fit It would be a gross oversimplification to describe the various elements of different community currency systems as Œright¹ or Œwrong¹; rather, we might consider how amenable these elements are to both the environment and the goals of a particular community. The capacity for mutual credit creation lends itself to situations where access to credit is limited. LETS members can start trading with an account balance of zero or even a negative account balance. HOURS do not allow for self-created credit, however, participants can obtain an interest-free loan from their local HOURS bank. Synthesis systems are able to provide credit to members, while, at the same time, attracting non-members to the system with easily accessible notes. The familiar format of HOURS is more quickly understood and employed, particularly where there is little or no experience with cheques and credit cards. HOURS appear to be more easily absorbed by local small business for trade in goods as well as services. This fosters cross-sectional growth within a community. Our limited study shows LETS to be more individual service- oriented, though, it remains to be seen whether current attempts for a more pro-business approach of LETS stakeholders will yield significant results. Theoretically, hybrid systems should allow for trade in both goods and services, however, experience is very limited. LETS administrators are able to debit members¹ accounts and credit a central account to pay for needed services such as printing costs, transportation, etc., in the community currency. Further revenue, both in community currency units and federal dollars, is generated through the sale of advertising space in the Œoffers/requests¹ bulletin. This latter method, which seems impractical in contexts where business promotion efforts are minimal, is the only option available to HOURS administrators. While a monoLETS is easily managed with pen and paper, multiLETS requires the advent of computer use. This requirement makes multiLETS prohibitive for low-tech or low-income settings. Certainly, if a multiLETS were to be attempted in a low-tech setting, more responsibility would fall on the individual to monitor their account balance in various systems. While the issuance of notes does not require database-literate administrators, it does require fairly sophisticated printing processes. The lack of a multiple community, or Œumbrella¹, trading system means that HOURS will not be as effective in attracting individuals or organisations who perform a large percentage of their trading outside of the HOURS community. Synthesis systems appear to be adaptable to either low-tech/low income or high-tech/high- income regions as developments in Guelph and Mexico City demonstrate. The requirement to register an account will be more acceptable in tight-knit communities which intend to develop long-term membership. HOURS notes are better able to bridge disparate social groups, including short-term or transitory individuals, but do not have the Œholding power¹ of a LETS. HOURS are preferred by communities whose political leanings are more decentralised and whose members place a high priority on personal privacy. Synthesis systems allow participants to choose between their support of the more easily monitored trading via the phone or paper receipts, and the untraceable use of freely circulating notes. Similarly, in the conventional economy, we can use cheques/credit cards or we may carry cash. There is no perfect world; even in the HOURS system, there must be some form of elected committee to evaluate loan applications and manage the money supply. 4. Key Success Factors 4.1 The People 4.1.1 The Champion One constant with the community currency systems contacted was the presence of a Œchampion¹‹an individual who first introduces the concept, works endlessly on its implementation and provides motivation and leadership. * Paul Glover, the founder of Ithaca HOURS is often cited as an example. Paul was the recipient of a two-year domestic Peace Corps grant given to start a support programme for the low- income residents of Tompkins County, New York. According to community members, Paul continues to work ³15 hour days² in a continuing effort to strengthen the Ithaca community both through the HOURS trading system and other initiatives. * Andy Ryrie, of East Kent LETS, has put considerable effort in setting up Canterbury LETS and has also been one of the prime forces behind the creation of a multiLETS which brings together four different LETSystems. Previously he did this work in his spare time, but presently he receives funding from the British government to promote the development of LETS in the area. Without his numerous visits and presentations, the LETS concept would probably not have caught on as it has. Champions must remain conscious of how they are perceived by members of the greater community. Just as a well-respected, personable, highly-skilled champion is the touchstone of success, so an individual who is viewed with suspicion or who lacks interpersonal skills can relegate an initiative to the fringes. Unfortunately, the latter scenario is not uncommon. There are more than a few examples of community currency systems which are judged more by the character of the champion than by either the merits of the concept or the achievements of the system