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International Journal of
Community Currency Research
Volume 16 (2012) Special issue
THIRTY YEARS OF COMMUNITY AND
COMPLEMENTARY CURRENCIES: A REVIEW OF
IMPACTS, POTENTIAL AND CHALLENGES
edited by Jrme Blanc
Thirty Years of Community and Complementary Currencies:
A Review Of Impacts, Potential And Challenges
IJCCR 16 (2012) Special Issue (Section D)
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International Journal of
Community Currency Research
Volume 16 (2012) Section D 1-4
SPECIAL ISSUE EDITORIAL
THIRTY YEARS OF COMMUNITY AND
COMPLEMENTARY CURRENCIES: A REVIEW OF
IMPACTS, POTENTIAL AND CHALLENGES
Jrme Blanc*
Universit Lumire Lyon 2, France; UMR Triangle
This special issue is composeu of seventeen papeis of which fiist veisions weie piesenteu at
the Lyon CC-Confeience that was helu on 16-17th Febiuaiy 2u11
1
.
Since the cieation of the fiist LETS in vancouvei Islanu in 198S, CCs have wiuespieau anu uif-
feieu, leauing to a long seiies of small vaiiations anu majoi uistinctions. Theie is no histoiical
eviuence of such a giowing wave of cuiiency schemes since the beginnings of inuustiialisation
at the tuin of the 19th centuiy. This wave has boosteu inteiest amongst ceitain humanities anu
social sciences ieseaicheis since the 199us, but an assessment of what has been uone to uate
pioviues a mixeu pictuie. We shoulu most assuieuly acknowleuge the emeigence of this new
fielu of ieseaich (new because of its extent anu natuie), but it must be iegietteu the insubstan-
tial influence that these woiks have geneially hau within humanities anu social sciences, anu
the lack of acauemic visibility that continues to leave the fielu on the peiipheiy of ieseaich.
The aim of the inteinational, multiuisciplinaiy anu tiilingual confeience oiganizeu in Lyon on
16-17th Febiuaiy, 2u11 was not only to uemonstiate why scholais' woiks on these cuiiencies
aie of scientific value, ieflecting the piactical value of the expeiiences themselves, but to affiim
that they shoulu obtain a significant iole with iegaiu to vaiious uisciplines that aie conceineu
with this type of tiauing schemes, such as economics, geogiaphy, sociology, political science,
anthiopology, histoiy, law, etc.
0ne puiely acauemic pioblem ceitainly aiises fiom the fact that they ielate to fielus of ieseaich
at the ciossioaus of a numbei of uisciplines: uevelopment stuuies, local uevelopment, maiket
exchange, Thiiu sectoi oi social economy, sustainable uevelopment, monetaiy uses, monetaiy
spaces, soveieignty, new spaces of tiansaction anu sociability, social movements claiming foi
economic tiansfoimations, social cohesion, community uynamics, women's economic initiatives
* Email: jeiome.blancuniv-lyon2.fi
!" $%&' &(%) *+&%$,'- Blanc, }. (2u12) 'Thiity yeais of community anu complementaiy cuiiencies: A ieview of
impacts, potential anu challenges' Special Issue Euitoiial !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3
4$&%15 16 (B) 1-4 <www.ijcci.net> ISSN 1S2S-9S47
1 The confeience was oiganizeu by the ieseaich centies Tiiangle (0NR S2u6) anu LEFI (EA 4u12), sup-
poiteu by the 0niveisity Lumieie Lyon 2, its Chaii of entiepieneuiship in Social anu soliuaiity economy, the
Institut ues sciences ue l'homme (ISB) anu the ENS Lyon, weie it was helu. Financial suppoits incluue: ve-
blen Institute foi Economic Refoims anu FPB (Fonuation Chailes Lopolu Nayei poui le Piogies ue
l'homme), Institut Caisse ues upts et consignations poui la iecheiche, Clustei 12 Bynamiques sociales et
teiiitoiiales of the Rhne-Alpes Region, Rhne-Alpes Region itself, Biiection gniale la langue fianaise
et aux langues ue Fiance of the Ninistiy of Cultuie anu Communication, Co-opeiative RES anu Conseil gn-
ial uu Rhne.
etc. Theiefoie, the Lyon confeience hau to be multiuisci-
plinaiy; papeis fiom uiffeient uisciplines weie welcome, as
well as papeis that weie inteiuisciplinaiy in theii veiy
scope.
The two-uays acauemic confeience incluueu SS communi-
cations anu two panels
2
. The fiist panel questioneu the
intellectual infiastiuctuie foi CC ieseaich anu showeu both
its piesent weaknesses anu its piogiessive emeigence. The
seconu panel focuseu on the links to public policies anu
showeu the uifficulties to make CCs a tool foi public poli-
cies without losing the autonomy anu innovation capacity
attesteu by theii histoiy. The thiiu uay was ueuicateu to
piactitioneis. This thiee uays event gatheieu 264 peisons
fiom moie than 2u countiies. Thiity yeais aftei the begin-
ning of the piesent wave of CCs in the woilu, piogiess is
still iequiieu to know anu unueistanu the uiveisity of ex-
isting schemes anu theii scope, though much has alieauy
been uone anu the ieseaich uynamics on CCs obviously
acceleiate.
The seventeen papeis of this special issue aie not iepie-
sentative of the extent of what was uiscusseu in Lyon since,
foi example, seveial aieas aie missing oi aie unuei-
iepiesenteu (Latin Ameiica, fiancophone countiies)
S
.
Bowevei, they alieauy covei a wiue iange of cases anu
topics anu they iely on vaiious ieseaich anu analytical
methous. The special issue is stiuctuieu aiounu foui sec-
tions.
! #$%&'($)*+ *))',-&% $- &#. ,/%/
Bistoiical stuuies ceitainly pioviue a majoi key to a bettei
unueistanuing of the possibilities, failuies anu successes of
what is happening touay. All along its histoiy, the 0.S. has
been a hotspot of monetaiy expeiiences. The thiee papeis
of this section consiuei uebates that uevelopeu on money
anu uemociacy fiom the enu of the eighteenth centuiy anu
sciips expeiiments of the uieat Bepiession.
%012 304567489: contiasts the cuiient majoi aspiiation of
putting uemociacy into money by CC auvocates with two
moments of the 0S monetaiy histoiy wheiein money anu
uemociacy weie linkeu: the Feueialist implementation of a
monetaiy system that woulu be compatible with capitalism
anu inequalities, anu the uieenbackeis who auvocateu a
uemociatic contiol ovei monetaiy issue thiough govein-
ment papei money cieation. Be shows that the notion of a
uemociacy is ueeply uiffeient in these thiee cases: CCs
iathei aigue foi "a type of uemociatic money that no
longei seems compatible with capitalism".
As stiesseu by Loien uatch anu Saiah Elvins, the yeais
aiounu 19S2-SS weie yeais of a boom in sciips of many
kinus in the 0.S.: bioauly speaking, cleaiinghouse ceitifi-
cates, sciips of baitei anu self-help gioups, stamp sciips
anu tax-baseu sciips fiom local goveinments, etc., leauing
to hunuieus of cases all ovei the 0niteu States.
%0709 .2;45< analyses the aiguments of auvocacy foi im-
plementing sciips in the 0S aiounu 19S2. She shows that
aigumentation mostly ielieu on the iueas of maishalling
local iesouices foi the iecoveiy of a paiticulai community,
self-help as the continuation of inuiviuualism, that is the
contiaiy of chaiity; in such conceptions, sciips woulu be
consiueieu a momentaiy solution to "piime the pump" of
an economic system that was still consiueieu sounu.
+=7>5 ?0:@9 focuses on tax-anticipation sciips fiom local
goveinments that flouiisheu between 19S1 anu 19SS, with
a paiticulai boom in 19SS as consequences of the "bank
holiuay" ueclaieu by Roosevelt in Naich 19SS as a way to
avoiu the final collapse of the banking system. These sciips
weie issueu extensively, by big cities like Chicago oi Be-
tioit, anu geneially lasteu moie than othei sciips. They
notably seiveu as paitial wage anu salaiy payments. uatch
analyzes the pioblem of uistinctive confiuence of the public
in these sciips, theii ielations to legal pioblems anu the
way municipalities hau to manage theii ciiculation in oiuei
to avoiu oi ieuuce uiscounts on theii face value. In a seiies
of cases, they benefiteu fiom businesses' suppoit. uatch
emphasizes the piopei management of the ciiculation by
municipalities as one of the key factois of success.
A &#.'(.&$)*+ $%%,.%
What about CCs in theoiy. In a histoiical, theoietical anu
iueological context, money is inescapably consiueieu eithei
the tool of soveieignty oi, foi those who acknowleuge the
possibility of monetaiy pluiality, a specific financial asset
submitteu to iational choice anu thus to competition piin-
ciples. A bettei unueistanuing of CCs obviously iequiies
theoietical ieassessments of money anu what can be uone
with it. The papeis of this section suggest ways to make
such ieassessments.
B0C=:= -4<94D> pioviues the ieauei with an inteipieta-
tion of CCs as a communication meuium. Wheieas Luhman
views money as a "symbolically geneializeu meuium",
which is unifoim (because unique), unuei Nishibe's view
CCs also integiate the two othei uimensions of a meuium:
language that enables communication of meanings anu an
extenueu meuium that extenus the ieach of communication
by language. CCs appeai eventually as a ieplicatoi foi "new
International Journal Of Community Currency Research 2012 Volume 16 (D) 1-4 Blanc
2
2 The call foi papeis, the piogiamme anu the list of the piesenteu papeis aie available on the Confeience website
http:tiiangle.ens-lyon.fispip.php.aiticle1S88. See also the wiuei website (in Fiench only) built on the basis of the uynamics of the thiee
uays of acauemic confeience anu piactitioneis' event: http:www. monnaiesenuebat. oig anu the news website
http:www.scoop.ittsocial-cuiiencies
S Seveial papeis fiom the confeience that coveieu these aieas have been publisheu in the fiancophone RECNA jouinal (Revue inteinationale
ue l'conomie sociale, nS24, Apiil 2u12, see http:iecma.oignoue19u9 ) anu aie to be publisheu in the Spanish-speaking Piologos joui-
nal (Revista ue histoiia, politica y socieuau, 0niveisiuau nacional ue Lujn, Aigentina).
species in the socio-economic evolution", leauing Nishibe to
link his analysis to evolutionaiy economics.
!"#"$% '%()%* +,- .+/"0" !%1)%23 contiast uiffeient
soits of money cieation: fiom concentiateu (banknotes anu
papei money type of CC) to uispeisive (LETS type), thiough
quasi-uispeisive (ueposit money cieation). They analyze
the ielative efficiency of the two opposite cases. LETS ap-
peai to be moie efficient in teims of tiansaction iealization
than a concentiateu anu pie-issueu cuiiency, because the
lattei iequiies a money stock in auvance. Bowevei, the
authois emphasize the iisk of fiee iiuing thiough LETS
uispeisive money cieation anu assess the uebit limit to be
implementeu to avoiu it.
456" 7"-1()+8/ extensively piesents the vaiiety of ue-
muiiage meanings, appioaches anu implementations. Be
uistinguishes thiee soits of pioposals: table money, stamp
sciips anu expiiy money anu goes into pioposals of uesell,
Fishei anu some otheis. While uesell's nationwiue anu
peimanent system was nevei implementeu, local expeii-
ments have taken place, alieauy, uuiing the 19Sus anu
since the 199us. Be states that the level of uemuiiage hau a
negligible iole in the possible (but fai fiom being geneial)
success of local expeiiments anu shows that, contiaiy to
the geneial unueistanuing, 0S tiansaction-baseu sciips
achieveu a much highei ciiculation velocity than the 0S
uollai.
In a self-ciiticism on the eailiei stages of a ieseaich pioject
on exchange netwoiks anu paiallel cuiiencies in uieece,
9:3,3 ;"0%:"<"58"5 tiies to put in peispective the piac-
tices uevelopeu in the uieek CCs anu baitei piactices. She
states, "oui inability to see multiple cuiiency systems anu
non-monetaiy tiansactions as possible positive political-
economic tools, stems fiom oui iuea that a monetaiy econ-
omy with one cuiiency only is the best social option, espe-
cially compaieu to othei economies wheie a vaiiety of ex-
change mechanisms exists." As a consequence, it must be
acknowleugeu that these piactices that have been "uis-
misseu, uisuaineu anu even uisiepute" have "nevei ceaseu
to exist".
= ;4>?@A>.9!7; B!C BA49DED.D!@;
A faii pait of the acauemic liteiatuie on CCs is ueuicateu to
assessments of vaiious soits of uifficulties they face anu
theii possible successes. Key factois incluue the ielation
between theii objectives anu theii oiganization, the way
they aie goveineu, theii size anu the uiveisity of useis, the
way they balance the commitment they iequiie of theii
useis anu efficacy iequiiements, the way they builu
piouuctionconsumption chains, etc. Aspects of these fac-
tois aie uealt with in this section.
73":6%,+ .F 7G$3# emphasizes the iole of CC goveinance
in theii sustainability thiough a compaiative analysis of the
goveinance moue of the thiee main tiueque netwoiks in
Aigentina, which pioveu to iesponu uiffeiently to the gen-
eial uownfall of CCs aftei 2uu2. She builus a taxonomy of
Aigentinian CC noues aftei the split of the movement anu
shows that none manageu to be sustainable enough. She
concluues on what seems to be the best-suiteu goveinance
conceining the scale anu size of schemes, suggesting: "on a
national, laige scale, theie seems to be no sustainable gov-
einance system foi a CCS".
Assessing the Bavaiian Chiemgauei's success, A):%10%+,
@)%38 iefeis to the theoietical fiamewoik of the commons
when uefining the geneial objectives puisueu by Regiogelu.
Pointing out the iisk of fiee iiuing in this context, he states:
"one cannot explain the Chiemgauei-use with a iational,
oppoitunity-optimizing attituue". People use it because it is
a moial money: "A 'moial money' offeis them possibilities
which they uon't have with 'noimal money'": the cuiiency
"assists shopping (.) by attiibuting a moial quality to
piouucts anu shops", anu they pioviue a means to exeit a
powei ovei each one's peisonal expenses but also ovei
otheis'.
':%103: E"8/$+,, analyzes the uistinctive featuies of
ueiman-speaking aiea Regiogelu expeiiences, uistinguish-
ing thiee soits of CCs: euio-baseu cuiiencies like the
Chiemgauei; activity-baseu cuiiencies like the 0istiom-
talei; anu mixeu cuiiencies aiticulating euio-baseu anu
LETS-like systems like the Steintalei. Be links the basic
objectives of CCs to a "soliuaiity economy": "all economic
foims that incluue aspects of soliuaiity anu faiiness in op-
position to puie piofit-maximizing". Regional cuiiencies
then allow "the inuiviuual to choose the uegiee to which he
oi she wants to paiticipate in the soliuaiity iealm".
."88H ;("00 A+0" +,- .+:0+ ;5I:3# piesent an account
"fiom the insiue" of the cieation anu eaily stages of the
Stiouu Pounu, in the 0K. They iaise one majoi question on
the ielevance of CCs. Like otheis, the Stiouu Pounu aimeu
at piompting consumption of locally piouuceu goous anu
seivices. Bowevei, aie they the best fiist step, woulu it not
be moie efficient anu uiiect to encouiage local piouuction.
Inteiestingly, the authois state that, in the case of Stiouu,
"the extiemely limiteu iange of local piouuce that is avail-
able, anu the small peicentages of locally piouuceu goous
that weie foi sale in the local shops, iauically unueicut the
uesign of the scheme by making local supply chains neai
impossible foi the laigest volume of economic activity in
the town."
The papei of J30: K38L,3/M N15#1+,,+ D1#03: ;#+8+H +,-
B8"%1 '",3O,P pioviues the ieauei with a pictuie of
visegiau countiies wheie CCs have not expeiienceu a gieat
success to uate. Community cuiiencies have uevelopeu in
Polanu, Czech Republic, Slovakia anu Bungaiy but nevei
ieacheu a wiue level anu mostly uisappeaieu, with the ex-
ception of Bungaiy. Seveial explanations help unueistanu
this; among them, one can stiess the case of self-inteiest
centieu activists, the homogeneity of membeis, the exhaus-
tion of leaueis, little economic neeu anu insignificant im-
pact, etc.
4%:"$% !+/+#+0" +,- @+/31)% 4%:+$"0" focus on the
way CCs may geneiate social suppoit among a community,
thiough a compaiative netwoik analysis of a LETS-type CC
International Journal Of Community Currency Research 2012 Volume 16 (D) 1-4 Blanc
3
in Sweuen (BYTS) anu an ecomoney-type CC in }apan (Ichi-
Nuiaoka). "In both Ichi-Nuiaoka anu BYTS, theie is almost
no ielationship between the fiequency of use of community
cuiiencies anu 'the uegiee of satisfaction with the suppoit
ieceiveu in uaily life'", which means that social suppoit
coming fiom these CCs is only peiipheial to eveiyone's life.
Though, these CCs aie acknowleugeu to pioviue foims of
social suppoit that aie all the moie impoitant as useis be-
come conscious of the possibilities pioviueu by CCs.
!"#$%&'% !)*%+,- ./0'%'%0, 1%2,3,4% ,#5 1,4/+/
6%0'%7" tiy to assess the consequences of shopkeepeis'
behavioui on the actual use anu ciiculation of a case of
ieueemable CC coupons in a uistiict of Tokyo, which have
commeicial anu non commeicial puiposes. While the
scheme seemeu to be a success in teims of awaieness of
intei-gioup links anu consumei behavioui, shopkeepeis
tenu to ieueem coupons in cash immeuiately. The authois
iuentify thiee main ieasons: fiist, accounting uifficulties
with sales in CC coupons; seconu, uncleai compiehension
on the pait of shopkeepeis on the possible uses of CC cou-
pons; thiiu, a psychological iesistance uue to the iuea that
ieusing CC coupons woulu iequiie auuitional effoits of the
shopkeepeis.
Finally, 1"8%#, ./)#9 focuses on 0S, Canauian anu Austia-
lian B2B baitei systems, which she consiueis shaiing
"many of the chaiacteiistics of social cuiiencies", though
they aie mostly "foi-piofit businesses opeiating in the pii-
vate sectoi". She analyzes how these so-calleu "baitei"
systems aie so ueeply connecteu with the national econ-
omy: they cannot be consiueieu ways to ueviate fiom it, to
flee taxes oi maiket competition etc. She also uiscusses the
peculiai anu inteiesting featuie of "two-cuiiency piicing
mechanism", wheieby piices, wheieas nominally stable,
might iefei to highei oi lowei paits of national cuiiency
anu baitei cuiiency, uepenuing on the choices of selleis.
: ;<=>;?@A> B6C ;<=D?@A>
0ne majoi stiength of CCs ovei the last thiity yeais has
been theii impiessive capacity to give biith to social inno-
vation. The two last papeis of this special issue contiibute
to this tienu.
EF8G#" D/,&',%# ,#5 H*F5F*%& !8/IJ"*+ ueal with CCs as
pait of policy instiuments foi enviionmental sustainability,
uiawing on the case of the Belgian pioject INESP0: eneigy
saving thiough the coupling of CCs anu Smait Neteis. They
use foimei expeiiments anu pioposals as benchmaiks to
help uesign a new pioject, notably iefeiiing to the N0-
Spaaipas in the Netheilanus anu the Belgian e-poitemonee
anu Toieke cases. 0ne impoitant line of cleavage is
whethei paiticipation is manuatoiy oi not anu whethei the
uesiieu enviionmental impact of the scheme thiough be-
havioial change is connecteu to social oi economic issues
as othei CCs uo. They builu a piecise taxonomy of the con-
stitutive paiameteis of CCs, which is applieu within the
fiamewoik of the INESP0 pioject.
1,*4 K*,44"#- ;*"0+/# B)0+%#- >+"I',#%" <",*%&4 ,#5
L",#5"* K%#5"M,85 piopose an aiticulateu anu hieiaichi-
cal monetaiy system able to acknowleuge the vaiiety of
values in society. They state: "an economic system with a
single cuiiency will only iecognize a veiy limiteu set of
activities as valuable"; they ueuuce fiom this fiist state-
ment the necessity to uesign "appiopiiately uiffeientiateu
cuiiencies capable of uenoting uiffeient types of value". To
uo so, they elaboiate an analogy with the tiophic pyiamiu
of ecology. The theoietical fiamewoik piesenteu in the
papei is at the ioot of a pioject that aims at piomoting time
banking foi "community iesponsive economic systems".
Finally, the vaiiety of these selecteu papeis fiom the Lyon
CC Confeience may seive as a faii pictuie of the piesent
state of CC ieseaich. Wheieas pioposals anu expeiiments
have pioven to be auuacious, empiiical ieseaich shows the
majoi limits anu shoitcomings that this movement expeii-
ence. Wheieas these ieseaiches aie moie empiiical than
theoietical, theoietization emeige that iequiie auuiessing
the piimaiy question of the possible iiieuucible specifici-
ties of CC piactices, puiposes anu eventually conceptualiza-
tion. Thiity yeais aftei theii fiist emeigence, CCs still have
to piove they can change the piesent state of things, while
ieseaich agenuas aie incieasingly consiueiing them.
International Journal Of Community Currency Research 2012 Volume 16 (D) 1-4 Blanc
4
International Journal of
Community Currency Research
Volume 16 (2012) Section D 5-13
DEMOCRATIZING MONEY: THE HISTORICAL
ROLE OF THE U.S. FEDERAL GOVERNMENT IN
CURRENCY CREATION
Saul Wainwright*
University Of Cape Town
!"#$%!&$
Foi two hunuieu anu sixty yeais the 0S Feueial uoveinment has claimeu that the most uemo-
ciatic money is a scaice foim of money. This claim is built off the notion that an abunuant sup-
ply of money woulu thieaten class ielations (the iights of piivate piopeity) anu ultimately the
fiee flow of commeice (capitalist exchange). Since the wiiting of the Feueial Constitution the
goveinment's focus has always been on cieating ieliable anu abunuant supplies of cieuit. The
iuea of scaice money anu abunuant cieuit has been challengeu twice: In the 186u's by the
uieenback Paity who claimeu the most uemociatic money is money cieateu by goveinment.
The seconu challenge in the 198us by the Community Cuiiency movement uniquely focuses not
on banks oi goveinment insteau claiming that uemociatic money is money cieateu by local
communities anuoi inuiviuuals.
!&'()*+,-.,/,($#
I acknowleuge the financial suppoit of the National Reseaich Founuation (NRF) towaius this
ieseaich. 0pinions expiesseu anu conclusions aiiiveu at, aie those of the authoi anu aie not
necessaiily attiibuteu to the NRF.
Auuitionally, I want to acknowleuge the use of the 0niveisity of Califoinia at Beikeley's libiaiy
while a visiting Stuuent Reseaichei in 2u1u-2u11 with the sponsoiship of Piofessoi uillian
Bait.
* Email: saulwainwiightgmail.com
$0 2345 4637 89432:5; Wainwiight, S. (2u12) 'Bemociatizing Noney: The Bistoiical Role of the 0.S. Feueial
uoveinment in Cuiiency Cieation' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3$&%14 16 (B) S-1S
<www.ijcci.net> ISSN 1S2S-9S47
!"#$%&'(#!%"
This papei examines the histoiy of the political iuea of
'uemociatic money', within the histoiically specific 0.S.
capitalist uemociacy (Woou 199S: 21S)
1
. It exploies the
political conveisation that occuiieu uuiing seveial phases
in Ameiican histoiy that weie focuseu on iesolving a cen-
tial tension in Ameiica's political economy - an expanuing
economy uepenuent on auequate anu ieliable supplies of
liquiuity anu the uominance of a scaice concept of money.
This papei is an attempt to highlight the way in which
money cieation, anu claims to be uemociatizing its ciea-
tion, aie uepenuent upon the histoiically anu geogiaphi-
cally specific context in which such claims aie maue. The
ielevancy of this ieseaich is to challenge contempoiaiy
claims to be uemociatizing money to fully aiticulate theii
concept of uemociacy, while iecognizing that the veiy iuea
of what "is" uemociacy has shifteu ovei time. The papei
makes no claim to know what is uemociatic money, noi
what is the most uemociatic foim of money, but iathei to
show that the claim to be uemociatic is uepenuent on the
specific conceptualization of uemociacy employeu by those
that claim oi auvocate a paiticulai type of money cieation.
Fiist, it is necessaiy to uefine specifically what is meant by
money. The paiticulai view taken is that money, as it is
cuiiently unueistoou, uevelopeu between the sixteenth
anu eighteenth centuiies (Ingham 1999: 84). What this
system of money cieation ielies on is a set of social anu
political institutional aiiangements to manage the quantity
anu value of this money, "mouein cieuit-money is itself,
fiist, a social ielation anu seconu; that as such its elasticity
of piouuction is entiiely a social constiuct" (Ingham 1999:
8u). Theiefoie money's value is not natuial oi intiinsic but
the piouuct of the social foices that manage its piouuction,
foices that aie uefineu by the histoiical context in which
they opeiate (Ingham 1999: 82).
Seconu, to exploie the political iuea of uemociatic money it
is necessaiy to claiify the specific chaiactei of uemociacy
within which touay's capitalist cieuit-money came to
uominate. This piocess is most easily examineu within the
context of the 0niteu States of Ameiica. The type of ue-
mociacy that emeigeu fiom the constitutional uebates of
1787 was one that explicitly suppoiteu piivate piopeity
anu accepteu class inequality as natuial. Anu, any effoit by
goveinment to level these inequalities oi thieaten the exis-
tence of piivate piopeity was vieweu as a thieat to libeity.
Buiing the peiiou leauing up to the wiiting of the 0.S. Feu-
eial Constitution theie weie a numbei of financial policies
enacteu by colonial state legislatuies aimeu at piomoting
the 'leveling spiiit'
2
that auvocates of oiiginal uemociacy
favoieu
S
.
The Feueialists fiameu these policies as a thieat to libeity,
to the stability of class ielations anu most impoitantly, to
the fiee flow of commeice (Caiey 2uu1: 2S1 |Feueialist No.
44j). Alexanuei Bamilton believeu that the cieation of
papei money by the colonial states hau cieateu, "mutual
uistiust in the bieasts of all classes of citizens" anu that,
"piecautions against the iepetition of those piactices on
the pait of the state goveinments, which have unueimineu
the founuations of piopeity anu cieuit," was a necessaiy
element in any Feueial Constitution (Caiey 2uu1: 4SS
|Feueialist No. 8Sj). The Feueialists cleaily siueu with a
system of cuiiency cieation that was the most compatible
with existing class inequality - a natuial anu necessaiy pait
of the commeicial economy (Caiey 2uu1: 41-44 |Feueialist
No. 1uj). Bamilton believeu that the, "most piouuctive
system of finance will always be the least buiuensome" to
the manufactuiing anu banking classes (Caiey 2uu1: 4SS
|Feueialist No. 8Sj). Theiefoie, whatevei system of money
cieation existeu, it neeueu to be, fiist anu foiemost, the
least buiuensome to these classes of society. The belief
was that a golu monetaiy base woulu be the most compati-
ble with the Feueialist concept of a capitalist uemociacy.
*+!,-& +##-./#0 +# ($-+#!"1 0#+2,- ($-&!#
0'//,!-0
0ne of the most impoitant consequences of the Feueial
Constitution was a move towaius a new monetaiy iegime,
which enueu the ability of inuiviuual states to piint money
oi to ueclaie a legal tenuei. This shift in money cieation
authoiity was the beginning of a histoiical piocess in which
the cieation of money was incieasingly centializeu unuei
the authoiity of the Feueial uoveinment; this helpeu guai-
antee that a goveinment fiienuly to the neeus of the capi-
talist economy enacteu money cieation policies. The iesult
was a financial system that ieinfoiceu the existence of pii-
vate piopeity anu the fiee flow of commeicial exchange,
while minuful of the neeu to limit any uisiupting influence
this may have on existing class ielations. The success of
this system of money cieation was ciitical to the continueu
existence of Ameiica's capitalist uemociacy.
International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
6
1 E.N. Woou uses the phiase anu the concept of a "capitalist uemociacy" in hei book, "Bemociacy Against Capitalism" (199S: 21S). Bei
cential aigument is that the concept of uemociacy that we assume was a histoiically specific cieation of the 0.S.A. uuiing the wiiting of the
Feueial Constitution. The Ameiican concept of uemociacy sepaiateu the political anu economic spheies of life. This was achieveu thiough
the cieation of a new concept of uemociacy that coulu accommouate capitalism by iemoving questions of piopeity anu socio-economic
equality fiom the political spheie. "In that sense, political equality in capitalist uemociacy not only coexists with socio-economic inequality
but leaves it funuamentally intact" (Woou 199S: 21S).
2 The use of the teim "leveling spiiit" was useu to iuentify effoits at ieuucing class inequality (Feiling 2uuS: 28S)
S When I iefei to oiiginal uemociacy I am uiawing on one of the cential iueas of Athenian uemociacy which is uesciibeu by E. N. Woou as
having no sepaiation between political anu economic fieeuom meaning that political equality "substantially mouifieu, socio-economic ine-
quality" (199S: 212). In essence this oiiginal concept of uemociacy saw inequality amongst citizens as unuemociatic, this was extenueu to
incluue iueas of elections anu iepiesentation, which weie, piioi to this eia, associateu with oligaichy (Woou 199S).
