Can the Buck Stop Here?: Supporting the Local Economy
Burlington - It's
all about the benjamins. But for the past 18 months or so, consumers
have been less willing to part with their hard-earned cash, whether
that greenback has a picture of George Washington or Ben Franklin.
As national economies have stalled, so has the global
economy. Americans have seen the housing markets slump, car
manufacturers crash, and banks begging for bailouts.
But some forward thinking people in Berkshire County
prepared for this several years ago, resulting in a local currency that
has been purchased more than two million times.
Members of the E.F. Schumacher Society, named for the
late Ernest Friedrich Schumacher, economist and author of "Small is
Beautiful," believe as he did - the most resilient economy is one where
goods and services are created for the community - rather than
depending on many of those same goods and services to be transported in.
Susan Witt, co-founder of Berkshares, Inc., said communities should look for a "resilient diversified economy that provides jobs and keeps skills in the region."
One of the society's goals is to research and develop ways citizens can shape the local economy.
"We're not thinking it's the responsibility of
government to solve that problem," she said, adding she agrees with
policies that support production.
One of the tools citizens can use to support their local economy, said Witt, is creating and using local currency.
"If you look at the 1800s and early 1900s, every
commercial bank issued its own currency," she said. "That means every
region had available to it the amount of credit needed and appropriate
for that region.
"We just gave it up for the convenience of a national
currency," she added. "What had been a local development tool stood in
the corner unused."
In an effort to keep dollars in the region, Berkshares,
a non-profit, began issuing its own currency, which are sold in
denominations of one, five, 10, 20 and 50 dollars.
Since 2006, said Witt proudly, $2.5 million federal
dollars have been exchanged for Berkshare bucks and about $150,000
Berkshares are in circulation at any one time.
More importantly, she added, there is nothing illegal
about creating local currency. While there is a prohibition against
local coinage, the U.S. Constitution does not prohibit local paper
"Local currencies must have an exchange rate with
federal dollars so the transaction can be recorded in federal dollars
for tax purposes," explained Witt. "If you earned $500 in Berkshares,
you must report $500 in federal dollars."
There is a discount for consumers at the initial exchange; $95 in federal currency will buy $100 in Berkshares.
Businesses will convert Berkshares to federal dollars
to pay bills and the initial 5 percent discount is accounted as an
expense similar to a credit card fee, Witt explained.
The program has been well received, Witt said, because global manufacturing has left the United States vulnerable.
"There's a growing understanding that our infatuation
with the global economy has not done us well," she added. "Berkshares
are seen as a positive way to take action, rather than complaining and
wringing our hands, it gives us the chance to solve the problem."
Shop first in Arlington
The Arlington Chamber of Commerce initiated a program
encouraging residents to shop locally with Shop Arlington First, which
began in 2004.
Since its inception, more than $104,000 in gift certificates has been sold and more than $70,000 have been redeemed.
Mike Buglio, a member of the chamber's board, said there have been efforts in the past few months to improve the program,
"We're looking to increase the number of merchants who
are willing to accept the certificates," he said, adding approximately
75 Arlington businesses participate in the program.
Originally, businesses had to be chamber members and
pay an additional fee to be part of the program. Now, Buglio said, it's
looking to change that so any Arlington business can participate.
The gift certificates, he added, are live bank checks underwritten by Leader Bank.
Shop Arlington doesn't ask businesses to sell the
Chamber's certificates instead of their own, but rather, asks them to
accept the certificates for sale transactions.
"Because it's a live check drawn on an account with
money in it, it's better than a personal check, because it's from the
bank, and it's better than the credit card because there's no fee,"
Another advantage, he added, is the certificates are often used by customers who may not have shopped at a particular store.
The certificates can be bought at each of Leader Banks'
branches and Balich 5 &10 in Arlington Heights, where Leader does
not have a branch bank.
Support Burlington businesses
James Murphy, executive director of the Burlington Area Chamber of Commerce, likes the idea of keeping spending local.
"I think everybody is in favor of that," he said. "In
this economy, it's important for the community to support local
The chamber, he said, is looking into the idea of a
discount program among its members to help get them through the current
Burlington Town Manager Bob Mercier called the idea
"intriguing," adding it would be interesting to see how much is spent
"It could be a chamber initiative. A good portion of
their members are local businesses," he said. "I'm sure they'd like to
retain dollars in Burlington."
Some stores already track where money comes from when they ask for zip codes during checkout, he explained.
"That would be an interesting exercise for a town like
Burlington," he said. "This is a very active community and a lot of
cash exchanges go on."
Michael Scola, owner of the Fish House & Grille at 184 Cambridge St., agreed with Mercier, saying it's important to keep dollars in Burlington.
"It would guarantee people spending money in Burlington
instead of surrounding communities," he said. "I think it will benefit
the people in Burlington because they are more apt to spending local as
Because residents could get a small discount if a
program similar to Berkshares Inc., is available, they would be more
apt to spending their money locally as well.
"If people can save money they will," said Scola.