NEW LOCAL "CURRENCY" SYSTEMS by Edward Goldsmith and Perry Walker
July 17 1995

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     It should now be clear that the global economy must inevitably
marginalise and render largely destitute a very large section of the
population of both the industrial world and the so-called developing
countries. For this reason alone everything must be done to prevent
the further implementation of the NAFTA, Maastricht, and other large
scale free trade agreements that are designed to advance the
globalisation of the world's economy.
     At the same time, we must revitalise local economies on which the
vast bulk of humanity must always depend for its livelihood. Helena
Norberg Hodge has outlined some strategies required to achieve this
goal. In this chapter, we shall examine two of the devices she
mentions for achieving it: - the setting up of LETS and of the Time
Dollar schemes.
     LETS stands for Local Exchange (sometimes `employment') Trading
Systems. The role of LETS is to revitalise a local economy and thereby
a local community by providing an alternative method of supplying
people with the goods and services that they can no longer obtain via
the formal (globalised) economy. The principle involved is simple. If
the formal economy no longer provides people with the goods and
services that they require then people must provide them for each
other, payment being made in an informal local currency that is only
valid within the local area.

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     The second strategy consists in creating Time Dollar schemes
which are basically alternative "welfare" systems. Industrial
countries that have developed elaborate and very costly welfare
services are now systematically dismantling them - as part of a
strategy for reducing costs - so that their corporations may hope to
compete with those operating in countries where labour costs are
twenty to forty times lower. Once again, if the state can no longer
provide these services, then people must provide them for each other.
Under a Time Dollar scheme, they do so without payment in the national
currency, but instead they earn credits in a local currency to obtain
similar services which can be used when they in their turn are old or
     These are not fantasies. There are already, for instance, at
least two hundred LETS in England, with about 20,000 people involved,
as well as a considerable number in Australia, Canada and New Zealand,
and a few in the U.S.A. Time Dollar schemes are so far confined to the
U.S.A.; one hundred and fifty of them, with a membership of from a few
dozen to several thousand members are now operating throughout thirty
states (New Economic Foundation Notes)
     Both LETS and Time Dollar schemes do more than merely deputise
for the formal economy once it ceases to be capable of catering for
peoples' more obvious needs. Access to the goods and services provided
via the formal economy is via money, but Edgar Cahn and Jonathan Rowe,
co-authors of an excellent book entitled "Time Dollars," point out
that people need a lot of things that money can't buy, those benefits
provided by the "kitchen-table world" of family and close friends
where everybody helped each other without any thought of remuneration.
However the functions that were once fulfilled by families and
communities for free have been "taken apart, function by function, and
sold back to people, who missed the things that these once provided.
As a result, for most people in the industrial world, the kitchen
table world is no more, and the things it represented -
"companionship, entertainment, security, intimacy, even gossip, must
now be bought for money". Increasingly, it is the TV and the computer
that will replace the "kitchen table world."

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     Very much the same thing has happened to the benefits that were
once provided free by the local community. Thus security from crime
"no longer means the watchfulness of neighbours. Rather it means
insurance policies, burglar alarms and other devices... as well as
greater demands for police." Inevitably "massive social problems
ensued, as the glue that held people together no longer seemed to be
there" and governments "have been forced to try and patch up the
damage with programs and services bought for money."
     People have "become "purchasers" of community and care, rather
than "participants" in it" and inevitably they are rapidly losing the
capacity to produce the goods and fulfil the functions it once did.
"When lawyers settle all disputes, teachers do all the teaching,
doctors do all the curing," as Illich puts it, "then people lose their
capacity to do things and the result is an ever enlarging circle of
dependency and need." This is not a mere side-effect of the process of
economic development, but its very essence. Indeed, the monetisation
of functions previously fulfilled for free by the now largely defunct
family and community, accounts for much of the economic growth that we
identify with progress.
     As Cahn and Rowe put it, the economy grows "by eating the flesh
and sinew that hold society together." Of course as this
"cannibalising process" takes place ever more money is required to
buy the services that the family and the community used to provide for
nothing. Eventually, as is increasingly the case today, to earn its
keep now requires a two worker family sometimes holding down three or
more jobs between them. But this in itself increases the requirement
for more money, among other things, to pay the cost of the day-care
centres where the children of working mothers will be looked after,
and the old people's homes to which the grandparents will be
     It is not surprising that government expenditure on social
services has literally escalated in the last decades in an obviously
unsustainable way. By creating a global economy, however, matters have
now been brought to a head. If industrial countries are to compete
with Third World countries, which now have almost equal access to
capital, technology and management, while benefitting from
incomparably cheaper labour costs, they can no longer afford a welfare
state and not surprisingly, it is being systematically dismantled.
     This creates a state of emergency with the corporations providing
ever fewer jobs and thereby producing goods and services that ever
less people can afford, and with the State incapable of caring for the
growing number of those whose basic needs the market can no longer
     The most obvious contribution that LETS and Time Dollar schemes
can make is to give people access to a local currency with which to
acquire the goods, services and care that they require. The local
currency can either take the form of special banknotes or merely of
entries in a book, or blips on a computer, as is usually the case. If
this is possible, it is because the people who use this local currency
for buying goods and services are at the same time those who provide
them. What in fact we are seeing is the development of a local economy
based on an emerging community of people who are willing to cooperate
with each other in order to provide benefits that, in recent decades,
have been provided (less satisfactorily) by the state and the market.