It was immeuiately eviuent to the Feueial uoveinment anu
most citizens of the newly cieateu 0.S.A. that the expanuing
economy woulu neeu incieasing supplies of cuiiency - be
it in the foim of money oi cieuit. While the economy, as it
giows, iequiies incieasing supplies of cuiiency, the chosen
base at the time was golu, which is natuially finite anu
theiefoie cannot ieliably expanu to meet the uemanus of
the giowing economy. It is this tension between continu-
ous giowth anu scaice supply, which keeps uebates ovei
the cieation of money politically ielevant into the twenty-
fiist centuiy. ueoffeiy Ingham, an acauemic who has wiit-
ten extensively on the histoiy of money, has highlighteu
how, "The scaicity of money is always the iesult of veiy
caiefully constiucteu social anu political aiiangements"
(Ingham 2uu4: 8).
Auvocates of scaice money - leu by those who saw golu as
money because it is a ieal anu natuial foim of value anu
has histoiically playeu the iole of money - believeu that its
value was not the iesult of goveinment's actions oi socially
constiucteu (Babb anu Caiiutheis 1996; Financial Pam-
phlets vol. 1-S). The auvocates of golu ciitically believeu
that money is "not socially constiucteu anu that it iathei
belongeu to an autonomous anu natuial spheie - the mai-
ket - in which it was peiilous foi a polity to inteivene"
(Babb anu Caiiutheis 1996: 1S8u). In othei woius, golu
money existeu iegaiuless of any action taken by govein-
ment anu in fact any effoit by the goveinment to cieate
money woulu be consiueieu peiilous to its own suivival
anu the bioauei political economy.
With state goveinments having lost theii ability to cieate
theii own money they tuineu to the next best solution, they
issueu state bank chaiteis anu enuoweu those banks with
the iight to issue theii own foims of cieuit
4
. This was
uiiven by the inuiviuual states' iealization that if they coulu
not issue money (as they hau been uoing piioi to 1787 in
the foim of papei), while the expanuing economy was ciy-
ing out foi auuitional liquiuity (in the foim of a ieliable
meuium of exchange), the only available solution was to
inciease the supply of cieuit.
The cieuit issueu by the state banks was always issueu on
the assumption that theie weie equivalent ieseives of golu
helu by the issuing bank. This meant that banks hau to
compete ovei the scaice supply of golu money in oiuei to
be able to pioviue ieliable foims of cieuit. 0vei the follow-
ing sixty yeais the numbei of state banks with cieuit issu-
ing chaiteis giew steauily. Fiom just thiee in 179u, "theii
numbeis iose to 28 in 18uu, 1u2 in 181u, S27 by 182u anu
S84 by 18SS," (Sylla 1998: 8S) anu by 184u theie weie
ovei eight hunuieu banks issuing theii own foims of bank-
notes (Rousseau 2uu4: 2S). Buiing the fiist half of the
eighteenth centuiy banks weie, "in the minus of the avei-
age citizens anywheie" chaigeu with oveicoming, "the
scaicity of money" by making available the cieuit neeueu to
enable the fiee flow of commeicial exchange (0ngei 1964:
4u). The uistinction being that these banks weie cieating
cieuit anu not cieating "uestabilizing" papei money. Be-
spite the piolifeiation of these cieuit-issuing state banks
anu because of the scaicity of golu money, they often faileu
to issue ieliable supplies of cieuit. The economy iepeat-
euly expeiienceu bank iuns anu ciashes thioughout the
eighteenth anu nineteenth centuiies, in gieat pait uue to
the ovei issuance of cieuit, hoaiuing of golu anu inability to
inciease the supply of the monetaiy base.
These iepeateu ciises set off a seiies of uebates that weie
uiiven almost immeuiately by uiffeiing class inteiests. The
uebates centeieu on the belief that bankeis iepiesenteu
anu woikeu to the benefit of the meichant anu banking
classes, ovei the inteiests of the agiaiian anu laboiing clas-
ses
S
. Bamilton explicitly stateu that the inteiests of the
laboiing classes, "can be moie effectually piomoteu by the
meichant than by themselves" (Caiey, 2uu1: 2u7 |Feueial-
ist No. SSj). This sense, that the banks weie focuseu on
seiving the neeus of the meichants ovei the neeus of the
faimei, was ieinfoiceu by the fact that the majoiity of
banks weie baseu in New Englanu anu the Niuule Atlantic
States uominateu by wealthy piopeity owning meichants
anu bankeis (Sylla 1998: 8S). This concentiation of money
in the noitheast was linkeu (at least in political ihetoiic)
with the economic haiuships expeiienceu in the pieuomi-
nantly agiicultuial south.
The continuous instability of this system of state bank is-
sueu cieuit, anu the negative iamifications this hau foi the
oveiall political economy, helpeu uiive the iepeateu effoits
of the Feueial uoveinment to cieate a system of national
banking. The effoits of the Feueial uoveinment centeieu
on the iuea that the cieation of a national bank, which is-
sueu its own cieuit, woulu pioviue the gieatest amount of
stability to the political economy. The Feueial uoveinment
cieateu two national banks both of which woulu cease to
exist by 1841 as a iesult of political, anu not financial iea-
sons (Bavies 2uu2: 47S-478). The iuea behinu the cieation
of these banks was that theii cieuit woulu be accepteu at
face value by all banks (unlike state bank issueu cieuit),
because they woulu tiust the ability (the liquiuity) of the
national bank to exchange the cieuit foi golu money. This
woulu cieate stability anu ieuuce the negative impact of
scaice supplies of money on the political economy. Impoi-
tantly, theie was no attempt by goveinment (feueial oi
state) to cieate moienew money (unlike the papei money
International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
7
4 Ny use of the teim cieuit applies specifically to banknotes issueu by inuiviuual banks. These banknotes, piioi to the aiiival of computeis,
weie issueu as pieces of papei, anu weie supposeu to iepiesent ieal anu existing supplies of golu money. The iuea being that if you ietuineu
to the bank with youi banknote you woulu be given an amount of golu money in ietuin.
S Foi an in-uepth look at these class conflicts anu the shifting inteiests see Shaikey, (19S9); 0ngei, (1964); Sylla (1998).
cieateu by the colonial states of the 177u's). All effoits
weie focuseu on cieating cieuit, while golu woulu continue
to foim the scaice monetaiy base anu act as the only "tiue"
anu "natuial" foim of money.
!"# %#&#'() *+,#'-.#-! /'#(!#0 1(1#'
.+-#2
In light of the Feueial uoveinment's oiiginal focus on cieat-
ing cieuit, anu not uuplicating the effoits of the colonial
state legislatuies, the uecision in 1862, uuiing the Ameii-
can Civil Wai, to issue new papei money into ciiculation,
was a suipiise to many anu leu to a seiies of challenging
anu illuminating uebates
6
. Bue to the faileu attempts at
cieating a national bank, the Feueial uoveinment was in
uespeiate neeu of a ieliable cuiiency supply to funu both
its militaiy opeiations anu enable the fiee flow of commei-
cial exchange.
Buiing the Civil Wai the Feueial uoveinment coulu not
iely on state banks to cieate auequate supplies of cieuit. At
the outset of the wai, "A supply of golu anu silvei coin
coulu in no way be uepenueu on. It has been noteu that
hoaiuing hau begun even befoie the suspension of specie
payments" (Shaikey 19S9: S4). This hoaiuing placeu mas-
sive constiaints on the flow of money, ieuucing the ability
of many banks to issue cieuit. In those few cases when
banks uiu issue cieuit, it was often assumeu that they weie
ovei-leveiageu anu theii cieuitwoithiness was questioneu.
All of this iesulteu in a ieal shoitage of available cuiiency,
anu without a national bank system in place theie was veiy
little the goveinment coulu uo to inciease the supply. In
the enu, the uecision taken by the Feueial uoveinment was
to piotect the continueu opeiation of the commeicial econ-
omy, "it seems that the "necessity" of the situation was not
in piotecting the cieuit of the goveinment but in supplying
a meuium of payment, in othei woius a cuiiency" (Shaikey
19S9: SS).
The fiist Legal Tenuei Act went into effect on Febiuaiy 2S,
1862 giving the iight to the 0niteu States Tieasuiy to cie-
ate papei money (0niteu States Congiess 1862: S4S). Two
moie Acts in 186S, enableu the issuance of foui hunuieu
anu fifty million uollais woith of papei money (Bavies
2uu2: 487). This papei money was officially issueu at a
one-to-one ielationship to golu. This meant that the papei
money hau the same puichasing powei as golu. The impoi-
tant point to note is that when this papei money was oiigi-
nally issueu it was not ieueemable in golu; it was not a
"iepiesentation" of golu, but was piesenteu as if it was the
same as golu. The fact that this papei, cieateu anu issueu
by the Feueial uoveinment, coulu not be ieueemeu foi golu
is what maue it money, anu not cieuit, in the eyes of many.
The uecision to piint papei money openeu up a uebate, foi
the seconu time in Ameiica's histoiy, ovei the souice of
money's value anu the iole of goveinment in the cieation of
this value. These uebates, "establisheu that the way in
which that institution |of moneyj woikeu was itself the
iesult of human inteivention" (Laiulei 1991: 188). Buiing
what was a ielatively biief moment in histoiy, the govein-
ment's iole in the cieation of money's value, not just in the
supply of cieuit, was establisheu anu confiimeu. Those
that suppoiteu the iight of the Feueial uoveinment to issue
this papei money woulu maishal aiguments that placeu
the souice of money's value, anu theiefoie the cieation of
money, in the hanus of goveinment. These aiguments chal-
lengeu the veiy founuation of the then accepteu theoiy of
money anu, in the eyes of many, thieateneu existing class
ielations anu theiefoie the entiie political economy.
Bespite the appeaiance that the Feueial uoveinment was
going back on its histoiical commitment to scaice money, it
was uoing nothing of the soit. It hau incluueu a clause in
the Acts that committeu the Feueial uoveinment to paying
inteiest anu Tieasuiy bonuholueis in golu anu not in papei
money. Bespite this stateu commitment to golu
7
, the Legal
Tenuei Acts met with the immeuiate piotest fiom the
banking anu meichant classes
8
. Suppoiteis of golu money
weie emphatic in theii aiguments against what they saw as
an attempt to place the souice of monetaiy value in gov-
einment. Bullionists, who weie pieuominantly fiom the
meichant anu banking classes, hau the auueu bonus of be-
ing the classes with the most uiiect political powei anu
influence. They believeu, as hau been assumeu by the Feu-
eialists, that they unueistoou best how to piotect the con-
tinueu fiee flow of commeicial exchange. ueneial uaifielu,
a Civil Wai heio anu futuie piesiuent of the 0.S.A. believeu
that, "Noney is a ieality, a weight, of a ceitain metal, of a
ceitain fineness. But a papei uollai is simply a ueeu, the
legal eviuence of the title that I holu to a uollai" (uaifielu
qtu. in Babb anu Caiiutheis 1996: 1S68). Blaii (1876)
summeu up the uominant unueistanuing of the souice of
monetaiy value in a speech he maue to congiess on Nay
18, 1876. Be aigueu that the monetaiy value of golu is,
"inuepenuent of anu moie necessaiy than any goveinment"
because it, "possesses value as a commouity" while theie
aie those on the siue of papei who aie claiming that, "ieal
International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
8
6 This section uiaws heavily on a five-volume set of oiiginal financial pamphlets that weie publisheu anu uistiibuteu between 182u anu the
late 189u's (see Pamphlets of Finance, vol. 1 - S).
7 The Legal Tenuei Acts incluueu the following clause: "payment of all taxes, inteinal uuties, excises, uebts, anu uemanus of eveiy kinu uue to
the 0niteu States, except uuties on impoits, anu of all claims anu uemanus against the 0niteu States of eveiy kinu whatsoevei, except foi
inteiest upon bonus anu notes, which shall be paiu in coin, anu shall, also be lawful money anu legal tenuei in payment of uebts, public anu
piivate, within the 0niteu States." (0niteu States. Cong., 1862: S4S) (Italics auueu)
8 This leu to a seiies of legal cases that went all the way to the 0.S. Supieme Couit; Bepbuin v. uiiswolu (187u), oveituineu the Feueial uov-
einment's iight to issue legal tenuei. In two cases, Knox v. Lee anu Paikei v. Bavis (1871), }ulliaiu v. uieenman (1884), the constitutionality
of the Legal Tenuei Act's was confiimeu.
money is not intiinsically piopeity, but a meie token oi
sign, enuoweu with powei to cancel uebts" (Blaii, 1876).
Bighlighteu in this fiaming is that goveinment is to have no
iole in the money cieation piocess, anu that the best solu-
tion iesiues with banks anu the continueu, natuializeu iole
of golu anu scaice money moie geneially.
!"#$%&'( $*+',$'% -+../&#- 01 20'#3
The passage of the Specie Resumption Act on }anuaiy 14,
187S, leu auvocates of papei money to foim a political
paity that woulu go on to make some of the most nuanceu
aiguments in suppoit of goveinment issueu money. In
187S, these inuiviuuals woulu foim the uieenback Paity
anu by 1878 they secuieu, "ovei a million voteis anu ie-
tuineu fouiteen membeis to Congiess" (Bavies 2uu2: 496).
They aigueu that iemoving the supply of papei money
fiom ciiculation woulu ieuuce the ability of businesses to
hiie laboi, fuithei exaceibating the level of unemployment
anu the iesulting social instability anu thieaten the entiie
capitalist uemociacy's stability.
In the piocess of making theii aiguments the uieenbacks
challengeu seveial of the funuamental assumptions maue
by auvocates of golu money anu they began to aiticulate a
theoiy of money cieation that placeu goveinment at the
centei. Repiesentative William Kelley, an auvocate foi
papei money anu a membei of the uieenback Paity, aigueu
that the auuition of the papei money was a positive uevel-
opment, having saveu the economy of the 0SA:
"It may have been unwise to use that 'gieat
enemy of the nation, the gieenback,' anu
thus inciease the volume of money anu en-
hance piices; but let it ieminu gentlemen,
who say that the gieenback is an enemy to
the countiy, that they ueciy theii countiy's
savioi" (1877).
Kelley is aiguing that this inciease in the money supply uiu
not uisiupt oi upset the political economy; in fact it en-
ableu the economy to expanu. The goal of this papei
money, accoiuing to Kelley (1877), was not to uisiupt class
ielations oi thieaten the fiee flow of commeice. Rathei, it
was about enabling those that wanteu to woik to woik anu
to help make this happen the goveinment was being askeu,
"to maintain a familiai meuium of exchange wheieby capi-
tal anu enteipiise may pay laboi foi its woik" (Kelley,
1877). Even though it is eviuent that Kelley anu the uieen-
backs aie pio-capitalist theie is a subtle but ciitical shift in
theii unueistanuing of the souice of money's value. By
assuming goveinment has the ability to cieate the money
neeueu to fuel commeicial exchange, the souice of value is
being socializeu anu consciously politicizeu.
In a pamphlet publisheu in 187u the authoi wiites, "we uo
not neeu golu oi silvei foi money, oi as a basis foi papei
cuiiency. All the money we neeu is legal tenueis issueu by
the goveinment" (Smith, 187u). The uieenbacks aigueu
that the value of money has eveiything to uo with the legal
authoiity of goveinment, anu nothing intiinsic to golu,
"Noney is a cieatuie of law, it is cieateu anu uphelu by law"
(Wolcott qtu. in Babb anu Caiiutheis 1996: 1S72). The
notion that goveinment coulu cieate money thiough acts of
law, placeu the souice of monetaiy value in its hanus, anu
challengeu the theoiy that money's value was natuial anu
outsiue of any legal act of goveinment:
"All money, whethei it be golu, silvei oi pa-
pei, ueiives its chief value fiom the fact that
goveinments uo enact aibitiaiy laws ueclai-
ing money foi the payments of uebts,
theieby cieating the chief uemanu foi it."
(Ensley qtu. in Babb anu Caiiutheis, 1996:
1S7u)
This conclusion iaiseu ueepei questions aiounu what con-
tiol ovei money cieation meant. An aigument emeigeu
that claimeu the iight of the voting citizens, whose ue-
manus woulu be expiesseu thiough theii iepiesentative
goveinment, to contiol the cieation of money:
"We, the people, make the goveinment. We
give the goveinment powei to make, pio-
viue anu issue money unuei piopei iules
anu iegulations.We make oui money, we
issue it, we contiol it. We iegulate it." (Wol-
cott qtu. in Babb anu Caiiutheis, 1996:
1S72)
The auvocates aie not claiming theii inuiviuual iight to
cieate money oi the iight of an inuiviuual State to cieate
money; noi is it aimeu at challenging the Feueial uovein-
ment. Rathei, the aigument is to ieinfoice the existing
system of goveinment, anu helps solve the tension between
scaice money anu the expanuing economy, by placing the
powei to cieate money in the uoveinment's hanus. These
aie impoitant uistinctions, sepaiating the uieenbacks ue-
bate fiom those of the 177u's oi of those that appeai in the
198u's
9
. In fact, it coulu be vieweu as the histoiian Shaikey
has claimeu, that all of the uebates incluuing the iauical
iueas of the uieenbacks, weie aimeu at peipetuating the
existing class ielations anu not uisiupting the system of
goveinance that ielieu on the iuea of natuial inequality anu
piivate piopeity (19S9: SS).
The iise of a political foice that aiticulateu the neeu foi an
auequate supply of cuiiency, anu linkeu the souice of
money's value to political uecisions ieinfoiceu by legal
tenuei laws, enableu them to place the iesponsibility foi
maintaining this cuiiency in the hanus of the Feueial uov-
einment. Accoiuing to Babb anu Caiiutheis, "The gieen-
back uebates contesteu the natuie of monetaiy value anu
the piopei iole of uemociatic goveinment in finance"
(1996: 1S7S). The uieenback Paity hau manageu to ieai-
ticulate the long iunning tension between a concept of
scaice money anu an expanuing economy, by showing that
theie neeu be no ieal shoitage of money. The solution that
International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
9
9 The iefeience to the 198u's is a iefeience to the community cuiiency movement. I will engage this subject latei in this papei.
the uieenbacks weie puisuing was one aimeu at expanuing
the commeicial economy by expanuing the volume of
money, not by incieasing the volume of cieuit (anu the
associateu tiappings of uebt anu money scaicity). This
impoitant uistinction places the iesponsibility foi sufficient
supplies of cuiiency on the goveinment anu not on the
banks. Impoitantly, it attempteu to bieak uown an iuea
that claimeu the cieation of money was outsiue of govein-
ment's contiol. The uieenbacks cential aigument was that,
"economic value coulu anu shoulu be subject to conscious,
uemociatic contiol" (Babb anu Caiiutheis 1996: 1S7S).
The Specie Resumption Act stipulateu that all papei money
was to be ietuineu foi golu to the Tieasuiy by }anuaiy 1,
1879. This uate came anu went, anu ovei thiee hunuieu
million uollais woith of gieenbacks (as the papei money
came to be calleu) iemaineu in ciiculation anu ietaineu its
status as money into the twenty-fiist centuiy (Bavies 2uu2:
496). This is a ciitically impoitant moment in Ameiican
histoiy because it subtly influenceu anu gave suppoit to
some of the emeiging (anu iauical) theoiies of manageu
papei money systems being exploieu within acauemic cii-
cles (Laiulei 1991: 198)
1u
. The uieenbacks hau manageu
to intiouuce iueas into political uebate that pointeu to the
iole of goveinment anu showeu the potential foi alteina-
tive ways of cieating money, that in fact woulu be, uespite
histoiical beliefs, compatible with the existing capitalist
uemociacy.
Bespite the fact that the uieenback Paity nevei specifically
aigueu foi the "uemociatization" of money, they uiu aigue
foi its politicization within the context of the capitalist ue-
mociacy. They saw it as a political conveisation, uiiven by
goveinment who is voteu into powei on the assumption
that they will iepiesent the inteiests of the people. Bow-
evei, placing this into the bioauei aich of histoiy it is cleai
that those "iepiesentatives" aie closely aligneu with a pai-
ticulai view that aigues foi the natuialness of money value
anu class inequality. Late twentieth centuiy oithouox
economists continueu to cling to theii "mouel of money
supply" which was, "an empiiical geneialization of a natu-
ially constiaineu supply of a metallic monetaiy base pio-
viueu by a cential authoiity (the mint) that was outsiue the
maiket" (Ingham 2uu4: 21).
!"##$%&'( !$**+%!( #",+#+%'
The histoiical tiajectoiy of the financial uebates in the
0.S.A. has always puisueu the same goal - the ieinfoice-
ment of the capitalist uemociacy anu the unueilying ine-
quality of class ielations anu piopeity owneiship. This
effoit has aimeu at guaianteeing the compatibility between
the capitalist uemociacy anu money anu cieuit cieation.
Bowevei, theie is anothei uebate that has iun in paiallel to
this one that is maikeu by the effoits of the colonial legisla-
tuies in the 177u's, anu in seveial ciitical ways by the
uieenback Paity of the 187u's, anu a new movement that
has iisen since the 198u's known as the community cui-
iency (CC) movement
11
. The commonality between these
uebates has been the effoit to challenge the assumeu ciiti-
cal neeu foi a scaice money supply. The effoits of many CC
auvocates pick up on some of these eailiei aiguments,
highlighting the social element of money anu claiming,
uniquely that inuiviuuals can cieate theii own money. This
is uiiven by a conceptualization of uemociacy that uoes not
appeai to be compatible with the Feueialist notion of capi-
talist uemociacy.
Nany auvocates of CC aigue foi the uemociatization of
money via the cieation of abunuant supplies of money.
Nany claim that the scaicity of money anu cieuit is uelete-
iious to the economy anu the cause of iising inequality anu
economic instability as well as enviionmental uestiuction.
Whethei theii analysis of the impacts is coiiect oi not,
what they aie uoing is challenging the iole anu ielevance of
both the Feueial uoveinment anu the banks in the cui-
iency cieation piocess. These effoits piesent a new anu
unique phase in the histoiy of the monetaiy uebates.
These CC auvocates uo not accept the notion of uemociacy
that Piesiuent Wilson claimeu in 191S when he stateu that
the cieation of the Feueial Reseive System iepiesenteu the
"uemociatization of cieuit" (qtu. in Wickwaie, 191S: S1).
Similai to eailiei uebates, this piocess is fiameu as benefit-
ing the wealthy meichant anu banking classes while exac-
eibating the instability of the entiie financial system.
Bowevei, unlike the uieenbacks, the CC movement views
the incieasing iole of goveinment as iepiesenting the fui-
thei piivatization anu centialization of the cieation of
money. 0n the website of Beikshaies, a CC baseu in the
noitheastein 0.S.A., they claim that, "The banking system is
one of the most centializeu institutions of oui economy anu
International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
10
1u Knut Wicksell, anu othei monetaiy theoiists of the late 188u's anu 189u's, hau begun to woik haiu on theoiizing cieuit anu exploiing
non-specie baseu monetaiy systems (Laiulei 1991: 198). Theii effoits weie uiiven in gieat pait by theii uesiie to cieate a system that was
moie stable anu that woulu give the capitalist economy a moie ieliable meuium of exchange. The solutions anu iueas that emeigeu uuiing
this peiiou woulu impact the likes of }.N. Keynes who built much of his eailiei woik off the theoiies of Knut Wicksell (Laiulei 1991: 198).
11 This teim encompasses a bioau iange of monetaiy expeiiments that go by a iange of names: local cuiiencies, social cuiiencies, time
banks, local exchange tiauing systems, local money, complementaiy cuiiencies. This section uoes not attempt to aiticulate all of the nuances
between these uiffeient expeiiments, but iathei to make a geneialization about the paiticulai political conceptualizations upon which they
opeiate.
one of the majoi obstacles to stiengthening iegional
economies anu the communities within them" ("What Aie
Beikshaies."). This fiaming seems to uiscount the histoii-
cal context within which the Feueial Reseive was cieateu;
it was cieateu to limit the negative impact of the nineteenth
centuiy pattein of hoaiuing anu monopolization of golu
money by the piivate banks. Anu, in paiticulai to ueal with
the iesulting inauequate anu unieliable supplies of cieuit,
which weie especially thieatening to the fiee flow of com-
meicial exchange anu a thieat to the entiie capitalist ue-
mociacy.
The way to combat this piivatization anu centialization,
accoiuing to many CC auvocates, is to enu the goveinment
anu bank's monopoly ovei cuiiency cieation anu to insteau
give powei to small local communities anu inuiviuuals to
cieate theii own money. This uesiie to enu the centializeu
system, anu to ietuin to an eia of competing money issuais
is also connecteu to the iuea of enuing the politicization of
money cieation
12
. In fact the claim is maue that govein-
ment uoesn't even neeu to "give" this powei to citizens;
citizens just neeu to asseit theii own money cieation
powei. Thomas uieco, an authoi anu auvocate of CC, states
that, "we have calleu foi the sepaiation of money anu state,
but since the people uo not contiol theii goveinment, we
believe that sepaiation can only be achieveu as the people
asseit theii money powei" (uieco 2uu9: 111). uieco goes
on to claim that the, "politicization of money has inhibiteu
the wiuespieau auoption of bettei alteinatives" (uieco
2uu9: 118).
Pait of what the CC auvocates see as unique about this cui-
ient moment in histoiy, is the iise of infoimation anu net-
woiking technologies, which offei a iange of possible al-
teinative uecentializeu appioaches to cieating money. CC
auvocates that iun seveial websites anu actively woik to
piouuce the technological systems that enable anyone to
cieate a cuiiency claim that, "given how much infoimation
technology has evolveu iecently, the membeis of a com-
munity can be theii own aibiteis" (Biock, "New Cuiiency
Fiontieis"). The technology is essentially fiameu as ieplac-
ing the iole of goveinment oi banks; uecentializeu "cui-
iency uesign will mean the obsolescence" of any soit of
uepenuence "on any foim of cential authoiity" (Biock, "P2P
Cuiiency"). These auvocates iecognize that they aie chal-
lenging the histoiy of centializeu cuiiency cieation, "Al-
most all cuiiency uesigns to uate (uollais incluueu) uepenu
on eithei a scaice commouity (such as golu oi papei notes)
oi a centializeu authoiity to issue anuoi tiack the cui-
iency (baitei clubs, time-banks, etc)" (Biock, "P2P Cuiien-
cy")
1S
. Foi these auvocates, "The new fiontiei is about
open cuiiencies which uo not exist by manuate of banks oi
goveinment they aie uistiibuteu anu un-enclosable sys-
tems of wealth cieation which can be uesigneu to benefit
moie than a piivilegeu few" (Biock, et al.; "New Cuiiency
Fiontieis").
CC auvocates typically uo not see goveinment as iepiesen-
tative of theii inteiests, anu theiefoie they aie looking foi
ways of solving the scaicity of money via new means. This
peiceiveu failuie of not just the goveinment but also of the
banks, signals a key shift in the histoiy of the financial ue-
bates. The auvocates of CC aie not looking foi solutions
that fit within the histoiical unueistanuings of class ine-
quality anu iepiesentative goveinment. In essence the
system of iepiesentative goveinment, built to enable capi-
talism, is failing to meet the uemanus of at least the CC au-
vocates, if not a laige swath of society. The potential uis-
iuption to the entiie political economy is huge, anu figuiing
out how to uesign a system of money cieation that ietuins
a sense that the Feueial uoveinment actually is iepiesent-
ing anu meuiating the neeus of all classes, may be of ciitical
impoitance to the suivival of capitalist uemociacies.
Naigiit Kenneuy, who has wiitten anu lectuieu extensively
on CC has aigueu that, "Noney can be maue to seive iathei
than to iule, to be useiathei than piofit-oiienteuanu to
cieate abunuance, stability, anu sustainability" (qtu. in
Stonington, 2uu4). She saiu that while "money is one of the
most ingenious inventions of mankinu" it has "the potential
to be the most uestiuctive oi most cieative" (qtu. in Ston-
ington, 2uu4). Noney, cieuit anu cuiiencies in geneial, aie
the piouuct of a long seiies of social uecisions. These ueci-
sions have histoiically focuseu on uesigning a system of
money cieation that is both compatible anu ieinfoicing of
the unueilying class inequality necessaiy foi the smooth
opeiation of the Ameiican capitalist uemociacy. The iise,
since the 198u's, of a new set of financial uebates, iepie-
sents a unique challenge to a long iunning theoiy of money
anu cieuit cieation. The CC auvocates aie pointing to the
sense that the cuiient financial system is failing; theii solu-
tions aie not focuseu on saving the cuiient system but of
funuamentally ieconfiguiing the entiie political economy.
No theoiy of money cieation has attempteu to aiticulate an
alteinative political economy since the faileu effoits of the
colonial state legislatuies of the 177u's. Bemociatic
money, accoiuing to CC auvocates, is a type of money anu
cieuit that envisions a new political economy built on class
equality - it is a vastly uiffeient conceptualization of ue-
mociacy that unueipins this iuea. The CC movement is
ieaiticulating the ioles of goveinment anu banks, while
iaising ueepei questions about what it means to cieate
money uemociatically.