in place. One way to avoid placing the burden of success or failure on one person¹s shoulders is to seek out an organisation or institution to play the champion role: * After participation in an initial attempt to establish a LETS in Kitchener-Waterloo dwindled, the initiative was taken on by the local Public Interest Research Group (PIRG), a social justice agency. This resulted in increased membership and trading volume; though, for better or for worse, the LETS is now associated with the other activities of the PIRG. * In the Netherlands, Strohalm, a social justice agency which advocates for ecotaxes and other environmental issues, serves as the central advisory body for all the LETS in the country. Strohalm has put considerable effort in setting up the Noppes system and, although Noppes have their own administration with full time staff, continues to assist with both the conceptual and practical aspects of system development. The association of Noppes with Strohalm, which is seen as a radical supporter of social change, may at least partially account for the decision to rename the currency for use in a business-friendly barter circle. * In Peterborough, the Community Opportunity and Innovation Network (COIN), a non-profit CED (Community Economic Development) group, was involved from the outset to help garner government and local business support for their system. It is widely accepted that Peterborough LETS has been the most successful LETS in North America of recent years at involving business. After the preliminary groundwork is laid, it is important that the leadership circle be broadened to include as large a cross- section of the chosen community as possible. This involves the creation of an administrative committee. 4.1.2 Administration A process for the selection of the administrative committee to replace the original champion (though it may include the champion) should be agreed upon by the general membership. Typically, such committees involve at least three members27, and selection decisions are made by consensus at general meetings. It is at these meetings that the goals of the system should be clearly established and a means by which they can be achieved outlined. Some of the questions which should be addressed include: * Is the primary goal of the system to develop social networks, strengthen the local economy, reduce unemployment or educate community members? * Who should be involved? * Are we creating a parallel, complementary economy (LETS) or are efforts intended to create an alternative to the existing system (INWO, Talents)? The importance of effective and transparent system administration should not be underestimated. To summarise its administrative goals, Toronto LETS came up with the acronym S.T.A.N.D.‹Service, Timeliness, Accounting, Notices (Ads), and Delivery. According to Chris Hohner, ³Šwhen it (administrative tasks) worked like clockwork, it did more than any rhetoric to establish credibility of the system.² It goes without saying that the opposite is also true. Beyond these basic requirements, Bill Hulet of Guelph LETS stressed the importance of the administrators¹ role in facilitating trade‹having an eye to bringing offers and requests together. In the case of business participation, we have seen to what lengths administrators have gone to ensure active participation. 4.1.3 General Participants The make-up of the administrative committee and the goals it establishes for the system will be reflected in the general membership. Community currency systems established in both Europe and North America have taken root in predominantly Œaffinity-based¹ communities‹that is, communities which share a common value system or ideology, either in addition to, or in spite of, geographical proximity. For example, the Maritime HOURS system in Halifax, Nova Scotia, was started by a group of Buddhists. This additional bond should presumably make it easier to mobilise volunteer support‹a key factor frequently mentioned by those interviewed. A further possible, though perhaps neglected, corollary of this kinship is the increased social pressure to trade fairly. It is possible that in a more diverse membership, it would be both more difficult to draw on volunteer effort and more likely that individuals would try to cheat the larger community (by leaving with a negative account balance, for example). However, the Œsocial capital¹ derived from a shared ideology could just as easily be generated from strong social roots which may traverse both political and economic boundaries. The need for education activities is paramount for the general membership. Participants who are better informed about the working requirements of a system will be both more active traders and more willing volunteers. New or prospective members may ³hold a suspicion that there is a catch.