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     One of the advantages of LETS and Time Dollar schemes is that for
two reasons there can be no shortage of the local currency as there is
of the national currency in poor communities. The first reason is that
people actually create their own currency themselves by the simple
expedient of providing goods and services for each other. The second
is that there is no incentive to hoard it, as offered with the
national currency during the depression years, for as local solidarity
builds up a new and more reliable form of security comes to replace
that provided by money. Also, no interest is paid on credit balances
just as no interest is charged on debit balances.
     Equally important is that the local "currency" is not convertible
into any other local currency, let alone the national one, and can
thereby only be spent on goods and services provided by other members.
This means that rather than serve to fund the production of for
instance cash crops, that would be exported to satisfy the needs of
distant populations - often at the price of creating local shortages -
it is far more likely to fund the production of food for local
consumption. This also provides a means of ensuring that purchasing
power stays within the community; in sharp contrast to the situation
today when money is sucked out of poor communities into the rich urban
areas - where, among other things, the headquarters of the large
corporations that control most of today's commerce, are situated.
     Thus in the case of a predominantly black district in Baltimore
where the inhabitants are largely unemployed as the result of the
closure of a steel works and of the local railway station, the shops,
according to Cahn and Rowe, have closed down so that there is now
almost nowhere to spend the money locally. Shopping is almost entirely
in an out of town supermarket. This means that all the money that
flows into the area, mainly in the form of social security payments,
almost immediately flows out again. In the case of Indian
reservations, it has been calculated that it only takes 48 hours for
75% of every dollar the Federal Government provides, to flow out to
border towns.

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     Some LETS have a standard hourly rate for whatever the services
rendered might be, but most LETS attribute a different value to
different services, and in our view this certainly seems preferable.
     We well that one of the reasons why Robert Owen's Equitable
Labour Exchange of 1832 to 1834 foundered was that people were paid a
standard rate of sixpence an hour, regardless of what particular
function they fulfilled, and, as a result, those who were earning more
on the open market tended to stay away.
     Most LETS seemed to have adopted this view. The price of the
different goods and services provided by members, however, is
evaluated by the local community, rather than being determined by the
market. As a result the price differential tends to be must lower than
it would be within the formal economy. To take an example, a dentist,
in a Vancouver Island LETS, started off by charging his normal fees,
and then expected to hire other members to do unskilled work for him
at a minute fraction of his own hourly rate. They refused. The
differential still exists, but it has been drastically reduced. This
change of attitude can be attributed to the ability of LETS to bring
people together and negotiate as members of the community rather than
as complete strangers. With Time Dollar schemes the situation is
different. Payment for services provided in these schemes is not that
important. Members see themselves as volunteers who are acquiring Time
Dollars for doing work which many of them would be quite willing to do
for free. Cahn considers that "people who are asked for help will get
it even if they don't have any Time Dollars to pay for it." "Yet the
fact that they receive something for their efforts is important too,
because it validates their contribution and encourages people to do
things which they would never do for cash. "A retired bank president
would never mow a sick person's yard for money, but he'll do it for
Time Dollars" Cahn says. Price is not the issue, it is status. To
accept money for such a task implies one has accepted the market
status defined by the wage. "Not entirely surprising only 15% of
dollars are ever spent, and no one is refused care because of a
shortfall in their account. (NEF notes)

     This brings us to one of the most important functions of LETS and
Time Dollar schemes - their role in building up the local community.
This occurs because the people involved rapidly get to know each other
by working, and above all by caring for each other. As a participant
in an early Canadian scheme put it "just about every time I trade
through the LETS system, I get to meet someone personally. I have got
to know an extra 100 -150 people in this way. To me, that wealth of
relationships is synonymous with economic well-being" (Dauncey).
     As you build up community people learn to trust each other. We
are used to a central bank having the responsibility for maintaining
confidence in the national currency - which is an increasingly
difficult task - since the value of a currency is increasingly
determined by giant international banks and even more so by currency
dealers such as George Soros. But is is not only a central bank that
can create trust. Until the Scottish Bank Act of 1845, banks in
Scotland were free to issue their own notes and there was no central
bank. An authority  on the subject, Laurence H White (Free banking in
Britain, Cambridge University Press 1987) concludes that: bad money
did not drive out good; banks did not tend to issue too many notes;
and that loss of confidence in banks was not an endemic problem.

