Town Bucks a Trend
Hartford Courant - Janice Podsada - Susan Witt decided it was time to make some money for the town she has called home for 26 years. Lots of it.
So this spring, along with community groups that she enlisted, Witt printed a stack of bills - $774,000 worth, to be exact. The cash comes in ones, fives, 10s, 20s and 50s, beautifully engraved on paper just like real greenbacks from Uncle Sam.
BerkShares, a local currency that made its debut 10 weeks ago here in the southern Berkshires, is legal tender, backed by federal dollars, exchanged at four local banks.
The point, Witt explains, is to encourage people to shop in and around this town of 8,000, and boost the local economy. For every $90 in U.S. money, buyers come away with 100 BerkShares, which have purchasing power equal to the full $100 with participating merchants.
So far, about 3,000 people have exchanged their federal dollars for 350,000 BerkShares. They have spent an estimated 130,000 of the B's at 188 stores, law firms, auto repair shops and other businesses that pledged to accept them.
"With BerkShares in your hand, you can't go online, you can't go to the mall," Witt said. "You have to think twice about where you buy."
Merchants can restrict how the BerkShares are used - some take them for small items but not big-ticket purchases - but when they take them, the merchants allow a 10 percent discount. Some are disgruntled but don't want to fight the movement.
The crisp new bills - slightly larger than U.S. tender - look, feel and trade like real money. Under ultraviolet light, they glow. And the proud folk of Great Barrington flash them as if they've finally struck it rich.
Sharon Lazerson fanned her BerkShares like Donald Trump after she traded $198 for a wad of the local cheddar at Berkshire Bank on Tuesday.
"When they first came out, I thought it was very cool," said Lazerson, a local resident, on her way to some holiday shopping. "My auto mechanic takes them. When I find out that merchants accept them, I'm more likely to go back there."
Most folks have heard about BerkShares whether they buy into the concept or not.
"I would really be using them very rarely. I spend my money at the mall. Maybe I'd spend a few at the coffee shop," said Tom Kotarba, 19, of Great Barrington, a student at Simon's Rock College of Bard who hasn't changed any dollars into BerkShares.
In one sense, Kotarba is exactly the sort of person Witt, 60, is trying to reach. She hopes BerkShares can revolutionize the area's economic base.
"The more industries that spring up to replace goods that are imported - the more jobs," she said.
And that could keep the area's young people from leaving for a lack of opportunity, a scenario that plagues many New England regions that have lost their manufacturing base.
"It's the consumers' fault that we haven't banded together. Instead of complaining about the global economy, and the goods produced under that situation - here's how to promote local production," Witt said.
"You don't wait for government solutions."
There's no law saying consumers have to pay for goods or services with federal reserve notes - although a local currency system can't preclude the use of U.S. dollars, a Federal Reserve spokeswoman said.
The experiment already has gained the attention of some economists and academics. In particular it caught the eye of Sam Anderson, a visiting professor of human rights at New York University and founding member of the Harlem Black Panthers. Anderson said he could foresee the black community benefiting from the creation of its own currency.
"BlackShares," Anderson said, "could be introduced in the black community on a national basis." Although such a system could alienate other minority groups, he said. "In promoting black economic development, yes, we'll step on some toes of some other people of color." He cited Hartford as an example: "You have the black community and the Hispanic community, and both are undeveloped. You have to find a mechanism to develop both."
Witt, who was born in Hartford, is the administrator of BerkShares Inc., the private, nonprofit group formed last February. The group created and paid for the currency with a $100,000 grant - in U.S. dollars, that is - from private individuals and the Rudolf Steiner Foundation.
The plan is co-sponsored by the Southern Berkshire Chamber of Commerce and the E.F. Schumacher Society, a nonprofit group run by Witt, which promotes the creation of strong local economies. For years the society's members, which meet every Tuesday for lunch at Witt's home, mulled the idea of creating a regional currency.
Now, instead of discussing theory, its members - seated at this week's gathering around a farm table spread with goat cheese (local, of course), arugula and homemade blackberry pies - are busy updating the list of merchants who've agreed to accept BerkShares.
To invoke the region's history, BerkShares feature portraits of a Mohican Indian, black civil rights activist W.E.B. Du Bois, writer Herman Melville and artist Norman Rockwell.
In recent years, merchants in downtown Great Barrington have struggled to compete against the chain stores and mall located 45 minutes away in Pittsfield. Many countered by increasing their inventory of unique items and catering to the area's population of second-home owners. But those residents only appear seasonally.
Retailers have tried to entice more year-round residents to shop at their stores, some quite upscale.
"I've been running sales here for years and have gotten no action - 30 percent off, buy one get one free," said Steve Carlotta, co-owner of The Snap Shop, an independent camera and film store. BerkShares, he said, are bringing people in.
"The first two sales I made in BerkShares were $1,200 sales. I took a hit on them," Carlotta said. "But instead of whining about the loss, we take it. If a 10 percent discount brings them in, great. I'll smile and take the BerkShares."
Some infrequent longtime customers, Carlotta said, are suddenly appearing more often.
Other merchants worry their stores can't sustain the 10 percent discount. Guido's Fresh Marketplace has taken in tens of thousands of BerkShares, said front-end manager Rick O'Neill - tough for a grocery store, which has thin profit margins.
"We're trying to spend those dollars," O' Neill said, "so we don't have to take the loss." As a result, Guido's is using BerkShares to pay for the ads it runs in the Berkshire Record, a weekly newspaper, and on the screens at the Triplex Cinema.
But John Conlin, the owner of TuneStreet, an independent electronics store, is less than thrilled.
"I can hardly wait until this is over," said Conlin, who accepts BerkShares on CDs and DVDs but not on TVs and stereo equipment.
"People we see every day wanted us to do it. In a town this size sometimes you just go with the flow," Conlin said.
Some firms are struggling with not only the discount, but the added expense of having to keep two sets of books. BerkShares Inc. tried to address the issue two weeks ago by holding an accounting seminar.
In June, participants will evaluate the experiment. If they pull the plug on it, BerkShares holders will have three months to redeem them for federal dollars at the four local banks - including Connecticut-based Salisbury Bank and Trust Co. - but the hope is the currency will flourish.
Economist Joel Naroff described BerkShares as not unlike what goes on in many university communities. "It's a little bit more eccentric, or out there, but if you go to any major university community they have `blank' bucks, Harvard bucks, it is money, like credit card money," said Naroff, the chief economist at Naroff Economic Advisors, a private forecasting firm. "They seem to be taking it to the next step, turning it into paper, rather than a credit card."
Witt said some early participants have dropped out, realizing they prefer to use credit cards. "And people who didn't like it at first," she added, "are now flashing their BerkShares."