John Steele: Local Currency Sustains Local Economies

American currency has been made of everything from copper to cotton. 
But it never felt more like ordinary, everyday paper than one day in 
1991, when Catherine Martinez, a samosa salesman at the Ithaca, N.Y., 
farmer’s market, began accepting a form of community currency called 
“hours.”

Their creator, community organizer Paul Glover, had received a grant 
to study the Ithaca economy and concluded that, since there wasn’t 
enough money to fix the system, Ithaca should print its own money. 
His premise was simple: the local economy was failing. People were 
making money locally and spending it in malls and corporate chain 
stores. But if you put a town’s name on it and backed it with people 
instead of banks, you could ensure the money would never leave, just 
re-circulate, only comforting the wallets of those lucky enough to 
share the Ithaca area code.

The plan worked and Ithaca’s unemployment rate has remained a full 
two percentage points better than the national average for the last 
20 years. Since his move to Philadelphia five years ago, Glover has 
become something of a sage for Pennsylvania communities in need of an 
economic boost, giving lectures on the local economy and explaining 
the magic of local currency. Now, the concept that started as a 
crayon sketch while coloring with his girlfriend’s nieces, has three 
PA communities looking to cash in, putting a new face on old money.

“The basic ingredient for a local currency is that a dollar system is 
not distributing the money effectively in the community,” says 
Glover. “What are dollars backed by? They have been backed by gold, 
silver, rusting industry and a $12 trillion national debt that will 
never be repaid. In local communities, we regard dollars as funny 
money. Whereas dollars will come to town, shake a few hands and then 
be gone, this is money with a boundary around it.”

In the suburban business district of Ardmore, which straddles 
Montgomery and Delaware Counties, it’s hard to believe money could be 
a problem. Sitting on the traditionally tony Main Line and residing 
mostly in one of the wealthiest public school districts in the 
nation, Lower Merion, the Ardmore business district looks the part. 
With high-end shops and restaurants dotting Lancaster Avenue and the 
Suburban Square shopping center, pastel-clad suburbanites can easily 
stroll with a Starbucks and shop to their hearts’ content. But after 
the recession drove consumer culture into hiding, many shops went 
dark, creating an uneven business district that was dragging everyone 
down.

“The economy will not rebound until consumers start spending again,” 
says Ardmore Initiative Executive Director Christine Vilardo. “We 
wanted to do something that would keep that spending local.”

A sale or discount wasn’t going to do it. This was a community-wide 
problem, so the solution had to be holistic. Planners at the Ardmore 
Initiative saw the downturn as an opportunity to bring people back to 
Ardmore. After looking at Glover’s work and similar programs, they 
created Downtown Dollars, a form of currency that would create a 
discount at smaller retailers in the Ardmore business district. 
Invoking the feeling of traveling to a country with a favorable 
exchange rate, Downtown Dollars are exchanged for double the cash 
value, creating a district-wide half-off sale. This way, instead of 
just one store reaping the benefits, shoppers were free to search for 
bargains at less-visited establishments.

Backed by an initial $5,000 grant from the Ardmore Initiative, 
Downtown Dollars hit the streets in May and sold out in a matter of 
hours. People waited in line in the rain to collect the steep 
neighborhood discounts. Since then, AI has put another $2,500 on the 
front end, and, with the help of local banker and chair member John 
Durso, were able to secure $10,000 of additional funding from four 
community banks. This will allow Downtown Dollars to return in 
November, where AI hopes to once again draw consumers just in time 
for the winter shopping season.

“This was never intended to be a long term solution, just a short 
term solution to what we hope is a temporary economic situation,” 
says Vilardo. “We have seen the environment start to change, people 
are starting to shop and spend money again. And this program makes 
people aware of just how many stores and places to shop we really do 
have in Ardmore.”

In the time that it took Ardmore to create and distribute their local 
currency, a similar effort in the Lehigh Valley had all but fallen 
apart. Using Ithaca as a model, retired teacher and environmental 
activist Gwen Colgrove had created a local currency group called 
Lehigh Valley Dough in 2009. The group invited Glover to speak at a 
forum on the economy in the Lehigh Valley and, with a few fellow 
activists, Colgrove enlisted a team to help compile a list of 
businesses to target. But after returning from a six-month voyage to 
India, she found her team missing in action and an inbox full of 
e-mails from excited business owners. Now, Colgrove is back on the 
case, searching for a full-time office manager for the project and 
lobbying community organizations for support.

This isn’t the first time the Lehigh Valley launched its own currency 
program. In the mid-1990s, an hours program was put in place to 
battle high unemployment, enrolling over 100 area businesses to 
accept the 1-to-1 local currency. But with no one leading the charge, 
the system quickly fizzled out. So when Colgrove called Glover this 
time, his advice was simple: hire full-time people and it will work.

“When one starts a local currency, one is starting a community 
institution,” says Glover. “The game of monopoly is over in a few 
hours but the challenge of anti-monopoly never ends. Any community 
that wants to start it needs to hire one person to network to the 
community.”

Colgrove may be the right person for the job. After spending her 
career as a teacher, teaching in five states and six countries, she 
moved to the Lehigh Valley in 2003 and, after retiring in 2006, went 
to work as a canvasser for Bethlehem Clean Water Action, meeting her 
neighbors and discussing issues. Still battling the wounds of 
recession, Lehigh County has matched the state-wide high for 
unemployment, and Colgrove believes there has never been a better 
time for a program like this.

“Our monetary system only benefits the originator, it doesn’t build 
community and it doesn’t solve many of the problems average 
communities face,” says Colgrove. “And yet that is rewarded most with 
the pay system we have embraced now. But part of the idea of having a 
local community is to foster the common wealth and keep the basics 
local.”

As for Glover, now that he has found a new home and a few new 
devotees, he is looking for one thing: trouble. In a plan to combine 
his two greatest achievements–his currency and the Ithaca Health 
Alliance free clinic he founded in 1997–Glover recently created a 
form of low-cost medical insurance that would create a 
health-conscious currency, allowing over a half a million uninsured 
Southeastern Pennsylvanians to pay just $100 per year for basic 
medical services.

Partnering with Dr. Patch Adams, a well-known free clinician and the 
subject of the 1998 Robin Williams film, Glover hopes to open 
PhilaHealthia, a free clinic where patients can purchase Medicash, a 
currency with a new boundary: health. Businesses promoting a healthy 
lifestyle would accept Philadelphia Medicash, as would PhilaHealthia. 
Along with promoting the empowerment of a local currency, Glover 
says, the Medicash would incentivise healthier living.

“This currency underscores a transfer of economic power from Wall 
Street to Main Street,” says Glover. “And it allows people to further 
explore the healthy options in their local community while being 
insured.”

Only this time, he has not been received with the same warm 
accolades. The Pennsylvania Insurance Department has issued a Cease 
and Desist order to PhilaHealthia, saying it requires an insurance 
license to avoid violating state laws. This license, Glover contends, 
requires exorbitant cost and years of red tape.

“Their laws are a cage for us to die in so we are going to do it 
anyway,” says Glover. “We have started an underground movement of 
uninsured people who pool money into what is now a glorified broken 
bone fund. But without state approval, we are limited to an 
underground movement. And we will be inviting the state insurance 
department to come to Philadelphia and address the uninsured and tell 
us why we must die rather than collaborate with one another.”

When asked if he had any fear of reprisal, Glover had one response: 
bring it on.

“I hope to get in as much trouble as I can,” Glover says. “People 
gain dignity through taking power over finance. Large social changes 
to redress injustice require revolution. And I don’t expect that 
change to come easily.”