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     LETS is clearly yet more decentralised, and so far, there have
been remarkably few defaults. This is mainly because members of the
system trust and develop a sense of responsibility towards each other.
It is also due to the openness of the system. One party to a
transaction can always ask to know the balance of the other party's
debit accounts, and he may decline to trade if the other party's debit
balance is too great. Finally, some systems also have limits on how
far people can get into debt or "in commitment" - to use the language
of LETS.

     The first LETS was started by Michael Linton in Jan 1983 in the
Comox Valley, British Columbia, Canada. The unit of currency was the
green dollar, tied to the Canadian dollar. In its first twenty months,
about 250,000 green dollars worth of trade was carried out.
     LETS was introduced to the U.K. in 1985, after Michael Linton
described it at TOES (The Other Economic Summit). By the end of 1994,
there were about 250 systems with membership varying from 14 to 500.
Today, roughly a fifth of these are growing and developing
     The largest UK LETS have a turnover of about #70,000 a year. The
biggest, and arguably the most successful LETS, is in Australia - in
the Blue Mountains of New South Wales, centered on the town of
Katoomba, about an hour east of Sydney. The Blue Mountains LETS was
started in Feb 1991 with the help of a committee of five people. Since
then it has grown to be the world's biggest LETS with a current
membership of about 1800 people, who between them have 1,100 household
accounts. In all, locally provided goods and services, worth an
equivalent of US $270,000 are traded every year. Among the more
interesting services so far provided has been the organization of a
wedding. This involved arranging for the design and production of the
bridal gown, the food and entertainments, and, when it was over, the
cleaning up of the mess. It has also dealt with the extension of
another member's home, all the building work being paid for in the
local LETS currency.

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     The idea of Time Dollar is the brain child of Edgar and Jean
Cahn. They met when students at the Yale Law School, and started their
first Time dollar scheme in Miami, Florida, providing services for the
elderly, which is still today the main accent of many Time Dollar
schemes. Tragically, Jean Cahn has since died and Edgar Cahn has moved
to Washington, where he works up to 80 hour a week with students and
volunteers to spread the Time Dollar idea as a memorial to her (NEF
     The Miami Time Dollar scheme remains one of the most successful.
It now has 900 participants, most of them elderly, retired people with
time on their hands, and they are putting in more than 8000 hours of
work a month at 32 different sites in different parts of the city. The
scheme can be seen as a community welfare scheme, also as a vernacular
insurance system. Retired people provide help for other retired
people, as do younger volunteers. They are known as "respite workers"
and they are paid in Time Dollars, which they can use to obtain help
for themselves or for their elderly relatives whenever either of them
need it.

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     Similar schemes have been set up in Boston, St. Louis, Brooklyn
and San Francisco. In Michigan and Missouri, Time Dollar programs have
been launched, with the help of local state authorities. Several are
already evolving into mini-economies, linking together people from
different generations. Young people are mowing lawns and painting
houses for elderly neighbours. Some, rather than keeping the credits
they have earned for themselves, actually contribute them to other
elderly people who need them more than they do. IN some programs, Time
Dollars have been "woven" into conventional medical care systems that
provide services that normal dollars alone cannot buy. In this way, as
Cahn and Rowe note, the elderly -among others - are becoming
"providers" rather than simply "consumers" of care.
     A particularly impressive Time Dollar scheme is in El Paso,
Texas, a very poor town known as the poverty capital of the United
States, where almost two out of every four residents live below the
poverty line and 80% of the children are born to teen-age mothers.
Lower Valley, directly outside the city, is even more poverty
stricken. There are few jobs and hence no tax base to finance public
schemes such as schools, water, sewage, public transport and medical
care. Recently, Phylis Armijo, of the Daughters of Charity, started a
Time dollar service based on the San Vincente Health Clinic run by
members of her Religious Order. Her idea was that under the Time
Dollar scheme, people would themselves "participate" in the provision
of the health services. Although they obviously could not replace the
doctors, they could provide other very important services, transport
for instance. People had to get to the hospital for treatment, so
other patients could earn Time Dollars by driving them there. They
could also provide counselling and prenatal care, and help mothers
once their babies were born, which turned out to be very effective in
reducing infant mortality.
     They could also provide baby-sitting for the sick children of
working parents, and companionship for the elderly, whom they could
also help with their shopping. There seemed to be no end to the
services that patients could fulfil for other patients, all of which
would reduce their hospital bill and in this way giving them access to
medical services which would otherwise never be available to them.
This is exactly what is happening, for instance, the Time Dollar
scheme has reduced the charge for prenatal care from $250 to $75.