International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
11
12 Fieueiich von Bayek, the Nobel piize winning fiee-maiket economist, was a big auvocate of what he calleu, "the uenationalization of
money" aiguing foi piivate companies to issue theii own cuiiencies anu allow the maiket to ueteimine the value of money (von Bayek,
1976). Pait of his aigument iesteu on his antipathy towaius what he also saw as the politicization of money. This iepiesents anothei of the
seveial ways in which the CC movement comes to miiioi oi builu off fiee-maiket capitalist economists.
1S It is impoitant to point out that Biock et al, uiffei fiom many of the othei CC auvocates in that they uo not see a iole foi a valuable com-
mouity, anu have a uiffeient notion of value fiom that which many of the othei auvocates auheie to. I have wiitten about this in gieatei ue-
tail in Wainwiight, 2u11.
!"#!$%&'"#
Claims to be uemociatizing money have been maue iepeat-
euly thioughout the histoiy of the 0.S.A's existence. The
oiiginal effoits of colonial legislatuies to cieate inflationaiy
money, aimeu at leveling society, weie built of a conceptu-
alization of uemociacy that weie moueleu on oiiginal iueas
of uieek uemociacy - a system of uemociacy that saw ine-
quality anu elections as anathema to a tiue uemociacy.
With the iise of the Feueialists in the 178u's a veision of
uemociacy emeigeu that accepteu inequality anu iepiesen-
tative elections. 0nuei this histoiically specific iuea of a
capitalist uemociacy effoits centeieu on cieating money in
ways that woulu not thieaten the existence of inequality.
The piouuct of this fiaming iesulteu in incieasingly cen-
tializeu money cieation with a cozy ielationship uevelop-
ing between the uominant meichant anu banking class anu
the Feueial uoveinment. The Feueial uoveinment has con-
tinueu to claim that the uominant anu centializeu foim of
money cieation is the most uemociatic way of cieating
money; a way of cieating money that was also most com-
patible with a system of capitalism anu its inequality. In
the 186u's a iaie moment emeigeu in Ameiican histoiy in
which these claims weie challengeu anu new iueas of
abunuant, goveinment cieateu money, weie piomoteu.
The impoitant uistinction being maue that money coulu
both be abunuant anu capitalist while claiming to be ue-
mociatizeu. All of these eailiei histoiical uebates - those of
the colonialists, Feueialists, uieenbacks, anu Feueial Re-
seive auvocates - all claimeu to be uemociatizing money.
These claims all have to be placeu into the histoiically anu
geogiaphically specific context in which the theoiy of ue-
mociacy is being fiameu. The iise of the CC movement in
the 198u's iepiesents a new claim to be uemociatizing
money, a claim that seems to be in many ways countei to
the ovei two-hunuieu yeai unueistanuing of uemociacy,
which emeigeu out of the Feueialist uebates of the 177u's.
This papei has not attempteu to claim to know what is
uemociatic money; iathei it has attempteu to show how
money cieation has been uiiven by the context within
which it is opeiating. Anu, foi the past two hunuieu yeais
this context has been within the Ameiican capitalist-
uemociacy - a foim of uemociacy that is compatible with
capitalism anu accepts inequality. Touay's CC auvocates
seem to be challenging this conceptualization by pioposing
a type of uemociatic money that no longei seems compati-
ble with capitalism. They woulu uo well to exploie this
histoiy fuithei by exploiing the ielationship between ue-
mociacy anu capitalism within the context of money ciea-
tion.
('($'")*+,-.
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0niteu States. Cong. (1862). A Centuiy of Lawmaking foi a New
Nation: 0.S. Congiessional Bocuments anu Bebates, 1774 - 187S.
Statutes at Laige., S7th Cong., 2nu sess., Ch. SS., page S4S. Libiaiy
of Congiess. Web. 18 Aug. 2u1u.
International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
12
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International Journal Of Community Currency Research 2012 Volume 16 (D) 5-13 Wainwright
13
International Journal of
Community Currency Research
Volume 16 (2012) Section D 14-21
SELLING SCRIP TO AMERICA: IDEOLOGY,
SELF-HELP AND THE EXPERIMENTS OF THE
GREAT DEPRESSION
Sarah Elvins*
Department Of History, University Of Manitoba
!"#$%!&$
Although theie was no single pattein to the use of alteinative cuiiency in Ameiica uuiing the
uieat Bepiession, the aiguments useu by suppoiteis of sciip often playeu on common themes.
Suppoit foi sciip ieflecteu the belief that local iesouices coulu be maishaleu to combat the eco-
nomic situation. Although the Bepiession was a national (anu inteinational) ciisis, many sciip
auvocates believeu that they woulu be able to focus impiovement within one paiticulai com-
munity. Sciip appealeu to Ameiican notions of self-help anu inuiviuualism. Even faceu with the
challenges of the Bepiession, few Ameiicans weie willing to embiace iauical change. Auvo-
cates of alteinative cuiiency hau to walk a fine line between emphasizing the innovative possi-
bilities of sciip anu ieassuiing the public that these plans weie simply a means to "piime the
pump" of an essentially sounu economic system.
!&'()*+,-.,/,($#
The authoi acknowleuges suppoit foi this ieseaich fiom the Social Sciences anu Bumanities
Reseaich Council of Canaua anu the 0niveisity of Nanitoba. The authoi was pleaseu to be pait
of the Inteinational Confeience on Community anu Complementaiy Cuiiencies in Lyon in 2u11.
Thanks to Bi. Bugo uouschalk foi allowing me to use some images of sciip fiom his collection.
* Email: elvinssms.umanitoba.ca
$0 2345 4637 89432:5; Elvins, S. (2u12) 'Selling Sciip To Ameiica: Iueology, Self-help anu the Expeiiments of
the uieat Bepiession' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3$&%14 16 (B) 14-21 <www.ijcci.net>
ISSN 1S2S-9S47
!"#$%&'(#!%"
The iavages of the uieat Bepiession piompteu many com-
munities acioss the 0niteu States to expeiiment with sciip,
baitei, anu othei foims of self-help. Alteinative cuiiency
schemes piolifeiateu aftei the Wall Stieet Ciash of 1929,
ieaching a peak in the eaily 19Sus anu waning as the eco-
nomic piogiams of Fianklin Belano Roosevelt's New Beal
weie put into place. Cities anu towns acioss the 0niteu
States attempteu to encouiage consumption anu alleviate
unemployment by issuing theii own foims of money.
Communities as uiveise as Chicago, Atlanta, Betioit, anu
tiny Bawaiuen, Iowa tuineu to sciip as a solution to the
ciisis. In some cases sciip was initiateu by municipal gov-
einments oi city councils, while in otheis piivate citizens,
meichants' associations, oi the unemployeu themselves
foimeu coopeiatives to put new types of money into action.
Theie was no single pattein to the use of alteinative cui-
iency in Ameiica: stamp sciip, baitei sciip, auction sciip,
anu tax anticipation waiiants weie all put into ciiculation
in uiffeient paits of the countiy (Baipei, 1948; uatch,
2uu8; Elvins, 2uuS; Wainei, 2u1u).
A closei examination of the uebate ovei sciip in the na-
tional anu local meuia by activists, politicians, business
leaueis, anu othei gioups can pioviue insight into the pos-
sibilities anu challenges foi futuie pioponents of alteina-
tive cuiiency in the 0niteu States. Even though the gioups
auvocating foi the use of sciip weie not unifoim, ceitain
aiguments weie iepeateuly mobilizeu in an effoit to gain
suppoit foi alteinative cuiiency. Fiist, sciip ieflecteu the
belief that local iesouices coulu be maishaleu to combat
the national economic ciisis. Although the Bepiession was
a national - anu inueeu inteinational - pioblem, backeis of
alteinative cuiiencies believeu that they woulu be able to
concentiate the ciiculation of money to impiove conuitions
within one paiticulai community.
Seconuly, sciip also appealeu to Ameiican notions of self-
help anu inuiviuualism. In the eaily (pie-New Beal) yeais
of the uieat Bepiession, Ameiicans ianging fiom Piesiuent
Beibeit Boovei uown to local chambeis of commeice ex-
piesseu concein that hanuouts of ielief to the unemployeu
coulu unueimine theii uignity anu sap them of theii will-
ingness to woik. The cieatois of sciip plans like the baitei
system ueviseu by the 0iganizeu 0nemployeu of Ninnea-
polis, Ninnesota, emphasizeu how the ielief that they of-
feieu was not chaiity, but a way to pioviue new oppoituni-
ties foi willing people to get back to woik.
Finally, a stuuy of the uiscussion of sciip in national anu
local meuia, by politicians, economists, anu business leau-
eis in the eaily 19Sus ieveals that alteinative cuiiency was
vieweu by many as an emeigency measuie, not a means to
peimanently tiansfoim the economy. Even faceu with the
ciisis of the Bepiession, few Ameiicans weie willing to
embiace iauical change. Auvocates of alteinative cuiiency
hau to walk a fine line between emphasizing the innovative
possibilities of sciip anu ieassuiing the public that these
plans weie simply a means to "piime the pump" of an es-
sentially sounu economic system.
Figure 1. Scrip from Clear Lake, Iowa and from the Or-
ganized Unemployed of Minneapolis, Minnesota. The
Organized Unemployed scrip features a photo of George
Mecklenburg and the slogan Work, not Dole. (from the
collection of Dr. Hugo Godschalk)
)%)'*+$ '"&-$.#+"&!"/. %0 #1- -(%"%23
The stuuy of sciip allows a unique oppoitunity to exploie
the aveiage consumei's unueistanuing of the economy anu
public uiscouises about the causes of the Bepiession. In
the months anu yeais aftei the Wall Stieet Ciash, a familiai
explanation foi the economic ciisis hingeu on the iole of
piivate consumeis who weie foolishly "hoaiuing" theii
money when they neeueu to iesume spenuing at the high
levels of the 192us. Piesiuent Beibeit Boovei cooiuinateu
an anti-hoaiuing uiive in eaily 19S2 to inciease the
amount of cuiiency in ciiculation (New Yoik Times 19S2a;
New Yoik Times 19S2b). Euitoiials anu ietail auveitise-
ments emphasizeu the iole of the piivate consumei in tuin-
ing economic conuitions aiounu. An euitoiial in the Buffalo
Evening News in Buffalo, New Yoik, aigueu:
The law of supply anu uemanu is constant -
consumei, ietailei, manufactuiei. It's logical
anu self-eviuent. Neichants supply the con-
sumeis' neeus - youi neeus. Nanufactuieis
suppl y the meichants - youi mei-
chants.You aie a necessaiy pait of the
business cycle, anu upon youi filling youi
place in this cycle uepenus the piospeiity
anu welfaie of the nation. If you stop buy-
ing, the meichants' shelves iemain stockeu,
International Journal Of Community Currency Research 2012 Volume 16 (D) 14-21 Elvins
15
the sales foiceu must be thinneu, factoiies
must shut uown (Buffalo Evening News,
19Su).
To business leaueis, this emphasis on voluntaiism anu
piivate consumption woulu pose no gieat iueological
thieat. By the enu of the 192us, the matuiation of new
foims of maiketing, ietailing anu uistiibution hau encoui-
ageu Ameiicans to view the puichase of consumei goous as
a means of self-expiession anu self-uevelopment. The no-
tion that the economy coulu iecovei if only people woulu
stop foolishly hanging onto theii money anu iesume inui-
viuual spenuing was a comfoiting one. It suggesteu that
the economic ciisis was only a tempoiaiy setback, which
coulu be solveu not thiough gieat inuiviuual saciifice, but
insteau by ietuining to the fiee-spenuing "noimalcy" of the
192us.
But beyonu simply getting consumeis to spenu, many
economists, ietaileis anu politicians became inteiesteu in
the notion that spenuing coulu be taigeteu within one pai-
ticulai community, focusing effoits at iecoveiy. This type
of aigument was not entiiely new. As inuepenuent ietail-
eis in Ameiican towns anu cities faceu incieasing competi-
tion fiom chain stoies anu mail oiuei catalogues uuiing the
191us anu 192us, many mobilizeu a language of localism to
encouiage pations to spenu "at home." Bepaitment stoies
emphasizeu that they weie locally owneu anu opeiateu,
that piofits eaineu weie chuineu back into the community,
anu not siphoneu off to Wall Stieet oi some fai-off coipo-
iate heauquaiteis. The accuiacy of such claims might be
open to uebate (foi example, one might aigue that chain
stoie bianches paiu just as much in local taxes as othei
businesses, anu that buying an item manufactuieu in a uis-
tant place uiu not qualify as a "local" puichase even if it was
acquiieu in one's hometown stoie). But foi the aveiage
consumei, these types of aiguments woulu alieauy be quite
familiai.
In a time of economic ciisis, ietaileis anu business auvo-
cates continueu to encouiage consumeis to pay attention
to wheie they spent theii uollais in oiuei to maximize the
amelioiative effects of piivate consumption. The euitoi of
the local papei in Cleai Lake, Iowa, acknowleugeu that any
foim of expenuituie was welcome in an effoit to jump stait
the economy, but uigeu citizens to piioiitize local spenu-
ing:
.above all, buy EvERYTBINu P0SSIBLE IN
TBIS T0WN, oi fiom the faimeis of oui
community that will iestoie oui suiplus
money to woiking in oui own community -
among ouiselves - anu oui 0WN piospeiity
will be gieatei than otheiwise.When we
tiaue with each othei we cieate local pios-
peiity. When we tiaue with othei people
elsewheie who uo not spenu anything with
us, we cieate local uepiession. Theie can be
no happy meuium - it is eithei one oi the
othei (Cleai Lake Niiioi, 19S2).
This message was iepeateu in a seiies of newspapei aus by
a gioup of local businesses. Reaueis weie exhoiteu, "Bi-
viue Youi Bollais with Youi Neighbois - Buy at Bome"
(Cleai Lake Niiioi, 19S1a). Cleai Lake iesiuents who took
theii uollais to anothei town oi city oi sent them to uistant
mail-oiuei houses weie not much bettei than the soluiei
who woulu ueseit his comiaues on the fielu of battle: con-
sumeis weie exhoiteu, "Stop!! Bon't be a Beseitei!" (Cleai
Lake Niiioi, 19S1b) In Rochestei, New Yoik, the local
Civic Committee oiganizeu a pleuge campaign to encouiage
inuiviuuals to piomise to spenu a ceitain amount of money
within the local economy (Elvins, 2uu4). In Key West, Floi-
iua, ietaileis oiganizeu a "home uollai" campaign in which
they ieminueu consumeis that no mattei wheie they spent
money in Key West, local businesses contiibuteu to civic
impiovements, paiu wages to people in the aiea, anu
helpeu to impiove conuitions foi all. Consumeis weie tolu,
"The uollai you spenu at home - stays heie anu woiks. . .
Remembei youi neighboi will take bettei caie of you than
a stiangei" (Key West Citizen, 19S2).
It was not much of a leap foi meichants to move fiom en-
couiaging consumption at home to uevising foims of altei-
native cuiiency that coulu only be spent within one com-
munity. In the eaily 19Sus, as communities expeiimenteu
with ways to coax moie money into ciiculation, the iuea
that some new soit of money coulu help to solve the ciisis
gaineu influence. Boosteis aigueu that sciip coulu focus
iecoveiy effoits in one aiea, allowing people to help theii
neighbois without iisk of funus being uiveiteu to Wall
Stieet bankeis oi stiangeis outsiue of the aiea. Anu in the
case of a community wheie theie was little cuiiency to
spaie, sciip coulu help to get business moving once again.
In the small town of Bawaiuen, Iowa, Chailes Zylstia be-
came an eaily pioponent of stampeu sciip. Zylstia, a Butch
immigiant, hau woikeu in a coopeiative bank befoie aiiiv-
ing in the 0.S. anu was familiai with Euiopean cuiiency
expeiiments anu the theoiies of Silvio uesell (Bawaiuen
Inuepenuent, 19S2; Weishaai anu Paiiish, 19SS, p.2u).
Zylstia uevelopeu a plan to pay the unemployeu to peifoim
public woiks: his sciip was uesigneu to geneiate its own
ieuemption funu thiough the puichase of stamps. 0seis of
sciip woulu be iequiieu to puichase a S-cent stamp anu
affix it to the back of the ceitificate each time it changeu
hanus. Aftei the money hau ciiculateu S6 times, it woulu
be woith $1.u8 (the extia eight cents woulu be collecteu foi
auministiative costs) anu coulu be ieueemeu in cash. The
piominent Yale economist Iiving Fishei became exciteu by
the possibilities of the Bawaiuen plan, although he cau-
tioneu that the iequiiement of a puichase of stamp foi
eveiy tiansaction woulu be less effective than a uateu plan,
wheie sciip coulu ciiculate fieely until, aftei a peiiou of
one oi two weeks, a stamp woulu be have to be puichaseu
to extenu its use. Fishei saw stamp sciip as a uiiect chal-
lenge to consumeis who weie hoaiuing cuiiency: it was "a
fleet-footeu cuiiency which nobouy can hoaiu" because the
cost of affixing a stamp on each ceitificate woulu penalize
any consumei foolish enough to holu onto sciip without
spenuing it (Fishei, 19SS). Fishei touieu the 0.S. offeiing
International Journal Of Community Currency Research 2012 Volume 16 (D) 14-21 Elvins
16
auvice about the mechanics of alteinative cuiiency plans to
inteiesteu communities, anu sent his ieseaich assistant
Bans Cohissen to collect mateiial about sciip expeiiments
in ueimany anu Austiia.
Zylstia, while not the inventoi of stamp sciip, became a
majoi piomotei of its use in the 0niteu States. Be saw un-
employment as a community pioblem, anu aigueu that just
as citizens uuiing Woilu Wai I hau iallieu to suppoit the
Libeity anu victoiy bonu uiives, "WE ARE AT WAR N0W,
at wai with each othei. We aie tiying to hang onto money
anu piopeity with a ueathgiip, but we uo not seem to ieal-
ize that it is oui fiienu's thioat of which we have holu anu
the haiuei we squeeze the moie uifficult it becomes foi this
fiienu to supply us with the necessaiy foou anu manufac-
tuieu aiticles" (Zylstia 19S2b). This sense of the iesponsi-
bility of all community membeis towaius the wellbeing of
each was key to the success of the Bawaiuen plan. Zylstia
aigueu that in a small community, most people woulu not
minu having to pay S cents in oiuei to complete a tiansac-
tion using sciip, given the gieat benefit that the piogiam
woulu have to geneial business conuitions anu in the ciea-
tion of woik foi theii neighbois (Zylstia, 19S2a).
Figuie 2. Photogiaph of coin submitteu in exchange foi
sciip in Cleai Lake, Iowa, 19SS (fiom the collection of Bi.
Bugo uouschalk)
Cleai Lake, Iowa, was home to a novel effoit to help local
faimeis by abanuoning the golu stanuaiu foi the "coin
stanuaiu." A gioup of local businessmen offeieu to pay 2S
cents in sciip pei bushel of coin submitteu, almost thiee
times the maiket piice. The coin was then to be solu at a
public auction. Neichants in the town piomiseu to accept
the sciip foi puichases, anu then tuin the coupons ovei to
the Coin Exchange Bank foi ieuemption. Piomotional ma-
teiials publisheu by the Coin Exchange Committee encoui-
ageu local faimeis anu citizens to be a pait of a histoiic
moment foi Cleai Lake: "This is youi chance to help this
community stait conuitions impioving" (Figuie S). 0n
Febiuaiy 24, 19SS, eighteen oveiflowing bins of coin lineu
Nain Stieet anu South 4th Stieet in uowntown Cleai Lake.
Souvenii photogiaphs weie maiketeu to the public so that
citizens coulu always iemembei this moment of aiea coop-
eiation.
Retaileis pickeu up on the notion that sciip helpeu to en-
suie that ielief effoits weie concentiateu within the com-
munity, anu the iuea was iepeateu in publicity foi alteina-
tive cuiiency campaigns. A plan ueviseu in Canaisie was
tiumpeteu as a "Plan to Keep Noney Ciiculating at Bome"
(New Yoik Times, 19SSb). Piofessoi E. B. uault of the
School of Business Auministiation at the 0niveisity of
Nichigan was an auvocate of baitei sciip as a means to
keep tiaue flowing within communities. In a memoianuum
foi ietaileis about the benefits of sciip, uault suggesteu
that meichants shoulu use sciip as the basis foi a "tiaue-at-
home" auveitising campaign. Be aigueu that consumeis
shoulu be ieminueu in piomotional mateiial (anu even on
inuiviuual sciip ceitificates) with a statement like "You
have this money only because oui local meichants suppoit
home inuustiies. If this money helps you, help youi local
inuustiies by buying fiom youi local meichants" (uault
19SS). The Evanston, Illinois, Retail Neichants' Associa-
tion (EIRNA) was instiumental in oiganizing sciip in that
community. The ietaileis aigueu that EIRNA money woulu
allow Evanston meichants to pay theii taxes, pay wages to
aiea employees anu suppoit othei local businesses (New
Yoik Times, 19S2c). Yet this emphasis on the local maiket
coulu also pose challenges: meichants weie caught be-
tween wanting to attiact customeis who wisheu to make
puichases anu supplieis who woulu not ieueem local sciip.
Even if iesiuents in a community unueistoou theii paitici-
pation in the economy in teims of theii pationage of the
aiea uepaitment stoie, that stoie was fiimly pait of a na-
tional economy. Inueeu, that meichant biought in goous
not only fiom aiounu the 0niteu States but fiom aiounu
the globe.
Figure 3. Promotional poster of the Clear Lake Corn Ex-
change, 1933 (from the collection of Dr. Hugo Godschalk)
The willingness of a laige business to accept sciip coulu
give a sense of legitimacy to the use of alteinative cuiiency.
Rich's Bepaitment Stoie in Atlanta iepeateuly steppeu in to
accept sciip that was issueu to the city's teacheis when a
International Journal Of Community Currency Research 2012 Volume 16 (D) 14-21 Elvins
17
capital shoitfall meant that theii salaiies weie going un-
paiu. The stoie uiu not iequiie teacheis to make a pui-
chase, but simply exchangeu theii sciip ceitificates foi
cash. Between 19Su anu 19S4, Atlanta issueu moie than
$Suu,uuu in sciip to municipal woikeis, which Rich's ab-
soibeu (Noigan, n.u.; Robeius, 199u, Elvins, 2u1u). Rich's
ieapeu the benefit of incieaseu loyalty fiom Atlanta teach-
eis, anu stoie piesiuent Waltei Rich was piesenteu as the
savioi of the city on the fiont page of the Atlanta Constitu-
tion (Atlanta Constitution, 19Su). In othei instances, how-
evei, sciip issues flounueieu as businesses iefuseu to pai-
ticipate, as was the case when Chicago's State Stieet ue-
paitment stoies iefuseu to accept the sciip which hau been
paiu to city teacheis. 0ne stoie executive explaineu that if
any single uepaitment stoie ueciueu to bieak iank with the
otheis anu accept sciip, "it woulu mean a tiemenuous iush
of buyeis taking out meichanuise anu leaving the stoies
with papei which they woulu be obligeu to tuin into cash
foi theii own cieuitois" (Chiistian Science Nonitoi, 19S1).
!"#$%&"#'( *+, -&./0,1
The tiauitional Ameiican celebiation of inuiviuualism anu
belief in self- help meant that even uuiing the ciisis of the
Bepiession, many weie waiy of collective solutions that
might unueimine the initiative of the unemployeu. Since
the late nineteenth centuiy, a geneial cultuial acceptance
of laissez-faiie capitalism anu social Baiwinist notions hau
iesulteu in a sense that the Ameiican economy pioviueu
oppoitunities foi those who weie willing to woik, anu that
it woulu be unnatuial anu ineffective to pioviue hanuouts
foi the pooi (Katz, 198S; Betten, 197S). A wave of self-help
oiganizations which aimeu to mobilize anu pioviue oppoi-
tunities to the unemployeu giew fiom coast to coast in the
eaily 19Sus (0.S. Bepaitment of Laboi, 19SS; Tselos, 1977;
uiinsteau anu Wisslei, 19SS). Sciip was cential to the
functioning of many of these new associations. In aieas
wheie people hau no cash on hanu, alteinative cuiiency
coulu facilitate baitei, allowing the exchange of goous anu
seivices to take place much moie piecisely. Nost of the
coupons useu in baitei anu exchange associations weie in
the foim of commouity sciip (wheie waiehouse ieceipts
backeu up the meuium of exchange) but in some cases
"houi" sciip was issueu which useu houis of woik as the
stanuaiu. A gioup of Bailem businessmen openeu the Bai-
lem Nutual Exchange, which issueu sciip to membeis in
exchange foi houis of skilleu woik (New Yoik Times,
19SSa).
In Ninneapolis, a gioup calleu the 0iganizeu 0nemployeu
ian a waiehouse anu stoie wheie the only ciiculating me-
uium of cuiiency was sciip. Reveienu ueoige Necklen-
buig, uiiectoi of the piogiam, aigueu that sciip was ciucial
in biiuging the gap between unemployeu laboi anu suiplus
piouucts. Be iecalleu yeais latei, "0ui lack was not foou
anu clothes; oui lack was money. People coulu not buy
things without money" (Necklenbuig, 1964, pp. 7S-4).
0nemployeu woikeis ieceiveu $1.Su a uay in sciip to woik
chopping woou, woiking on a plot of lanu giowing vegeta-
bles, making pieseives oi canning saueikiaut. The oigani-
zation ian a "white-collai" iestauiant foi the unemployeu,
wheie hot lunches weie solu foi 1u cents, anu a uoimitoiy
wheie one coulu pay foi a beu to sleep in with 1S cents of
sciip a night. The gioup's stoie stockeu an amazing aiiay
of items - not only useu goous biought in foi baitei but
woou, piouuce anu a host of piouucts maue by woikeis foi
the coopeiative. At its height, ovei 1,Suu people visiteu the
facility uaily (Kuitz, 19SS).
Key to the success of the piogiam, in Necklenbuig's view,
was the psychological benefit it offeieu to unemployeu
Ninnesotans. In his memoiis, Necklenbuig uesciibeu "The
best seivice the 0iganizeu 0nemployeu hau ienueieu was
to save the self-iespect of the people. They all felt that they
weie not ieceiving chaiity. They weie woiking coopeia-
tively with each othei anu foi each othei, unuei caiefully
laiu plans." (Necklenbuig, 1964, p. 78) A publicity flyei foi
the oiganization boasteu of the spiiit of comiaueship that
infuseu foimeily unemployeu woikeis, now engageu in
chopping woou oi woiking at the saueikiaut factoiy:
"These people feel they aie woiking foi themselves, not foi
somebouy else. The ex-bankei woiks with the ex-plumbei
chopping woou anu eating the heaitiest meals they have
enjoyeu in twenty yeais." A closing statement on the cen-
tial lessons that the auministiation of the 0iganizeu 0n-
employeu hau leaineu thioughout the expeiiment asseiteu
"0nemployeu people want to woik. They hate the bieau-
line" (0iganizeu 0nemployeu, n.u., p. 4). When Kail Staik-
weathei of Plymouth, Nichigan wiote to Iiving Fishei foi
infoimation about setting up a sciip piogiam in his com-
munity, he emphasizeu his sense of piiue in his own initia-
tive: "Even though I have nothing else, I still have the opti-
mistic attituue, time anu eneigy. I want to use this in some
way to help get things out of the geneial uoluiums"
(Staikweathei, 19SS).
The fact that sciip woulu not be tainteu with suggestions of
chaiity but woulu pioviue a way foi inuiviuuals who weie
uown on theii luck to help themselves was touteu as a cleai
auvantage by communities contemplating the use of sciip
foi ielief payments to the unemployeu. In the city of Poit-
lanu, 0iegon, officials emphasizeu that sciip "iepiesents a
sinceie effoit on the pait of public officials anu well-
meaning piivate citizens to enable theii neighbois to help
themselves thiough self-iespecting woik" (Nultnomah
County, n.u.) This language of self-ieliance anu the psycho-
logical impoitance of allowing inuiviuuals to feel that they
weie eaining theii ielief payments, iathei than simply ie-
ceiving a hanuout, was echoeu by othei sciip piomoteis.
When wiiting to Iiving Fishei about the benefits of self-
liquiuating cuiiency, Chailes Zylstia aigueu:
Somehow people will have to be able to buy
the things that they neeu to live, oi the pies-
suie can not be ietaineu anu ievolution will
iesult. The money necessaiy to pay foi
these necessities can be collecteu as volun-
taiy gifts anu uonateu, uestioying people's
moiale, oi it can be pioviueu thiough a
cieuit extension to pioviue woik (Zylstia,
19S2c).
