Buying into BerkShares
Berkshire Trade & Commerce - John Townes - Ever since the colonial era, southern Berkshire County has been known for its independent spirit. Now, the region is taking a step towards greater economic independence by launching its own local currency – called “BerkShares” – on the weekend of Sept. 29.
This does not mean the southern Berkshires are seceding from the Union or withdrawing from the national economy. The familiar federal currency will continue to be the coin-of-the-realm in south county.
Instead, BerkShares is an ambitious community-based initiative that uses this local currency to encourage buyers to support local businesses – and thus keep more money circulating within the community, rather than being sent to distant corporate headquarters.
Organizers believe it has the potential to become an ongoing form of grass-roots community development that could stimulate all sectors of the economy – including retailing, production, farming, professional services and non-profit activities.
“This could be one of the best things to happen here in a long time,” said Louann Harvey, president of the Southern Berkshire Chamber of Commerce and vice president of BerkShares Inc., the non-profit organization that was formed to implement the program.
BerkShares are specially issued paper bills which can be spent at participating businesses in southern Berkshire County. They represent actual U.S. currency that is held on deposit. As an incentive to shop locally, they include a de facto discount for customers who use BerkShares.
BerkShares are also intended to be a tangible way for residents to commit to supporting a more self-sustaining regional economy by dedicating a portion of their spending to BerkShares transactions.
“By encouraging people to patronize local businesses, this can strengthen our overall economy and benefit the entire community,” said Harvey, who is also a mortgage officer in the Great Barrington office of Berkshire Bank.
A local currency functions in the same way that national currencies operate – building the economy by maximizing circulation of trade within a defined region.
It is legal currency, because it is backed by federal dollars and has a set exchange rate and is taxable, according to Susan Witt, director of the E.F. Schumacher Society, the organization that initiated the BerkShares program.
BerkShares are also viewed as a strategy to counteract the increasing dilution of regional economies by corporate consolidation, chain retailing, globalization and other modern trends that siphon money outside of communities.
“To have a sustainable regional economy, it’s important to look at the amount of products and services that are imported from sources outside the region,” said Witt. “When we import those, it also exports money out of the region. We can reduce that by substituting those imports with more products and services from businesses that are based here. BerkShares are one way to encourage that.”
In addition, BerkShares are intended to demonstrate the positive impact and the ripple effects of local spending.
“As BerkShares are spent, the circulation of the bills will show how a dollar spent at a local business stays in the community and moves throughout the local economy,” said Witt.
The Schumacher Society and the Southern Berkshire Chamber of Commerce are co-sponsors of BerkShares, which is overseen by a board of directors that includes Harvey, board president Asa Hardcastle, Jennifer Sahn, David Lazan, Art Ames, Susan Ingersoll, Hank Ervin and Christopher Lindstrom.
By mid-September, over 130 businesses had signed up as participants. They include retailers, restaurants, architects, health services, attorneys, builders and other contractors, computer consultants, artists and other categories.
Four banks with local branches in south Berkshire have agreed to handle the distribution and redemption of BerkShares, including Berkshire Bank, Lee Bank, Pittsfield Co-Operative Bank and Salisbury Bank.
The BerkShares program will be officially launched at a public celebration at the Mahaiwe Performing Arts Center in Great Barrington on Sept. 29, and at other events that weekend. (Details of the launch weekend and other information about BerkShares can be found at www.BerkShares.org.)
The program is slated to be reviewed in about a year, at which point a decision will be made to either continue it or allow it to expire. If the program is successful, the goal is to make BerkShares a permanent element of the southern Berkshire economy.
Initially, the BerkShares initiative is focused on the southern Berkshires, from Sheffield up to Stockbridge. Proponents hope to see the concept eventually adopted throughout the Berkshires and beyond.
In that respect, Witt noted that BerkShares is also a pilot project. She said that there is a great deal of national interest in BerkShares as a potential model for local currencies that other regions might emulate.
BerkShares notes are designed to reflect their regional orientation. Rather than portraits of presidents, the bills feature prominent figures from Berkshire history, including artist Norman Rockwell, scholar and activist W.E.B. DuBois, the Stockbridge Indians, author Herman Melville, and Robyn Van Eyn, a pioneer in the Community Supported Agriculture movement.
The notes, which were designed by John Issacs, include a logo based on a work by artist Michael McCurdy. They also feature scenes by area artists, including Morgan Buckley, Bart Eisback, Joan Griswold, Joan Rickus and Warner Friedman.
They were printed by Excelsior Printing of North Adams on security paper of a similar quality to that used in national currencies from Crane & Co. of Dalton. They include several anti-counterfeiting features.
BerkShares are being issued in denominations of $1, $5, $10, $20 and $50. Witt noted that the initial run has printed 90,000 notes representing the equivalent of $835,000 of BerkShares.
People can receive the currency by exchanging their U.S. dollars for BerkShares notes at participating local banks. They can also request BerkShares when they receive change from businesses that handle them.
All of the money that is exchanged by the public for BerkShares will be placed in a central account, to ensure that they are redeemable for U.S. currency.
Under the exchange rate, 90 cents of federal currency is equivalent to a $1 BerkShares note. Thus, a person can exchange $9 in federal currency and receive $10 in BerkShares.
Participating businesses have agreed to accept BerkShares in the same way they would accept U.S. dollars, which translates into a basic 10-percent discount for customers using the local currency.
However, the specific terms of acceptance will be determined by individual businesses.
“Different businesses have different profit margins and situations,” said Witt. “So it was important to give them the flexibility to decide how they handle BerkShares. The only requirement is that they agree to accept some BerkShares from customers.”
