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When money is running short, print your own

An economic experiment in the Berkshires wins new attention in the COVID downturn.

A collage of the Berkshires' local currency.Courtesy of the Schumacher Center for New Economics (Custom credit)

Last spring, shortly after it became clear that COVID-19 was more than just a little flu and that local shops would be down and out for more than just a little while, America got to wondering: How can we save small businesses?

Many commentators demanded quick federal relief. Some consumers went on gift card shopping sprees. And 2020 presidential candidate Andrew Yang tweeted a proposal combining the two — government-issued debit cards redeemable only at locally owned small businesses.

The Twitterati mostly condemned Yang’s idea as “stupid,” “impractical,” and “useless.” And the debit cards never came to pass; consumers got stimulus checks and small businesses got Paycheck Protection Program loans instead.


But a piece of his idea — a currency that could only be spent at local businesses — has been a fixture of life in Massachusetts’ southern Berkshires since 2006.

BerkShares, the region’s currency, are redeemable at over 400 Berkshires businesses — good for buying a pastry at the bakery or an hour of a lawyer’s time. Printed as real paper bills and adorned with hometown heroes like “The Souls of Black Folk” author W.E.B. DuBois, BerkShares can be purchased at three local banks. And for shoppers, those fancy notes are more than just a reminder to “buy local”; they’re also a way to get 5 percent off, because $95 gets you 100 BerkShares.

It wasn’t the first alternative currency in the world. It wasn’t even the first in the region. But BerkShares are arguably the most successful. In the currency’s 14 years of existence, the region has circulated $10 million worth of BerkShares, and the model has inspired other regions abroad.

Now, almost a year into America’s COVID downturn, and with roughly 800 small US businesses closing each day, politicians are trying to repair the damage. Massachusetts is investing in a “buy local”' advertising campaign. California is offering technical support to help small businesses adapt to e-commerce. But some municipal governments are looking to go further: promoting the use of a local currency by borrowing, spending, and accepting it themselves.


This could be a game changer for struggling regional economies nationwide; if municipalities were to spend money that could only circulate in their regions, they’d have a powerful tool for stimulating business, creating jobs, and generating tax revenue at the local level.

The idea of getting municipalities involved, which comes from the Schumacher Center for New Economics, the think tank behind BerkShares, is still in its infancy. But if it catches on — if it helps to thrust local currencies into the American mainstream — it could provide a potent new means for reviving Main Streets, whether they’re battered by a pandemic or by the relentless hammer of a globalized economy.

The birth of BerkShares

In 1973, the year an oil crisis and stagflation wreaked havoc with Western economies and had investors looking abroad, a British economist named E.F. Schumacher published a powerful dissent: “Small Is Beautiful: Economics as if People Mattered.” The book, which called for an economics revolving around local communities and land, as opposed to industry, energy, and unlimited growth, was an instant classic — eventually landing a spot on Time’s list of the 100 most influential books since World War II.

When Schumacher died unexpectedly four years later, his friends approached a pair of Massachusetts activists, Susan Witt and Robert Swann, about spreading the “Small Is Beautiful” legacy in the United States. Their dream was to create a sort of experimental lab that would put Schumacher’s theories into practice and share the results around the world. And so, in 1980, alongside an apple orchard in South Egremont, the Schumacher Center for New Economics was born.


In its 40-year history, the Schumacher Center has made good on its promise to honor the late economist; its many successful and widely replicated experiments include community land trusts and community-supported agriculture (CSA) models. And though BerkShares took some extra effort (the center had to create a separate nonprofit corporation, BerkShares Inc., to print and manage the currency), it’s been one of the center’s most influential creations.

Not that the concept was wholly original. Many US regions had their own currencies as far back as the 17th century. And even in the Berkshires, local currencies re-emerged organically during the early 1990s recession, in response to a widely felt community need.

That story begins with small business owners like Dan Tawczynski of Taft Farms in Great Barrington, who were having a hard time getting bank loans.

“Cash was very hard to come by, so somebody wildly said, ‘Well, why not print your own?’” he recalled in a 1991 CBS interview. “You think, ‘It’s not legal,’ but we found out it was.”

Thus was born one of the earliest of the Berkshires’ modern-day local currencies: the Berkshire Farm Preserve Note.


Taft Farms partnered up with the Corn Crib, another struggling farm, to print their own bright-green bills — featuring a cabbage head, in lieu of George Washington’s, and a motto, “In Farms We Trust.” The notes scored shoppers at both farms a discount ($9 worth of Farm Notes bought $10 worth of produce), and became a modest hit; in 1991 alone, they sold $5,000 worth.

The farms weren’t the only Berkshires businesses fighting the recession with handmade currency. Frank Tortoriello of The Deli in Great Barrington printed “Deli Dollars“ with the same 10-percent-off incentive. Monterey General Store did much the same. In 2006, the Schumacher Center effectively merged those currencies into the one that circulates today — BerkShares. With input from businesses that adopted BerkShares, the Schumacher Center decided to swap out the 10 percent discount for a 5 percent discount instead.

Main Street in Great Barrington.Jules Hotz/For The Boston Globe (Custom credit)

Of course, a 5 percent discount for shoppers means a 5 percent hit to business owners’ revenue — if they exchange BerkShares for US dollars at the bank. But many, like Steffen Root of Berkshire Bike & Board, feel that trading in BerkShares for dollars defeats the currency’s purpose.

“If I have BerkShares, I’m gonna recirculate them to another accepting business — I’ll buy flyers at the paper-goods store, or lunch for my staff at the Co-op,” Root says. “It’s a rising-tide-lifts-all-boats kind of thing.”