International Journal Of Community Currency Research 2012 Volume 16 (D) 14-21 Elvins
18
Zylstia compaieu sciip to a soit of piessuie valve that
coulu ielieve tensions which might otheiwise iesult of an
oveithiow of the existing system. Fishei, in tuin, unuei-
scoieu the sense of sciip as a ielief plan that offeis woik,
not chaiity, to the unemployeu when suggesting the use of
a national system of stamp sciip to the Emeigency Relief
auministiation. Be noteu that unlike a "uole" payment
which piimaiily benefits its iecipient, sciip ciiculates
thiough an entiie community anu thus spieaus its benefit
to all. Best of all, "When given to the unemployeu, Stamp
Sciip uoes not cieate the psychology of chaiity; it meiely
puts the unfoitunate in a position to help themselves"
(Fishei, n.u.). Economist Stuait Chase aigueu that these
systems of exchange woulu help to quicken the ciiculation
of ieal money, but just as impoitantly, woulu "iestoie self-
iespect anu tangible comfoit" to consumeis enuuiing the
iavages of the uepiession (Chase, 19SS).
!"#$#%& ()* !+$!
Sciip was an innovative expeiiment foi communities giap-
pling with an unpieceuenteu economic ciisis. Politically, it
was vieweu as a "piogiessive," but not ievolutionaiy,
measuie. Communities fiom acioss the political spectium
became inteiesteu in the possibilities of alteinative cui-
iency. 0n one hanu, a community like Bawaiuen, Iowa,
was iepoiteu as being "goveineu by a council so 'libeial' in
its attituues" that it hau cieateu a municipally-owneu light
anu watei woiks to funu all costs of city goveinment. It
was not seen as suipiising that the council woulu be open
to new collective solutions to the pioblem of unemploy-
ment (New Yoik Beialu Tiibune, 19SS). When, on the othei
hanu, Evanston, Illinois fiist pioposeu the use of alteinative
cuiiency, the Chiistian Science Nonitoi uesciibeu, "This
conseivative subuib to the noith of Chicago has suuuenly
gone ultia-piogiessive with the auoption of a stampeu
sciip plan" (Chiistian Science Nonitoi, 19S2). The authois
of an eaily suivey of baitei anu sciip in Ameiica weie em-
phatic that expeiiments with community self-help anu al-
teinative cuiiency weie not a iauical uepaituie fiom tiaui-
tional piactices. They noteu,
Nost of the thiee hunuieu anu fifty baitei
oiganizations anu the one hunuieu unem-
ployeu gioups in the countiy aie locateu in
sections of the countiy populateu by what is
commonly known as olu Ameiican stock.
They aie the plouuing, conseivative, loyal,
'iuggeu inuiviuualists,' the so-calleu back-
bone of the nation. In haiu times they finu it
easy to co-opeiate anu woik togethei (Wei-
shaai anu Paiiish, 19SS, p. 1uS).
The emeigency of the Bepiession coulu thus push some of
these tiauitional "inuiviuualists" into moie collective ac-
tion. But it uiu not tiansfoim theii coie beliefs. While
some Communist Paity membeis anu ciitics of "tyiannical
capitalism" calleu into question the existing social anu eco-
nomic system, the majoiity of Ameiicans "uug in anu
helpeu themselves in a simple way. It is an auventuious,
hopeful.Ameiican movement" (Weishaai anu Paiiish,
19SS, p. 11u).
Foi even the most aiuent suppoiteis of sciip plans, caie
hau to be taken to emphasize that alteinative cuiiency
woulu pioviue a tempoiaiy boost to the existing economy,
not a way to facilitate abanuonment of the cuiient system.
The metaphoi of "piiming the pump" of the economy
seiveu as a shoithanu foi sciip's iole: it woulu pioviue a
tempoiaiy boost to encouiage the flow of "ieal" money into
ciiculation. In his 19SS guiue to stamp sciip, Iiving Fishei
uesciibeu how as a boy he was given the job of pumping
watei at his gianumothei's house. Aftei laboiing fuiiously
without piouucing any watei fiom the pump, he was in-
stiucteu to pioviue a "supply-siue scoop" of watei in oiuei
to connect with the supply of watei in the giounu anu jeik
it out of hiuing. Fishei aigueu, "Such is the office of Stamp
Sciip - to piime the pump, which has thus fai been unable
to connect the gieat supply of cieuit cuiiency with the
thiisty woilu. The small scoop of watei is the customei
walking with his stamp sciip" (Fishei, 19SS, Chaptei IX).
Figure 4: Hawarden, Iowa stamp scrip (from the collection
of Dr. Hugo Godschalk)
Fishei saw local sciip piogiams as insufficient to jolt the
economy back to a healthy state, anu so pioposeu a na-
tional sciip plan, to be auministeieu thiough the 0.S. Post
0ffice. Bemociatic Repiesentative Samuel B. Pettengill of
Inuiana sponsoieu a bill foi a national sciip plan jointly
with Senatoi }ohn Bollis Bankheau of Alabama. In his ie-
maiks to the Bouse of Repiesentatives, Pettengill explaineu
how sciip coulu piompt hoaiueu uollais back into the
economy:
It is submitteu that this bill attacks the pioblem at its foun-
uation. It biings buyeis into the maiket. It encouiages the
payment of uebt. It penalizes buyeis foi not using available
puichasing powei..It might be all that is necessaiy to
"piime the pump." As soon as these buyeis come into the
maiket place, confiuence shoulu ietuin anu values imme-
uiately stait to iise. If that shoulu be the iesult, then othei
money, now hoaiueu by the hunuieus of millions of uollais,
woulu also come into the maiket. People woulu say, "Now
is the time to buy" (Congiessional Recoiu, 19SS).
International Journal Of Community Currency Research 2012 Volume 16 (D) 14-21 Elvins
19
The secietaiy of the Evanston Illinois Retail Neichants'
Association similaily emphasizeu the way in which sciip
coulu allow not only those in the uiiest neeu but consum-
eis who weie making uo with "shabby anu woin" clothing,
peisonal effects anu householu fuinishings because of a
geneial lack of confiuence in business. Sciip coulu help
these consumeis to finally ietuin to the maiketplace. Be
noteu, "The law of uemanu will be foitifieu with ieauy cash
to tuin the wheels of piogiess. The law of supply will cause
the factoiy whistles to blow anu machineiy to hum.oui
consuming capacity has not uecieaseu, noi has oui popula-
tion uecieaseu" (}ans, 19SS).
Even oiganizations which hau manageu to set up a soit of
alteinative economy of baitei tiansactions saw theii ac-
tions as a supplement, not a challenge, to conventional
business. ueoige Necklenbuig aigueu that Ninneapolis's
sciip issue woulu ultimately benefit aiea meichants, by
"stiiiing up the stagnant pool into which business has
slumpeu" (Tselos, 1977, p. S14). A pamphlet piouuceu by
the 0iganizeu 0nemployeu self-consciously iejecteu any
suggestion that the coopeiative was somehow a challenge
to the capitalist system, maintaining, "We aie not a piotest
movement. We aie foi laboi. We aie foi the mei-
chants.We uo not inteifeie with iegulai business because
we cieate new business which woulu not have been in exis-
tence hau we not oiganizeu" (Executive Committee, 19SS).
Such piogiams weie conceiveu as a way to tempoiaiily
cieate a sepaiate economy foi the unemployeu. 0iganizeis
assumeu that as soon as membeis of the coopeiative ie-
gaineu full employment, they woulu once moie use theii
wages to shop in the conventional ietail outlets of the
community. Sciip simply facilitateu exchange amongst the
unemployeu anu was thus a supplement, not a thieat, to
the "iegulai" economy.
!"#!$%&'"#
The many business leaueis anu politicians who suppoiteu
sciip weie split between a willingness to expeiiment foi
the sake of iecoveiy anu an essentially conseivative faith in
the capitalist system. Foi those inteiesteu in piomoting
alteinative cuiiencies in the twenty-fiist centuiy, theie aie
some lessons that can be leaineu fiom the expeiiences of
Ameiicans uuiing the uieat Bepiession. uiven the uivei-
sity of those involveu in sciip plans, it is stiiking the extent
to which common themes of self-help, coopeiation, anu
local community action iecui again anu again in the aiti-
cles, speeches, anu piomotional mateiials suppoiting al-
teinative cuiiency. It is possible that some of the activists
involveu in these campaigns hau laigei goals of tiansfoim-
ing the economy: figuies like Chailes Zylstia anu Iiving
Fishei ceitainly floateu othei iueas of monetaiy iefoim
that extenueu beyonu the ciisis of the Bepiession. 0theis,
like the meichants involveu in Evanston's EIRNA scheme
oi the membeis of the Cleai Lake Coin Exchange saw theii
actions as an extiaoiuinaiy iesponse to extiaoiuinaiy con-
uitions. If sciip woikeu as they hopeu, eventually it woulu
no longei be neeueu, anu the economy woulu go back to
functioning as it uiu uuiing the piospeiity of the 192us.
Bespite the hopes anu ambitions of all of these gioups,
sciip uiu not piove successful in enuing the Bepiession. As
}onathan Wainei has noteu, at best these expeiiments
tempoiaiily helpeu to mitigate the woist effects of unem-
ployment in small communities (Wainei, 2u1u). Typically,
aftei a fluiiy of inteiest anu newspapei iepoiting about the
stait of a sciip plan, aftei a peiiou of only a few weeks oi
months the issue woulu collapse anu local goveinments
sought out othei means to solve theii financial ciisis.
This papei suggests that it is woith paying attention to the
ihetoiical stiategies useu by sciip oiganizeis. In the
Ameiican context, theie has tiauitionally been little ioom
in mainstieam political uiscouise foi expiessions of iauical
collective action. Buiing the 19Sus, sciip oiganizeis weie
able to encouiage inuiviuuals to paiticipate in alteinative
cuiiency expeiiments by highlighting the ielationships of
local consumeis to the businesses in theii communities, by
emphasizing the ways in which sciip was supeiioi to chai-
ity in pieseiving values like inuiviuualism anu self-iespect,
anu by shying away fiom any suggestion that alteinative
cuiiency was ievolutionaiy oi woulu peimanently change
the stiuctuie of Ameiican capitalism. This is not to ueny
the tiansfoimative potential of sciip as a tool of iefoim,
but to ieminu oiganizeis of futuie sciip plan that in oiuei
foi any plan to iesonate beyonu the iealm of local activists,
to be tiuly embiaceu by a wiuei public, attention must be
paiu to laigei cultuial patteins anu beliefs. By appealing to
tiauitional Ameiican notions of self-help anu inuiviuualism,
sciip oiganizeis might be able to bioauen theii suppoit
anu ensuie the continueu success of complementaiy cui-
iency issues.
('($'")*+,-.
Atlanta Constitution (19Su) "Rich's Inc. Will Auvance Pay foi At-
lanta School Teacheis". Becembei 14, p. 1.
Atlanta }ouinal (19Su) "Teacheis' Salaiies Paiu at Rich's". Becem-
bei 21, p. S.
Buffalo Evening News (19Su) "Buy 0ut Bepiession". Novembei 2u,
p. 1.
Chase, S. (19SS) "Suu,uuu Tuin to the 0se of 'Woouen Noney'".
New Yoik Times, }anuaiy 1S, p. E8.
Chiistian Science Nonitoi (19S1) "Negotiating Theii Sciip Salaiy
New Stuuy foi Chicago Teacheis". Septembei 11, p. 8.
Chiistian Science Nonitoi (19S2) "City in Illinois Auopts Sciip to
Raise Funu". Becembei 29, p. 1.
Cleai Lake Niiioi (19S1a) "Biviue Youi Bollais with Youi Neigh-
bois". }uly 2S, p. S.
Cleai Lake Niiioi (19S1b) "Stop!!! Bon't Be a Beseitei!" August 6,
p.S.
Cleai Lake Niiioi (19S2) "Euitoiial". Naich S1, p. S.
Cohissen, B. (1991) "Woiking foi Iiving Fishei". Cato }ouinal 1u
no. S (Wintei): pp. 82S-8SS.
International Journal Of Community Currency Research 2012 Volume 16 (D) 14-21 Elvins
20
Congiessional Recoiu (19SS), Bouse of Repiesentatives, Febiuaiy
22.
Elvins, S. (2uu4) Sales anu Celebiations: Retailing anu Regional
Iuentity in Westein New Yoik State, 192u-194u. (Athens, 0hio:
0hio 0niveisity Piess).
Elvins, S. (2uuS) "Sciip Noney anu Slump Cuies: Iowa's Expeii-
ments with Alteinative Cuiiency uuiing the uieat Bepiession".
The Annals of Iowa, vol. 64 no. S (Summei), pp. 221-24S.
Elvins, S. (2u1u) "Sciip, Stoies, anu Cash-Stiappeu Cities: Ameii-
can Retaileis anu Alteinative Cuiiency uuiing the uieat Bepies-
sion". }ouinal of Bistoiical Reseaich in Naiketing, vol. 2 no. 1 pp.
86-1u7.
Executive Committee of the 0iganizeu 0nemployeu of Ninneapolis
(19SS) "Calling in Sciip". Pamphlet in ueoige Tselos Collection,
Ninnesota Bistoiical Society.
Fishei, I. (n.u.) "Nemoianuum". Iiving Fishei Papeis, New Yoik
Public Libiaiy, vol. 28.
Fishei, I. (19SS) Nasteiing the Ciisis: With Auuitional Chapteis on
Stamp Sciip. (New Yoik: Auelphi).
uatch, L. (2uu4) "'This is Not 0niteu States Cuiiency:' 0klahoma's
Emeigency Sciip issues uuiing the Banking Ciisis of 19SS". The
Chionicles of 0klahoma, vol. 82 no. 2 (Summei), pp. 168-199
uatch, L. (2uu8) "Local Noney in the 0niteu States Buiing the
uieat Bepiession". Essays in Economic & Business Bistoiy, vol.
XXIv, pp. 47-61.
uault, E.B. (19SS) "A Sounu Noney Plan foi Community Baitei".
Naich 1S, Buiton Bistoiical Collection, Betioit Public Libiaiy,
Nayois' Papeis, Box 7.
uiinsteau, L.B. anu Wisslei, W. (19SS) "Baitei Sciip anu Piouuc-
tion 0nits as Self-Belp Bevices in Times of Bepiession". Buieau of
Business Reseaich, College of Commeice anu Auministiation, 0hio
State 0niveisity, Novembei.
Bams, Richaiu B. (1991) "Paiu in Sciip". Nichigan Bistoiy vol. 7S
no. 1 (}anuaiyFebiuaiy): pp. S7-4S.
Baipei, }. W. C. (1948) "Sciip anu 0thei Foims of Local Noney".
Ph.B. uisseitation, (0niveisity of Chicago).
Bawaiuen Inuepenuent (19S2), August 4 p. 2.
}ans, P.N. (19SS) Pioposal foi national sciip plan, Iiving Fishei
Papeis, New Yoik Public Libiaiy.
Katz, N. (198S) In the Shauow of the Pooihouse: A Social Bistoiy
of Welfaie in Ameiica. (New Yoik: Basic Books).
Key West Citizen (19S2) "Look! You Keep a Stiing 0n Eveiy Bollai
You Spenu At Bome". Apiil 19, p. 6.
Kuitz, R. (19SS) "Resume of Stuuy of the 0iganizeu 0nemployeu,
Inc., of Ninneapolis, Ninn.". Russell Sage Founuation, 0niteu Way
of Ninneapolis Recoius, Foluei 1SS: 4, Social Welfaie Bistoiy
Aichives, 0niveisity of Ninnesota.
Necklenbuig, u. (1964) Nevei a Bull Noment: Reflections on Sixty
Yeais in the Piotestant Ninistiy. (New Yoik: Exposition Piess).
Noigan, L. (n.u.) "The Foui R's in ueoigia. . . Reauin', Wiitin',
'Rithmetic anu Rich's". 0npublisheu Nanusciipt, Rich's Bepait-
ment Stoie Collection, NSS 7u8 Box 2, Foluei S, Kenan Reseaich
Centei, Atlanta Bistoiy Centei, Atlanta, uA.
Nultnomah CountyCity of Poitlanu, 0R (n.u.). Pamphlet, Iiving
Fishei Papeis, New Yoik Public Libiaiy, vol. 28.
New Yoik Beialu Tiibune (19SS) "Stampeu Noney Calleu Success
in Iowa Town". Section 2, p. 1.
New Yoik Times (19S2a) "Bumble Bomes anu Biive on Boaiuing".
Febiuaiy 1S, p. 26.
New Yoik Times (19S2b) "Biive 0pens in City to Check Boaiuing".
Naich 1, p. 1.
New Yoik Times (19S2c) "Sciip Bollais Ciiculateu in Evanston,
Ill.". Becembei 29, p. 2u.
New Yoik Times (19SSa) "Back Baitei in Bailem". }anuaiy 1u, p.
4u.
New Yoik Times (19SSb) "Neichants Sponsoi Plan to Keep Noney
Ciiculating at Bome". Naich 4, p. 27.
0iganizeu 0nemployeu Inc. of Ninneapolis (n.u.). Typesciipt leaf-
let, ueoige Tselos papeis, Ninnesota Bistoiical Society.
Robeius, W. (199u) "Lenueis of the Next to Last Resoit: Sciip
Noney in ueoigia, 19S2-19SS". Economic Review - Feueial Re-
seive Boaiu of Atlanta vol. 7S no. S (Septembei-0ctobei), pp. 16-
Su.
Staikweathei, K. B. (19SS) "Lettei to Iiving Fishei". Febiuaiy 1S,
Iiving Fishei Papeis, New Yoik Public Libiaiy.
Tselos, u. (1977) "Self Belp anu Saueikiaut: The 0iganizeu 0nem-
ployeu, Inc., of Ninneapolis". Ninnesota Bistoiy, vol. 4S (Wintei),
pp. Su6-2u.
0.S. Bepaitment of Laboi (19SS) "Coopeiative Self-Belp Activities
Among the 0nemployeu". Buieau of Laboi Statistics.
Wainei, }. (2u1u) "Stamp Sciip in the uieat Bepiession: Lessons
foi Community Cuiiency Touay." Inteinational }ouinal of Com-
munity Cuiiency Reseaich. vol. 14 pp. 29-4S.
Wainei, }. (2uu8) "The Anaheim Sciip Plan". Southein Califoinia
Quaiteily vol. 9u no. S, pp. Su7-S2S.
Weishaai, W. anu Paiiish, W. W. (19SS), Nen Without Noney: The
Challenge of Baitei anu Sciip. (New Yoik: u.P. Putnam's Sons).
Zylstia, C. (19S2a) "Fiist Release". Piess ielease, not uateu but
appeais to be 19S2, Iiving Fishei Papeis, New Yoik Public Libiaiy,
vol. 28.
Zylstia, C. (19S2b) "Seconu Release". Piess ielease, not uateu but
appeais to be 19S2, Iiving Fishei Papeis, New Yoik Public Libiaiy,
vol. 28.
Zylstia, C. (19S2c) Lettei to Iiving Fishei. 0ctobei 28, Iiving Fishei
Papeis, New Yoik Public Libiaiy.
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Novembei 18, Iiving Fishei Papeis, New Yoik Public Libiaiy, vol.
29.
International Journal Of Community Currency Research 2012 Volume 16 (D) 14-21 Elvins
21
International Journal of
Community Currency Research
Volume 16 (2012) Section D 22-35
TAX ANTICIPATION SCRIP AS A FORM OF LOCAL
CURRENCY IN THE USA DURING THE 1930S
Loren Gatch*
Department Of Political Science, University Of Central Oklahoma
!"#$%!&$
Buiing the woilu economic ciisis of the 19Sus, the 0niteu States expeiienceu wiuespieau use of
local cuiiency oi "sciip". The most significant foim of sciip, both in teims of the longevity anu
size of the issues, was tax anticipation sciip. This aiticle suiveys the vaiieties of tax anticipation
sciip issue uuiing this peiiou, anu suggests some applications to non-ciisis ciicumstances. Aftei
outlining the geneial expeiience with uepiession-eia sciip, this aiticle uesciibes the natuie anu
oiigins of tax anticipation sciip as a paiticulai foim of local cuiiency. It also examines specific
local aiiangements that affecteu the successful ciiculation of such sciip. The Ameiican juiis-
piuuence conceining non-national cuiiency is assesseu insofai as it puts into legal context sciip
issueu uuiing the 19Sus. The aiticle concluues by ielating the significance of the Ameiican ex-
peiience of the 19Sus to neo-chaitalist inteipietations of the oiigins anu functions of money.
* Email: lgatchuco.euu
$' )*+, +-*. /0+*)1,2 uatch, L. (2u12) 'Tax Anticipation Sciip as a Foim of Local Cuiiency in the 0SA uuiing
the 19Sus' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3$&%14 16 (B) 22-SS <www.ijcci.net> ISSN
1S2S-9S47
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International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
23
3 U:#-= 1"#D*=1 ,2 ()* "1* ,2 1/#$< ."#$%& ()* 34561 /:% C* 2,"%. $% G#,+% ]34`3^ :%. a:#<*# ]34`b^@ A+, 0,#* #*/*%( (#*:(0*%(1 ,2 : &*%F
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ing facility was necessaiy to manage municipal expenui-
tuies. In noimal times, this coulu be uone eithei by shoit-
teim financing fiom local banks, oi in laigei cities by the
sale of tax anticipation notes to investois. In effect, tax an-
ticipation financing pioviueu a souice of shoit-teim cieuit
that solveu a common pioblem of municipal finance.
Yet the political anu legal implications of this financing
weie not unpioblematic. Nunicipal goveinments uisbuiseu
funus using "waiiants", much as inuiviuuals might wiite
checks. If an inuiviuual hau no funus in hei account, then
hei check woulu not be paiu by the bank. uoveinments, in
contiast, opeiateu unuei gieatei legal foibeaiance. Tax
levies pioviueu a baseline estimate of what goveinments
hau to spenu; collecteu at specifieu inteivals, these ieve-
nues funueu the iecuiiing obligations that goveinments
hau enueavoieu to meet thiough theii appiopiiations.
Even if tax collections fell shoit of the estimates, govein-
ments coulu issue waiiants in anticipation of the taxes that
woulu ieueem them. Ciucially, the cieation of such floating
uebts was not subject to the legal limitations that goveineu
the issue of state anu local uebt. By the 19Sus, a majoiity of
Ameiican states imposeu iestiictions on the amount anu
type of uebt that goveinments coulu incui. Noieovei,
neaily all state goveinments weie foibiuuen fiom pleuging
the states' cieuit to inuiiectly guaiantee the uebts of local
goveinments oi piivate coipoiate entities (Ratchfoiu 1966
|1941j: 429-44S). Yet state couits hau inteipieteu the is-
sue of waiiants against tax levies as not giving iise to a
municipal uebt, even in the event that the actual ievenues
weie insufficient to pay them. As a iesult, state anu local
goveinments coulu evaue constitutional oi statutoiy limi-
tations on theii boiiowings by cieating floating uebts in
the foim of unpaiu waiiants. These uebts uiu not count
against existing limitations, even when they weie latei
coveieu by bank loans oi funueu by the latei sale of tax
anticipation notes (Baivaiu Law Review 19S2; Ratchfoiu
1966 |1941j: 468-47S).
While a common financial piactice, the issue of waiiants oi
notes against anticipateu taxes was fiowneu upon by mu-
nicipal finance expeits, who stiesseu theii potential foi
abuse. Inueeu, the economic ciisis of the 19Sus upenueu
these financing ielationships, anu exposeu the uangei of
using a floating uebt to finance cuiient expenuituies. Al-
though the maiket foi coipoiate uebt was the fiist to piice
in the economic uowntuin, by the enu of 19S1 municipal
uebt became incieasingly uifficult to place with investois
as it became appaient that the magnituue of the uowntuin
was affecting tax ievenues. Chaiacteiistic of these uifficul-
ties was the staik uiveigence between the piicing of local,
state, anu feueial uebt, as iisk-aveise investois fleu to the
gieatei secuiity of uebt backeu by a national tax base
(State anu Nunicipal Compenuium 19SS). Bepenuent as
they weie upon piopeity (ieal estate) taxes, state anu local
goveinments founu theii financing uisiupteu by the eco-
nomic collapse. Beclining piopeity valuations that accom-
panieu the uepiession eioueu the tax bases of state anu
local goveinments. 0nemployeu citizens anu bankiupt
businesses incieasingly lost theii piopeities to tax foieclo-
suies, which only ieuuceu the tax iolls anu buiueneu mu-
nicipalities with unsalable piopeities. Tax aiieais soaieu,
sometimes in iesponse to oiganizeu citizen iesistance ("tax
stiikes") to municipal levies (Beito 1989).
The fiscal expeiiences of two majoi Ameiican cities, Chi-
cago anu Betioit, weie emblematic both of the fiscal pie-
uicaments that gave iise to sciip, anu of how sciip coulu be
useu well oi bauly. In Chicago, legal challenges to piopeity
valuations in the late 192us cieateu a fiscal ciisis even be-
foie the uepiession began. When the uepiession hit, col-
lapsing piopeity values ievealeu incompetent anu coiiupt
piopeity assessment piactices which only aggiavateu the
tax shoitfalls of the 19Sus. As a iesult, Chicago was the fiist
majoi city foiceu to pay its employees in tax anticipation
waiiants. Teacheis weie paiticulaily haiu-hit by the ciisis,
going foi neaily two yeais until Fall 19SS with only occa-
sional payments of theii iegulai salaiies (Buibank 1971).
The city of Betioit's fiscal pioblems also pieuateu the
woist of the economic uepiession. The iapiu giowth of the
automobile inuustiy uuiing the 192us (anu a neai tiipling
of the city's population between 191S anu 19Su) feu a
boom in municipal boiiowing to finance the city's expanu-
ing infiastiuctuie. As the automobile maiket shiiveleu
aftei 1929, the city founu it incieasingly uifficult to both
iefunu this uebt anu boiiow in the shoit teim to make up
foi tax shoitfalls. Between 1929 anu 19SS, moitgage foie-
closuies quintupleu. By 19S2-19SS, tax ieceipts amounteu
to only 6S% of the official levy; at the same time, the pei-
centage of the city's buuget uevoteu to uebt seivice chaiges
jumpeu to ovei 4u%. The scissoi blaues of giowing uebt
anu ueclining ievenues also incieasingly cut Betioit off
fiom access to any shoit-teim financing. Beset with a heavy
uebt, a ciumbling economy, anu mounting tax uelinquen-
cies, the city goveinment woikeu with gioups of piominent
citizens to maintain confiuence in its cieuitwoithiness. In
paiticulai, the Committee on City Finances (the "Stone
Committee") sought to maintain woikable ielations be-
tween the city anu the banks which pioviueu it shoit-teim
financing, while the Committee of Inuustiialists (heaueu by
Alfieu Sloan, }i., Piesiuent of ueneial Notois) woikeu to
minimize the backlog of uelinquent taxes (Wengeit 19S9;
Baipei 1948: S1-S8).
Nationwiue, the fiscal pioblems of municipalities weie
aggiavateu by the uepiession's effects upon the banking
system. The steauy eiosion of banks' balance sheets leu, by
late 19S2 anu eaily 19SS to the ueclaiation of state-level
bank 'holiuays' to pievent uepositois' iuns that woulu push
illiquiu institutions into insolvency. Culminating in the na-
tional 'holiuay' ueclaieu by Piesiuent Roosevelt in Naich
19SS, these closuies not only uepiiveu municipalities of a
souice of financing, but cut them off fiom whatevei funus
they themselves hau on ueposit.
While the expeiiences of Chicago anu Betioit weie spec-
taculai examples of the uifficulties municipalities faceu, the
fiscal piessuies weie wiuespieau. By 19SS some two thou-
sanu municipal goveinments hau uefaulteu on payments of
inteiest oi piincipal on theii uebts, anu only the laigest
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
24
cities ietaineu at least some access to shoit-teim financing
thiough the nation's capital maikets
2
. To ielieve these
piessuies, a numbei of state legislatuies authoiizeu the use
of tax anticipation financing in the foim of sciip
S
. Although
no state-level schemes foi tax anticipation sciip weie con-
siueieu (foi the legal ieasons auuiesseu below), state gov-
einments essentially countenanceu the tiansfoimation of
the existing piactice of shoit-teim boiiowing into a foim of
local cuiiency
4
. In auuition to being labeleu "sciip", these
issues weie uesignateu tax anticipation notes, waiiants,
city bills, anu even "baby bonus". By uenominating these
instiuments in stanuaiu amounts anu issuing them to
"beaiei", goveinments coulu pay these out to employees
anu venuois in place of waiiants maue out in ouu amounts
anu payable to paiticulai paities. While these instiuments
coulu not be ieueemeu immeuiately foi stanuaiu funus,
they often boie an inteiest iate (which enhanceu the will-
ingness of iecipients to holu them) anu coulu be useu to
pay cuiient oi uelinquent taxes.
The funuing of public schools via piopeity taxes was an
impoitant function of local goveinments, anu some sciip
issues weie explicitly labeleu "school sciip", issueu to pay
teacheis' salaiies anu acceptable foi school taxes (Be
Young 19S6: S67-9; Biown 1941, vol I: 4S). Foi example, in
19S1 Nichigan authoiizeu local goveinments to issue
inteiest-beaiing tax anticipation notes, setting up a "Loan
Boaiu" at the state capital that woulu appiove the applica-
tions of local school boaius to issue sciip (Cuito 1949). In
New }eisey, even as the County of Atlantic issueu "school
sciip" on behalf of school uistiicts in Atlantic City anu
ventnoi, these communities in tuin put out theii own sepa-
iate municipal sciips that ciiculateu concuiiently (Nitchell
anu Shafei 1984: 149-1S2).