²28 An effective response to such reactions is to provide concrete success stories which use clear and relevant language.29 Bombarding community members with complex philosophical repudiations of the current monetary system will have a predictable outcome. Two former community currency systems administrators indicated that, if they were to start a new system, they would spend as little energy as possible on academic modes of educating and focus, instead, on Œlearning by doing¹‹learning through trade. As with any human endeavour, it is critical not to underestimate the potential for conflict. Within those systems contacted there were numerous reports of competing personalities and widely differing agendas. Just as systems have been affected by the external perceptions of a champion or key member, so too have several systems been nearly torn apart by internal disputes. Suffice to say that those involved in establishing a community currency system should put in place, as soon as possible, dispute resolution mechanisms. This might include, for example, the appointment of an ombudsperson, the delineation of administrative roles and responsibilities, and the scheduling of regular meetings where a voting procedure is established. 4.2 The Community In those places where community currency systems successfully take root, there is usually a match between the characteristics of the general membership and those of the host community in which it operates. In both Toronto and Vancouver, the membership is made up of individuals who could be best described as Œsocial progressives¹. Not surprisingly, therefore, trading levels are highest in those areas of the city which are seen as socially progressive‹Bloor West Village and Kensington Market in Toronto; Kitsilano and Commercial Drive in Vancouver. Outside of these areas, the systems are either unknown or disregarded. Whether or not these attitudes represent an obstacle to organisers depends on their objectives. What they clearly illustrate is that, if one of the system goals is to include a broad cross-section of the community, then representatives of various sub-groups must be involved at all stages and levels of decision-making. There seems to be no clear indication as to the ideal physical attributes of a host community. This fact lends credence to community currency systems proponents¹ arguments that the concept can be adapted to a multitude of environments. Practitioners in larger cities observed a tendency for trading to cluster around smaller communities within the larger whole. In fact, in Manchester, a small cluster of LETS members have gone so far as to convert to the gift economy‹they trade with each other as required and do not account for transactions. Maritime HOURS administrators found that the physical size of the city of Halifax (nearly 50 km from one end to the other) was prohibitive for many traders, particularly those without vehicles. While large geographic size and population may be problematic, it does not appear that there is such a thing as too small a host community. The citizens of Mount Pelier, Vermont, operate an HOURS network in a little town of approximately 4,000 people. This raises what is, perhaps, a more important factor in determining success‹resource availability and diversity. What are the possibilities for self-employment within a given community? What proportion of the required inputs could be sourced locally? The answers to these questions differ for every community and, furthermore, are dependent on the ambitions of the system participants. In Drumchapel LETS, in Glasgow, Scotland, participants were undeterred by crime levels which required volunteers to contact the police before going to visit low- income housing estates‹less than ideal conditions to nurture the entrepreneurial spirit. In Peterborough, critical mass, the point at which the diversity of goods and services available for trade is able to attract members without requiring further promotional efforts, was reached ³at about 300 to 400 members.²30 Political realities are a key factor in the community currency system equation. Organisers should know how much support to expect from local government. Experiences in North America and Europe have ranged from Hattersley LETS in Greater Manchester, which encountered opposition from the Department of Social Services (DSS)31 to Calderdale LETS, where local government has offered funding support in recognition of the role to be played by community currency systems in providing social services. The great majority of host governments are indifferent to system development. Even in Ithaca, flagship of the HOURS concept, the mayor refers to founder Paul Glover as a ³granoolie² (a somewhat derogatory term for a social progressive)32. The political dimension will, undoubtedly, play an increasingly significant role as systems venture into new territory. If this transition is managed correctly, community currency systems may come to be accepted as an economic tool worthy of government support. On the other hand, failure to appreciate the complexities of existing powerbases may mean that they are seen as a threat which should be suppressed. 4.3 Responding to Real Needs Individual interest-charging creditors encourage entrepreneurs to seek out very specific and, preferably, highly profitable, target markets whose constituents may be spread thinly across a very large area. Within a single community, the number of such individuals may be small or non-existent. The entire community acting as an interest-free creditor is better served by supporting those activities which appeal to a broad cross-section of citizens. In this sense, marketing in a community currency system is the ³opposite of niche marketing²33. Furthermore, while trade in luxury items may strengthen social networks and, indeed, improve the quality of life, it will always represent a relatively small percentage of most peoples¹ economic existence. For community currency systems to play a meaningful role in local economic development, they must find avenues for the inclusion of essential goods and services. This belief is unanimous amongst participants in Europe and North America. 