Local Currency for Louisville

I live in Louisville, Kentucky. We have a number of independent businesses here, but a few of them are in the act of closing, and it may be a result of the recent economic downturn. Stephen George, editor of our local alternative newsweekly the Louisville Eccentric Observer clearly believes this is the case.

I have responded to George's column (and contacted the Louisville Independent Business Association) with the following proposal:

I propose that Louisville create a local currency.

The Berkshire region of Massachusetts has local scrip – Berkshares – that is accepted and used by 360 businesses local to the area. These businesses continue also to use US dollars, of course.

Berkshares are purchased at local banks for 90 cents each, but Berkshares are accepted at local businesses for the full value of one dollar per Berkshare. Customers utilizing Berkshares are therefore automatically receiving a 10% discount.

The businesses in question also use Berkshares to facilitate trade between each other. If one business accumulates an excess of Berkshares they can always cash them in at a participating bank for their original cost of 90 cents each.

Studies of local currencies show that they facilitate customer loyalty, and that the currency circulates more rapidly than regular currency (there being no incentive to keep the local currency out of circulation) therefore facilitating greater economic activity.

What’s especially exciting is that Berkshares and other organizations have done all the heavy lifting already. All the legal issues of launching legit local lucre have been addressed.

There are many resources upon which to draw. One of the best resources is most likely the Berkshares web site, which includes the bylaws of that organization.

Berkshares launched with assistance from the E. F. Schumacher Society – an organization dedicated to promoting the benefits of local economies. The E. F. Schumacher Society’s website – smallisbeautiful.org – is another very useful resource. The site also lists a number of other local currencies that are currently in use in various states. There appear to be no local currencies in Kentucky yet, though.

Louisville should have a local currency.

We already have the Louisville Originals and the Louisville Independent Business Alliance. These two organizations have 180 local businesses as members, and a few of these businesses - such as local banks - have multiple locations.

We'll need at least one of the local banks to facilitate distribution of Louisville’s local lucre.

The Louisville Originals already offer gift cards that are accepted at 50 area restaurants. The Originals’ web site also allows you to purchase gift certificates redeemable at some individual local restaurants at a 30% discount.

It seems to me, then, that this is an idea for which our local businesses are ready. Members of these organizations have already learned the value of co-operating, of motivating patrons to prepay in order to make purchases at multiple businesses, and of selling gift cards at a discount. It seems that creating and utilizing a local currency would be just another small step.

Let's launch local lucre, Louisville!

Update: I want to give credit where it's due, so please be aware that I was inspired to begin thinking about a local currency for Louisville by this clip from the fine folks over at GOOD.