Whethei specifieu as school sciip oi paiu out foi othei ob-
ligations, local goveinments cieateu foims of local cuiiency
out of the pievailing piactices of shoit-teim municipal fi-
nance. Authoiizeu by state legislatuies, appioximately one
hunuieu municipal goveinments of uiffeient soitsCoun-
ties, cities, townships, boioughs, school uistiictslevei-
ageu theii poweis to tax in oiuei to sustain local sciip cii-
culations. These ciiculations hau the simultaneous effects
of incieasing the puichasing powei of goveinments (thus
avoiuing layoffs anu fuithei cuitailment of seivices) anu
impioving the iate of taxpayei compliance by giving citi-
zens an instiument ieueemable in theii own civic obliga-
tions.
While theie was no single foimula foi issuing municipal
sciip, the uetails of Betioit's expeiience may be taken as
illustiative of the bioauei phenomenon. 0n the veige of an
agieement with a synuicate of banks to unueiwiite a funu-
ing of the city's piojecteu ueficit, Betioit was foiceu into
uefault when the state banking holiuay of Febiuaiy 24,
19SS uepiiveu the city of the banks' iesouices. At this
point, Betioit iesoiteu to sciip as a substitute foi shoit-
teim bank financing. 0n Apiil S, the legislatuie huiiieuly
passeu the "Wayne County Sciip Bill" which amenueu the
existing authoiity of municipalities to use tax anticipation
notes so that such uebt coulu be issueu as ciiculating sciip.
While available to all counties anu municipalities in the
state, the bill was intenueu piimaiily to meet the fiscal
emeigency in Betioit (Commeicial anu Financial Chionicle
19SS). Between Apiil 19SS anu Apiil 19S4, thiee sepaiate
issues of sciip totaling $41.9 million funueu the city's uefi-
cit. The fiist $18 million issue came out in Apiil anu Nay of
19SS. Backeu by the piospective ieceipts of the 19SS-19S4
tax levy, whose cash payments the City Council hau explic-
itly appiopiiateu to builu a ieuemption funu foi the sciip,
Betioit's new cuiiency boie a matuiity uate six months
aftei the issue. It paiu S% inteiest, though was maue call-
able ten uays aftei an official notice of intent was publisheu
by the city. By city oiuinance uiscounting of the sciip was
maue an offense, though this featuie seemeu to have no
piactical significance. Paiu out to city employees anu ven-
uois, sciip was acceptable at pai plus acciueu inteiest foi
cuiient anu uelinquent taxes, watei utility chaiges, anu
othei city fees (Ameiican Nunicipal Association 19S4;
Baipei 1948: 6u-61)
These featuies of Betioit's sciip weie consistent with the
guiuelines laiu out by the state legislation that authoiizeu
Nichigan cities to issue municipal sciip. Inueeu, the state
law peimitteu matuiities of up to one yeai, anu an inteiest
iate up to 6%. Sciip issues in Nichigan weie limiteu to 8S%
of the amount of cuiient taxes uue, 6u% of uelinquent
taxes, anu 2S% of futuie taxes (0niteu States Confeience of
Nayois 19SS; Ameiican Nunicipal Association 19S4). In
any event, the matuiity uate meant little, given how the
sciip functioneu. Since sciip paiu out by the city quickly
ietuineu to settle tax bills, the fiist issue was ieueemeu as
soon as August 19SS. The matuiity uate amounteu to a
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
25
2 Excluuing floating uebt like tax anticipation financing, the annual total of new municipal uebt issueu in the 0niteu States hau uioppeu fiom
a high of $1.S billion in 1927 to baiely $Suu million in 19SS, the lowest level since 1918. By the beginning of 19S4, appioximately $1 billion
of an outstanuing $18 billion in municipal uebt was in uefault. Symptomatic of both the pooi state of the economy anu of municipal finances
weie the facts that fully 4u% of the 19SS issues weie uevoteu to "pooi ielief" iathei than tiauitional infiastiuctuie puiposes, anu that net of
uebt ietiiements, total municipal uebt actually shiank in 19SS. See State anu Nunicipal Compenuium (19S4).
S These states weie: Inuiana, Illinois, Nichigan, New Bampshiie, New }eisey, New Yoik, Noith Bakota, 0hio, 0iegon, Pennsylvania, Rhoue
Islanu, South Caiolina, Tennessee, anu Texas. In auuition, even if they uiu not authoiize the actual issue of sciip, an equal numbei of states
passeu statutes allowing bonus, notes oi waiiants to be ieceiveu foi taxes. These states weie: Alabama, Aikansas, Coloiauo, Floiiua, Iuaho,
Illinois, Iowa, Kansas, 0iegon, South Bakota, 0tah, Washington, anu Wisconsin. (Yale Law }ouinal 19S4, 9Su-9SS; Baipei 1948, 48).
4 In Baipei's (1948) opinion, "no basically new legal foims weie uevelopeu by municipal goveinments foi use as sciip. Existing types of
cieuit instiuments neeueu only to be maue payable to beaiei, split into small even uenominations, anu paiu uiiectly to cieuitois anu em-
ployees insteau of being solu to banks oi investois foi cash" (119).
foimality that simply assuieu its useis that sciip was not
some kinu of unfunueu uebt of inuefinite uuiation. Noie-
ovei, the legal piovision that a cash funu woulu be built up
to ieueem the sciip was also otiose, since the sciip was in
fact anu piactice ieueemeu thiough the sheei piocess of
paying off taxes. No cash ieuemption was necessaiy since
the sciip was extinguisheu thiough the veiy natuie of its
function. A seconu issue of $1u million was emitteu in Sep-
tembei 19SS, but impioveu cash collections alloweu the
city to call the sciip foi ieuemption in }anuaiy 19S4. Cii-
cumstances nonetheless iequiieu a thiiu anu final emission
of $1S.9 million in Apiil 19S4, though with the ietuin of
moie noimal financial conuitions, Betioit was soon able to
iesume shoit-teim boiiowings fiom banks. Inueeu, $1
million of the final sciip issue was simply solu as an in-
vestment to a bank at pai plus acciueu inteiest (Wengeit
19S9: 18-2u).
0peiating unuei guiuelines establisheu by the state legisla-
tuie in 19S1 anu 19SS, Betioit's expeiience was iepeateu
by ovei foity othei taxing authoiities in Nichigan. Nost of
these ciiculations, like Betioit's, weie ietiieu by 19S4,
though some of the moie financially-piecaiious school
uistiicts (Feinuale, Lincoln Paik, anu seveial townships in
0aklanu County) continueu to use sciip as late as 19S6.
Betaileu newspapei accounts exist foi the city of 0wosso
(Shiawassee County) wheie economic conuitions as well as
public funus lockeu away in closeu banks leu to thiee uif-
feient types of sciip, one issueu biiefly by local meichants,
one by the city goveinment, anu one by the school uistiict.
Bata aie also available foi Benton Baiboi (Beiiien County),
wheie similai ciicumstances foiceu both the city anu the
school boaiu to iesoit to sciip (Nitchell anu Shafei 1984:
11u-1SS; The 0wosso Aigus-Piess 19SS: Naich 4, 1u, 1S-
17; The |Benton Baiboij News-Pallauium 19SS: Nay 16;
}une 6, 2u).
Similai laws passeu by the 0hio anu New }eisey legisla-
tuies set in motion substantial sciip issues in those states
as well. In 0hio, the Naishall Act of Apiil 1S, 19SS authoi-
izeu counties, upon application to the State Tax Commis-
sion, to issue sciip if tax ieceipts fell below 9u% of the an-
ticipateu amount. Non-inteiest-beaiing sciip woulu then be
appoitioneu by county auuitois to the municipalities that
applieu foi it in piopoition to the amounts of theii tax ue-
linquencies. Sciip coulu iemain in ciiculation foi a maxi-
mum of five yeais anu its ieuemption occuiieu thiough tax
payments only (The Toleuo City }ouinal 19SS). New }ei-
sey's law, passeu a month eailiei, also extenueu the exist-
ing authoiity of counties anu municipalities to issue tax
anticipation notes to incluue small-uenomination beaiei
sciip. As in Nichigan, inteiest payable on New }eisey's sciip
was cappeu at six peicent (Commeicial anu Financial
Chionicle 19SS; Ameiican Nunicipal Association 19S4).
By eaily 19SS, New }eisey's finances hau enteieu a state of
ciisis similai to Betioit's. uiowing tax uelinquencies meant
that only 6S% of the 19S2 levy statewiue was collecteu;
cumulative uelinquencies amounteu to an entiie yeai's tax
ievenues. Payments on municipal uebts, incluuing tax an-
ticipation boiiowings, ate up 4S% of available ievenues.
The heavy ieliance upon piopeity taxes in a piolongeu
economic uowntuin uiieu up the ievenue stieam. Not only
uiu piopeity owneis lack the income to pay theii taxes, but
the maiket foi piopeity seizeu foi nonpayment of taxes
also uisappeaieu. By miu-19SS, 12u New }eisey municipali-
ties, leu by Atlantic City, weie in uefault on some poition of
theii uebts, anu neaily twice that numbei of school uis-
tiicts coulu not pay theii teacheis. In these ciicumstances,
the use of sciip in New }eisey became wiuespieau. To
maintain theii opeiations, New }eisey municipalities ue-
velopeu an extensive netwoik of sciip ciiculations which,
by the enu of 19S4, encompasseu 8 counties, 11 cities, S
towns, 11 boioughs, anu 1u townships, all of which to-
gethei issueu neaily $27 million in sciip (New }eisey Legis-
latuie 19SS: 9, 4u; New Yoik Times 19S4; Biown 1941, vol.
I: 169-171).
Betails fiom Nonmouth County illustiate how New }eisey's
sciip system woikeu. Between Septembei 19SS anu Sep-
tembei 19SS, the County's Boaiu of Chosen Fieeholueis
authoiizeu 14 issues each of $2uu,uuu in sciip, beaiing S%
inteiest, payable at matuiity in 19S7. The County Tieas-
uiei's office installeu a special tellei winuow to hanule all
sciip tiansactions. Sciip tuinovei was iapiu. By }anuaiy
19S4, of $6uu,uuu issueu, some $S4u,uuu hau been paiu in
taxes, leaving a sciip liability of $26u,uuu as the yeai began.
Six moie sciip issues of $2uu,uuu each weie paiu out
thiough Novembei 19S4. 0n Becembei 1, 19S4, about
$9SS,uuu of this sciip hau been ieueemeu thiough tax
payments. By }une 19SS, when the Fieeholueis announceu
theii 1Sth issue, the County hau issueu $2.4 million, of
which only $S8u,uuu iemaineu outstanuing. (Wain 19S4;
Reu Bank Registei 19SS: Septembei 27; 19SS: }une 6, Sep-
tembei 19).
In Nonmouth County, "officials weie not long in uiscovei-
ing that, automatically, eveiy one to whom sciip was is-
sueu, whethei in lieu of salaiies oi in payment of bills, be-
came a tax collectoi of Nonmouth". 0thei auvantages be-
came appaient. Sciip paiu in befoie 19S7 acciueu no intei-
est, so the County saveu on chaiges that woulu have been
oweu on bank financing. Noieovei, insteau of accumulating
uelinquencies, Nonmouth taxpayeis not only paiu off ai-
ieais but met theii 19S4 obligations in full. 0f fifty uiffeient
tax uistiicts within the County, all accepteu the County's
sciip, as uiu utilities anu outsiue venuois. No uiscounting of
sciip was appaient, at least foi the eaily issues. Within the
County, local goveinments ieplicateu this success. 0f
$1Su,uuu issueu by the city of Long Bianch, only $8,Suu
iemaineu unieueemeu befoie a Becembei 19S4 matuiity
uate. 0fficials in Asbuiy Paik claimeu its sciip saveu the
city $22,uuu in inteiest chaiges which woulu otheiwise
have been uue to banks. In the tiny boiough of 0nion
Beach, sciip was ietuineu to the tieasuiei foi taxes as iap-
iuly as one uay aftei its issue (Wain 19S4).
Aftei some initial pioblems with the uiscounting of its
sciip, the summei iesoit of 0cean City (Cape Nay County)
quickly ciiculateu anu ietiieu most of a $1Su,uuu issue
between Naich anu }une 19SS. Local meichants oiganizeu
to finu ways of getting sciip to those neeuing to make tax
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
26
payments. Builuing anu Loan companies took the sciip foi
moitgage payments, as uiu utilities foi theii fees. Chain
stoies weie less obliging. Nany meichants limiteu theii
acceptance of sciip to puichases by city employees only, oi
confineu its use to paying customeis' oveiuue bills. 0thei
meichants accepteu sciip only up to the amount of theii
own tax liabilities. Change foi the sciip was often maue in
stoie cieuit, not cash (0cean City Sentinel-Leugei 19SS:
Naich 24).
Initially skeptical about sciip, the local newspapei gusheu
ovei its benefits. "0cean City sciip is a outstanuing suc-
cessa miiacle woikei!...Resoit business houses that at
fiist vieweu sciip as an insuffeiable nuisance have founu it
a wonueiful business stimulant, anu now eageily await
fiesh uisbuisements of it by the city. They have founu it
easy to uispose of to taxpayeis." Cape Nay County auueu to
local cuiiency supplies with its own sciip ciiculation in
Nay 19SS. 0nuei state law, municipalities weie iequiieu to
accept county sciip (in auuition to theii own sciip) up to
the amount they oweu theii counties in taxes. In auuition,
the sciip was goou foi fines anu fees collecteu by the coun-
ties (0cean City Sentinel-Leugei 19SS: Nay 12).
County sciip was thus useful locally, within limits. In late
19SS, the city of Reu Bank, which itself uiu not issue sciip,
accepteu Nonmouth County sciip in tax payments up to the
$S4,uuu it was obligeu to iemit to Nonmouth County. Foi
similai ieasons, the city of Natawan limiteu its acceptance
of Nonmouth County sciip to 2u% of taxes oweu. While
acknowleuging the benefits of sciip, the city of Reu Bank's
newspapei consiueieu its use symptomatic of county gov-
einment mismanagement anu fiscal extiavagance, juuging
sciip to be "an ill winu, but it may blow some goou". The
papei also woiiieu that the extenueu use of sciip only en-
couiageu piopeity owneis to piefei it to stanuaiu funus
when making tax payments, thus aggiavating the veiy
buugetaiy shoitfalls that sciip was supposeu to iemeuy
(Reu Bank Registei 19SS: Septembei 2u, quote; 0ctobei 4;
19SS: Apiil 2S).
With the passage of authoiizing legislation in Nichigan,
0hio, anu New }eisey, it became appaient that, unlike othei
foims of uepiession-eia local cuiiencies, tax anticipation
sciip was not a fleeting phenomenon. 0nlike cleaiinghouse
ceitificates, tax-baseu sciip was not ietiieu with the ie-
opening of the banks in Naich 19SS; unlike the sciip of
baitei anu self-help gioups, it uiu not ciiculate meiely on
the maigins of the foimal economy; anu, unlike stamp
sciip, its methou of valiuation uiu not confine its ciiculation
to smallei communities. As a slight mouification of long-
stanuing financial piactices, a ciiculating meuium backeu
by the taxing powei of local goveinments was both familiai
anu unsettling. uoou financial piactice accepteu that gov-
einments coulu boiiow in oiuei to match the continuous
flow of municipal payments to the clumpiei ieceipt of tax
ievenues. Yet manageu bauly, such tax anticipation financ-
ing enableu ieckless spenuing anu accumulateu ueficits
that violateu the spiiit, if not the lettei, of state laws. This
ambivalence maue it uifficult to accept the piactical success
of tax-backeu municipal sciip. Even at the nauii of the ue-
piession in miu-19SS, when such sciip was a wiuespieau
anu successful ieality, expeit oithouoxy still conuemneu
municipal boiiowing against tax ieceipts; as one authoiity
put it, "as soon as we iecognize this as an unsounu piactice
the bettei" (Wall Stieet }ouinal 19SS). Some issueis even
shieu away fiom the use of the woiu "sciip", piefeiiing
euphemisms like "baby bonus" to accentuate the uistinc-
tion between cuiiency anu uebt (Pieison 19S4; Biown
1941: S9). Yet the local goveinment officials who actually
implementeu these piogiams appieciateu them not only
foi the suppoit they gave to municipal finances, but foi the
economic stimulus they pioviueu to local communities.
Reflecting on New }eisey's expeiience, Aithui N. Pieison, a
foimei state senatoi, both acknowleugeu tax anticipation
sciip's usefulness as a cash substitute yet cautioneu that it
was "the same as a high-poweieu stimulant in the hanus of
an unskilleu physician". A sciip piogiam was most effec-
tive, he aveiieu, if implementeu befoie it became a uespei-
ate fiscal last iesoit. No moie than half of a municipality's
payioll shoulu be met with sciip, he counseleu. The matuii-
ties of sciip shoulu be no moie than six months, anu woulu
iueally be matcheu to the cycle of tax payments. In this way,
"by iestiicting the piopoition of the sciip to be useu, anu
the teim to thiee oi foui months, piactically the entiie
issue woulu finu its way back in the municipal tieasuiy in
the payment of taxes befoie its uue uate". In contiast, Piei-
son waineu, sciip that lingeieu as a long-teim, unfunueu
uebt was suie to fall to a uiscount (Pieison 19S4: 2S).
Cail B. Chatteis, a piominent national municipal finance
expeit, was moie sanguine than Pieison anu saw some iole
foi tax anticipation sciip in local finances. Skeptical of
stamp sciip, Chatteis nonetheless thought that tax-backeu
municipal sciip was "no uiffeient than a bank loan except
that meichants, employees, anu othei citizens lenu theii
cieuit to the city uiiectly insteau of thiough theii banks".
"Cities shoulu uevise at once some means of boiiowing on
shoit teim small uenomination notes. The secuiity anu
pleuge maue foi theii payment shoulu be ample. Small
notes shoulu be tiansfeiable by ueliveiy anu laigei ue-
nominations by enuoisement. It will be necessaiy to have
new meuia of exchange foi a shoit peiiou at least, anu mu-
nicipalities having the confiuence of theii citizens shoulu
pioviue these meuia" (Chatteis 19SSa: 76). Inueeu, Chat-
teis saw in sciip a potential foi encouiaging civic engage-
ment: "The issuance of sciip anu waiiants in some foim is
just anothei way of boiiowing fiom meichants, citizens,
anu otheis in the local communities. If eveiy citizen in a
community hau a small uiiect inteiest in the financial obli-
gations of his city, much less tiouble in civic matteis might
be expecteu" (Chatteis 19SSb: 117).
Bespite these piospects foi a local, tax-baseu cuiiency,
municipal officials uuiing the 19Sus weie not unminuful
that theii sciip issues hau legal implications, anu the fol-
lowing section ieviews the juiispiuuence on non-national
cuiiencies insofai as it might have affecteu the use of mu-
nicipal sciip.
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
27
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="&2 *%.-. '#>"(>-4 %&&-0<&. =9 .&%&-. &" %>"'4 %**-<&'#?
&2-.- '#.&,+0-#&.B /2'*2 &2- .&%&-. &2-0.-(>-. 2%4 <%'4
"+& %& %# -%,('-, &'0-B '# ,-*-'<& "1 &%]-.: 3#('G- O'.."+,'\.
-%,('-, <".'&'"# '# N,%'?B ="&2 _',?'#'% %#4 ;-]%. %,?+-4
&2%& &2-', *"+<"#. %#4 /%,,%#&. /-,- ='((. "1 *,-4'&B %#4 %.
.+*2 '((-?%( 0-%#. "1 <%90-#& /2'*2 /-,- >"'4 %. % &-#4-,j
I# 2'. d"+.&"# "<'#'"#B k+.&'*- h-*G2%0 <+& 1",&2 % 1+#*$
&'"#%( >'-/ "1 0"#-9 &2%& 0%4- '&. 4-6'#'&'"# % 0%&&-, "1
4-?,--: l1 &2- ;-]%. /%,,%#&.B h-*G2%0 /,"&-B A'& 0+.& #"&
"#(9 =- &2%& &2-9 %,- *%<%=(- "1 ."0-&'0-. =-'#? +.-4 '#$
.&-%4 "1 0"#-9B =+& &2-9 0+.& 2%>- % 6'&#-.. 1", ?-#-,%(
*',*+(%&'"# '# &2- *"00+#'&9 %. % ,-<,-.-#&%&'>- %#4 .+=$
.&'&+&- 1", 0"#-9 '# &2- *"00"# &,%#.%*&'"#. "1 =+.'#-..C:
O+*2 %. &2- *,-4'& "1 &2- .&%&- "1 ;-]%. 0'?2& -#2%#*- &2-
/%,,%#&.\ <,%*&'*%( #-?"&'%='('&9 %. % *+,,-#*9 .+=.&'&+&-B
h-*G2%0 *"#*(+4-4 &2%& A/- .-- #"&2'#? '# 0",%(. ", '#
(%/ /2'*2 .2"+(4 <,->-#& &2- 5&%&- 1,"0 ,-*"?#'Z'#? %#4
('@+'4%&'#? &2- '#4-=&-4#-.. /2'*2 /%. 4+- 1,"0 '& %#4
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
28
which was iepiesenteu by the waiiants" ( 177 0.S. 66: 84,
92; Solomon 1996).
As a iesult of this case law, the feueial goveinment's posi-
tion in the 19Sus was that municipal sciip uiu not violate
constitutional piohibitions of non-national cuiiency
S
. At
the same time, the feueial goveinment uiu not actively
suppoit municipal sciip, foi example by authoiizing the
Feueial Reseive to ieuiscount tax anticipation waiiants, as
city mayois auvocateu in testimony befoie Congiess (0.S.
Senate 19SS). That the cuiiency quality of municipal
waiiantssciip unuei the law was a mattei of uegiee
meant that officials uuiing the 19Sus hau to be caieful in
uesigning theii sciip emissions in oiuei to keep them legal.
Inueeu, not only coulu sciip be pioblematic unuei the feu-
eial constitution, but many state constitutions also con-
taineu limitations oi outiight piohibitions on the issue of
piomissoiy notes with ciiculating piopeities. Foitunately,
as the Ameiican Legislative Association pointeu out to its
membeis, the feueial constitution explicitly foibaue only
state bills of cieuit; the emissions of goveinmental units
below the state level weie not piesumptively unconstitu-
tional. In oiuei to minimize the possibility of tax anticipa-
tion sciip being constiueu as money, state laws peimitting
sciip "shoulu not contain any woiuing which might inui-
cate a legislative intention to pioviue a cuiiency". Cieating
a cuiiency that was not legally a cuiiency iequiieu some
legal cieativity. Beyonu the obvious aumonition to not
make the sciip look too much like 0.S. cuiiency, states
weie auviseu to incoipoiate a numbei of featuies that uif-
feientiateu it fiom legal money. Among othei things, states
weie auviseu not to make sciip a geneial oi even a limiteu
legal tenuei; in contiast, making sciip acceptable foi pay-
ment of state anu local taxes aiguably seiveu to facilitate
the sciip's ieuemption, anu not to piomote its ciiculation
as money. Nanuating its cancellation upon payment into
municipal tieasuiies (iathei than allowing it to be ieis-
sueu) stiesseu sciip's puipose as a means of paying mu-
nicipal uebts, iathei than as a ciiculating meuium. Secuiing
sciip with the goou faith anu cieuit of a state implieu the
sciip was an obligation of the state as a soveieign entity;
bettei, states weie auviseu, to make sciip the obligation of
a specific state agency anu secuieu by the pleuge of specific
ievenue stieams, assets oi piopeities. Finally, making sciip
inteiest-beaiing, anu specifying a uate of matuiity, unuei-
scoieu its chaiactei as an eviuence of uebt, anu not an ille-
gal issue of cuiiency (Nott 19SS).
!"#$$%&'%( #&* (+!!%((%( ,- .#/ #&.0!01#2
.0,& (!301
Some of the legal sciuples uesciibeu above aiguably ien-
ueieu municipal sciip less uesiiable to the public, while
othei featuies might have enhanceu sciip's acceptability.
Legal tenuei qualities, unavailable to municipal sciip,
cleaily woulu have wiueneu its usage. Naking sciip an obli-
gation of a state, iathei than its municipal subunits, woulu
similaily have tenueu to inciease public confiuence in the
sciip's value. A iequiiement foi local goveinments to can-
cel sciip upon ieceipt iathei than pay it out anew to em-
ployees oi venuois woulu tenu to limit its usefulness as a
ciiculating meuium. Finally, backing sciip with geneial tax
ievenues iathei than the pioceeus of a specific levy (like
school taxes) woulu, all things being equal, have given sciip
gieatei secuiity. Conveisely, making sciip acceptable foi a
wiue iange of uelinquent taxes woulu make it moie attiac-
tive to useis than if it weie valiu foi only a naiiow iange of
taxes anu fees. In shoit, those measuies iecommenueu by
municipal authoiities in oiuei to make sciip look less like
money in the eyes of the law woulu also have tenueu to
uetiact fiom its success. Against these hypothetical uiaw-
backs can be placeu two auvantageous featuies: making
sciip inteiest-beaiing, anu specifying its ieuemption by a
specific matuiity uate.
In piactice, the success of municipal sciip expeiiments was
uue less to specific featuies of a given issue than to the
oveiall volume of issues, ielative to the commitment of
stakeholueis, anu the economic ciicumstances that occa-
sioneu sciip's use. At a fiist appioximation, the easiest
measuie of success was whethei oi not sciip tiaueu at a
uiscount to stanuaiu money. The laigest example of an
unsatisfactoiy expeiience with municipal sciip was Chi-
cago's. Issueu in a context of chionic fiscal mismanagement
anu ciisis, both the iecipients of the Chicago Boaiu of Euu-
cation's sciip (teacheis anu othei employees) anu the mei-
chants who might accept it weie uisinclineu to paiticipate
in the expeiiment. 0nwillingness by Chicago banks to holu
these waiiants meant that city employees went payless if
they weie unable to sell theii waiiants at some uiscount to
pai. Lacking any fiim plan by which the sciip woulu be
latei ieueemeu, the Boaiu of Euucation paiu it out on a
voluntaiy basis to employees whose own unions objecteu
to its use. The Cook County Bankeis' Association iefuseu to
cash the sciip; majoi uowntown uepaitment stoies iefuseu
it in tiaue; anu those meichants who uiu accept sciip uis-
counteu it substantially. The fewei the numbei of outlets
foi spenuing the sciip, the moie uifficult it became to spenu
the laige uenomination notes (fiom $1u all the way to
$Suu) oi to give change foi them in legal tenuei funus. The
local utility, which was unusually geneious in accepting the
sciip foi small payments, founu itself inunuateu by teach-
eis uespeiate to get cash in change (Elvins 2u1u).
In contiast to Chicago's uismal expeiience, Betioit man-
ageu the single laigest issue of municipal sciip in the
0niteu States without similai pioblems with uiscounting
anu acceptability. Bespite a uespeiate fiscal situation com-
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
29
S Foi a contempoiaiy legal opinion fiom the feueial goveinment's peispective, see Beiman 0liphant (ueneial Counsel, Tieasuiy Bepait-
ment) to veinon L. Biown, }anuaiy 17, 19SS. A legal opinion iegaiuing the sciip issues of the County of Buuson (New }eisey) ueclaieu them
"valiu, binuing anu geneial obligations of the County of Buuson, payable out of unlimiteu taxes on all piopeity in the County subject to taxa-
tion". See Bawkins, Belafielu & Longfellow to William F. Sullivan, Septembei 21, 19SS. Both letteis aie iepiinteu in Biown (1941, Appenuix
A, 162-164, 168).
paiable to Chicago's that culminateu in outiight uefault by
Febiuaiy 19SS, Betioit manageu to issue anu ciiculate ovei
$4u million in sciip foi the next yeai anu a half. Iionically,
it was the closing of Betioit's banks as a iesult of the state
banking 'holiuay' that maue the use of sciip unavoiuable:
once any iefunuing of the city's vaiious uebts thiough the
banks became impossible, sciip became the only alteina-
tive. Both citizens' gioups anu the banks hau pieviously
iesisteu sciip; yet once it was theie, effoits weie unuei-
taken to make it woik.
0nlike Chicago, Betioit paiu employees 2u% in cash anu
the iest in sciip, though venuois weie paiu entiiely with
the lattei. Betioit issueu sciip both in moie conveniently
lowei uenominations (uown to $1) to facilitate ietail tians-
actions, anu in highei uenominations (up to $1uuu) to pio-
viue laige holueis of sciip such as ietaileis the oppoitunity
of exchanging many low uenomination notes foi the con-
venience of a smallei numbei of the highei-uenomination
vaiiety. These coulu be then helu eithei as inteiest-beaiing
investments (as bonus), oi useu in payment of city taxes.
While in the eaily uays of the Betioit example sciip tiaueu
as low as 7S cents on the uollai, this uiscount soon shiank
as the Committee of Inuustiialists set up a $1 million funu
to suppoit the sciip at pai. Auuitionally, the establishment
of exchange buieaus wheie ietaileis coulu exchange theii
sciip foi cash fiom laige taxpayeis, who then useu it to pay
theii taxes, tenueu also tenueu to minimize the uiscount.