4.3.1 Agriculture To date, the development of community currency systems has been focused in urban centres. While restaurants and grocery stores are included in trading, farmers are often under- represented, if not altogether absent. One of the main factors cited for the successful and relatively rapid growth of the Ithaca HOURS system was the use of the Farmers¹ Market as a catalyst for trading. Little Tree Orchards receives approximately 300 to 350 HOURS ($3,000 to $3,500US) per year, which it accepts for up to 50% of the sales price of its apples and pears. This amount, which represents only 3% of total revenue, is used to hire two Ithacans to do two months of pruning in the off-season. The pruners accept 100% of their wages in HOURS, equal to $10US per hour‹well above the going market rate for such work. Interestingly, Little Tree Orchards believes that they could easily handle 1000 to 1500 HOURS per year, or 10 to 15% of total income. The extra HOURS could be ³used for plumbing or carpentry or taken out as owner¹s income.²34 Toronto Organics, an organisation offering home delivery of organic food to urban citizens, is a member of Toronto LETS. Initially, Toronto LETS played an important role in providing Toronto Organics with a social network through which new customers could be reached. However, problems encountered in spending accumulated Green Dollars forced Toronto Organics to reduce the percentage community currency ratio from 20% to 10%. The farmers who supplied the produce were located too far away from the city to be able to use Green Dollars. The task of sorting the produce into individual orders was originally paid in Green Dollars, however, there were problems with workers who preferred to be paid in food or who displayed a poor work ethic when being paid in Œfunny money¹. This experience points out two things: firstly, the necessity to match community currency inputs with outputs within the same trading cycle; secondly, it highlights the need for widespread acceptability before community currency can successfully be used to pay wages. The use of community currencies to support local agriculture is largely untapped. Potential implementations include: farmer to farmer barter; facilitating the establishment of farmer co- operatives to process, package or deliver produce; providing growers with short-term, off-season credit; helping to establish Community Supported Agriculture (CSA) programmes; and use in urban community garden initiatives. 4.3.2 Input Factors: Wages, Credit and Rent A major criticism levelled at community currency systems is their ³Šinability to address inputs.²35 As long as trading occurs predominantly at the point of output, the percentage of the final sales price which can be accepted in community currency will be severely restricted. The present situation is such that community currency income must be spent outside the trading cycle (on separate goods and services) rather than inside the cycle (on inputs to the goods and services sold). Demand for community currency would be enormously strengthened by the integration of input factors such as wages, capital and rent. A distinction should be made between what we might call Œfirst¹ and Œsecond order¹ wages. Systems have successfully integrated the wages of the first order group‹namely, individual entrepreneurs and small business owners who take out community currency as salary. Integration of the second order wages, those of employees of member organisations, is more difficult. Isolated instances of labourers accepting 100% of their wages in community currency do exist (such as the pruners mentioned above), however, in the majority of cases, community currency is used only as a supplement to regular wages. This Œsplit-wage rate¹ raises the issue of utility discrepancies between the community and the national currencies. In a tight labour market, employers could exploit those workers willing to accept a smaller proportion of their salary in national currency. Amongst the groups contacted, this has not occurred. The greater problem, for the time being, is a lack of diversity in goods and services available for trading which discourages employees from accepting wages in community currency. Obviously, community currency systems allow for the creation of credit in local currency units. Is there a bridging role to be played by a community currency in accessing national currency credit? If there is, the link has only begun to be explored. Alternatives Credit Union, in Ithaca, allows its members to pay banking fees, interest charges and a small amount of principal (up to 1 HOUR per loan payment per month) in HOURS. The credit union is spending the HOURS on plumbing and gardening as well as supplementing staff wages. In fact, they are spending the HOURS faster than they are coming in. Several other systems are actively pursuing closer links with local credit unions‹a credit union in Manchester has recently opened an account with Manchester LETS. If not through such formal