Local Currency
A Good Idea for the Napa Valley

Local Currency, also known as "community currency, "complementary currency" and "time dollars", is currency or "scrip" printed by a community for use only within that community. It is backed by the agreement of those using the currency to accept it in payment - part or full - for goods and services. This "value by agreement" is similar to the mutual trust that supports U.S. Federal Reserve Notes, except the agreement here is between friends and neighbors in a community - a much stronger bond.

A Historical Example

In 1932, the mayor of the Austrian town of Worgl decided to do something about the 35 percent unemployment of his constituency (typical for most of Europe at the time). He convinced the town hall to issue 14,000 Austrian shillings' worth of "stamp scrip," which were covered by exactly the same amount of ordinary shillings deposited in a local bank.

After two years, Worgl became the first Austrian city to achieve full employment. Water distribution was generalized throughout, the streets of the entire town were repaved, most houses were repaired and repainted, taxes were being paid early, and forests around the city were replanted.

It is important to recognize that the major impact of this approach did not derive from the initial project launched by the city, but instead had its origin in the numerous individual initiatives taken in the process of recirculating the local currency instead of hoarding it. On the average, the velocity of circulation of the Worgl money was about fourteen times higher than that of the normal Austrian shillings. In other words, on the average, the same amount of money created fourteen times more jobs.

In the United States

Local Currency was common in this country during the Depression when banks failed and many communities decided to create their own currencies as a way of increasing the local money supply and supporting local businesses and residents. Over 300 cities and thousands of communities and organizations issued emergency currency.

In other types of "communities", similar self-printed currencies can be as varied as the "Disney Dollars" used at Disneyland and Disney World, and the Military Payment Currency (MPC) that was used by the U.S. military in Vietnam.

Currently Used Throughout the Country

One of the best known local currency programs is "Ithaca Hours", which started in Ithaca, New York in 1991and has grown to the point where credit unions, restaurants, movie theaters, bowling alleys, grocery stores, the local hospital, farmers market vendors, and over 300 other businesses honor the currency. They are also used for plumbing, carpentry, electrical work, roofing, nursing, chiropractic, childcare, car and bike repair, food, eyeglasses, firewood, gifts, and thousands of other goods and services. Over 1300 individuals participate in the program, which has over $60,000 in circulation.

In California, programs are in place in Berkeley (Berkeley Bread), Santa Rosa (Our Community Cash), Santa Barbara (Santa Barbara Community Currency) and San Francisco (Bay Area Bucks).

Today more than 60 communities throughout the United States have their own form of local currency, and hundreds of others are considering starting their own programs.

What is Local Currency?

Specifically it is printed currency, produced at a local print shop using paper, ink and printing techniques that are proven to protect against counterfeiting. Currency is generally printed as a standard "one-hour" denomination (usually the equivalent of a $10 federal reserve note). Other denominations including one/half-hour and one/quarter-hour are also printed. Local currency is considered legal by the federal government and is taxable income when traded for professional goods or services.

Local businesses and services agree to accept the local currency at a fixed rate, i.e. generally one "hour certificate" for an hour's worth of labor, or $10 worth of goods. In Ithaca, for example, some professionals such as physicians or attorneys initially required two to three "hour certificates" for their time, but that attitude is changing and many now accept a one-to-one trade.

Advantages of Local Currency

  • Promotes and expands local shopping. Members are given a list of businesses that accept local currency, and naturally tend to patronize those businesses. This increases both business activity and loyalty to participating businesses.
  • Local businesses can, on occasion, offer discounts for customers using local currency, as a low-cost form of sales promotion.
  • Currency stays in the community. Because it can be used only locally, there is no "dollar drain" out of the community to absentee business owners in other areas, states or even countries.
  • Local currency gives those often shut out of the national economy, such as the disabled, the homebound, or low-educated, an increased opportunity to participate in the local economy.
  • The local currency governing board will occasionally introduce new currency into the economy by contributing to local non-profit organizations.
  • The board can also make small, no-interest loans to local merchants and service providers who need this assistance.
  • The "one hour/$10 dollar" denomination doubles the local minimum wage to $10.00, benefitting not only workers but businesses as well, who find new and loyal customers with increased purchasing power.
  • Helps start new businesses and jobs, whose employees and services further stimulate the local economy
  • Enhances community pride

Souvenir Items

One additional advantage to local currency, particularly in a location such as Napa, is that tourists will often purchase the currency and take it home as a souvenir. Since it is never redeemed for goods or services, its purchase actually ends up as a no-cost "cash transfusion" directly into the local economy. The Disney organization doesn't publicize this little secret, but it's delighted when tourists buy their little pieces of Mickey Mouse and Donald Duck paper and take them home without spending them.

The purchase of "Napa Dollars" by tourists - attracted by both the novelty of the currency and the beauty of its wine-country design motif - could bring significant dollars into the local currency program itself, helping to maintain the administrative side of the program and providing additional funds to local non-profit organizations.

Will this work in Napa?

Yes, because it's already been tested and proven in many other communities. It would be an excellent way to support and promote local businesses, particularly Downtown Napa merchants concerned about attracting shoppers to their area.

It would also be a natural complement to the revitalization of the downtown area, which is occurring with the Napa River development, Hatt Building, Opera House, Oxbow School, the Oxbow Market, Copia and a number of new hotels. It would help keep our money in our community, to be used over and over again to the benefit of all of us who live here.