Inteiestingly, these exchanges hau to take place in buieaus
outsiue of Betioit's city limits, since the City Council hau
ueemeu the uiscounting of sciip illegal! These measuies,
combineu with a successful bonu iefunuing in }une 19SS
anu a biightei outlook foi tax collections, ietuineu Betioit
sciip to pai. Inueeu, pait of the last issue authoiizeu in
Apiil 19S4 was simply solu to Betioit banks as an invest-
ment, as shoit-teim bank financing again became available
to the city (Business Week 19SS; Biown 1941, vol. I: 4u-42;
Baipei 1948: S8-62).
0thei successful examples of municipal tax anticipation
sciip, though enjoying the inheient benefit of a smallei size
than Betioit's, exhibiteu similai featuies. Some 7S miles
noithwest of Betioit, the small city of 0wosso also faceu
bleak finances. When the city goveinment misseu a payioll
in miu-Naich 19SS foi want of funus, the City Commission-
eis authoiizeu the emission of $2u,uuu in 6-month sciip
ianging in value fiom S cents to S uollais. With baiely a
thiiu of its assesseu school taxes paiu in anu $2u,uuu stuck
in the bank, the 0wosso Boaiu of Euucation faceu mass
layoffs of teacheis anu an eaily enu to the school yeai. It
voteu to issue $Su,uuu in a iange of uenominations up to
2u uollais (The 0wosso Aigus-Piess 19SS: Naich 4, 1u, 1S-
17). While neithei issue expeiienceu uiscounting, the piob-
lem of making change foi the laigei-value sciip leu to a
iebalancing of the uenominations, as the city incieaseu the
numbei of S-cent notes anu ietiieu the equivalent value of
Su-cent notes. Nanagement of the ciiculation was hanuleu
by the City Tieasuiei's office, which functioneu as a bank
foi the sciip. By late Apiil, excessive city anu school sciip
balances with ceitain meichants weie alleviateu by the
Chambei of Commeice, which acteu as a cleaiing house to
ieuiiect sciip to people neeuing it to pay taxes. Sciip holu-
eis hau the option of conveiting small notes into the 2u-
uollai uenomination, which unlike the otheis was inteiest-
beaiing (The 0wosso Aigus-Piess 19SS: Naich 28; Apiil S,
12, 21, 24; Nay 1).
The 0wosso school yeai enueu in Nay 19SS with teacheis
ieceiving theii final pay paitly in sciip, paitly in cash, anu
the Boaiu of Euucation was able to ieueem the last $9,uuu
outstanuing at its Septembei Su matuiity uate. Neanwhile,
the iemaining $1S,uuu of 0wosso's city sciip was ietiieu
out of incoming tax ieceipts by its August 1S ueauline.
Nonetheless, continueu lagging tax ieceipts uuiing the
summei maue a seconu issue of city sciip necessaiy, anu
$Su,uuu moie was authoiizeu by the enu of the yeai on
similai teims to the fiist issue. (The 0wosso Aigus-Piess
19SS: Nay 26; }uly 26-27; Septembei 29; Novembei 28).
0thei, laigei sciip issues elsewheie maue use of similai
aiiangements. To sustain its ciiculation of $88u,uuu in
municipal anu boaiu of euucation sciip, uianu Rapius
(Nichigan) cieateu a "Revolving Funu" of $1Su,uuu in cash
which it useu to puichase sciip fiom souices that hau ac-
cumulateu excess supplies. The Funu's uiiectoi canvasseu
the city's ietail establishments to ueteimine wheie these
excesses weie builuing. Although they weie sepaiate taxing
authoiities, the city anu the boaiu of euucation agieeu to
accept each othei's sciip foi city anu school taxes (a similai
aiiangement involving the watei utility pievaileu in Flint,
Nichigan). uianu Rapius meichants anu manufactuies also
encouiageu the ciiculation of sciip by paying theii own
employees 2u% of theii wages in sciip. In Loiain (0hio),
inuustiies puichaseu sciip foi theii own payiolls uiiectly
fiom the city. (Ameiican Nunicipal Association 19S4;
Nitchell anu Shafei 1984: 2uu).
Nobilization of public anu business suppoit also bolsteieu
the acceptability of sciip ciiculations. Foi example, in Bii-
mingham (Nichigan), the school boaiu oiganizeu cam-
paigns to encouiage the use of school sciip as measuie of
suppoit foi local schools, anu teacheis' clubs maiketeu it as
an investment (Cuito 1949). The West Palm Beach (Floi-
iua) Chambei of Commeice abanuoneu its own plan to is-
sue stamp sciip in favoi of piomoting the city's tax antici-
pation vaiiety foi the payment of back taxes. In Pinellas
County (Floiiua), wheie teacheis hau been paiu in sciip,
the meichants' association of St. Peteisbuig sought ways of
keeping the sciip liquiu (The Palm Beach Post 19SS: Apiil
11, 22; St. Peteisbuig Times 19SS: }une 8). Nilwaukee's
(Wisconsin) "baby bonus" oveicame eaily pioblems thanks
to fiim leaueiship by the city's feisty socialist mayoi, Baniel
Boan. Facing hostility by bankeis anu laige meichants to
city sciip, Boan oiganizeu city employees to keep them
fiom selling theii sciip salaiies to speculatois at a uiscount;
those ietaileis willing to take sciip weie given public iec-
ognition anu pationage by city employees, anu theii exam-
ple piessuieu othei ietaileis to coopeiate with the sciip
plan. Initial uiscounts of 88 cents on the uollai soon uisap-
peaieu, anu the city's inteiest-beaiing sciip became sought
aftei as an investment. (Chatteis 19SSc; National Nunicipal
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
30
Review 19SSa; Boan 19S6: ch. 11). 0cean City (New }eisey)
piomoteu its sciip by accepting it at a 1% piemium foi
timely tax payments, anu stoou ieauy to exchange $Suu
blocks of sciip foi tax anticipation notes that paiu a highei
iate of inteiest. The Reu Bank (New }eisey) Chambei of
Commeice encouiageu local businesses to pay sciip to
those employees with piopeity tax bills; likewise, busi-
nesses leasing piopeity weie uiiecteu to pay ients in sciip
to owneis with similai obligations (0cean City Sentinel-
Leugei 19SS: Nay 12; New Yoik Times 19SS; Reu Bank
Registei 19SS: Septembei 27).
Businesses' suppoit foi sciip coulu also give them some
leveiage ovei municipal finance. Atlanta's sciip faceu a
shaky stait in 19S2, when the banks woulu not accept it,
until the city's meicantile establishment, leu by Waltei B.
Rich, Piesiuent of Rich's Bepaitment Stoie, uniteu aiounu a
plan to accept sciip paitly in exchange foi cash, paitly in
exchange foi goous. Bencefoith the meichants helu an ef-
fective veto ovei the use of sciip in city finances, withholu-
ing foi example theii suppoit foi a seconu sciip issue in
19SS, which the city goveinment attempteu even as ie-
uemption of the 19S2 issue iemaineu incomplete (Biown
1941, vol. I: S6; Robeius 199u; Elvins 2u1u).
In most examples, municipalities paiu out less than 1uu%
of theii wages anu salaiies in sciip, which pioviueu piacti-
cal suppoit to its value. The piopoitions of sciip vai-
ieu8u% in Betioit, S4% in Pateison (New }eisey), 6u% in
Ameiicus (ueoigia), 66 2S% in Pontiac (Nichigan), Su%
in Nilwaukee, anu 6S% in Bayton (0hio)anu seemeu to
be moie a function of the available cash iathei than any
othei consiueiation. Atlantic City (New }eisey) paiu the
fiist $1u of its employees' wages in cash; all wages above
that weie paiu 8S% in sciip. By 19SS, Atlantic City ieuuceu
sciip poition of wages to Su%, anu only foi payuays in the
seconu half of the month. Royal 0ak (Nichigan) which hau
a compaiatively long iun of sciip (19S1-19S6), vaiieu the
peicentage of sciip issueu in employee wages anu salaiies
fiom 2S% to 7S%, uepenuing upon the amount of cash on
hanu. uuilfoiu County, Noith Caiolina useu sciip foi 1uu%
of wages, but only because local banks iemaineu closeu
thiough most of 19SS anu communities theie weie uespei-
ate foi any kinu of ciiculating meuium. Like the city of
0wosso (Nichigan), which also paiu all wages in sciip, uuil-
foiu County issueu fiactional uenominations that mini-
mizeu the piactical pioblems of making small change. 0th-
eiwise, having at least some wage payments maue in cash
uiu lessen the pioblem of people spenuing sciip simply in
oiuei to ieceive change in cash, anu ieuuceu the neeu to
piouuce laige supplies of the lowest-uenomination bills
(0niteu States Confeience of Nayois 19SS; Ameiican Nu-
nicipal Association 19S4; National Nunicipal Review
19SSb: 4uS; Boan 19S6: ch. 11; Biown 1941, vol. I: 172;
Cuito 1949).
0nlike sciip issueu by baitei anu self-help gioups, tax an-
ticipation sciip issueu by municipalities suffeieu at most
ielatively mouest uiscounts against stanuaiu funus. In
}anuaiy 19SS, befoie the laigest municipal sciip issues
occuiieu, Cail Chatteis testifieu befoie a 0.S. Senate com-
mittee that such sciip tiaueu, oi was casheu, at a 1S% to
2u% uiscount which, on top of equally-laige cuts in theii
nominal wage iates, iepiesenteu a substantial blow to the
living stanuaius of municipal employees (Chatteis 19SSu:
178-9). The uiscount on Betioit's sciip was initially laige,
but momentaiy. In his suivey of 74 issues of municipal
sciip, }oel Baipei (1948: 124-126) founu that at least 19
expeiienceu uiscounts of up to 1u%. While Baipei gives no
specific ieasons foi these uiscounts, scatteieu anecuotal
eviuence suggests some chaiacteiistic causes of uiscount-
ing.
Nilwaukee's sciip plan was pusheu thiough in a hostile
enviionment (see above). In Atlantic City (New }eisey),
iesistance by small ietaileis causeu the uiscount on sciip to
wiuen to as much as 2u%, although the laigei iesoit hotels
steppeu in to exploit this uiscount in oiuei to meet theii
own tax buiuens. As the uate of ieuemption foi, anu pay-
ment of inteiest on, Atlantic City sciip neaieu, its notes
tiaueu as high as $1.u7 (National Nunicipal Review 19SSa:
4uS; Biown 1941, vol. I: 44). As Nonmouth County issueu
$2uu,uuu in sciip month aftei month foi two yeais, by
19SS the emeigence of a S% uiscount suggesteu some ue-
giee of populai fatigue with the uevice (Reu Bank Registei
19SS: Apiil 2S). Pateison's (New }eisey) sciip fell to a uis-
count aftei local banks iefuseu to hanule it (Noble 1978:
9u-91). The school sciip of Wiluwoou (New }eisey) was
boycotteu by local meichants until the city maue it accept-
able foi its own taxes (0cean City Sentinel-Leugei 19SS:
Nay 26). Although suppoiteu by its meicantile community,
Atlanta's sciip uiu tiaue at a uiscount of at least S% outsiue
of the majoi ietaileis, accoiuing to oial histoiies (Robeius
199u). Chicago was the laigest example of an unsatisfac-
toiy expeiience, wheie little thought oi effoit seemeu to
maue to tuin municipal waiiants into a convenient me-
uium of exchange foi the long-suffeiing teacheis. The only
outiight failuie of tax-backeu sciip seems to have occuiieu
in Eiie (Pennsylvania), wheie the bulk of a $Suu,uuu issue
was iepuuiateu unuei unceitain ciicumstances (Nitchell
anu Shafei 1984: 227).
!"##$%# $' ()* )%(+,+-)(+$% #,.+-
As Baipei (1948) concluueu in his suivey of municipal
sciip expeiiences, whethei sciip was inteiest-beaiing, call-
able, oi backeu in a paiticulai way was less impoitant to its
success than the cieuibility of its management. Apait fiom
the sheei size of a given sciip issue ielative to the ability of
local ietaileis to absoib it, the most impoitant factoi in
sciip's success was "the efficiency of aiiangements foi
avoiuing the clogging of channels in which it tenueu to ac-
cumulate"; in tuin, "|tjhe uegiee of coopeiation in ieciicu-
lating sciip.uepenueu laigely upon the confiuence of mei-
chants in the financial plans of the local goveinment anu
the amount of intelligent auvanceu planning anu publicity
on the pait of public officials" (126-127).
The "financial plans" Baipei alluueu to essentially envis-
ageu the futuie ietiiement of sciip, as iecoveiing tax ieve-
nues anu successful uebt iefunuing plans (as in Betioit's
example) ietuineu municipal finances to a cash basis.
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
31
uiven that uefaults on existing uebts hau piecipitateu the
tuin to sciip in the eaily 19Sus, it was unueistanuable that
futuie iefunuing of these uebts woulu involve ietiiing mu-
nicipal sciip as well. Thus, an agieement between Non-
mouth County anu its bankeis in }uly 19SS combineu a
iefinancing of the county's matuiing uebt anu the ieuemp-
tion of its outstanuing sciip into a twenty-five yeai bonu at
an inteiest iate lowei than that paiu on the sciip (New
Yoik Times 19SS; Reu Bank Registei 19S7: Febiuaiy 11,
Nay 27). In 19S6, Atlantic County negotiateu a similai
agieement with a bonuholueis' committee that paiieu the
iefunuing of its uefaulteu uebt with a cessation of sciip
issues (New Yoik Times 19S6). Within Atlantic County,
Atlantic City, which hau expeiienceu the laigest municipal
uefault in New }eisey, ieacheu a sepaiate agieement with
its cieuitois shoitly theieaftei (Wall Stieet }ouinal 19S6).
That sciip was nevei intenueu to function as a peimanent
element of municipal finance may have conuitioneu the
attituue of paiticipants towaius its use. Employees who
took the sciip in wages, ietaileis who accepteu it in pay-
ment foi theii waies, anu goveinments who ieceiveu it
back as tax payments peihaps uisplayeu gieatei foibeai-
ance towaius its use, knowing that sciip was a tempoiaiy
expeuient uictateu by the economic ciisis. Yet Baipei no-
ticeu something that municipal officials at the time seemeu
ieluctant to acknowleuge: in some iespects, sciip issues
weie supeiioi to bank loans as a tool of municipal finance.
The effective inteiest iate on sciip was lowei than compa-
iable bank financing (anu entiiely absent, if the sciip weie
non-inteiest beaiing); moieovei, sciip gave municipalities
a flexibility that stanuaiu tax-anticipation financing lackeu.
Bank loans oi tax notes hau to be engageu in laige, lump
sums in auvance of tax ieceipts. In contiast, sciip coulu be
issueu uiiectly foi wages anu othei expenses in amounts as
neeueu to accommouate municipal finance neeus (Baipei
1948: 116-119).
Foi a local tax-baseu cuiiency to function in nonciisis con-
uitions as a noimal featuie of local goveinment finance anu
local economic activity woulu iequiie a wiuespieau anu
public ie-thinking of monetaiy legitimacy. Nonetheless, the
sciip expeiiences of the uepiession yeais suggest foui
ielevant paiameteis foi sciip expeiiments baseu upon
public taxing powei:
- Sciip issues must be commensuiate with the absoip-
tive capacity of ietaileis, which have obligations
outsiue the local economy uenominateu in national
money.
- Sciip issues must be commensuiate with the absoip-
tive capacity of local goveinments, which have uebt
anu othei payment buiuens outsiue the local econ-
omy uenominateu in national money. Bue iegaiu
must be taken foi the substitution effects of sciip, as
taxpayeis will piefei to meet theii obligations in
sciip while hoaiuing national cuiiency foi its supe-
iioi negotiability.
- Tax obligations must be sufficiently laige to cieate a
uemanu foi sciip foi use in tax payments to local
goveinments.
- Nechanisms must exist to ieuistiibute sciip fiom
those who have it to those who neeu it foi tax pay-
ments ("avoiuing the clogging of channels").
These paiameteis iepiesent necessaiy, but not sufficient,
conuitions foi successful tax-baseu sciip to the extent that
community willingness to use sciip outsiue of the ciicuit of
tax payments is an inuispensible, albeit iesiuual, conuition
foi a viable tax-baseu sciip. In the Ameiican expeiience
with such sciip uuiing the 19Sus, it iemains uncleai (be-
yonu anecuotal eviuence) to what extent sciip actually
ciiculateu via tiansactions unielateu to the oiiginal tax
ciicuit. In the case of Atlanta, foi instance, uespite civic
mobilization on behalf of its sciip, the emeigency meuium
functioneu moie as a souice of municipal finance than a
local cuiiency (Robeius 199u). Beyonu the sheei piesence
oi absence of a uiscount on stanuaiu funus, the bioauei
acceptance of sciip foi ioutine tiansactions iepiesents a
moie significance measuie of sciip's success qua local cui-
iency. At the veiy least, sciip's suitability as a geneializeu
meuium of local exchange woulu exhibit netwoik ef-
fectsthe moie vaiieu its tiansactional use, the moie use-
ful it woulu become foi fuithei tiansactionssubject to
some minimum thiesholu below which sciip woulu be
shunneu as a nuisance, anu a maximum thiesholu above
which sciip woulu lose its tiansactional valiuity (i.e invaliu
outsiue of the pievailing tax juiisuiction, anu the economic
aiea to which the juiisuiction is ielevant). The ueteimina-
tion of these lowei anu uppei thiesholus woulu uepenu
upon the specific aiticulations of the foui paiameteis set
out above; ultimately, howevei, what activates tax-baseu
sciip is sufficient public willingness to accept sciip as a
legitimate economic instiument.
As Elvins (2uuS, 2u1u) ably uemonstiates, in the 19Sus
favoiable public attituues towaius sciip hau to be actively
cultivateu. Public acceptability of sciip was mobilizeu
thiough appeals to local economic, cultuial, anu social val-
ues that weie thieateneu by uistant foices anu inteiests.
This ihetoiic of the local was often buttiesseu by a folk
analysis of the causes of the economic uepiession that ac-
coiueu to sciip a meaningful iole in any futuie economic
iecoveiy. Inueeu, the uepiession yeais weie a paiticulaily
fecunu peiiou foi populai analyses of money, its natuie,
anu its iole in eithei piouucing oi solving the economic
ciisis. Ciank plans abounueu (Reeve 194S). Thiough theii
public-spiiiteu examples, piominent local citizens (as in
Atlanta) coulu ially suppoit foi sciip expeiiments. Con-
veisely, the absence of such leaueiship (as in Chicago)
coulu sabotage the use of sciip. Foi theii pait, municipal
finance expeits evinceu ambivalence towaius sciip, since
these expeiiments hau evolveu out of shoit-teim boiiow-
ing piactices that skiiteu the euge of fiscal iesponsibility.
Bespite sciip's successes, its significance as a monetaiy
meuium was wiuely uownplayeu. By 19S4 these expeits
hau uniteu aiounu a set of 'best piactices' foi the use of tax
anticipation sciip that uefineu it as a financial, iathei than
International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
32
monetaiy, phenomenon which woulu uisappeai once
healthiei tax ieceipts woulu allow goveinments to ietuin
to a cash basis (Luuwig 19S4; The Ameiican City 19S4a,
19S4b; Lutz 19S6: 81S-6). "At best," concluueu two
authoiities, "sciip seives only as a tempoiaiy expeuient to
take the place of moie foimal boiiowing" (Chatteis anu
Billhouse 19S9: 181).
!"#$ &'($) '$#*'+! '$,*-(./ -" -0$"'1
It is a maik, peihaps, of the iueological natuialization of
mouein money as abstiact exchange value that local cui-
iency expeiiments neeu to be uefenueu as ueviations fiom
some impeisonal logic of the maiket. While the vast liteia-
tuie on monetaiy theoiy contains scatteieu iefeiences to
the concept of tax-backeu money, the point of uepaituie foi
the uominant peispective is that money emeiges as a Nen-
geiian solution to the inefficiencies of baitei, anu that
money's funuamental natuie is that of a means of exchange
(Foistatei 2uu6; Nastiomatteo anu ventuia 2uu7; but see
uolubeig 2u1u). Even in the ueiman chaitalist tiauition, of
which Knapp was the majoi example, the iole of the state's
taxing powei was accoiueu only a minoi iole (Ellis 19S4:
11, S8-4u). The implications of tax-backeu monetaiy issues
have been exploieu in histoiical ieseaich, especially in the
context of tests of the quantity theoiy of money (Smith
1984, 198Sa, 198Sb; Wickei 198S; Pecquet anu Thies
2uu7). ueoffiey Ingham's piominent iestatement of the
chaitalist peispective tiaces the oiigins of money to its
function as a unit of account foi the calculation of uebts
with the pievailing matiix of social inequalities meuiateu
by state powei. Accoiuing to Ingham, "both the logic anu
the histoiical oiigins of money aie to be founu in the state.
Nonetaiy space is soveieign space; it uoes not consist sim-
ply in the symbolic iepiesentations of maiket tiansactions,
as it uoes in oithouox economic theoiy" (Ingham 2uu4: S7;
see also Wiay 2uu4).
What the chaitalist analysis illuminates about the Ameii-
can expeiience of tax anticipation sciip is uifficult to spec-
ify. Ingham himself is skeptical about the potential foi local
cuiiencies insofai as they "uo not give iise to the cieation
of puie abstiact value in the foim of the social ielation of
cieuit-uebt, anu, consequently, no money in this sense is
cieateu enuogenously thiough the extension of bank lenu-
ing". At best, local cuiiencies can function as limiteu pui-
pose monies, confineu to spheies of "inteipeisonal tiust
anu confiuence"; at woist, "they tenu to maiginalize the
infoimal economy anu ieinfoice the fiagmentation anu
inequality of the wiuei economy" (Ingham 2uu4: 186, 187).
Foi similai ieasons Ingham is uubious about the piospects
of the Euio, since its technociatic auministiation by an
inuepenuent cential bank is not matcheu by an equivalent
Euiopean soveieign authoiity.
If the money-soveieignty nexus is constitutive of "mone-
taiy space", then the implieu lessons of the histoiical expe-
iience with tax anticipation sciip will come fiom answeis
to political questions about the poweis anu autonomy of
local goveinments, anu not to economic questions about
the putative benefits of local cuiiencies. What aie the ie-
sponsibilities anu piopei scope of local goveinments. Bow
aie these to be asceitaineu anu asseiteu against the poweis
anu pietentions of the cential state.
Seventy yeais ago, these questions weie answeieu to the
uetiiment of local powei. Policy iesponses to the uieat
Bepiession in the 0niteu States hau the cumulative effect of
uiawing powei away fiom local communities to the states,
anu fiom states to the cential goveinment. Inueeu, fai fiom
iegietting this tiansfei of powei, municipal finance expeits
auvocateu anu welcomeu the centialization of taxing
powei anu the subsequent ieliance of local goveinments
on feueial anu state giants-in-aiu (Billhouse 19SS: 1-7).
Foi the conceins of this aiticle, this centialization took
place both in the iealms of municipal finance anu in mone-
taiy piactice. Fiom the bioauei peispective of Ameiican
monetaiy histoiy, the piolifeiation of local cuiiencies uui-
ing the 19Sus appeais as an anomalous uevelopment in the
piogiessive centialization of monetaiy powei anu authoi-
ity in Washington B.C. By 19SS, not only was the golu stan-
uaiu ieplaceu by a fiat cuiiency, but the basic functions of,
anu iesponsibilities foi, iegulating the mechanism of cieuit
weie tiansfeiieu fiom the iegional Feueial Reseive banks
(especially the New Yoik bianch) to the Feueial Reseive
Boaiu in Washington B.C. As one legal authoiity wiote
about tax anticipation sciip, "it is somewhat suipiising that
the Feueial auministiation has not taken cognizance of this
uesultoiy infiltiation of illegitimate papei money into the
channels of monetaiy ciiculation" (Nussbaum 19S7: 1u8S).
Fai fiom taking "cognizance" of this "uesultoiy infiltiation",
the feueial goveinment ignoieu the use of tax anticipation
sciip, anu these expeiiments in local cuiiency quickly
faueu fiom public consciousness. A ieviveu awaieness of
the potential of local cuiiency in the piesent uay iequiies
an appieciation of those histoiical moments when local
cuiiency, uespite its success, uisappeaieu as an expiession
of local powei.
'$)$'$.2$!
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International Journal Of Community Currency Research 2012 Volume 16 (D) 22-35 Gatch
35
International Journal of
Community Currency Research
Volume 16 (2012) Section D 36-48
COMMUNITY CURRENCIES AS INTEGRATIVE
COMMUNICATION MEDIA FOR EVOLUTIONIST
INSTITUTIONAL DESIGN
Makoto Nishibe*
Graduate School Of Economics And Business Administration, Hokkaido University
!"#$%!&$
The piesent aiticle shows that community cuiiencies (CCs) aie inteipieteu as integiative com-
munication meuia with uual aspects of money anu language, anu that, since money is the most
inuispensable meuium of the mouein capitalistic maiket economy, CCs shoulu be stiategic tai-
gets foi evolutionist institutional uesign in oiuei to solve cuiient social anu economic pioblems
causeu by global capitalism.
In oiuei to theoietically view the biuiiectional effects causeu by alteiation of money as a plat-
foim institution in its evolutionaiy peispective, we intiouuce some basic concepts such as iep-
licatois anu inteiactois anu illustiate the micio-meso-macio loop mouel by using those con-
cepts. Then we eluciuate the significance anu possibility of evolutionist institutional uesign in
policy applications of the theoietical iueas put foiwaiu. Lastly, we investigate why anu how CCs
can be stiategic platfoim meuia in evolutionist institutional uesign.
* Email: nishibeecon.hokuuai.ac.jp
$' )*+, +-*. /0+*)1,2 Nishibe, N. (2u12) 'Community Cuiiencies as Integiative Communication Neuia foi
Evolutionist Institutional Besign' !"#$%"&#'("&) +(,%"&) (- .(//,"'#0 .,%%$"10 2$3$&%14 16 (B) S6-48
<www.ijcci.net> ISSN 1S2S-9S47
!" $%&'()*+&$(%
The puipose of this aiticle is to show that community cui-
iencies (CCs) which have been useu woiluwiue since the
199us can be inteipieteu as integiative communication
meuia, anu that, since money is the most inuispensable
meuium of the mouein capitalistic maiket economy, CCs
shoulu be stiategic taigets foi evolutionist institutional
uesign in oiuei to solve cuiient social anu economic piob-
lems causeu by global capitalism
1
. We will also show that
the case foi CCs exemplifies the possibility anu feasibility of
evolutionist institutional uesign in contiast to othei ap-
pioaches such as constiuctivist anu opeiationalist institu-
tional uesign.
Fiistly, we explicate communication meuia anu situate
money anu language as such, anu then show that we can
compiehenu CCs as integiative communication meuia with
uual aspects of money anu language. Seconuly, in oiuei to
theoietically view the biuiiectional effects causeu by al-
teiation of money as a platfoim institution in its evolution-
aiy peispective, we intiouuce some basic concepts such as
ieplicatois anu inteiactois anu illustiate the micio-meso-
macio loop mouel by using those concepts. Thiiuly, we
eluciuate the significance anu possibility of evolutionist
institutional uesign in policy applications of the theoietical
iueas put foiwaiu. Lastly, we investigate why anu how CCs
can be stiategic platfoim meuia in evolutionist institutional
uesign.
, -(%./ 0%) 10%2*02. 03 +(--*%$+0&$(%
-.)$0
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In oiuei to ieuefine the chaiacteiistics of CCs as integiative
communication meuia in the next section, we, fiist of all,
iefei to N. Luhmann's iueas anu classifications of 'commu-
nication meuia' (Luhmann 1984=199S, 1988).
Luhmann uefines a total system of society as an autopoietic
oi self-iepiouucing system of communication wheie
"communication cieates communication." In othei woius,
society is a closeu self-iefeiential communication system
(Luhmann 1984=199S ch.4). Then he iegaius economy,
politics, science, euucation, ieligion anu the like as paitial
systems of society in which each of the uiffeient symboli-
cally geneializeu communication meuia functions inue-
penuently. Beie, communication is conceiveu not as tians-
feiiing infoimation fiom a senuei to a ieceivei but as
emeigent integiity of thiee selections of infoimation,
tiansmission anu unueistanuing (Luhmann 1988, Kap.2).
,", &F?77 G6<C; 4A 54EE=<65:864< E7C6:H @:<D=:D7I
7J87<C7C E7C6: :<C ;9EK4@65:@@9 D7<7?:@6L7C E7C6:
We must note that the woiu 'meuia' has a wiuei connota-
tion than is conventionally useu foi mass meuia, means of
tiansmission anu meuiatois. Communication meuia aie
emeigent entities in evolution that can tiansfoim uncei-
tainty into ceitainty of communication anu aie classifieu
into thiee types: 1) 'language' that enables communication
of meanings by using auuitoiy anu visual signs, 2) 'ex-
tenueu meuia' such as uocuments, piinting anu communi-
cation technologies that extenu the ieach of communica-
tion by language, anu S) 'symbolically geneializeu meuia'
such as money, tiuth, powei, love anu noims. Each of these
communication meuia conceins unceitainty in teims of 1)
unueistanuing, 2) ieach anu S) attainment (acceptance),
iespectively (Luhmann 1984=199S, ch.4.7-8, 1988, Kap.7).
