Previously in this column, we looked at a particular kind of local currency based trading system called LETS. The variant described used an open tally sheet to keep track of everyone’s "money". No actual printed script is exchanged since all transactions are entered into a common spreadsheet that tracks trade between members.

We now turn our attention to other forms of local trade systems. Some of the most widely known examples of local currency use printed script that people can physically exchange. Ithaca New York’s "ITHACA HOURS" are perhaps the premier example of local script currency. ITHACA HOURS were invented in 1991 and the system has seen hundreds of businesses and individuals participate in their transfer. The script is printed with colorful locally inspired designs and was initially valued against the U.S. dollar at a rate of 1 HOUR per $10 USD. Participants pay one U.S. dollar to join and receive four HOURS when agreeing to be listed as backers of the money. A free newsletter, Ithaca Money, is published six times a year, which lists a directory of members’ services and phone numbers, as well as related articles, ads, and announcements. Every eight months those listed may apply to be paid an additional two HOURS for their continuing participation. This is how the supply of currency in the community is carefully and gradually increased.

Using federal currency as a valuation point has its advantages and disadvantages. Businesses are more comfortable transitioning part of their enterprise into local currency when they can judge how the system relates to their dollar-backed transactions. Most Ithaca businesses only offer partial local currency payment options. For example, a grocer may accept 25% of payment for a bill in the form of HOURS while the rest would be in dollars. Since most businesses must purchase certain goods and services with dollars, they require some amount of traditional dollar income. However, most local currency systems are trying to fundamentally revalue labor. Pegging the local currency to the dollar undermines this attempt by encouraging comparisons to the "old" standard of valuation. Ideally, everyone’s honest hour of work is valued the same under a local script system. In practice, some negotiation takes place. A trip to the doctor may cost more ITHACA HOURS per hour of work than a visit from a computer specialist since an assistant and receptionist are all working together with the doctor during your appointment. Likewise, some businesses will be forced to purchase dollar-intensive materials for their work. They may not be able trade local currency at the same rate as others.

The experiment in Ithaca has shown that local currency systems can work extremely well. As with other local currency ideas, the key to local script is an honest and transparent system run by a dedicated and non-partisan group. Lots of hard work is required to launch a script system, but the list of towns that are successfully capturing local labor and trade is growing. Almost every state can boast of a local currency. Perhaps Charlottesville will be next on the map!