August 23, 2007

Ithaca Currency Keeps Money Local

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Small World Music, a used record shop that sits at the end of a narrow driveway off State Street, describes its assortment of songs as “the music Ithaca loves.” In a way, the record shop is a microcosm of Ithaca with its emphasis on local business and its laid-back atmosphere.
Steve Burke, the owner of Small World Music, has worked to sustain this small-town culture. As a founder and president of the board of Ithaca Hours Inc., an Ithaca-specific currency used as a means of bartering, Burke has tried to improve the local economy by bringing business to Ithaca stores, restaurants and citizens offering various services.
“The main impetus to create [Ithaca Hours] was the situation in Ithaca … a certain level of underemployment,” Burke said. “Tompkins County is sparsely populated, and has a few big employers like Cornell and Ithaca College. People are chasing after the same jobs, which means the wage structure is low.”
One “Ithaca Hour” is worth ten U.S. dollars, since the average hourly wage in Ithaca was ten dollars when the Ithaca Hours program was created in 1991. Hours can be spent or earned like U.S. currency. In order to become a member of Ithaca Hours Inc. and begin using the currency, one must simply fill out an application.
Ithaca Hours enables citizens to trade services without having to pay U.S. currency. People can use Ithaca Hours to get their car repaired or house painted, while saving U.S. currency for necessities like food.
“Early on, few businesses signed on,” Burke said. “Some businesses that take locality very seriously joined, but for brick and mortar businesses, how do you take Hours and use them outside of the local community?”
As more and more people joined, many businesses became members as well, a sign that Ithaca Hours had become a permanent fixture in the community. Around this time, chain stores began became more common in Ithaca, so Hours became a means of keeping money in the hands of locals. Currently, over 600 businesses and individuals are registered members of Ithaca Hours.
ABC Café owner Ken Hallett says that his business, which accepts full payment from customers in Hours, has profited from Ithaca Hours.
“I think it brings in some people who have them and might not come here as often if they didn’t have them,” Hallett said.
Hallett uses his Ithaca Hours revenue to pay his employees and provide them with benefits, as well as to buy items for the café. If he has any Hours left over at the end of the year, he divides them among his employees for their holiday bonuses.
However, Hallett says that only about 5 percent of the business in his restaurant is transacted in Ithaca Hours.
While Ithaca Hours might seems like a concept far removed from Cornell, Cornell Cinema does accept one tenth of an Ithaca Hour as partial payment for admission to the theater.
“We accept them because it’s good business,” said Chris Riley, managing director of the Theater. “We are part of Ithaca, and we like to support the local community.”
According to Burke, Ithaca Hours has stimulated the local economy, but businesses sometimes run into problems translating Hours into U.S. dollars as many members accept only a limited amount of payment in Hours.
Although Ithaca Hours is the largest and oldest local currency in the U.S., a number of other towns use similar systems. The Berkshire region in western Massachusetts uses a currency called BerkShares. Salt Spring Island in British Columbia has created the Salt Spring Island Dollar, which is 100 percent backed by the Canadian dollar. There are also a number of local currencies in Japan, according to Burke.
“I think [a local currency] is attainable in any community, it’s just a question of whether the community can handle it,” Burke said.
“In Ithaca, it worked for a number of reasons. First, there was a need for it. Second, Ithaca is a politically progressive place. Third, the educational level is high. Lastly, Ithaca is a small town so it is easy to spread the word. A lot of people are very dedicated to this idea,” he said.