Buman agents can obtain moie infoimation thiough such
extenueu meuia, (i.e., 'ieach meuia') anu juuge whethei
they will accept the infoimation baseu on such symbolically
geneializeu meuia (i.e., 'ieception meuia'). In that sense,
the ieception meuia functions as filteis foi selecting infoi-
mation anu foiming motivations. Reception meuia thus
enable both a senuei anu a ieceivei of infoimation to shaie
knowleuge as a system of infoimation, but the ieceiveu
knowleuge is not exactly the same foi them. Then, both
inteisubjectivity (attachment) anu subjectivity (uetach-
ment) aie simultaneously at woik anu agents aie loosely
connecteu.
If ceitain symbolically geneializeu meuia expiess a laige
numbei of things anu biing about geneialization of mean-
ings, 'symbolic geneialization' iesults in meuiating vaiious
uiffeiences anu closing sepaiations. 0n the othei hanu, if
such geneialization of meanings insteau cieates vaiious
uiffeiences anu mutual sepaiations, 'uiabolic geneializa-
tion' sets in. Noimally, these two functions aie tightly in-
teiwoven.
,"M -4<79 A4? : =<6A4?E E7C6=E K?6<D6<D :K4=8 5:>6B
8:@ :<C 68; C6:K4@65 D7<7?:@6L:864<
We fuithei investigate the uiffeience between money anu
language on the basis of Luhmann's iueas that we have just
seen. Noney anu language aie 'aitificial meuia' that aie the
piouucts of social anu cultuial evolution anu aie isomoi-
phic in 'geneialization' of uiffeiences in time, events anu
societies. The uecisive uiffeience between money anu lan-
guage is that, wheieas money is a 'unifoim meuium' that
conuenses qualitative uiveisity anu complexity of com-
mouities into one-uimensional infoimation as piices, lan-
guage is a 'uiveise meuium' that enables fai iichei expies-
sions that maintain vaiiety anu complexity
2
.
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
37
1 The piesent aiticle aims at integiating the basic iueas in a seiies of the pievious aiticles (Nishibe 2uu2, 2uu4, 2uuS, 2uu6a, 2uu6b, 2u1u)
anu showing a synthetic view of CCs foi evolutionist institutional uesign.
2 It is inteiesting to see that, fiom a iathei uiffeient viewpoint with the piesent papei, Bait (2uuu) uesciibes the similaiity between language
anu money as two uiffeient memoiy banks anu suggests that both woulu conveige in the age of Inteinet anu CCs.
The foim of payment by money involves much simplei
stiuctuies than uoes the foim of statement by language.
Noney as a measuie of value ieuuces complexity in the ieal
woilu to a one-uimensional value, anu the foim of payment
functions as a symbolically geneializeu meuium so that
uivision of laboi anu knowleuge as well as new uiscoveiies
anu innovations aie encouiageu anu sales of a gieat
amount anu vaiiety of meichanuise in the maiket aie facili-
tateu.
Noney, at the same time, biings about the uiabolic genei-
alization that expiessing eveiything in unifoim piices ue-
stioys chaiacteiistic piopeities anu qualitative uiveisity in
teims of cultuie, value anu noims paiticulai to nations,
local communities anu gioups of inuiviuuals. This pioblem
has become moie seiious, as moie inuiviuuals have come
to use money as 'capital' foi only the puiposes of value
augmentation anu accumulation. Piactices of investment
anu speculation have spieau, anu thinking ways in teims of
iational choice of alteinative such as oppoitunity cost anu
human capital have pievaileu in iecent yeais. This means
that the consciousness of people giauually appioaches that
of capitalists. Women anu motheis have giauually come to
iegaiu uomestic laboi anu chilucaie as lost oppoitunity to
eain wages in the woikfoice. Youngei people at piesent
tenu to conceive of not only vaiious qualifications but also
highei euucation anu leaining as investment in theii own
human capital foi gaining highei futuie income. Such
changes in value anu consciousness acceleiate the uissolu-
tion of communities such as univeisities anu families into
maikets. Latei, we will examine what solution CCs as inte-
giative communication meuia offei to the afoiementioneu
pioblems.
!" $$% &% '()*+,&)'-* $.//0('$&)'.( /*1'&
!"2 $$3 4567 8967 :3;<=63 9> ?9@<A :@B C:@DE:D<
Let us now take a look at how we can uesciibe CCs in view
of communication meuia such as language anu money as
uiscusseu above. Fiist of all, we must pay attention to the
unique chaiacteiistics of CCs in this iespect.
CCs ceitainly have aspects of both 'money' anu 'language,'
like }anus the gou in ancient Roman mythology who has
two faces looking foiwaiu anu backwaiu. Although CCs
actually aie syntheses of these two factois, they tenu to
have stiongei economic connotations because of the asso-
ciation between the woius 'money' anu 'cuiiency.' In oiuei
to claiify that CCs stietch ovei not only economic uomains
but also social anu cultuial uomains, we name them 'inte-
giative communication meuia' since they aie enuoweu
with the chaiacteiistics of both 'economic meuia' as money
anu 'social anu cultuial meuia' as language.
Luhmann thinks of the whole society as an autopoietic sys-
tem of communication anu uiviues it into seveial subsys-
tems accoiuing to 'symbolically geneializeu meuia' such as
money, tiuth, powei anu otheis. We also iegaiu CCs as
belonging to the same categoiy, but consiuei them unique
in the following senses. They possess the main puipose of
vitalizing both local economy anu local community, anu
expiess anu convey the values, inteiests anu ethics shaieu
by membeis of a community, uiffeient fiom conventional
money that specializes in economic functions, anu thus CCs
aie not meiely language anu extenueu meuia but also sym-
bolically geneializeu communication meuia such as love
anu noims. Accoiuingly, CCs aie founu to have all piopei-
ties of thiee kinus of communication meuia. What CCs ac-
complish is not to uiffeientiate the whole society into sub-
systems as uo conventional symbolically geneializeu meuia
such as money, powei, tiuth anu love, but iathei to inte-
giate such uiviueu social subsystems.
Luhmann explains that a whole society is a closeu self-
iefeiential communication system whose subsystems aie
opeiationally close with uiffeient symbolically geneializeu
communication meuia functioning inuepenuently. If so,
how can the integiation of subsystems by CCs actually take
place. Beie we have to focus on the peculiaiity of powei-
fulness of money compaieu to othei symbolically geneial-
izeu meuia. Since money is a 'unifoim meuium,' it can suc-
cessfully ieuuce oui complex anu laige-scale society as a
whole into uecentializeu netwoiks as cash nexus com-
poseu by autonomous tiansactions as buying anu selling by
using one-uimensional infoimation as piice. All othei 'ui-
veise meuia' cannot uo the same. It means that Naiket with
money, neithei State with powei noi Community with love
(fiateinity anu iecipiocity), can solely have the potential to
integiate the whole society into the single global maiket
society, as will be shown in section S.4. This chaiactei of
money manifests itself as globalization in which money
tenus to excluue othei symbolically geneializeu communi-
cation meuia.
If we can inhibit such immense piopagation of money anu
weaken its powei of social integiation, it woulu be piacti-
cable to utilize such ability to connect Naiket to othei so-
cial subsystems as Politics anu Cultuies. In shoit, CCs can
become the communication meuia foi integiation, not foi
uivision, of the whole society. Foi this ieason, we have ue-
sciibeu it with the aujective 'integiative.'
!"F $$3 :3 <=9@9?5= ?<B5: :@B 39=5:C :@B =EC6EG:C ?<H
B5:
Table 1 shows the uual piopeities of CCs as integiative
communication meuia (2uu6b)
S
. Fiist, let us look at the
economic aspects on the left-hanu siue of the table. The
monetaiy aspect inuicates the ability of CCs to one-
uimensionally expiess anu evaluate a uiveise aiiay of het-
eiogeneous goous anu seivices as a magnituue on a single
scale, say, 'gieen uollais.' Selleis set piices of goous anu
seivices anu wait foi buyeis to come, anu buyeis obseive
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
38
S Table 1 is piesenteu heie foi cleai conceptualization of CCs' uual aspects abstiacteu fiom vaiious piopeities of actual CCs, not foi taxo-
nomic classification of all kinus of CCs cuiiently opeiateu woiluwiue. Foi the lattei puipose, Blanc (2u11, p.7) successfully classifies CCs into
Local, Community anu Economic fiom the viewpoint of thiee kinus of piojects as Teiiitoiial, Community anu Complementaiy, iespectively.
the piices anu ueciue to make puichases if the goous anu
seivices aie uesiieu anu appiopiiately piiceu. Such unit
tiansactions of buying anu selling constitute 'uispeisive
maikets' conceiveu as netwoiks of consecutive tiansac-
tions meuiateu by money as the means of ciiculation.
CCs natuially involve such one-uimensional expiessions
anu evaluations anu, if they aie useu iepeateuly, ciiculate
among paiticipants as long as goous anu seivices aie
piiceu in teims of CCs. Then, we can see that CCs as eco-
nomic meuia cieate some soits of maikets, even if they aie
uiffeient fiom those in capitalistic maiket economies. What
conventional moneys anu CCs have in common is that both
of them aie unifoim meuia anu cieate 'uispeisive maikets'
such as netwoiks of tiansactions. A common notion is that
CCs cieate communities not maikets, but it is not tiue.
Aspect Money (eco-
nomic media)
Language (social
& cultural media)
Purposes Vitalization of
local economy
(Autonomy,
circulation,
recycling)
Rehabilitation of
community
(Dialogue,
interchange,
commitment)
Func-
tions
Independent de-
sign, issuing and
administration
Bounded sphere
circulation
No interest or
minus interest
Ferment of trust
and reciprocity
Cooperative pro-
sumers
Linguistic expres-
sion and transmis-
sion
Forms Complementary
currencies and
Emergency cur-
rencies
(Stamp scrip,
LETS)
Mutual-help cou-
pons
(Time Dollars,
Eco-money)
Domain Market Community
Table 1 Dual properties of CC as integrative communica-
tion media
4
(Source: Nishibe (2006b))
So what is the uiffeience between conventional moneys
anu CCs. CCs aim at exchange with iecipiocity, that is, 'ie-
cipiocal exchange,' anu aie supposeu to foim 'coopetitive'
(i.e., competitive anu coopeiative) local maikets in consiu-
eiation of anothei aspect of social anu cultuial meuia. In
oiuei to unueistanu that maikets can incluue altiuistic anu
bounueu-iational agents anu coopeiative ielations among
such agents, it is necessaiy to wiuen the conventional vi-
sion of the maiket, which is uepicteu in neoclassical eco-
nomics as being composeu of selfish anu supei-iational
agents with peifectly competitive ielations among them.
Let us now tuin oui attention to a 'social anu cultuial as-
pect' wiitten on the iight-hanu siue of Table 1. This can
also be calleu a 'linguistic siue.' All human ielations utilize
languages anu numbeis complementaiily. Noney quantita-
tively expiesses anu evaluates eveiything in piices, so it
belongs to 'one-uimensional meuia' uiffeient fiom 'multi-
uimensional meuia' that language iepiesents. CCs expiess
anu convey a uiveisity of social values, noims anu cultuies
paiticulai to the issuing anu auministiative bouies anu
local communities wheie the CCs aie ciiculateu.
!"! $%& '()'*+&+ *, --+
CCs have the puiposes, functions, foims anu spheies ac-
coiuing to these two aspects. The puipose of CCs as eco-
nomic meuia is 'to vitalize local economy.' 0ne of the
causes foi uepiession anu unemployment in local commu-
nities is saiu to be the pioblem that money flows out of
local communities anu eventually theie is a shoitage of
money in ciiculation. Foi example, }apan has expeiienceu
two 'lost uecaues' of seveial seveie iecessions since the
collapse of the }apanese asset piice bubble staiting in 199u.
Even though }apan as a whole suffeieu fiom iecessions,
theie was a gieat uispaiity between metiopolitan aieas
anu othei iegions in teim of the iate of bankiuptcies anu
the iate of unemployment uepenuing on the inteiiegional
balance of payments anu the inuustiial stiuctuie. 0n the
whole, iuial aieas weie much moie seveiely affecteu.
Nost towns anu villages have the pioblem of ueclining
shopping stieets in auuition to the pioblems of uepopula-
tion anu population aging causeu by the falling biithiate
anu migiation of young people to uiban aieas wheie they
finu moie job oppoitunities. Although motoiization facili-
tateu iuial anu small-town iesiuents going shopping in
supeimaikets oi shopping malls in laigei towns, it also
gave iise to 'shopping iefugees,' the elueily who uo not
uiive cais anu cannot go shopping fai fiom home. When
local shopping stieets uisappeai, so uo many invisible
community functions that they seive, such as stieet clean-
ing, mutual aiu, chilucaie anu festivals. As a iesult, the ue-
cline of local economies acceleiateu anu the living envi-
ionments of all iesiuents ueteiioiateu as well. If the people
unuei such ciicumstances can cieate theii own local
money that stay in the community anu ciiculates theie,
local economies coulu become moie active anu ielatively
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
39
4 All CCs have both piopeities of economic meuia anu social anu cultuial meuia, but the piopoitions of these aie uiffeient. Foi example, time
uollais anu eco-money aie exclusively useu foi mutual aius anu volunteei woik, so they aie 1uu% of social anu cultuial meuia. 0n the othei
hanu, Stamp sciips in 19Sus aie mostly useu foi shopping uaily meichanuises in local shops, so it is 1uu% of economic meuia. LETS is useu
foi local shopping, but the paiticipants in LETS also exchange theii white elephant, skill anu knowleuge. So LETS is thought of as half anu half
meuia. But theie is no place in the miuule in Table 1, so we put LETS in the left hanu siue.
inuepenuent of the influence of national anu global econo-
mies. This woulu encouiage foiming a sustainable anu
iecycling-oiienteu local economies of 'local piouuction foi
local consumption,' which is the ultimate aim of CCs intio-
uuceu as 'economic meuia.'
Anothei puipose of CCs is to 'activate community' oi 'acti-
vate communication anu inteicouise.' This coiiesponus to
the 'social anu cultuial meuia' aspect of CCs. In oiuei to
ueeply investigate CC as 'social anu cultuial meuia,' we
have to take a iounuabout way to fully unueistanuing the
socioeconomic cooiuinating piinciples incluuing maikets
anu the meaning of globalization.
!"# %&'()&*+),*'-. ,/0 /*1,'2*3)& ,0-40-35 6'2 7)280, ,'
09:)-4 )-4 6'2 ;'<<=-*,5 )-4 >,),0 ,' 1/2*-8
In mouein capitalistic maiket economies, all conceivable
things incluuing inteinal oigans, genetic mateiial, genetic
infoimation, peisonal infoimation anu the iight to emit
caibon uioxiue has been commouifieu anu the maiket uo-
main has incieasingly expanueu anu ueepeneu.
Fig. 1 Globalization (Source: Nishibe (2006a))
Beie, in oiuei to make cleai the meaning of so-calleu
'globalization' since the 199us, we intiouuce thiee uiffeient
cooiuinating piinciples of socioeconomics, accoiuing to
Polanyi (1944) anu with some mouifications: 1) Naiket
(the piivate uomain of exchange anu fieeuom), 2) Commu-
nity (the common uomain of iecipiocity anu fiateinity) anu
S) State (the public uomain of ieuistiibution anu equality).
Let us confiim that thiee economic piinciplesexchange,
iecipiocity anu ieuistiibutionexactly coiiesponu to the
thiee political iueals of the Fiench Republic, which oiigi-
nateu fiom the Fiench Revolutionfieeuom (blue), fiatei-
nity (ieu) anu equality (white).
Then, globalization can be inteipieteu as the histoiical
tienu ovei seveial uecaues foi Naiket to expanu, anu foi
Community anu State to shiink, qualitatively anu quantita-
tively, as shown in Fig. 1. As Naix (18S9=197u, Su, 2u8,
1867=1887, 6u) iepetitively put it, Naiket emeiges fiom
between two communities, two states, oi a community anu
a state. 0nce Naiket emeiges fiom such bounuaiies, it ex-
panus anu penetiates into Community anu State, uissolves
them, anu ieoiganizes them accoiuing to Naiket piinciples.
This tenuency can be calleu 'inteinalization' of Naiket. We
now unueistanu that globalization is a manifestation of the
'inteinalization' tenuency of Naiket to commouify eveiy-
thing.
!"? ;):*,)&. ,/0 20:&*3),'2 '6 3):*,)&*1< ,' 42*@0
A&'()&*+),*'- )1 6200 *-@01,<0-,
It is cleai that the tenuency of globalization is uiiven by
'Capital'. It is not a tangible thing as inventoiy, machine,
factoiy, lanu, but an intangible mattei. Fiom the peispec-
tive of evolutionaiy thinking that we will see in section 4.2,
Capital is the way to use money foi its piopagation, that is,
the ieplicatoi (the institution as a bunule of iegulative
iules) of capitalistic maiket economies, not the ieplicatoi
of a human agent oi a piofit oiganization such as a fiim. So,
to be piecise, Capital is the ueiivative of Naiket as net-
woiks of buying anu selling tiansactions, anu it uissolves
Community anu State anu ieplaces them into Naiket by its
giauual tiansfoimation of moie kinus of nontiauable goous
anu seivices into 'fictitious' commouities. If globalization
pioceeus to its logical enu, not only money anu assets such
as stocks anu ieal estates but also choices, iights, infoima-
tion anu genes of ouiselves will all theoietically be capital-
izeu as piofit-eaining oppoitunities.
If the 'fiction' is iealizeu without any iestiictions oi iegula-
tions in the maiket, the 'fiee investment' piinciple beyonu
'fiee tiaue' will be fulfilleu as the ultimate stage of a capital-
istic maiket economy. We claim that the tenuency of
globalization actually exists because it is obseivable that all
human ielations tenu to be ieuuceu to only economic anu
contiactual ielations such as buyei-sellei anu cieuitoi-
uebtoi ielations so that all types of communities suppoiteu
by iecipiocal exchange anu mutual aiu woulu uecline anu
even collapse. The tenuency of globalization has been anu
is counteiacteu by 'self-piotection of society' (Polanyi,
ibiu.) as in communism anu anti-globalization movements.
!"B ;;1. ,/0 3'=-,02@)*&*-A <0)1=201 6'2 <)280, 6=-C
4)<0-,)&*1< )-4 320),*-A D7)280, E*,/*- ;'<<=-*,5F
In oiuei to counteivail the tenuency of maiket funuamen-
talism in uaily life, CCs can be intiouuceu to iehabilitate
iecipiocal communities anu ievitalize human communica-
tions. In }apan, 'Eco-money,' which is a CC uesigneu specifi-
cally as 'social anu cultuial meuia,' became wiuely useu
until the eaily 2uuu's. But subsequently moie attention has
been paiu to the use of CCs as 'economic meuia' since Eco-
money was founu uifficult to ciiculate smoothly, owing to
the lack commeicial tiansaction netwoiks. We must unuei-
stanu fiom the expeiience that the uniqueness of CCs lies in
simultaneous anu complementaiy coexistence of both the
'economic meuia' anu 'social anu cultuial meuia' aspects.
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
40
CCs aie integiative communication meuia with aspects of
both economic meuia anu social anu cultuial meuia. They
can associate Naiket with exchange anu competition anu
Community with iecipiocity anu coopeiation, anu integiate
Naiket anu Community into 'Naiket within Community.'
Since CCs have a stiong affinity foi both Naiket anu Com-
munitylike soap that allows oil anu watei to mix, CCs
woulu woik as inteifacial active agents at the inteiface
between Naiket anu Community so that the two easily mix.
CCs can thus pioviue a socioeconomic policymaking meas-
uie foi balancing Naiket anu Community in oiuei to ovei-
come the uefects of both: capital iunning out of contiol as
well as coiiuption of closeu anu collusive ielations, anu 'ie-
embeu' the 'uisembeuueu' maiket economies into society
anu cultuie.
!"# %&' ()*+,-.*/ .( 00/
Next, let us tuin to the functions of CCs. Fiist, we shall ex-
amine theii functions as 'economic meuia.'
!" $%&'('%&'%) &'*+,%- +**.' !%& /!%!,'/'%)
Any gioups can inuepenuently anu voluntaiily uesign, issue
anu manage CCs. If people cieate theii own CCs anu con-
uuct tiansactions with them within a ceitain aiea, it means
that they paitially iestoie the iight to issue money as a civil
libeity anu social iight. This is the libeial anu uemociatic
piopeity of CCs.
0" 1+23.4!)+5% +% ! 05.%&'& *(6'2'
If consumeis go shopping at a laige supeimaiket oi con-
venience stoie, even those within a local community, the
money paiu flows out of the local community anu concen-
tiates at the company's heauquaiteis.
The local money put into savings anu investment funus is
tiansfeiieu to a moie piofitable place, say, a metiopolitan
aiea wheie lanu iapiuly appieciates. Such spillovei of
money has a negative impact on local economies, especially
uuiing a peiiou of uepiession. CCs aie uesigneu to ciiculate
within a ceitain local aiea without flowing out of it in oiuei
to piomote inteinal tiansactions of goous anu seivices anu
eliminate the shoitage of effective uemanu causeu by
money hoaiuing. Incieaseu ciiculation within a community
inuuces local piouuction foi local consumption anu iegion-
alism.
3" 75 +%)'2'*) 52 %',!)+8' +%)'2'*)
What uoes no inteiest on CCs mean. If you boiiow money
fiom a commeicial bank, you have to iepay the loan plus
inteiest. But if you boiiow money fiom youi paients oi
fiienus, you pay no inteiest because you have theii tiust
anu affection. If you uaie to pay inteiest, it might haim
close ielationships. Whethei people lenu money at inteiest
inuicates social uistance between cieuitois anu uebtois.
'Negative inteiest' coiiesponus to the cost of holuing
money known as 'uemuiiage' anu encouiages the use,
iathei than the holuing, of money to piomote consumption.
This iuea was embouieu in Stamp Sciips accoiuing to Silvio
uesell's uesign. A famous Ameiican economist, Iiving
Fishei, intiouuceu Stamp Sciips to the 0niteu States, anu
consequently the iuea of uemuiiage spieau uuiing the in-
teiwai peiiou. This is the noncapitalistic aspect of CCs.
These thiee aspects aie the functional chaiacteiistics in
view of economic aspect of CCs. When we focus on the so-
cial anu cultuial aspect of CCs, the view that CCs aie tools
foi oveicoming haiuships in a seveie uepiession anu eco-
nomic ciisis aie too naiiow. In }apan, iecent examples such
as Fuieai Kippu (Caiing Relationship Tickets) anu Eco-
money assigns gieatei impoitance to CCs' linguistic aspect,
which we will consiuei next.
&" 92.*) !%& 355('2!)+5%
CCs ciiculate baseu on tiust anu coopeiation among pai-
ticipants. Paiticipants inteiact with each othei thiough
tiansactions, stiengthen links of mutual aiu anu ueepen
theii mutual tiust. This is the community foiming aspect of
CCs.
Let us take the Local Exchange Tiauing System (LETS) as a
iepiesentative example of an account-type CC, wheie the
inteiest iate is zeio anu the summation of each paitici-
pant's account balance is the net of cieuits anu uebits. In
this system, the total uebits anu cieuits shoulu sum to zeio
at any time. We can inteipiet the situation as follows: a
paiticipant boiiows money fiom the community when the
account balance is in the ieu, anu lenus money to the com-
munity when the balance is in the black; they call it squaie
in the community. This zeio-sum piinciple simply ex-
piesses the continuous accomplishment of mutual aiu anu
soliuaiity among paiticipants in the community anu pio-
viues an institutional basis foi ueepening tiust anu coop-
eiation.
'" 155('2!)+8' (25*./'2*
'Piosumei' is a poitmanteau combining 'piouucei' anu
'consumei.' The teim was coineu by Alvin Tofflei (198u)
anu chaiacteiizes the tenuency of economic lives to be-
come moie self-sufficient oi uo-it-youiself in the thiiu
wave, the mouein infoimation age. 'Coopeiative piosum-
eis' aie simultaneously piouuceis anu consumeis anu
maintain coopeiative ielationships to mutually help each
othei anu theieby effectively utilize the iesouices they
own. This expiesses the iueal of CCs that all paiticipants
shoulu stanu on equal footing as much as possible by
eliminating asymmetiy between consumeis as money
owneis anu piouuceis as money seekeis.
:" ;+%,.+*)+3 '<(2'**+5% !%& )2!%*/+**+5%
Each local community has intiinsic anu inuiviuual chaiac-
teiistics in cultuie anu natuie. Such qualitative uiffeiences
anu uiveisity cannot be measuieu in a one-uimensional
quantity of money. CCs aie intiouuceu anu useu as social
anu cultuial meuia to expiess anu tiansmit such inuiviuual-
ity of local communities. Theie aie many unique names of
CCs to succinctly expiess such uistinctive tiaits as specialty,
uialect, geogiaphy, tiauition, mythology anu iueal of local
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
41
community. CCs thus function as linguistic meuia iegaiuing
local cultuie, inteiests anu values.
!"# %&' ()*+),)-.+-' /0 11( .( 2&' 3'45)-.2/3( 0/3 +'6
(4'-)'( )+ (/-)/'-/+/7)- '8/592)/+
CCs always have aspects of both economic meuia anu social
anu cultuial meuia, anu such uuality anu complementaiity
of CCs is the most inuispensible piopeity that we cannot
finu in any othei communication meuium. So we cannot
tiuly unueistanu the significance of CCs by viewing them
fiom only one aspect oi the othei. Bowevei, CCs usually
uiffei in which aspect is stiongei oi moie embouieu in
them. CCs fuithei uiffei in puipose anu locality. Wheieas
CCs evolveu as new species fiom money anu language, a
uiveise aiiay of CC subspecies emeigeu. The micio behav-
iois anu motivations of paiticipants anu the macio pei-
foimance anu patteins of communities composeu of pai-
ticipants inteiact anu change each othei as time goes on.
Such enuogenously uynamic changes aie consiueieu to be
path-uepenuent anu noniepetitive.
If macio enviionments aie kept constant, oi change exoge-
nously anu inuepenuently of the behavioi of micio agents,
it is possible to uefine the 'auaptability' of each micio agent
unuei a given enviionment. Then the concept of 'suivival of
the fittest' can also be cleaily uefineu in the sense that inui-
viuual oiganisms with maximum auaptability can piopa-
gate most successfully. Bowevei, we cannot have a mean-
ingful uefinition of the concept of auaptability if we ueal
with an evolutionaiy piocess wheie macio enviionments
anu micio agents mutually inteiact anu theii piopeities
enuogenously change. Anu we must iemembei that actual
socioeconomies aie ceitainly such evolutionaiy piocess
with enuogenous change anu path uepenuence. Conse-
quently, we cannot ask which institution of CC is the best oi
the most effective because such a question is meaningless
in the evolutionaiy piocess.
!": ;/6 -.+ 6' '8.59.2' 11( 0/3 '8/592)/+.3< 4'3(4'-=
2)8'(>
Then how can we evaluate CCs fiom the viewpoint of evo-
lution. 0nuei the piesent macio enviionments of capitalis-
tic maiket economies, CCs aie incieuibly weakei in teims
of suivival anu piopagation than existing national cuiien-
cies such as the 0.S. uollai anu }apanese yen, anu thus CCs
cannot spieau oi even continue to exist. Even unuei the
unfavoiable conuitions foi CCs, theie must be ciitical situa-
tions such as acute financial ciises, chionic economic ie-
cessions anu uevastating natuial uisasteis wheie CCs can
tiansfoim theii weaknesses into stiengths. Cleaily, CCs
must, at the least, become safety nets anu complementaiy
institutions utilizeu as emeigency measuies in such excep-
tional situations. But they aie only tempoiaiy, not constant.
The aim of CCs is to contiol the negative effects of money as
capital (Luhmann's uiabolic geneialization) anu iestoie the
stability anu sustainability of socioeconomic livelihoou by
intentionally iestiaining money's univeisal valiuity with
iespect to space-time ciiculation, tiansaction objects anu
paiticipants. Is such an iueal of CCs only a beautiful fantasy
oi a ieal possibility.
As we have alieauy seen, the poweis of suivival anu uiffu-
sion of CCs change uepenuing on the situation. Theii weak-
nesses can be tiansfoimeu into stiengths in a uiffeient
situation. If so, how can a situation become uiffeient. As we
have also explaineu, in an evolutionaiy piocess wheie
macio enviionments anu micio agents inteiact, they woulu
change themselves enuogenously. Social ieality is founu
only in such evolutionaiy piocesses.
!"?@ 11( .-2 .( . -.2.5<(2 /+ 2&' 7'(/ 5'8'5 2/ &'54 .