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     However, Phyllis Armijo is even more ambitious. Conventional
medicine is largely concerned with treating those who are already
sick, and little is done about prevention, hence about reducing the
actual incidence of diseases, which in the long run must be a far more
effective strategy, than treating the victims, which is expensive and
not always successful. So she extended the services that could be paid
for by Time Dollars to such things as digging wells, removing lead-
based paint and undertaking a survey of all possible sources of water
pollution in the area, of which, she identified thousands.

     Fiscal authorities are unlikely to be too concerned about LETS
and Time Dollar schemes while they are still small, but as they grown
bigger they may well begin to feel that they are being done out of a
lot of tax revenue. What then can we expect? In the U.K. the general
position seems to be that if LETS workers are doing the sort of work
they would normally do to earn their living, their LETS earnings are
taxable. If on the other hand people are using skills they do not use
in their normal work, their transactions are classified as social
favours and are not taxable. This seems to be a position with which
LETS can live. There have been attempts, particularly in Australia, to
secure agreement that taxes, at the state level if not the national
level, be paid in LETS. So far it does not seem that the Government
has accepted this.

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     In the U.S., the experience with Time Dollar schemes in the State
of Missouri has been significant. In the mid 1980's the State passed a
law to provide tax relief for members of Time Dollar schemes who took
care of elderly family members at home. If no Time Dollar member was
available to help the person who has earned a credit in the local
currency, the State actually committed itself to providing this help
at its own expense. In 1985 the state authorities went further and
actually asked the Internal Revenue Service (IRS) to declare money
earned in the form of Time Dollars to be exempt from Federal Income
Tax. To everyone's surprise the IRS accepted to do so. However, since
then, the IRS has enacted new regulations expanding the definition of
barter, requiring full disclosure of all such transactions on people's
annual tax returns. Credits received through a barter network are now
deemed to be taxable when received rather than when spent.
     Fortunately, Time Dollars were made an exception to this rule. In
March 1985, as Cahn and Rowe note, the regional IRS office in St.
Louis ruled that volunteers in the State program who earned service
credits would not be taxed on their value. The reason is that such
transactions are deemed to be of a charitable nature, which serve the
public purpose and would otherwise have been provided by the State.
For these reasons a Time Dollar transaction is seen as fundamentally
different from a transaction based on commercial barter, which could
easily have been undertaken for cash. In commercial barter, it is
pointed out, the parties are bound by contract, and credits earned are
a "cash substitute." In Time Dollar schemes, on the other hand,
members who "receive" a service have no contractual and hence no legal
obligation to pay for it, while people who "render" a service acquire
"no contractual right to compensation, the credits merely providing a
means of motivating the volunteers to continue their community

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     What is seen to be particularly important is that Time Dollar
members do not have access to the courts to settle their disputes.
Resorting to the courts "means you are asserting the rights of a
stranger against strangers, and that you are operating in a context of
monetary values." The IRS, as Cahn and Rowe put it, see Time Dollar
systems as being very similar to the sort of transactions that once
occurred among members of traditional families and communities in the
pre-industrial age. "Families and communities" they note "operate on a
standard of reciprocity. That is a moral norm, "not a legal one;" The
mechanism of enforcement is not the courts, but the sanctions that
operate naturally between people", - people, they should have
specified, living in a real community - of the sort that Time Dollar
schemes are helping to reconstitute.

     How then are LETS and Time Dollar schemes likely to develop?
Firstly, it seems but a question of time before people start regarding
as a hindrance the restriction that a LETS currency can only be spent
in a specific locality. For example, within Perry Walker's own small
scheme in London he has no access to organic vegetables, nor to much
food of any sort.
     There will therefore be pressure to link systems so that they can
trade with each other. There are two ways in which this could happen.
A centralised register could handle the accounts for several different
systems. they could then trade with each other either if they shared a
currency or if their currency could be converted into the national
     However, this could destroy the essence of LETS because trading
would no longer be so local. Hence, proponents of this view are likely
to favour setting up additional systems to cover larger geographic
areas each with their own non-convertible currency that leave in place
the original, highly localised, systems.

