An Interview with Peter North, author of Local Money


In past recessions and depressions, a popular response from communities has been to create their own forms of money. How can local money help communities in times of hardship and cut as much carbon out of their economies as possible?

Pete North’s new book ‘Local Money: how to make it happen in your community’ will be formally launched at the 2010 Transition Network conference and will be available to order here at the end of this week.  The latest book in the Transition Books series, ‘Local Money’ is a comprehensive overview of local currencies, and how to plan and implement such a scheme.  It is written with Transition initiatives in mind, drawing from the experience of Transition currencies such as the Brixton Pound and the Lewes Pound, but it also tells the fascinating stories of other alternative currencies, including the story of how local money was a key element of how communities survived the Argentinian crash.  To celebrate the launch of the book, I interviewed Pete about the book, and about local currencies….

‘Local Money’ is about to be published… can you tell us, in a nutshell, what the book covers?

In a nutshell, the fruits of looking at local currencies over the past nearly 20 years distilled into 240 pages. I’ve tried to cover both the longer standing alternative currencies like LETS and Time Money and the newer kids on the block, transition currencies, in as much detail. I’ve also tried to give the reader an understanding of why money is in the form it is now, what is good about different forms of money, and how it could be improved. And I’ve tried to show how people have experimented with alternative forms of money in the past, and what we can learn from them. As a result, its perhaps a bit too meaty than meets some tastes, some but I hope it’s still informative and accessible. I’ve tried to make it clear as well as detailed, as creating your own money does need a little thought to get it right in the long run.

What new insights do you think it brings to the Transition movement at this point in its evolution?

I think that thinking about new forms of money helps us to envisage deeper forms of local reliance where we are producing more of the things we need on a day-to-day basis – especially food, power, everyday goods and services. I can see a way to a vibrant local economy where we are in the driving seat, not distant corporations or banks. I can see the development not only of local forms of money, but perhaps local banks and credit unions, and other forms of local wealth. These are all key parts of transition, but perhaps more for later stages of the transition to a low carbon economy.

That’s not to say that this is just for the more advanced transition initiatives. A small scale LETS or time bank is very easy to set up, and can be a good way of manifesting local skills and resources. It can be an easy quick win.

My sense was that you started researching the book somewhat sceptical about Transition currencies, and over the duration became more enamoured with them… would that be fair?

That’s a cheeky question! I would never say I was sceptical, but over the years I have become very clear about two problems with alternative currencies that I hoped were not being replicated by the new transition currencies. First, they are, to coin a phrase ‘never knowingly undersold.’ Over the years, I’ve heard the most outrageous and overblown claims about what alternative currencies can achieve, most of which were totally unrealistic.

I’d hear about a wonderful story of a marvellous local currency somewhere, only to find a bloke who has been thinking about it but hasn’t actually done anything yet. I’ve learned that some people can struggle with facing up to problems, and happier with comfy stories and cosy networks. I’m an old fashioned English empiricist. I want to see concrete action on the ground before I get too excited. So I’ve always consciously avoided saying anything that contributes to these myths.

The second issue I’ve become very aware of is that it can be very easy to set up a local currency scheme, but harder to keep it going when the initial enthusiasm wears off. The fact is that at the moment we live in a very globalised world where next to nothing that we use everyday is produced locally. Its something that we need to change, but that won’t happen overnight. Making too many claims too quickly about what you can do with a local currency can be a problem if you find that local businesses actually don’t sell anything produced locally, so they can’t spend on the local currency they take in. And endlessly recirculating things made in China between ourselves does not make us very resilient.

What is important is to keep your eye on the long term prize: a locally resilient, locally owned economy. As my understanding of all the different currency models deepened as I wrote the book, I probably became clearer about that and less focussed on ‘what works’ now. What ‘could’ work in the future?

What do you see as being the key ingredients of a successful local currency scheme?

A well organised group running it, in for the long run, and with good communication skills. They need to be able to explain how it could work to a wide range of people from business to local people to councils, and produce publicity material, websites, directories and notes that look serious. They need to be able to inspire people, but not make overblown claims. They need to be seen as serious and trustworthy, perhaps even small ‘c’ conservative.

They need to do the administration well – we are dealing with real money and people’s businesses and livelihoods here. It’s really important that from the go this is seen as a serious initiative, that every penny is accounted for, and that it is clear how decisions about how your local money will work will be made. Keep perfect records of what you are doing, and be efficient and transparent.