+'6 7)-3/=7'(/=7.-3/ 5//4 ('2 )+
If CCs coulu somehow suivive without being weeueu out in
such evolutionaiy enviionments, they woulu be able to
giauually affect the inteiests, values, noims, ethics anu
ioutines that ueteimine the behavioi of paiticipants as
micio agents. The influences aie initially veiy small anu
giow giauually, but once the accumulateu effects exceeu a
ceitain thiesholu, some positive feeuback mechanism sets
in anu eveiything might iapiuly change. If CCs coulu thus
act as a catalyst on the meso-level anu help a new micio-
meso-macio loop to be self-oiganizeu, then macio envi-
ionments change micio agents anu micio agents change
macio enviionments anu the uual uiiecteu inteiactions
uiastically anu cumulatively change both enviionments
anu agents.
Netaphoiically speaking, theiefoie, CCs aie similai to slow-
acting Eastein meuicine foi impioving oveiall wellness
(e.g., acupunctuie), iathei than fast-acting Westein meui-
cine foi symptomatic tieatment (e.g., meuication). Continu-
ing the metaphoi, CCs, by inseiting micioscopic exogenous
mateiial into the immune system oi the neivous system of
the human bouy, piouuce subtle changes in the phases
between oiuei anu chaos at the iegion bounuaiy of a sys-
tem anu, consequently, activate each cell in oiuei to vitalize
the bouy system as a whole. We will explain this point
moie analytically fiom the viewpoint of evolutionist insti-
tutional uesign in the next section.
A" BCDEF%GDHGI% GHI%G%F%GDHJE KBIGLH
A"? %&' K)00'3'+-' M'26''+ B8/592)/+)(2 G+(2)292)/+.5
K'()*+ .+N D2&'3 GN'.( /0 K'()*+(
We pioposeu evolutionist institutional uesign (EIB) as an
applieu policy methou in evolutionaiy economics a uecaue
ago (Nishibe 2uu2, 2uu4). It is a uiffeient appioach fiom
conventional economics anu focuses on evolution of social
institutions. EIB tiies to show an oiiginal anu effective an-
swei to the uifficult mouein pioblems foi which conven-
tional appioaches cannot easily finu suitable solutions.
As Keynesian macioeconomic contiol policy lost its effec-
tiveness in the 197us anu the communist bloc compiising
Eastein Euiope anu the Soviet 0nion collapseu in the
199us, oveiconfiuence in human ieason was uefeateu.
Bayek's ciiticism of 'the fatal conceit' (Bayek, 1988) that
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
42
taigeteu at constiuctivism anu
scientism hau uominant influences
since then. Aftei Bayek, on the one
hanu, too much emphasis hau been
placeu on fallibilism of iationality,
anu, on the othei, libeitaiianism
hau been wiuely tiumpeteu. As a
iesult, uesign came to be vieweu
negatively until the enu of 2uth
centuiy.
Bowevei, biological phylogenetic
evolution that geneiateu human
beings as social animals involves
emeigence of such aitifacts as tools
anu machines that aie uesigneu by
humans. Although the concept 'ue-
sign' in itself might imply aitificial
planning anu constiuction, it is
faiily possible to intiouuce a new
way of 'uesign' in oiuei to imple-
ment socioeconomic policies baseu
on the natuial, complex anu nonue-
teiministic piopeities of evolution.
Beie, we piesent evolutionist institutional uesign as such.
Fiistly, it is quite uiffeient fiom constiuctivist institutional
uesign wheie cential goveinments oi planneis fiom the
outset constiuct anu manage a whole economic system
baseu on a compiehensive plan foi achieving a uesiieu
outcome in teims of efficiency anu equality in socialist cen-
tial planning as well as mechanism uesign such as in mai-
ket socialism oi mechanism uesign. Seconuly, it is also uif-
feient fiom opeiationalist institutional uesign wheie cen-
tial goveinments oi planneis uiiectly contiol the iesulting
peifoimance of a whole economic system by aujusting
macioeconomic policymaking paiameteis in Keynesian
'fine-tuning' of effective uemanu.
In contiast to such conventional appioaches, evolutionist
institutional uesign (oi meuia uesign) is wheie agents con-
sciously attempt to ieuesign platfoim meuia that aie basic
exteinal institutions in oiuei to iegulate the evolutionaiy
socioeconomic system so that uual uiiectional causality
between inteinal institutions such as habits, conventions
anu value on the micio level anu the bounuaiy anu pei-
foimance of whole systems at the macio level can be in-
uuceu to change. We woulu like to piesent evolutionist
institutional uesign as a new iuea anu methou foi policy-
making piactices.
!"# %&'(&)'&*&+(' ,-&./0(&*1 2)3.('40&56 4*7
*0)54'0&56
Beie let us intiouuce seveial basic concepts anu iueas in
evolutionaiy economics so that we can use them to claiify
the aims anu significance of evolutionist institutional ue-
sign. What aie similaiities anu uiffeiences between biologi-
cal evolution anu socioeconomic evolution. Biological evo-
lution in neo-Baiwinism is conceiveu as a complex phe-
nomenon involving the following thiee mechanisms: 1)
vaiiance via mutation, 2) heieuity anu S) natuial selection.
In the case of socioeconomic evolution, consiueiing the
peculiai ability of Bomo sapiens to leain fiom anu commu-
nicate with each othei by using language anu money, we
neeu to make some impoitant ievisions to the afoiemen-
tioneu mouel of biological evolution, even if we have thiee
similai mechanisms: 1) vaiiance via natuial anu aitificial
mutation (innovation), 2) ieplicationtiansmission of
knowleugeinfoimation anu S) natuial anu aitificial selec-
tion (competition anu coopeiation). If we auu 4) self-
oiganization as anothei mechanism missing in neo-
Baiwinism in oiuei to explain how oiuei spontaneously
emeiges anu giows, we now have foui inuepenuent
mechanisms of socioeconomic evolution.
Fig. 2 uepicts an example of a multilayeieu nesteu stiuc-
tuie. Thiee inuiviuuals (inteiactois 1j, 2j anu ij symbolizeu
by thiee small ciicles) with theii own ieplicatois as intei-
nal iules foi cognition anu behavioi (ieplicatois 1j, 2j anu ij
symbolizeu by thiee small iectangles in small ciicles, ie-
spectively) belong to an oiganization (inteiactoi j symbol-
izeu by a laige ciicle) with its own ieplicatois (ieplicatoi j
symbolizeu by a iectangle at the centei of the laige ciicle)
as exteinal iules foi laws, noims anu moials.
Evolutionaiy economics has two basic concepts: 'ieplica-
tois' anu 'inteiactois.' 0n the one hanu, ieplicatois in so-
cioeconomic evolution that coiiesponu to genes oi BNA in
biological evolution aie institutions that consist of a bunule
of ifthen iules shaieu by a ielatively laige numbei of
agents. Such institutions constituteu as iules aie classifieu
fiom the viewpoint of agents into 'inteinal' (game stiate-
gies, fiames of cognition, psychological biases anu behav-
ioial ioutines) anu 'exteinal' (game iules, laws, conven-
tions, noims anu moials). 0n the othei hanu, inteiac-
toiscausal agents that coiiesponu to oiganism anu
gioups oi populations in biological evolutionaie inui-
viuuals oi gioups of inuiviuuals who execute iules (act
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
43
Fig. 2 Multilayered nested structures composed of replicators and interactors (Source:
revised from Nishibe, et.al (eds.) (2010) p.80)
accoiuing to both inteinal anu exteinal iules) anu inteiact
with themselves anu otheis as well as exteinal enviion-
ments. Then we can visualize oui socioeconomy as coexis-
tence of a uiveise aiiay of iules anu institutions that foim
mutually complementaiy anu substitutive ielations. We
call such a uynamic system the 'institutional ecology'
(Bashimoto & Nishibe 2u12).
In most cases, ieplicatois anu inteiactois foim multilay-
eieu nesteu stiuctuies. Wheieas inuiviuuals aie agents
with theii own ieplicatois as inteinal institutions (iules),
such gioups of inuiviuuals as oiganizations (fiims), mai-
kets, communities anu states aie also agents with theii
own ieplicatois that aie piefeientially imposeu as exteinal
institutions (iules) on inuiviuual membeis as long as they
belong to those gioups. If some inuiviuual membeis cannot
fully accept all the iules of the belonging gioup, in othei
woius, any of the inteinal iules of the inuiviuual membeis
conflict with the exteinal iules of the belonging gioup, they
must leave oi be kickeu out of the gioup. Foi example, as
long as inuiviuuals belong to any gioup of inuiviuuals, they
must obey some necessaiy basic iules of the gioup. If any
inuiviuuals cannot follow the iules, they cannot belong to
the gioup. The ielations of gioups (foi instance, fiims) anu
uppei levels of gioups aie similai. The numbei of hieiai-
chical levels in the nesteu stiuctuies is logically infinite, but
in ieality theie aie usual only seveial.
!"# %&'()*%+,)*%-'() .))/
We now piesent a simplei mouel with thiee levelsthe
micio-meso-macio loop mouelto uesciibe uynamic chai-
acteis of an evolutionaiy system as in Fig. S. Symbolically
geneializeu communication meuia such as language, law
anu money can be iegaiueu as platfoim institutions (basic
ieplicatois) locateu on the meso level in Fig. S. Inuiviuuals
as inteiactois on the micio level have theii own ieplicatois
composeu of inteinal iules such as instincts, chaiacteis,
habits, ioutines, motives anu value. Such platfoim institu-
tions as money, accounting, company anu laws aie ie-
gaiueu as basic ieplicatois (iules) locateu on the meso
level because, as outei institutions, they affect such innei
institutions as common value, moial anu consciousness
shaieu by a ceitain numbei of micio agents on the meso
level, anu, on the othei hanu, ueteimine such inteinal iules
within micio agents as the ioutinizeu fiames of cognition
anu habitual iules of uecision action on the micio level so
that agents can behave baseu on such fiames anu iules. In
shoit, platfoim meuia as outei institutions on the meso
level basically iegulate how agents shaie theii moials, val-
ues anu beliefs on the meso level anu behave anu inteiact
with one anothei on the micio level. Platfoim meuia meui-
ate uual uiiectional causal ielations between socioeco-
nomic peifoimances anu patteins on the macio level anu
behavioi of agents baseu on inteinal iules on the micio
level.
CCs aie integiative communication meuia locateu on the
meso level anu meuiate uual uiiectional causal ielations
between socioeconomic peifoimance anu patteins on the
macio level anu behavioi of agents baseu on inteinal iules
such as values motives anu ioutines on the micio level.
Fig. 3 Micro-Meso-Macro Loop
(Source: Nishibe &Kusago (2012)
0" 112 32 245346781 9.34:;5% %6<83 8=
6>;.?48;=824 8=2484?48;=3. <6287=
If we set new iules oi ievise some iules of CCs as platfoim
institutions on the meso level, such a change woulu affect
socioeconomic peifoimance anu patteins on the macio
level because agents change theii behavioi in iesponse to
the change of exteinal iules even though agents keep in-
teinal iules such as fiames of cognition, motives anu iou-
tines unchangeu. Even though agents follow the same in-
teinal iules wiitten as ifthen statements, if any input con-
uitions change in the conuitional clause (if~) incluuing any
change in exteinal iules, they might change theii behavioi
as output in the main clause (then.) accoiuing to the
change in the conuitional clause.
But if any mouification of exteinal iules as platfoim institu-
tions on the meso level changes inteinal iules such as val-
ues, motives anu ioutines of agents on the micio level, they
eventually have changeu theii 'ways of behaviois,' not 'be-
haviois as output' in the same inteinal iules.
Foi example, let us assume that you always behave as a
utilitaiian accoiuing to the iule of maximizing youi utility,
anu if the ciiminal laws aie amenueu to allow you to steal
anything fiom otheis without penalty, you aie supposeu to
stait stealing things to maximize youi utility, iathei than to
pay money to buy things. But if you weie taught the moial
stanuaiu that stealing is not iight because it huits otheis,
anu theiefoie iefiain fiom stealing, you woulu ultimately
give piioiity to the moial stanuaiu iathei than the utility
maximization iule anu you woulu not behave as a utilitai-
ian. This means that you woulu not change youi behavioi
itselfyou uiu not steal befoie oi aftei amenument of the
law; insteau you change youi inteinal iules, that is, youi
ways of ueteimining how to behave.
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
44
Aftei all, the change of exteinal iules on the meso level can
affect not only peifoimance on the macio level but also
inteinal iules on the micio level. Both constiuctivist anu
opeiationalist appioaches of institutional uesign piesume
that such inteinal iules on the micio level aie all fixeu be-
cause such inteinal iules aie given by optimality piinciples
such as maximization of utility anu piofits. The constiuctiv-
ist appioach, on the one hanu, aims at constiucting systems
oi stiuctuies on the macio level baseu on utilitaiian behav-
ioial piinciples imposeu on agents on the micio level. The
opeiationalist appioach, on the othei hanu, makes mac-
ioeconomic mouels with seveial sectois anu aims at social
engineeiing to uiscietionally contiol such fluctuations anu
instability of the system, such as business cycles anu
inflationueflation on the macio level.
Bowevei, uiffeient fiom those, the evolutionist appioach
thinks of inteinal iules on the micio level as vaiiable, anu
tiies to consiuei the effects both on peifoimance anu pat-
teins oveiall at the macio level anu on inteinal iules at the
micio level; these effects aiise simultaneously fiom
changes in the policymaking iegaiuing exteinal iules em-
bouieu in platfoim institutions (e.g., meuia such as money)
anu fiom changes in accounting iules at the meso level.
Fig. 4 Classification of foui types of socioeconomic policies
(Souice: Nishibe (2u1u) p.249)
Fig. 4 classifies socioeconomic policies into foui categoiies
along two axes of changeuunchangeu foi inteinal oi ex-
teinal institutions. Beie, evolutionist institutional uesign
coiiesponus to 4) 'meuia uesign' wheie both exteinal anu
inteinal institutions aie changeu. In contiast, constiuctivist
institutional uesign is unueistoou as S) 'mechanism uesign'
in which only exteinal iules aie changeu, anu opeiational-
ist institutional uesign is uepicteu in 1) conventional mac-
ioeconomic monetaiy anu fiscal policies wheie neithei iule
is changeu. We can see 2) 'change of inteinal iules oi con-
sciousness' in ethical consumption, social investment anu
coipoiate social iesponsibility. These aie all socioeconomic
policies, but oui focus is especially on 4) 'meuia uesign'
baseu on evolutionist institutional uesign.
To make oui socioeconomy moie sustainable without the
intoleiable instability anu tuibulence of a financial capital-
istic maiket economy, we can use meuia uesign as a poli-
cymaking tool to implement special uistiicts, social ex-
peiiments anu local movements specifically in teims of
money anu cieuit as economic meuia on the meso level. But
it is ciucial to examine what set of iules of money anu
cieuit aie bettei suiteu to accomplishing ceitain aims, foi
example, pieventing excessive economic fluctuation anu
achieving socioeconomic stability by iefeiiing to mouein
expeiiments of vaiious kinus of CCs.
Conventional national cuiiencies aie the platfoim institu-
tions that ueteimine the gianu uesign (basic ieplicatois)
foi the capitalistic maiket socioeconomy to evolve. In con-
tiast, such cuiiencies, CCs can be thought of as uiffeient
kinu of platfoim institution with uiffeient basic ieplicatois
that can giauually change both exteinal anu inteinal insti-
tutions of agents anu can potentially evolve fiom a capital-
istic maiket socioeconomy to noncapitalistic maiket econ-
omy. But even so, the ieality is that CCs have only weak
capabilities foi suivival anu uiffusion. We shoulu thus ex-
amine in iegaiu to meuia uesign what kinus of othei extei-
nal institutions can coexist with CCs oi cieate a favoiable
enviionments foi them in oiuei to empowei CCs.
!" $%&'%()*+ ,-.*+/0'1*2) 0-3(.$ -4 (5-6
.7%*-2*$% *2$%*%7%*-2'. 3($*)28 0(3*' 3(6
$*)2 '23 +-0072*%/ 3-+1
If we intiouuce CCs that possess the uual puiposes anu
piopeities of both money anu language, we can inteipiet it
as ievision of the ieplicatois conceining exteinal iules foi
money on the meso level. Accoiuing to the afoiementioneu
uynamic chaiactei of the micio-meso-macio level of the
system, the intiouuction of CCs as platfoim meuia on the
meso level affects both the peifoimance anu patteins on
the macio level anu the inteinal iules within agents on the
micio level. In evolutionist institutional uesign, we neeu to
consiuei both aspects at the same time, anu implement
meuia uesign of CCs so that they can impiove the macio
peifoimance anu become moie viable fiom the peispective
of business management. Fuitheimoie, it woulu be uesii-
able fiom the stiategic viewpoint to iecognize anu evaluate
the changes of paiticipants' inteinal iule causeu by the
intiouuction of CCs, anu make use of such feeuback in oi-
uei to impiove the uesign of CCs that can inuuce fuithei
uesiiable changes.
Fig. S shows such stiategic policy-making mouels foi evolu-
tionist institutional uesign. While meuia uesign is locateu
on the uppei level within evolutionist institutional uesign,
community uock is locateu on the lowei level. They foim
the nesteu stiuctuie of evolutionist institutional uesign.
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
45
Fig. 5 The nested structure of media design with commu-
nity dock (Source: Nishibe 2006a)
!"# %&'() *&+(,-
When we use the teim 'meuia uesign' in a bioau sense as a
synonym foi evolutionist institutional uesign, it geneially
inuicates a new iuea anu methou of institutional uesign. So
it concietely signifies policymaking methous (e.g., special
uistiicts, subsiuies anu iefoims) in teims of meuia such as
money, laws, accounting iules anu sciences. But we can
also use the woiu 'meuia uesign' in the naiiow sense to
inuicate the piocess of uesign of any specific meuium like
CCs within the fiamewoik of evolutionist institutional ue-
sign in Fig. S. In this section, we will focus on the bioau
sense fiist anu the naiiow sense theieaftei.
The constiuctivist institutional uesign known as 'mecha-
nism uesign' consiueis inteinal iules within agents (con-
sumeis anu piouuceis) as fixeu optimality piinciples (util-
ity oi piofit maximization). In constiuctivist institutional
uesign the maiket is unueistoou to be the 'concentiateu
mechanism' piecisely embouieu in the 'piice mechanism' in
only an iueal sense anu the maiket is evaluateu accoiuingly
in teims of efficiency of iesouice allocation anu infoima-
tion tiansmission as well as incentive compatibility in oi-
uei that the outsiueis of the system can constiuct an opti-
mal 'auction mechanism' baseu on the ciiteiia.
In contiast to this, 'meuia uesign' conceives inteinal iules
within agents as consisting of ielatively simple ioutines,
motives anu values in oiuei to pioviue satisfaction, not
maximization, subject to iealistic constiaints such as iiie-
veisible time anu bounueu iationality of agents. Fuithei,
meuia uesign takes the maiket to be moie iealistically 'ue-
centializeu netwoiks' of aim's length tiansactions foi buy-
ing anu selling meuiateu by money anu accoiuingly evalu-
ates the maiket in teims of iepiouuction, uevelopment anu
uiveisity of social anu ecological systems, satisfaction of
effective uemanu, anu systemic stability anu iobustness of
macio peifoimance. Neuia uesign thus enables the paitici-
pants of the system to uesign moie uesiiable meuia as
money, CCs, anu the like. In othei woius, meuia uesign is
not a phenotypic appioach that attempts to uiiectly con-
stiuct (iathei than uesign) the mechanism itself with ue-
siieu functions anu piopeities, but iathei a genotypic ap-
pioach that uesigns meuia as institutions (ieplicatois) that
inuiiectly inuuce uesiieu functions anu piopeities which
aie manifesteu by themselves.
Let us now to take a closei look at the iuea of institutional
ecology to elaboiate on the wiuei sense of meuia uesign. In
the age of globalization, a commonly helu notion is that
money will move towaiu a single cuiiency because of the
effects of netwoik exteinality in consiueiation of efficiency
anu convenience (Aithui, 1994). The uominance of the 0.S.
uollai as a key cuiiency in the woilu economy is in many
cases citeu as an exemplification of the claim. Bowevei, the
euio was cieateu as a tiansnational cuiiency to countei the
0.S. uollai's uominance anu the cuiiencies of the BRIC
countiies have incieaseu in value. In }apan, theie aie ui-
veise cuiiencies with specific piopeities anu niches, such
as national cuiiency, coipoiate money (mileages anu
points), electionic money, local cuiiencies anu local cou-
pons (gift ceitificates). Thus, a single uominant cuiiency is
not complete anu the coexistence of vaiious monetaiy in-
stitutions is cuiiently obseiveu just as institutional ecology
suggests.
Nonetaiy institutional ecology is an ecosystem wheie
gioups of monetaiy institutions anu gioups of useis who
stiategically use multiple moneys co-evolve (Bashimoto &
Nishibe 2u12). Such moueling can bettei explain the styl-
izeu facts that globalization anu localization of money si-
multaneously pioceeu anu multiple species of money con-
tinue to coexist. Anu we cannot concluue that meuia uesign
in teim of multiple cuiiencies incluuing CCs will open a
new fielu in socioeconomic policy until we can see the
woilu fiom such a stanupoint.
0nuei such a theoiy of applieu policymaking, we uo not
necessaiily have to iecognize globalization anu its piob-
lems as inevitable facts. Then we neeu neithei to think that
theie aie no othei effective methous than to ueiegulate the
maiket anu open it to foieign countiies, noi to patch ovei
each pioblem tempoiaiily by aujusting fiscal anu monetaiy
policies when financial ciises anu iecessions occui. Insteau,
it woulu be wisei in the long iun to conuuct meuia uesign
to encouiage vaiious CCs to emeige anu to aim at builuing
a sustainable anu iecycling-oiienteu socioeconomy fiom
the peispective of iepiouuction iathei than efficiency so as
to impiove mouein socioeconomic constitution by ieues-
igning platfoim institutions of money anu cieuit. Next, we
will focus on seveial examples using CCs foi meuia uesign
in the naiiowei sense.
Fiistly, theie have been many attempts to ieuesign the
iules of CCs in oiuei foi them to be moie sustainable. In the
case of Eco-money, a }apanese CC that came into use in the
late 199us foi only volunteei activities anu mutual aiu,
theie was a pioblem that cuiiency ciiculation is hinueieu
by such noncommeicial tiansactions. If Eco-money coulu
be useu foi commeicial tiansaction foi local shoppeis as
well as local fiims, goveinments anu nonpiofit oiganiza-
tions, uouble ciicuits of CC uiiven by the complementaiity
of noncommeicial anu commeicial tiansactions, wiue cii-
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
46
culation coulu be achieveu moie smoothly. In an expeii-
ment on a CC in Tomamae Town, Bokkaiuo, the velocity of
the CC with the 'Bouble-Tiiangle Nethou' was founu to
ieach S.1 (fiist expeiiment, 0ct. 2uu4 to Feb. 2uuS) anu S.S
(seconu expeiiment, Aug. 2uuS to }an. 2uu6) tuinoveis pei
yeai, which iespectively coiiesponu to about 6-7 anu 4-S
times that of the legal tenuei at the time. These uata sup-
poit oui claim that the CC of such a methou can have sig-
nificant economic effects in vitalizing local economies (Ki-
chiji & Nishibe 2uu8).
Let us take anothei example of meuia uesign of CCs in
which auministiation bouies attempt to change the piopei-
ties of CCs by aujusting vaiious paiameteis. Buiing the
2uuus in }apan, local coupons issueu by local goveinments
anu chambeis of commeice flouiisheu. Nany consumeis
weie willing to puichase local coupons because they went
foi a piemium between 2% anu 1u%, subsiuizeu by local
goveinments. At the time, the }apanese cential goveinment
hau cieateu seveial special uistiicts foi CCs to ueiegulate
laws that placeu conuitions on the issuance anu ciiculation
of such coupons. It also encouiageu CCs to take the foim of
ieueemable local coupons as in Tomamae Town's CC. In
this case, meuia uesign mainly taigeteu how to aujust such
paiameteis as the iates of piemium, uemuiiage (negative
inteiest) anu ieuemption fee, in auuition to the choice be-
tween note-type anu account-type CCs. The highei the
piemium, the moie willingly local consumeis bought the
CC. The highei the uemuiiage, the fastei consumeis spent
the CCs, consuming insteau of hoaiuing. The highei that of
ieuemption fee, the moie times consumeis ciiculateu CCs
without ieueeming them. Accoiuingly, it is effective to iaise
the iates of piemium, uemuiiage anu ieuemption in oiuei
to encouiage supply, tuinovei anu local ciiculation of CCs.
If local goveinments issue CCs, they will have policymaking
tools foi aujusting the local money stock similai to the ones
that a cential bank has foi a national money stock.
!"# %&''()*+, -&./
'Community uock' is uesigneu as pait of evolutionist insti-
tutional uesign foi embouying a stiategic anu compiehen-
sive methou foi integiating self-estimation of socioeco-
nomic situations of the community anu self-alteination of
such inteinal iules as fiames of cognition, motives, values
anu noims foi paiticipating agents of CCs. It was ueviseu to
be analogous to 'human uock,' which is a }apanese teim
that means a peiiouic complete meuical checkup foi eaily
uiagnosis anu self-awaieness of lifestyle pioblem, because
lifestyle-ielateu uiseases aie wiuely obseiveu in many
communities. Similai to human uock, community uock not
only aims at accomplishing objective obseivation anu uata
analysis of the piesent state, but also puts emphasis on
paiticipants' self-awaieness, self-estimation anu self-
alteination (Nishibe 2uu6a, Nishibe & Kusago 2u12).
0nce policymakeis oi auministiative agents establish ex-
teinal institutions of CCs in meuia uesign anu paiticipants
conuuct tiansactions using CCs, community uock will
commence. It is composeu of the following foui piocesses:
1) analysis anu uiagnosis of cuiient peifoimance of the
socioeconomy of a community given uata collecteu by
thiiu-paity ieseaicheis anu auviseis, 2) self-estimation
anu ieflection on the peifoimance of the community anu
theii own inteinal iules by paiticipating agents, S) self-
alteination of fiames of cognitions, motives, values anu
noims by paiticipating agents, anu 4) change of piopeities
of CCs as platfoim meuia causeu by alteination of inteinal
institutions of paiticipating agents.
The loop of community uock is encompasseu by the whole
piocesses of meuia uesign of CCs in Fig. S. Aftei sufficient
numbeis of iepetitions of community uock with the same
CC iules, policymakeis oi auministiative agents might fine-
tune oi iefoim exteinal CC iules baseu on accumulateu
expeiiences anu upuateu uiagnosis so that they can auapt
the alteieu inteinal iules of paiticipants anu attain the ini-
tial goals moie effectively. Neuia uesign in the naiiow
sense is thus situateu on the uppei level of community
uock in the oveiall pictuie of evolutionist institutional ue-
sign, that is, meuia uesign in the bioau sense.
We conuuct analysis anu uiagnosis in community uock by
using both subjective uata such as iesults of question-
naiies, inteiviews anu uiscussions anu objective uata such
as uetails of tiansactions, tuinovei of money, anu piopei-
ties of the money ciiculation netwoik among paiticipants.
While the economic effects of CCs can be asceitaineu fiom
theii tuinovei oi netwoik of ciiculation by using the uata
about each tiansaction (uate, item, fiom, to), theii social
anu cultuial effects can be asceitaineu fiom the obseiveu
changes of paiticipants' consciousness anu values. Foi ex-
ample, we conuucteu netwoik analysis of CC ciiculation
among agents anu iegions by using uata filleu in on the
back of notes by paiticipants in the Tomamae Town ex-
peiiments (Nishibe 2uuS; Kichiji & Nishibe 2uu8).
Even though analysis anu uiagnosis aie uone by using ob-
jective uata, whethei such uata can be obtaineu actually
uepenus on whethei paiticipants aie willing to pioviue
them, that is to say it uepenus on paiticipants' inteinal
iules incluuing fiame of cognition, motives anu values. It is
thus significant to pay attention to the uynamic piocess
cieateu by implementing community uock. In evolutionist
institutional uesign, the change of paiticipants' inteinal
institutions affects not only macio peifoimance of platfoim
meuia oi exteinal institutions but also its analysis anu es-
timation. Its effectiveness thus uepenus on volunteei pai-
ticipation anu the pioactive attituue of agents. Community
uock as a policymaking methou is not top-uown fiom poli-
cymakeis, but iathei bottom-up fiom paiticipants.
The fiamewoik of evolutionaiy institutional uesign is thus
establisheu so that we can moie ueeply unueistanu both
theoietical anu piactical aspects of CCs fiom moie iealistic
viewpoints of evolutionaiy economics. We believe that this
fiamewoik can pioviue a moie suitable methou of self-
management of CCs foi theii piactitioneis.
International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
47
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International Journal Of Community Currency Research 2012 Volume 16 (D) 36-48 Nishibe
48
International Journal of
Community Currency Research
Volume 16 (2012) Section D 49-57
A COMPARISON IN TRANSACTION EFFICIENCY
BETWEEN DISPERSIVE AND CONCENTRATED
MONEY CREATION
Nozomi Kichiji*
, Preston Austin**
, Stephanie Rearick**
And
Leander Bindewald