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     Outside LETS itself there are plenty of ways to extend the range
of services available to the membership. For instance, Michael Linton
has suggested a LETS fund. This is a sort of community bank that only
deals in the local currency. Unlike an ordinary bank it would not
charge interest on loans or for that matter pay interest on deposits.
     The final development, which is already starting to happen, is
the greater involvement of business. LETS, at least in Britain,
started with a slightly New Age flavour. It was thus not surprising
that businesses were initially suspicious. Furthermore, many
individuals use skills to earn LETS that they would not other use to
earn national currency, which means that the LETS currency they earn
is thereby additional to the money they earn in their normal
occupation. Businesses, on the other hand, are likely to feel that the
LETS currency they earn will be at the expense of earnings in the
national currency. Nevertheless, in many areas small local businesses
start joining after a while. One reason may be that charging partly in
LETS can bring them new customers who could not afford to pay entirely
in the national currency. Furthermore, their ability to pay in LETS
reduces their expenditure in the national currency.

     Again, the Australian experience illustrates how business can
become involved. Already twenty one businesses have joined the Blue
Mountain LETS system, together with twenty five self-employed traders.
The businesses involved include cafes, healing and medical centres,
schools, hardware and fresh fruit and vegetable stores, together with
a legal partnership, a few accountants, a book store, nursery, a food
cooperative and a local community newspaper called "The Weekender"
(Lets-link, 1994)

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     As it happens, what appears to be little more than a relatively
marginal self-help system becomes in effect an almost mainstream local
economy, though one that is partly, at least, insulated from the
global economy that would otherwise swallow it up. This partial
insulation is critical. That is why LETS cannot be allowed to expand
indefinitely by allowing supermarkets and other large enterprises that
are integral parts of the economy to join, which they may well want to
do if these schemes continue to grow. This would clearly be totally
self-defeating, and LETS must be very vigilant to assure that,
whatever the temptations, this is not allowed to occur."
     Cahn and Rowe make a number of interesting suggestions regarding
the future development of Time Dollar schemes. One is the creation of
a new government tax to meet basic social needs, and that can be paid
either in dollars or in Time Dollars.
     Another is to introduce Time Dollar schemes into the field of
education. A portion of the financial aid to students, whether it
takes the form of guaranteed student loans, tuition grants, work-study
money and other benefits, would be set aside for students working in
Time dollar schemes. Students would thereby become participants in
their own education by doing such things as maintaining their college
buildings, tending the gardens, growing and cooking their own food,
and looking after the library. Some of these things are already done a
at Berea College in Kentucky and also at Schumacher College in Devon,
     The question of State involvement in Time Dollar schemes is
clearly delicate. Clearly it is in the interests of the authorities to
stimulate both LETS and Time Dollar schemes. Both seek to assure the
livelihood of people who otherwise might be seeking unemployment
benefits and other welfare payments that the state, operating under
the constraints of the global economy, must be ever less capable of
providing. For this reason, it should welcome these initiatives, even
if they marginally reduce its tax receipts.
     this has been one of the objections levelled against these
schemes. It is argued that they are just providing benefits that the
State and the corporations should themselves provide, and that, in
this way, it is discouraged from providing them. There is a certain
element of truth in that, but the objection is not entirely fair. By
building up local economies LETS and Time Dollar schemes reduce our
dependence on the State and corporations, making it far easier for
citizens to oppose the latter's socially and environmentally
destructive development policies.
     Finally, it could be argued that the formal world economy is
already tottering on the edge of collapse. The Mexican crisis we have
just experience (see Heredia and Purcell) is by no means over and it
might be but a foretaste of what will soon occur elsewhere, probably
on a bigger scale and with more permanent consequences. Since today, a
vast proportion of people depend for their sustenance on the
functioning of the global economy, this would have the direst possible
consequences, but they would be incomparably less dire for those who
have organized their own local community-based economies and have
thereby partly, at least, insulated themselves from the consequences
of such an eventuality.
     In any case, as already noted, the formal economy, dominated by
the corporations and the State, cannot even in the most propitious
conditions provide all the benefits that were once provided by the
"kitchen-table" world that it has so effectively supplanted.
     Ralph Nader, in the prologue to Cahn and Rowe's excellent book
notes how "the serious problems our society faces come from the
erosion of..... the economy., of the family and neighbourhood", and
"the Time Dollar is a currency designed to reward time spent on
rebuilding that economy" - and so, of course, are the LETS. That is
why both these schemes are a source of great hope to us all.

     FJrom my letter to Mr. Edward Goldsmith about his LETS essay:

Wednesday Oct 01 1997
Mr. Edward Goldsmith,
46 The Vineyard,
Richmond, surrey, TW10 6AN, UK
Tel: 0181-332-6963/0295  Fax: 0181-948-6787

Dear Mr. Goldsmith:

     In your July 16 1997 letter to Pauline was included a copy of the
July 17, 1995 paper "New Local Currency Systems" by you and Perry
Walker. I hope you expected that I would, as Pauline's mentor, give it
a LETS engineer's critical appraisal. As financial angel and
consulting Banking Systems Engineer on Michael Linton's Local
Employment-Trading System project, I was truly thrilled at your
conclusion that Time dollars and LETS Greendollars are a source of
hope to us all and was moved many times by your sympathetic prose in
praise of LETS.