Root says keeping money local — as opposed to “that outside place” — has been a “strong ethos” in the region, and the business owners I spoke with agreed. Randy Austin, owner of The Gifted Child toy shop in Great Barrington, spends her BerkShares on local advertising. Tom Levin of neighboring Tom’s Toys spends them at the farmers market. And Elizabeth Keen, owner of Indian Line Farm in South Egremont, pays her lease in BerkShares.


But even the business owners who love the currency acknowledge its limitations. When Levin asked his employees if he could pay their bonuses in BerkShares, they declined. Austin says it can be a bit of a pain to deal with issuing change. (There are no BerkShare coins — just bills: ones, fives, 10s, 20s, and 50s.) And while those who have BerkShares tend to use them whenever they can, the currency accounts for only a very small fraction of total local purchases. In a region of 22,000 people, just 140,000 BerkShares ($133,000) are in circulation at any one time.

But those who accept BerkShares see them as more than a matter of money.

“What’s really unique about the Berkshires region is this strong commitment to speak with buying choices,” says Keen. “Folks really, really see that without that, we’re just any other community that invites a big chain store.”

‘Small is beautiful’ evolves

A few years after BerkShares launched, word of their success reached the New Economics Foundation (NEF) in London. In the aftermath of the 2008 financial crisis, the NEF reached out to the Schumacher Center, curious about whether it might launch a similar, easily exchangeable currency backed by British pounds. Those conversations helped shape two of them: the Brixton pound, for the south London district, and later the Bristol pound, for the city in southwestern England.

Both prospered; 250 businesses now accept the Brixton pound, and over £5 million worth of Bristol pounds have circulated. But according to Witt, the currencies are also evolving away from their original models. The Brixton pound, sold more as a souvenir item, features David Bowie on the 10. And the Bristol pound has become something more ambitious: the UK’s first community currency that can be used to pay local taxes. Switzerland and France have since followed Bristol’s lead, launching local currencies sponsored by the countries’ host cities, such as Léman notes in Geneva and Sol Violette in Toulouse.

Those developments got the Schumacher Center wondering about the evolution of local currencies in its own country. In recent times, US alternative currencies have been used by the private sector alone. Could American municipalities start sponsoring, accepting, and making payments with local currencies, as their European counterparts do?

In the COVID-19 pandemic’s early days, city officials in New York and New Orleans reached out to the Schumacher Center with that very question. “They were less interested in the BerkShares program as we currently run it and more interested in applying it to solving their own COVID problems,” Witt recalls.

And so, this past April, the center drafted a proposal. It outlined how municipal governments could use currencies like BerkShares to pay local vendors, and vice versa. For example, says Rachel Moriarty, the Schumacher Center’s director of operations, a town could borrow the local equivalent of BerkShares to help finance a construction project and pay workers in the local currency. The workers could also use the currency to pay at least some of their local taxes.

Not only are these policies “perfectly legal” — so long as the currencies are exchangeable for US dollars — they also have “plenty of behavioral precedent,” says Robert Hockett, a law professor at Cornell University and one of the proposal’s legal advisers. During the Great Depression, local governments issued and accepted scrip — essentially, IOU notes to pay taxes — to support cash-strapped residents.

Tom's Toys in Great Barrington.Jules Hotz/For The Boston Globe (Custom credit)

As a pandemic relief measure, Schumacher’s proposal also allows local governments to issue emergency local-currency payments to businesses and residents in need.

The city of Maricá, Brazil, has been doing something similar since 2014, when it launched Mumbuca — basic income issued in a currency only redeemable at small local businesses.

Eduardo Diniz, professor of banking and technology at the São Paulo School of Business Administration, calls Mumbuca one of the most “unique” basic-income models in the world. “If [the government] were to do this in Brazilian money, they can’t avoid people spending it in other cities, or losing some of that money to the credit card companies,” Diniz says. But by sending Marica’s most in-need residents monthly Mumbuca payments, he explains, it lifts up the city’s local businesses even as it strikes a blow at poverty.

Witt, of the Schumacher Center, hasn’t spoken with any Berkshires municipalities about making similar use of BerkShares. She says they would need “significant resources to follow through.” And she has no illusions about the “heck of a lot of work” that would be involved — to say nothing of the naysayers who have criticized even the basic BerkShares model.

But for Witt, BerkShares are about something much bigger than logistics.

“This is about honoring how amazing it is to know your shopkeeper and local producer in all their complexity as citizens in a community — parent, planning board member, folk dancer,” she says.

Perhaps nobody believes in that value more than the shopkeepers themselves. In their toughest year yet, on top of a decade that’s seen Amazon and big box retail continually chip away at their prospects, Berkshires business owners continue to tirelessly fight for that “know-your-shopkeeper” way of life.

For Austin, that means giving her customers the full 411 on each toy’s make and gameplay. For Levin, it means hand-painting gingerbread houses to put in his shop window. For Root, it’s handing his customers a free BerkShare — just to start a conversation about what money is.

The shopkeepers say they would love for Schumacher’s municipality proposal to become reality in the Berkshires. More BerkShares in circulation, after all, means more chances for customers to spend them at businesses like theirs.

But beyond what the currency can do — be it enlarging the customer base or improving the bottom line — the shopkeepers seem most motivated by what the currency can convey, a message best summarized by the thinker who helped inspire it: “Small is beautiful.”

Julia Hotz is a journalist covering innovation in local communities. She also works as the communities manager at the Solutions Journalism Network. Follow her on Twitter @hotzthoughts.