Most businesses are expected to accept BerkShares on a straight dollar-to-BerkShare basis, which results in the basic discount, according to Witt.
However, some businesses may limit the items that can be purchased with BerkShares or the percentage of a purchase that can be paid for with them. On the other hand, some businesses plan to offer additional discounts or other special offers for those who use BerkShares.
Participating businesses also have the option of either exchanging for federal dollars the BerkShares they take in on sales or using those BerkShares for their own purchases.
For a straight redemption at the bank, the business will receive 90 cents in U.S. currency for each $1 of BerkShares. While this represents a slight loss, Witt said it is similar to what happens when a business holds a sale or offers other discounts.
Witt noted that organizers are encouraging participating businesses to use the BerkShares bills they receive from customers to make their own purchases of goods and services from other local suppliers. When they do that, she said, the discounts they give are compensated for by the discounts they receive, while also furthering the overall goal of the program.
“One of the purposes of BerkShares is to encourage local business-to-business sales too,” said Witt. “When businesses use BerkShares in their own spending, they are also receiving the benefits. That’s also how the bills will be circulated within the local economy.”
Larry Steinberg, owner of Gans Bedding on Stockbridge Road in Great Barrington, is one of the participating merchants. He said the slight reduction in money from individual BerkShares sales is worth it to him, both as a way to support the community and also as a way to attract additional customers.
“I have no problem with the discount,” he said. “Hopefully the 10 percent I lose on an individual sale I’ll gain in an increased volume of sales.”
While the program is oriented to local businesses, outside businesses and chain stores that do business in the southern Berkshires are also able to participate in BerkShares.
“Any business here is welcome,” said Witt. “Many chain franchises are actually local businesses that are owned by people who live here. Also, one of the problems with outside corporations is that they don’t have connections to the communities where they operate. Instead they buy their supplies elsewhere and use their corporate attorneys and accountants instead of local services. If BerkShares can encourage them to become more involved and spend more of their money here, that also serves a purpose.”
Grant for prototype
The impetus for BerkShares began in February, when the Schumacher Society received a $100,000 grant from a group of philanthropists through the Rudolph Steiner Foundation to develop a prototype for a local currency that other communities can adopt.
The Schumacher Society is a national non-profit organization based in Great Barrington that promotes the principle of decentralization. This includes supporting smaller-scale community-based economics as an alternative to the trend towards centralization and consolidation. It is named for the economist who wrote the book “Small is Beautiful” which popularized that phrase in the 1970s.
The Schumacher Society has long encouraged local currencies as a strategy to strengthen sustainable regional economies. Several years ago, they worked on an earlier and simpler version of this concept in Great Barrington, in a promotion that was known as Deli Dollars.
Local currencies were widely used in the early 1900s, and they are again being recognized as a tool for sustainable economic development. Some other communities have devised variations of the basic idea.
“It’s a movement that’s growing,” Witt said. “The concept is based on four basic elements: community, ecology, the economy and sustainability. The health of these are all tied together.”
Although not the first local currency, she said that BerkShares is one of the more ambitious versions – particularly the concept of an actual currency that is backed by federal dollars.
When they received the grant, Witt approached the Southern Berkshire Chamber to work with the project as a co-sponsor.
“A basic role of the chamber is to support our membership by encouraging people to shop locally, so this was a natural fit for us,” said Harvey. “We were enthusiastic about getting involved in it.”
Witt and Harvey acknowledged that putting the program together has been a formidable undertaking, because there were so many elements that had to be developed, organized and coordinated.
In addition to the task of designing and producing the currency, developing a system for distribution and accounting was a complex task. It also required convincing local banks to participate.
“This is not easy for the banks who are taking part in this,” said Harvey. “It requires a lot of preparation and work, and they do not really get any financial benefits for doing it. The four banks that agreed to participate deserve a lot of credit. The only motivation they have is their community orientation. They’re doing it as a service because they believe in the program as something that’s good for the community.”
She noted that the banks are also offering free accounts to businesses that handle BerkShares and do not already have an account of their own.
Businesses that agree to accept BerkShares must also make adjustments. These range from integrating the currency into their bookkeeping and accounting systems to teaching their staff how to handle BerkShares at the cash register along with regular money.
Witt and Harvey said that the majority of businesses they have contacted have been enthusiastic. “Most businesspeople love it,” said Witt. “There’s hard work involved in setting it up, but they’ve been willing to do it.”
Businesses participating in the BerkShares program will be able to post signs to that effect at their establishments. The BerkShares website will also maintain an updated list of participating merchants and businesses.
Steinberg of Gans Bedding said he strongly supports BerkShares both as a way to build his own business and also to support the local economy.
“I think of us as a community business that primarily serves local residents,” he said. “The 10-percent discount is a good deal for people. I also believe in supporting the community. I like the fact that BerkShares is a community endeavor to promote all local businesses.”
He added that he does not see making the adjustments to handle a local currency as a problem. “That’s pretty easy to do,” he said.
Nevertheless, some businesses have been reluctant or want to see how the program works before participating.
“Some businesses are taking a wait-and-see attitude,” said Witt. “I think if it proves to be successful, many of them will sign up for it too.”
Witt believes the concept can be successfully adopted throughout the Berkshires. “This idea would be perfect for Pittsfield, for example,” said Witt. “It reflects what the city is trying to achieve in their revitalization efforts.”
She said local currencies could be done as separate efforts in different localities or through affiliations that would create a countywide version of BerkShares.
She added that the organizers of BerkShares would be willing to work towards that in the future, although their own focus currently is on launching BerkShares in south Berkshire.
“Our main mission right now is setting it up to succeed in south county,” said Witt. “But beyond that, there are many possible ways this idea can grow.”