     I judge my interest in what I read by the amount of yellow high-
lighter and exclamation points I use. With the exception of the few
paragraphs on "leakage" concerns which I hope to later thoroughly
reassure you can be dispelled, I'm happy to find that it was loaded
with great points, whether on content or on style of phrase.

     I would suggest you present it to the TOES 98 Summit in London
next year. I've already invited the Bishop of Worcester, Peter Selby,
to join me in making a presentation on the Local Currency Panels and
Workshops. Another interesting speaker might be the Labour MP from
Falmouth who belongs to his Falmouth LETS. Don't forget that LETS is
already endorsed by many Jewish, Christian, Muslim, Bhuddist, Sihk
ministries. Next year's TOES 98 conference could provide a stunning
array of LETS support.

     Frankly, you are the first person with a likely association to
Team Rich who I've ever heard speak of LETS in such a positive way
though I'm sure you have accepted that all personal fortunes will end
up more or less stabilized with only earnings and spendings affecting
new score. I have a hard enough time getting poor people to accept
that LETS won't charge them any interest let alone getting rich people
to accept that with LETS, they won't need to get any interest. Your
support of LETS in such an eloquent way is a great step in preparing
people for that eventuality. "If a rich guy like him doesn't think
LETS is going to hurt, why should I?" I hope you don't mind my citing
some of the best quotes and facts in my internet and political LETS
debates without attribution until you indicate otherwise.

     I was pleased you noted that it operates as if by "no contractual
rights" other than a neighbor's word to try to return that which was
borrowed. Any abundance supplied at the present time for neighbors'
want is later expected to supply our want. The essence of "Lend
expecting nothing in return but what they can."

     Having argued for years that LETS Time Dollar employment
opportunities would be effective in reducing teen suicides, the most
thrilling result you found was in El Paso Texas which reported:

     "Time dollars are effective in reducing infant mortality. They
could also provide baby-sitting for the sick children of working
parents, and companionship for the elderly, whom they could also help
with their shopping. There seemed to be no end to the services that
patients could fulfil for other patients, all of which would reduce
their hospital bill and in this way giving them access to medical
services which would otherwise never been available to them. This is
exactly what is happening."

     JCT: I only wish they had done statistics on teen suicides which
might have confirmed the fact that less teens commit suicides when
local employment-trading is available.
     What is really amazing is that all the plaudits you report are
for mere drops of interest-free medium of exchange in the overall
planetary pool. Just try to imagine life where 100% of what we need is
available on Time Dollars. I want the large barter corporations to
standardize to an Hour value and I'll connect them to a market of
people with Hours to spend.

     Of course, I discern my co-LETS engineer Michael Linton's
concerns about "leakage from our money barrels" in a few paragraphs.
     Page 1 Par. 3 argues for "Currency that is only valid within the
local area" to prevent leakage;
     Page 5 Par. 2 points out leakage concerns:
"funding cash crops creates local shortages;"
"purchasing power leaving the community;"
"money sucked out of poor communities to corporation headquarters."
     Page 15 Par. 1 are more concerns on "leakage:"
"swallow it up;"
"critical multi-nationals can't join."
     Page 13 Par. 3 mentions
"pressure to link systems.. could destroy the essence of local."

     JCT: To reassure you about such currency flows, I have placed
responses to each point raised in those paragraphs on leakage to
Appendix: Parsed Paragraphs.
     Overall, my lack of concern about leakage will be based upon the
major advantage which you cited on page 5 Par. 1:
     "Advantages of LETS and Time Dollars schemes:
     #1) there can be no shortage of local currency because people
create their own currency themselves;
     #2) there is no incentive to hoard with no interest."

     I think that the Scottish banks you cited in your paper could put
leakage concerns to rest but since they relied on gold backing and a
little usury rather than collateral backing with a little service
charge, it still left their banking system needing a little balancing.
     So I prefer to use my Casino Turmel "checks" as the best model of
reference. Having since 1978 and many times since then been invited by
Ottawa's B'nai B'rith to provide the Blackjack, Craps and Poker games
at their fund-raising Millionaire's Nights, I'll assume you've been to
a few Millionaire's Nights and could help oversee the cashier's cage
with me.

