Several decades ago, in a world threatened by financial failure, one B.C. community found a way to cope by allowing locals to issue mutual credit to each other in a way that drove business activity in hard times.
Now, lessons learned in the Comox Valley and other communities around the world are the foundation for a revised model that's on the verge of launching in Vancouver, with the aim of strengthening local economies.
By using non-profits to accelerate the distribution of a new community money between citizens and businesses, the Vancouver Seedstock seeks to make a big-city breakthrough for a local currency model that has so far been confined to smaller communities.
"In Vancouver we have a tremendous amount of wasted human and material resources," says Jordan Bober, one of the currency's co-creators. "We have many incredibly talented people who could be making valuable contributions to the economy but they're not -- they are underemployed or mis-employed because the money isn't flowing for what they do."
Michael Linton felt that tension too. He started a currency in the Comox Valley after a significant economic downturn in the late 1980s, a project that has since stalled. And Bober's first attempt at creating a currency, the Dunbar Dollar, found little traction in Vancouver's affluent Dunbar neighbourhood.
Despite the challenges, the two have now teamed up with the hopes of creating a lasting community currency in Vancouver -- this time with the goal of expanding local food production and alleviating underemployment.
Giving credit to Comox Valley
In 1982, Vancouver Island's Comox Valley faced an economic blow as a fighter squadron moved off the CFB Comox to Alberta, taking about 450 families and their paycheques out of the region.
At that time Linton's business suffered the same fate as many others in the area: income dried up. As the amount of money circulating through the community suddenly fell, his business teaching posture-poor clients the Alexander Technique saw fewer and fewer clients.
"It was a bad year for fish and a bad year for the U.S. economy as well," he recalls. "When mortgages hit 18 per cent, everyone lost interest in spending money on anything."
Linton sat around with friends contemplating how to move forward.
"We knew the skills were still there, but now the money wasn't," he says.
The group used the local office bureau's computer to create a Craigslist-like message board, where community members could leave phone messages for offers and requests on goods and services. But bartering proved too unwieldy: how would the babysitter and the dentist come to a deal?
Instead, they decided to create their own money, out of nothing other than shared promises to honour commitments. Though it seems radical, this is the same process that nearly every one of the world's central banks use to create the money that makes the world go 'round. But unlike established currencies like those issued by the Bank of Canada and the U.S. Federal Reserve, launching a new currency meant they had to decide how much everyone started with.
"What would prevent it all from collecting with a few high earning traders? Then we hit the idea of starting everyone at zero," Linton recalls. "Starting with zero simplified things immensely -- it had to be what we make it."
They decided to create a mutual credit system as a local currency.
"The first person who spends the money has their account debited to -$50 and the other person goes to +$50. This isn't like a borrower going into debt with a bank; the buyer has created a monetary issuance, he issued his own money."
People in the Comox Valley who took on a transaction became sovereign issuers of their own currency. Their credibility relied on their willingness to meet their obligations.
"Make a promise, keep a promise was the basic rule. That is the breathing of any form of mutual credit, measured in time, yen, kilowatt hours or anything," says Linton.
At first it was difficult for people to see that money is a political and social construct, he added.
"We were initially saying 'Let's get our community back to work, let's get this show on the road, let's put credit where credit is due, let's have fun.'"
All those "let's" led the group to name it: "LETS: Local Exchange Trading System." While the original LETS was in use for over six years, its accounts have remained stagnant since 1989. After the dentist left town, many lost interest in the exchange network.
Since then, however, several thousand mutual credit systems like LETS have launched around the world. A few hundred are presently active, like Vlaandaren, Belgium which has thousands of member businesses, and Powell River, B.C. where a local money project has steadily gained momentum.
How Seedstock pays
Building on lessons learned from developing LETS, Linton developed what he calls a Community Way model. Vancouver will be one of the first places in the world to trial the concept, in the form of Seedstock.
Bober, one of the lead organizers behind Seedstock, moved to Vancouver after finishing his Master's thesis in economics on community currencies at the University of Gothemburg in Sweden. The idea for a local currency emerged from discussions with the Village Vancouver Transition Towns initiative in late 2010.
This May, Bober and other organizers held an event at The HiVE to launch a crowdfunding campaign for Seedstock. In one night they exchanged nearly $4,000, though the currency won't exist for several more weeks. After a crowdfunding campaign ended on June 17, they raised an additional $4,788.
How does it work? It starts with businesses creating their own Seedstock by issuing money to non-profits as a donation, with the usual tax deductions if the recipient is a registered charity.
Citizens make contributions to non-profits and receive Seedstock in return, which can be used at participating businesses. Or, the non-profit can use it to buy goods and services from any business that accepts Seedstock, reward volunteers, or as an incentive for fundraising campaigns.
While many businesses already contribute to community organizations, Linton hopes they'll start supporting local efforts with Seedstock instead.
"What we're saying is don't part with cash, part with promise. This is a promissory note. Businesses make a donation to a cluster of charities and are inviting their staff and suppliers to trade with them in this money," he explains.