links with a credit union, the opportunity exists for systems to establish their own national currency savings and credit associations based on similar principles. Few examples were encountered where rental costs can be paid in community currency. Typical of those instances where they can is Creative Living LETS, in Manchester, which rents its meeting rooms for community currency. Why have landlords proven reluctant to participate in community currency systems? Small business owners¹ self-interest can be served because capacity (measured in goods and services available for sale) can be increased to exploit new markets accessible through community currency. Conversely, with a strictly limited amount of land, buildings or equipment on offer, landlords must make a trade-off between income in national or community currency. Unless motivated by factors other than purely economic ones, it is unlikely that community currency will be accepted. That is, unless the real estate market or general economy is depressed‹ community currency or nothing! There is a further issue to be considered; is it fair or desirable to allow owners of conventional capital to use those assets to generate community currency? While some view this as a form of exploitation, others see it as preferable to allowing the profits from such activities to escape from the community. 4.3.3 Social Services In Europe and North America, oftentimes there is less interest in integrating social services than there is concern of how to prevent community currency systems from interfering with the receipt of state supports. Perhaps, not surprisingly, in the absence of universal health care, community members of Ithaca, New York, have been most active in incorporating health care into a broader system. The Ithaca Health Fund offers memberships for $100US per year, which can be paid in US Dollars, HOURS or home visit credits. Members receive a discount of three to ten percent at participating health care providers. The definition of Œhealth care provider¹ has been broadened to include exercise outlets, air and water quality treatments and diet centres, as well as more traditional services such as those available at the Cayuga Medical Center. As membership grows, the Fund will accept claims for an increasing variety of health care costs for up to five percent of total available funds for any single claim. Reaction to community currency systems from government welfare departments has been mixed. In Ithaca, one HOUR is placed in every welfare envelope as recognition of the important role to be played by the systems in generating self-employment opportunities. In Canada, earnings in LETS are ignored in the calculation of unemployment benefits so long as they are not derived from an individual¹s principle occupation (i.e. a carpenter doing carpentry for Green Dollars). In the Netherlands, up to 3,000 Noppes per year can be earned which will not be counted as income for benefits purposes; at present trading levels, there are no participants who risk crossing this threshold. Without an effective savings instrument it will impossible for systems to play a proactive role in welfare provision. Green Dollars earned today will be virtually worthless in twenty years time without interest accumulation. It should be noted, however, that this function could be accomplished by the TimeDollars system where community service hours can be earned and then drawn upon after retirement, during periods of unemployment or at other times of need. Unlike other community currency units which are tied to national currencies, an hour of community service today will still be an hour of community service tomorrow. A much greater experience base will be required before any definitive claims can be made about the role of TimeDollars in providing welfare. For now, communities wishing to establish a form of community welfare outside of state structures will have to rely upon a more conventional savings association model. Educational services obtainable in a community currency system are limited to informal activities such as private tutors and day care centres. While difficult to conceive of in a minority- world setting, there may be scope for the inclusion of the wages of primary and secondary school educators in a community currency system. 4.3.4 Taxes Perhaps the single most effective manner to create demand for a community currency would be to declare them legal tender for tax purposes. This provides an immediate incentive for all variety of local merchants to accept the currency. The use of tobacco as money survived two centuries, nearly twice as long a run as gold, because it was declared legal tender for tax purposes in colonial Virginia and Maryland.36 The benefits for municipal governments are relatively straight-forward; local economic development is promoted; taxes paid in community currency can not be expropriated by higher levels of government; and, like any other community currency system member, government can obtain interest-free credit to fund local initiatives. In a proposal to the Ontario provincial government, in Canada, a closed-end concept was proposed wherein, "Štowns agree to accept 5 to 10% of property taxes in Green Dollars and then spend the units employing labour in the public sector.