     Better, say that as Patriarchs of our town, we partnered the
hotel, general store, mule train and gambling casino. And even though
we took gold, we also accepted our own casino checks in our own
businesses until towns-people started buying in for checks at our
casino cage with not only their gold but also their assets because our
casino checks were accepted by everyone in town. Of course, our casino
cashiers would be very busy issuing more checks for more new pledged
collateral, including pledged labor backed by personal credit lines;
and redeeming checks for collateral and credits paid out.
     It is inevitable that everyone realizes that our casino tokens
are redeemable for the collateral pledged to our cashier's cage and
everyone, even outsiders, will value our checks and accept them. They
are valid receipts for value and acceptance by all cannot be
prevented. On some evenings when we close shop, there are many
outstanding checks and on other evenings, there might have been none.
But usually, it was between lots and lots more outstanding.
     Under the conditions that we continue to run our casino
accounting using a 1/s LETS software engine, wouldn't you still sleep
easy because you know that the cardinal rule of casino accounting is
"collateral held must equal checks out." I know I did. Casino Turmel
Topaz LETS cage was handling hundreds of thousands in cage
transactions and millions in gaming transactions every night and not
once did I worry about what people were doing with my checks as long
as "collateral held equals checks out."

     I hope this overview has assured you that worrying about whether
our local tokens get sucked out of town is unnecessary. I am pleased
that even with these concerns, you still picked LETS as "a source of
hope to us all."
     With a government LETS account, I have no trepidation at the
advance of the globalisation of the world's economy through various
nefarious trade agreements. As your paper points out, people tethered
to their community by a LETS connection start to move towards fairer
pricing. Once these transnational corporations are also leashed with
the same LETS tether, they will also moderate and justify their
prices. I do not dissuade but seek to encourage the world's largest
potential trading partners to accept my IOU as readily as my LETS
neighbor does.
     Michael and I have publicly dickered for years about the merits
of having LETS government-financed social service with government as
an equal trading partner. I have always contended that government
acceptance of LETS in taxes would cause all my neighbors to also want
a LETS account, a 100% saturation of the currency market.
     At our recent TOES97 LETS Workshop on June 20, 1997, Michael
Linton stated that he was looking for 10% of the population to be
doing 10% of their livelihood on LETS by 2005, a 1% market
penetration. I consider that the hard as well as slow way. I keep
trying for a 100% market penetration with government and industry
accounts luring the personal ones. I consider a 1% penetration by 2005
to be way too low considering the International Barter currencies are
already Green and just lack a standard common denominator to time
prevents all LETS seeming as viable link-ups. Get Coca Cola to accept
Green and all LETS become more viable markets world-wide.

     All notions designing a LETSystem to stifle trading with the
world's biggest trading partners is self-destructive. Still, who
LETSers trade with a decision with respect to the steering of the
mechanism with no bearing on the optimal operation by professional
banking networks.

     Which brings us to the crux of the issue: How to best get life-
saving LETS credit to most people the fastest. I have always stated
that if only the Rothschild and Rockefeller families of banks decided
to install the LETS on their networks' computers and offer LETS Green
credit accounts side-by-side with their usury-credit accounts, the
interesting historical twist would be that the scions of the guys who
in all likelihood are to blame for the financial mismanagement of the
world's currency into this ecological disaster might very well be the
scions who atone for their fathers' errors and save our world by the
simple expedient of leading the way in upgrading the software on their
banking networks to LETS. Maybe there's a role you can play?

     Given Michael's projections, I don't think interest-free currency
can be installed in time to help much without the direct intervention
of the guys who now own the banking hardware. I don't know about you
but with 100% Green account down at my local bank branch, I see even
more of a paradise than you have described in your paper. If they're
cheering for mere drops in the desert, imagine when a large oasis
springs up right before their eyes.

     I don't know the status of your paper as it is yet unpublished
but if you could drop the parts about leakage concerns which are
short-circuited by LETS Advantage #1, "no shortage of local currency,"
I would rate it a perfect piece.

     Just the mention of your paper in Pauline's TOES97 report posted
on the Internet and Michael Linton expressed interest in getting a
copy. I think he'd love it. It's an articulate approbation of a
project we've both put years into and it would thrill him as an
original LETS engineer as much as it did me. Dropping those leakage
concerns might not make him so happy but you'll have to decide which
LETS engineer is right.

     I'm sure everyone in the LETS world has now heard of your paper
on LETS and will want to know more. It might be time to publish it in
your Ecology Magazine as a solution to the underfunded prevention of
ecological disaster. Should you wish to send him a copy, his email But I'll not key in or post the whole thing without
your permission. (JCT: Had to change my mind.)

     My Advanced Engineering Analysis of the Banking System on pages
77-85 of my Adventures was just cited in Peter Selby's, Bishop of
Worcester's new book Grace And Mortgage to refute quotes by John K.
Galbraith. Almost two decades ago, I predicted the LETS "Miracle
Equation" would win three Nobel Prizes and it's good to hear the
Bishop tell the world's economists that The Engineer proves them
wrong. Maybe your magazine might like to be the first to publish what
the bishop judged winning economic thought.
     Hoping you enjoy future good health and prosperity, I am,
Yours truly John C. Turmel.

