Going to the Berkshires in western Massachusetts is a bit like going to a foreign country – you won’t need a passport, but they do have their own money. The Berkshare is a dollar-backed alternative currency used in the five-town area around Barrington. Local banks issue the money using the exchange rate of one Berkshare equals 95 cents. Once in circulation, Berkshares are treated just like U.S. dollars – but they can only be used to support local businesses.
From a tax perspective, Berkshares maintain identical tax treatment as U.S. dollars.
Each denomination of the Berkshares features a different local hero, such as artist Norman Rockwell ($50), novelist Herman Melville ($20) and civil rights activist W.E.B. Du Bois ($5).
“The idea of local currency is local benefit”, says Nick Kacher of the New Economics Institute. He also says by having strong local economies, communities partially shelter themselves from upheavels that occur on a national or global scale.
One local mainstay is the Red Lion Inn, which uses Berkshares to pay for produce from area farmers. The farmers, in turn, come back into town and spend their Berkshares at local stores.
For users who redeem U.S. dollars to buy Berkshares, it is similar to getting a 5 percent discount for any of 400 local merchants. Five towns around the Barrington area participate in the project, and thirteen bank branches do Berkshare exchanges. The money does not currently earn interest and there is a slight penalty for redeeming them for U.S. dollars. As a result, Berkshares tend to change hands quickly and remain in circulation.
Nick Kacher points out that because Berkshares are presently pegged to the value of the U.S. dollar, they will not provide protection if the dollar collapse in values. He says that the next step might be to peg the value of the Berkshare to a locally produced commodity, such as maple syrup. If ten Berkshares had a fixed exchange rate equal to a gallon of maple syrup, then they would still be worth a gallon of maple syrup, regardless of what happened to the U.S. dollar. If the value of a gallon of maple syrup went up, it would cost more U.S. dollars to buy Berkshares.
Other cities, such a Baltimore, Washington D.C., Philadelphia, New Orleans, and Detroit, have also created their own local currencies. Presently, there are over one-hundred such efforts throughout the United States.
Paul Glover was largely responsible for the creation of the Ithaca Hours program. The original concept behind this currency was that each unit was worth one hour of time (roughly $10 U.S.) although locals are encouraged to negotiate the value of their Ithica Hours. Professionals sometimes charge a multiple of Ithaca Hours to compensate for training and expertise, but many of them offer discounts to support the community.
The notes are colorful and printed on high-quality papers from cotton, hemp, or cattail fiber. Each bill uses a thermal ink that disappears when exposed to heat from photocopiers. The reverse side says, “This note entitles the bearer to receive on hour labor or its negotiated value in goods and services. Please accept it, then spend it.”
Ithaca Hours have changed the community in many interesting ways. Now, when visitors come from out of town, their local children have started to ask, “what does your city’s money look like?”