More than just charities benefit -- any non-profit organization or project will be able to receive Seedstock contributions. Supporters of the arts or local charities will be able to exchange their money for Seedstock, receiving more than just the tax deduction they would normally get for a donation.
"Parents who want their kids to have tuba lessons can exchange 500 Canadian dollars and get 500 in community money. This money is validated because businesses are under legal promise to honour it," says Linton.
"This isn't costing you buying power, it is just redirecting it," Bober adds.
Linton says he's used to hearing his projected results for local businesses are too good to be true. Skeptical attitudes around money is the biggest barrier for wider adoption of mutual credit currencies like Seedstock, he says.
Yet as with a recent currency project in Vancouver, sometimes the barrier is a community that doesn't see the need.
Dunbar Dollar down
The Seedstock isn't the first community currency Bober has attempted to start in Vancouver. He and the Village Vancouver team initially planned to launch a local currency in the Dunbar neighbourhood: the Dunbar Dollar.
"Dunbar seemed like it was a great place for a pilot because it had a strong resident's association, was geographically consolidated, and the executive director of the Dunbar Village Business Association was supportive of the idea of a community currency," explained Bober.
But after a year of trying to engage Dunbar residents, the idea hadn't gained widespread momentum.
"It wasn't going to be sustainable unless we got more buy-in and ownership from people in Dunbar. We had a campaign and we just didn't get the level of support that we were looking for," Bober says.
The difference in reception was in demographics and scope, he adds.
"Dunbar is more conservative and has more affluence so residents aren't necessarily aware of the same economic issues as many people from East Van who are rallying behind Seedstock. [In East Van] they realize that there are economic issues like underemployment, more people in creative fields and they are on average younger."
Also, Bober has changed the way he explains the idea of a community currency.
"Seedstock is a much bigger vision than just a neighbourhood currency -- it's the idea that we could start with a very few localized industries from agriculture to our arts community, and we could start re-patterning and rebuilding the local economy of Vancouver in a way that could have a very big impact."
For now the Dunbar Dollar is on hold, and Bober is focusing on Seedstock.
"We are getting so much more resonance with people and it was clear that it was going to work so much better."
Stock up on Seedstock
Linton sees Seedstock as a way forward for an environmental movement that has yet to broadly question the rationale for environmental degradation.
"The environmental movement has been unsuccessful because it has had no critique on how the conventional patterns of money are creating the exploitation of ecological resources and labour," he said.
Linton hopes Seedstock gives people the opportunity to experience recirculating their money, so that the idea can move beyond the theoretical.
"When someone learns to ride a bike, they don't read a book about it or go to lectures about it," he notes.
Seedstock could re-pattern the city's local food economy, Bober says. Local restaurants, grocers, food processors and farmers earning Seedstock through their customers would have an incentive to seek out local suppliers that use Seedstock or accept payments in Seedstock.
"We can generate some resources that farmers can re-invest into local food production to expand it into a significant source of food. I think that excites people in Vancouver, because there's been a huge awareness about re-localizing our food system."
The Seedstock aims to create a feedback loop between local restaurants and food growers. Bober thinks that as more people use the new currency, local food will be amongst the biggest beneficiaries.
"If nearby farmers accept Seedstock, then local restaurants have an incentive to use local farmers even if the marginal cost is a bit higher."
Local artisans could also benefit, he says.
"If you have an artist who is talented but can't find a lot of paid work in their field, then businesses that have Seedstock can pay an artist to come and paint a mural or redesign their logo or to pay a web designer to re-do their website."
The implementation of Seedstock can vary from business to business. Each will set different rates of Seedstock acceptance depending on their type, ranging from 20 per cent for grocery stores to up to 100 per cent in some service businesses or entertainment venues with low marginal costs, says Bober.
Linton says restaurant-goers can expect to pay 50 per cent of their bill in Seedstock. And the provincial and federal government won't see any barriers to tax revenue either; HST applies to Seedstock transactions just as it does in dollar sales.
Raj Nidhan Kaur teaches kundalini yoga out of a home studio and thinks that signing up to participate in the Seedstock is a no-brainer for health practitioners. She's already purchased $100 in Seedstock
"Seedstock is ideal for all yoga teachers, healers and individual service providers who want to be the change in their own community," Kaur says.
The currency is scheduled to launch later this summer. Businesses that accept Seedstock will be listed on the currency's website and an upcoming mobile app. The Seedstock team has put out a call to local artists to submit their own interpretations of money by July 15 for an art show at the end of the month -- and the chance to have their art featured on the first run of paper Seedstock bills.
Bober thinks that in a year, more than 1,000 businesses using Seedstock wouldn't be a stretch, and also plans a marketplace on the website where freelancers and artists can advertise their skills and that they'll accept Seedstock.
"If we can get a few thousand businesses participating it would mean that it would generate millions of dollars for our local non-profits which are working on our local food security," Bober says. "It would be on a greater order of magnitude than even what the City's Greenest City Grants could achieve."
Read more: Local Economy
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