²37 There are no communities that the authors are aware of where this has been implemented. Conclusion After over fifteen years of development, community currency practitioners have overcome, through first hand experience, many of the obstacles which have arisen at varying stages of development. However, with few exceptions, systems are still limited to relatively small affinity-based memberships whose trading volume represents only the tiniest fraction of total community flows. In recognition of this, administrators and development groups are now actively pursuing small business, institutional and government participation. This is not to suggest that the proven role of community currency systems in developing and strengthening social networks is being neglected; only that the scope of engagement is being increased. Reaching critical mass will require further creative initiatives designed to gain credibility and acceptance. It will be essential for new efforts to open with a wedge which is carefully tuned for local conditions and involves key individuals or organisations chosen to further the long term goals of the system. Whether or not the backing of a community currency will speed the process of acceptance remains uncertain until such time as something like the Bonus concept is attempted. The capacity for multiple community trading and the integration of lessons learned from the barter experience should help to attract the business sector. The cumulative experience in deciding operating policies indicates that a number of different approaches may be effective. Fees should reflect a transparent Œpay-for-service¹ principle. Budget spending should be prudent and follow mutually decided- upon community goals; impacts on currency depreciation should be carefully monitored and steps taken immediately to counteract any adverse effects. Credit limits, while conceptually redundant, have been an effective way in practice to maintain confidence in system fairness. All the systems spoken with tie their community currency to the national currency with the intention of gradually shifting to valuations based on wage rates or independent assessment. Both existing practitioners and those who plan to become involved in system development should be able to examine, without preconceptions, the successes and failures of the elements of various systems. This should inspire a re-examination of local conditions and goals. Administrators who are flexible in their approach, responsive to local needs and can draw upon a number of different problem-solving tools will, inevitably, be more successful than those who are intransigent and dogmatic. Limited research indicates a tendency of LETS to favour trading in social services while HOURS are more amenable to trade in goods. Hybrid systems, which combine the convenience of notes with the power of mutual credit creation, should handle both goods and services. Presumably, further hybrid experiments will continue to broaden the range of approaches available. For this reason, it is crucial that systems world-wide are able to share new ideas and experiences. At this time, Œpeople¹ issues are holding back further development of the concept as a tool of community economic development. The role and responsibilities of the champion should be appreciated and participants made wary of the Œcult of personality¹. One way to avoid this problem is to involve a respected and highly visible organisation during the pre- implementation phase. Once an administrative committee is selected, system goals must be clearly established. Efficiency and transparency should inform all the actions of administrators. This is the most effective manner to ward off potential problems before they occur; despite conceptual constructs, community currencies must operate in environments fraught with human politics and psychology. Immediately after systems begin trading it is important that dispute resolution mechanisms be put in place. These agreements should not be complex; rather they should clarify objectives, roles and responsibilities. Some of the ground-breaking initiatives to integrate real needs into trading should be widely shared and subsequently adapted to local conditions. Much of this still relies however, on the integration of a broad cross-section of community members from the outset. Community currency systems¹ success will ultimately be judged by their ability to mobilise resources. Acknowledgments Many thanks to all who took us into their homes or offices, allowed us to criticise and pronounce judgement on their excellent efforts, and provided invaluable advice, both practical and theoretical. Please accept our apologies for any misspellings or incorrect information. European Contacts * Andy Ryrie, East Kent LETS and LETS Development House Canterbury * Siobhan Harpur, Manchester LETS and Creative Living Centre LETS * Steven Knight, Manchester LETS * Fraser How, LETSgo * Jonathan Simms, Calderdale LETS and Teaching Fellow (economics) at the Manchester School of Management * Rachael Tibett, fellow community currency researcher * Raff Carmen, Professor at Manchester University * John and Mandy Winkworth, Wrekin LETS, LETSconnect and LETSolutions * Bruno Jehle, INWO Switzerland, member of WIR and Talents * Matina Haemmerli, president of INWO, member of WIR and Talents * Renato Pichler, Talents * Rob van Hilten, Noppes * Richard