A key ingredient to a successful scheme is less tangible: it needs to have the qualities of ‘moneyness’ and ‘valuableness’. If its a paper note, does it look like monopoly money orlike real money, like a pound, a Euro or dollar? Can you actually spend it on really stuff and services? Only when people experience being able to spend local money, and value it, does it become serious. In the book I spend some time showing you how to do this, be it ways of organising your money scheme to what you put on your notes.

One of the most fascinating parts of the book is your own reflections on your time in Argentina around the time of the economic crash there, and how local currencies became one of the key ways by which communities continued to function. What lessons did you draw from your time there?

I was in Argentina just after the financial crash of December 2001, and saw what might have happened to us if Gordon Brown hadn’t carried out his ‘quantitative easing’ in 2007. I saw what happens when you go to the bank and it won’t let you have your money as its being used to bail out the banks. The first thing was that I saw people rallying round and supporting each other by setting up literally millions of local currency schemes through which they shared what they had to get through the crisis.

I could see that the democratically run and community scale schemes worked better than the bigger, centrally-organised networks which were not that resilient. I saw unscrupulous people taking advantage of their fellows in the big, impersonal networks. Eventually I saw confidence in the big networks shattered by accusations that they were a scam. I saw how to avoid this.

If things get hairy either quite quickly as spending cuts hit vital services and perhaps cause a double dip recession, or more long term as peak oil and resource crises really start to bite, Argentina’s experiences show how we can rally round and support each other through local action in ways that do not lay us open to attack.

How might a community get a sense of when it is ready to start a local currency? What does it need to have in place before it considers such a thing?

You can set up a small skills share network immediately: share the skills you have and the things you need either without money, or using a LETS scheme to keep score. If your transition initiative has many less wealthy members or districts in it, or you can find a community group to work with then think about time money. Both these schemes are tried and tested and work in certain circumstances, although you won’t get local businesses involved. If your transition group has lots of more radically minded people who want to share their skills with each other, why not try ‘hours’ – a paper currency denominated in time? All these can be done quite quickly, as long as your group has the energy to do it.

You might disagree with me here Rob as you all set up the Totnes Pound quite quickly, but I would hold a local paper currency back until you are perhaps a more accepted part of the local scene, have a track record and are trusted, and taken seriously by local small businesses. Take the time to talk to and listen to your local businesses, and respect them. And take time to develop a paper currency that really does look like money, not like monopoly money or a voucher. Make sure you are able to deal with teathing troubles, help businesses to spend a local currency, and avoid getting a reputation that it’s a good idea but it doesn’t actually work. Be in it for the long run.

What future evolutions of local currencies do you foresee beyond printed currencies? Where might this all go next?

I think that depends on your view of the usefulness of technology verses more ‘small is beautiful’, appropriate technology approaches, and your view of how quickly and how deeply we are likely to enter a post oil world. Given that may of us do so much of our everyday business with debit cards or on the internet, a paper currency can seem a little old fashioned. Why not go digital, many say?

I’m happy with that to an extent, but I’d hate us to become reliant on a piece of technology that might not be resilient in the long run. If see computers and the internet as resilient in the long run, then fine. But I struggle with the idea of a local currency run over the internet from a server in South Africa, helpful though that can be in the early days. I don’t think its resilient in the long run.   You also need to solve the problem of who will pay for the cards and card readers. They are not cheap.

A second issue is that at the moment we have only two ways of valuing currency: time, or in relation to national currencies. I can see a new form of currency emerging: energy currencies perhaps denominated in watts or tonnes of C02. That would be very interesting.

Perhaps more concrete, in the medium term I would like to see the development of more regional or bioregional currencies that would include enough businesses to enable them to really spend a regional currency with each other, and in the long run help us to produce more of the things we need locally. Does it make sense, for example, to produce handmade wooden tables and chairs in every small town, or would we want that to be organised regionally? Should we aim to power our communities using regional wind, wave and biomass resources? In Liverpool we have huge wind and wave resources, which towns inland lack: I’d like us to share them.

Could we start to think about developing the range of things that we produce locally, perhaps with the help of regional banks or development organisations? I think that, economically, we need to think more about regions or bioregions, less about the scale of small communities and towns. That could be really resilient, and is my long term vision … but perhaps more EF Schumacher than Steve Jobs.

The great think about setting up a small local currency is that it does get you thinking about these issues. That’s why I’ve enjoyed studying and setting them up over the past twenty years.