APPENDIX: Parsed Paragraphs

     Addressing concerns about the stability and value of our local
currency due to having them sucked out to the global economy:

Parsing Page 5 Par. 2:

*"Equally important is that the local "currency" is not convertible
*into any other local currency, let alone the national one,

     JCT: It says right above our cashier's cage "Casino checks
convertible for cash, assets, time." It's pretty hard to stop
convertibility when they can convert from local currency into a
national one just by changing the mix of currencies they accept in
trade or by merely saying "Give me 10 in cash, I'll use my Green
account to get your sink fixed." Trying to stamping out convertibility
is trying to stamp out a medium of exchange's most useful function.

*and can thereby only be spent on goods and services provided by
*other members.

     JCT: Are you, as the casino owner, to worry because many non-
members would provide goods and services to our casino members in
exchange for our casino checks? I never did. It never bothered me when
I ran my casino that the owner of the nearby Chinese restaurant would
come in every few days to cash out some chips. It never bothered me
that my chips had been traded to and by outsiders. Leakage was no
concern as long as the cashiers obeyed the cardinal rule of casino
accounting: "collateral held equals checks out."

*This means that rather than serve to fund the production of for
*instance cash crops, that would be exported to satisfy the needs of
*distant populations -

     JCT: I see nothing wrong with LETS funding cash crops for export
to satisfy the needs of distant populations if they are in abundance
since this brings in more scarce goods or artificially-scarce cash.

*often at the price of creating local shortages -

     JCT: This is contradicted by advantage #1. There can be no
shortage of local currency because people create their own IOUs. Let's
say that many of our casino IOUs really are being hoarded by outsiders
because they trust our cashier for its store of value. New liquidity
can always be bought in for with new pledges perfectly sufficient to
facilitate all local exchanges.
*it is far more likely to fund the production of food for local

     JCT: Again, concerns about funding either crops for cash export
or for local consumption is based on the premise of insufficient funds
to do both. This is again contradicted by Advantage #1.

*This also provides a means of ensuring that purchasing power stays
*within the community;

     JCT: Again, as casino bank owners, whether our purchasing power
tokens stay within your community is of no concern and any time we
would spend on such control would be superfluous effort.

*in sharp contrast to the situation today when money is sucked out of
*poor communities into the rich urban areas

     JCT: More worries about money being sucked out of the community's
barrel like usury-based money while there is a shower in the cashier's
cage ready to always satisfy just local currency demand.

*- where, among other things, the headquarters of the large
*corporations that control most of today's commerce, are situated.

     JCT: Do we, as casino owners, mind that large corporations decide
to accept our local casino checks to pay their agents in and around
our town? Seems like another superfluous expenditure of time to try to
control something which would be of benefit to our city's people.

Parsing Page 15 Par. 1:

*"As it happens, what appears to be little more than a relatively
*marginal self-help system becomes in effect an almost mainstream
*local economy, though one that is partly, at least, insulated from
*the global economy that would otherwise swallow it up. This partial
*insulation is critical. That is why LETS cannot be allowed to expand
*indefinitely by allowing supermarkets and other large enterprises
*that are integral parts of the economy to join, which they may well
*want to do if these schemes continue to grow.

     JCT: Sure, though our casino tokens might appear to be little
more than a relatively marginal self-help system, they are in effect
an almost mainstream local economy which is insulated from the global
economy ever swallowing up all our local currency by our infinite
source of casino checks.

     Therefore, it is not critical and not even productive, to, in the
name of fighting leakage, say that LETS cannot allow supermarkets and
other large enterprises which are integral parts of the economy to
join. This LETS engineer thinks it's critical that they, and their
already existing international barter systems, do merge once the
Global Hour standard of value is adopted.

*This would clearly be totally self-defeating, and LETS must be very
*vigilant to assure that, whatever the temptations, this is not
*allowed to occur."

     JCT: I think the concerns about such leakage have been
counterproductive to the availability of LETS to the general
population in general. It is inevitable that once the International
barter companies that effect trades for transnational corporations
adopt the Hour standard of value, the trading between the large
networks of commercial partnerships with small markets of LETS
networks of personal proprietorships will be the next step.

Parsing Page 13 Par. 3

*There will therefore be pressure to link systems so that they can
*trade with each other... However, this could destroy the essence of
*LETS because trading would no longer be so local.

     JCT: We can choose to spend from my LETS account as locally as we
wish and as nationally and internationally as we wish without
destroying the essence or interfering with any the other spendings.

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