Douthwaite, author of ³Short Circuit² (see Bibliography) * Edgar Cahn, TimeDollars * Strohalm, Utrecht * New Economics Foundation, London * Ruerd Ruben, Department of Development Economics, Wageningen North American Contacts * Sat Khalsa, Toronto LETS * Bill Hulet, Guelph LETS * Suzanne Galloway, Kitchener-Waterloo LETS * Professor Michel Chossudovsky, Professor of Economics, Ottawa University * Terry Cottam, Ottawa LETS * Lee Carlos Murray, Homemaker LETS * John Hollingsworth, Ottawa LETS * Dave Steele, Kingston HOURS * Chris Hohner, Peterborough LETS * Mike Shriner, Toronto Organics * Wayne Roberts, Coalition for a Green Economic Recovery * Nancy Lee, Calmeadow Institute * Joe Wettmore, Manager of Autumn Leaves Books, Ithaca HOURS * Carol Chernikoff, Alternatives Credit Union, Ithaca * Anne Emmett and Jack Bidell, Committee on Monetary and Economic Reform * Stephen Chan, Vancouver LETS * Mark Roseland, Community Economic Development Centre, Simon Fraser University * Ernie Yacub, Landsman Community Services Ltd. * Bob Cervelli, Maritime HOURS * Susan Hamilton, Kootenay Barter * CUSO staff including Brenda Doner, Linda Snyder, Carla Harder, Barbara Johnson, Karl Flecker, Delyse Sylvester, Anne Philpot, Fathy Ibrahim, and Debby Cote A special thanks to Stephen DeMeulenaere, Dave Patterson, Alec Bamford, and Andy Ryrie for their criticisms and suggestions. 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Tibbett, R.. ³Alternative Currencies: A Challenge to Globalisation?.² New Political Economy, Vol. 2, No. 1 (1997). 1 From discussions with Sat Khalsa, one of the initiators of Toronto LETS. 2 Helen Barnes et al, LETS on low income, (London: New Economics Foundation, 1996) 3 In debit-zero accounting there is an equal credit made to one account for every debit made to another. This assures that the overall balance of the system must always equal zero. 4 Ruth Anderson et. al., Alternative Economy Systems in Rural Scotland, (Rural Forum Scotland, 1997), p.16. 5 Helmut Creutz, Alternatieve geldsystemen: een uitweg uit het gebrekkige geldstelsel 6 From discussions with Rob van Hilten, Director of Noppes LETS. 7 MultiLETS software has been developed by Richard Kaye to fulfil this role. Problems were also widely reported with initial versions of this software. 8 Andy Ryrie and Martin Hyams, The Registry Paper, Intertrading & interlinking (London: 1996) 9 From discussions with Joe Wettmore, Manager of Autumn Leaves Used Book Store, in Ithaca, NY. 10 From discussions with Fraser How, February, 1998. 11 From discussions with Andy Ryrie, East Kent LETS Development House in Canterbury, UK, February 1998. 12 Bruno Jehle and Mattina Haemmerlich have set up the Talents. Mattina is also president of INWO Switzerland. 13 Mark Jackson, The Problem of Over-Accumulation: Examining and Theorising the Structural Form of LETS, (Bendigo: Latrobe University, 1996), p. 7. 14 Thomas Greco, Improving Local Currencies, (Arizona: 1997) 15 Thomas Greco, New Money for Healthy Economies, (Arizona: 1994) 16 Thomas Greco, New Money for Healthy Economies, (Arizona: 1994), p. 57. 17 Income from these taxes is transferred to community members, such as the elderly, who are unable to provide goods or services to the community. 18 Landsman Community Services Ltd. and Angus Soutar, LETS Design, LETSystem Design Manual version 1.2, (Canada: Landsman Community Services Ltd, 1994), p. 2. 19 Richard Kaye, Interest and Inflation. From the internet. 20 Paul Glover, Hometown Money (Ithaca: Ithaca Money, 1996) 21 Offe and Heinze, ³Canada¹s ŒLocal Employment and Trading System¹², Beyond Employment. 22 From discussions with Stephen DeMeulenaere, former administrator of VicLETS. 23 LETS, designed by Michael Linton, originated in Courtenay, British Columbia, Canada in 1983. The HOURS concept was begun by Paul Glover in Ithaca, NY, USA, in 1991. 24 QLETS was designed by Chris Hohner of Peterborough, Ontario. 25 mLETS is software of Landsman Community Services Ltd. and EcoData Australia. 26 Ithaca HOURS is now trading an estimated several hundred thousand dollars per annum. Michael Linton asserts that LETS trading has ³real substance in an economic context when it accounts for 1% of local wages and spending (10% of income and expenses for 10% of the population)². 27 The basic committee might be made up of, for example, an administrator, an accountant and a mediator. For a more detailed explanation of Administration Committee and System Development Group Roles, refer to Stephen Demeulenaere¹s article, LETS Registry (available on the econ-lets list). 28 From email discussions with Bob Cervelli, Maritime HOURS, Halifax, N.S., Canada. 29 Helen Barnes et al., LETS on low income, (London: New Economics Foundation, 1996), p. 17. 30 From email discussions with Chris Hohner. 31 Helen Barnes et al., LETS on low income (London: New Economics Foundation, 1996), p. 13. 32 From discussions with residents of Ithaca, NY. 33 From discussions with Bill Hulet, Guelph LETS. 34 From discussions with James at Little Tree Orchards, Ithaca, NY. 35 From discussions with John Hollingsworth, Ottawa LETS, Ottawa, Ontario, Canada. 36 John Kenneth Galbraith, Money: Whence it Came, Where it Went, (New York: Houghton Mifflin Company, 1975), p. 48. 37 R. A. Racey, The Green Dollar Approach: Economic Renewal for Depressed Regions, (Schumacher, Ontario: 1987)