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Inspirational Stories

Seedstock and the idea that Vancouverites could have their own currencies were not born in a vacuum; many people and communities have tried these ideas out, succeeded, and are showing us the way today. Here we will share some of the stories that inspire us - we hope they'll inspire you too!


The Guernsey Market House Scheme

From THE FIG TREE," Quarterly edited by C. H. Douglas (No. 10, September, 1938, pp.190-3):




THE financial experiment known as the Guernsey Market House Scheme was started over 100 years ago and, although of modest proportions, since it was confined to a small island of 25 square miles, it contained so many fundamental principles that everybody should know of it.


At the beginning of the nineteenth century, as a result of the Napoleonic wars, the trade of Guernsey was practically extinguished and the people were in despair. Unemployment was rife, the sea defences were breaking down, there were practically no roads, public buildings were in disrepair and, above all, a new market house, where the islanders could exchange their produce, was urgently needed.


It was impossible for the Government to finance these necessary improvements out of revenue, as this only amounted to £3,000 yearly, all of which was required for ordinary expenses and the interest charges on the island's debt of £19,000. Nor could the necessary finance be obtained by borrowing; the Government sought indeed to raise a loan, but such was the poor state of the island's assets that the only would-be lenders demanded the prohibitive rate of 17 per cent. per annum.


"Necessity is the mother of invention"; and in this case the idea put forward that the State should issue its own money daily gained ground. It was argued that, as labour and materials were both available, it was absurd for improvements to be held up simply through lack of money, and as conditions became even worse, this plan served to provide the only solution. Finally, after various setbacks and considerable opposition, the adherents of State money carried the day and, in 1816, 4,000 notes of £1 each were printed by the Government and paid out for the most urgent repairs.


By the success of this issue the principle was established and during the next 20 years the Government authorised notes to the extent of £80,000, which were utilised in building the new Market House, schools in every parish, roads all over the island, St. Elizabeth's Cottage, etc. These Government notes were redeemed, as the economic circumstances of the island justified, from earnings derived from the collection of market rents, customs duties, etc., and in 1836, when the scheme ended, there was a balance outstanding of £55,000 Government notes.


It is sad to relate that in spite of its eminent success this experiment was deliberately brought to an end. Although, after the first issue of the notes, there had been little active opposition to it in Guernsey itself, there were two outside bodies violently opposed to it. First, the inhabitants of the neighbouring island of Jersey became so jealous of Guernsey's prosperity that, in 1819, they obtained from Westminster an Order in Privy Council to the effect that the Government of Guernsey should not in any year exceed the amount of its annual income without Royal Consent. The Guernsey Government, however, took no notice of this and continued issuing notes as and when required.*


[*It would be interesting to know by whose advice Jersey was induced to appeal to the Privy Council.]


A few years later, however, opposition came from another quarter, the banking community in England. Although there had been no bank in Guernsey since 1810, there is reason to believe that the English bankers were becoming more and more apprehensive as the success of the Guernsey State money became more widely known.


It was in 1827 that a bank was established in the island and started issuing notes, which circulated side by side with those of the State. Two years later the directors of this bank complained to Westminster that the Government, by issuing its own notes, had exceeded its powers as defined by the Privy Council some ten years earlier. The Privy Council wrote to the Guernsey Government for an explanation, and such a logical and determined reply was sent that no further action was taken at that time.


In 1835 a second bank was started and more bank notes were issued to an extent to produce inflation, and by 1836 there was something akin to panic in the island. The Guernsey Parliament met and hurriedly appointed a Committee to discuss, with the bankers, the steps necessary to control the position. The members of this Committee were not all fully sympathetic to the issue of Government notes and the bankers won the day, for an agreement was reached whereby the Government was to convert £15,000 of their notes into a bank loan at 3% interest, and to cease issuing further notes, whilst, on the other hand, no limit was placed on the issue of notes by the banks.


This was the end of what was commonly known as the Market House scheme, the balance of the original Government notes, amounting to £40,000, being still outstanding today. Although since 1914 the Guernsey Government has again issued its own notes, these are now always covered by the Government deposits with the banks, and as today Guernsey currency is linked with sterling, these notes are issued or withdrawn in conformity with orthodox principles.


In considering the Market House experiment the following points should be borne in mind.


Orthodox finance could do nothing to get the people out of the depression caused by the Napoleonic wars. The Government could not obtain the necessary funds, either by taxation or by borrowing, and provided that labour and materials were available, as they were, there was nothing to prevent the Government issuing its own money. This it did, with the result that the appearance of the island changed out of all recognition. From its backward and depressed state it became, within 20 years, renowned for its well-being.


Moreover, by issuing State money, this transformation was carried out without increasing the island's national debt and without incurring interest charges. In fact if interest had been payable on the capital sums for these improvements, they could not possibly have been carried


It is interesting to note that up to 1914 the Government of Guernsey had collected in taxes over £35,000 to pay the interest on the £15,000 of State notes which were converted into a bank loan by the agreement of 1836.


The opponents of State issuance of money can usually be relied upon to raise the bogey of inflation. It must be remembered that inflation depends on the amount of money issued relative to the goods for sale, and does not depend on who issues the money. In the case of Guernsey, when the State first issued money, if it had been inflation there would have been either a shortage of commodities or else a rise in prices, and there is no record of either of these until 1836. Up to that year the Government had gradually and continuously increased the note issue, and it is reasonable to suppose that the net increase of money approximately corresponded with the island's increasing productivity. In that year, however, the banks deliberately brought about inflation, flooding the island with notes, with the inevitable result that, as there was no corresponding increase in goods for sale, prices began to rise and a panic ensued.


Let us compare the conditions of Guernsey and its need a century ago, with the condition and need of England today. When we hear arguments against slum clearance, against building new schools or hospitals or providing better roads, or even against providing everybody with a sufficient income to keep themselves decently, on the grounds that we have not the money, if we remember the Guernsey Market House experiment, we realise how specious such arguments are.



What we love about this story - and what it has to teach us
What happened in Guernsey in the early 19th century was significant because it was, as far as we know, the first time in modern recorded history that a community recognised the inadequacy of relying on conventional money alone and then took action to address that inadequacy by creating its own money in order to achieve some very specific and worthwhile community objectives, such as constructing a market house, schools and other infrastructure. Guernsey's experiment was also significant because of the sustained and tangible success that it achieved over 20 years, until being shut down by commercial banks with other interests.


Guernsey's most important insight at the time was something that we should all bear in mind: that oftentimes our communities have no shortage of the material and human resources needed to meet their needs, but the only thing missing is money. Perhaps it should come as no surprise that the light bulb went off for a group of islanders first; there's something about an island and its definite boundaries that puts economic patterns in sharp relief, and illustrates which systems are problematic and how they can be improved. Unfortunately, all too often the state of "not enough money" remains unquestioned, with far too many people making the assumption that there is nothing to be done about the matter.Yet what Guernsey did to unlock the wealth it already possessed, we can do to!


The Deli Dollar

PASTRAMI ON rye might not sound like an alternative to hard cash but in one American town, sandwiches are replacing dollar bills.

Frank Tortoriello runs a deli in Great Barrington, Massachusetts. In 1989 he wanted to move to larger premises but the bank would not lend him the $4,500 he needed, so he simply printed his own money.

He did not forge dollar bills - he launched "deli dollars" which customers could buy for $8 and, at phased periods, cash in for $10 of food. He sold the lot in a month and raised $5,000. "Frank's customers were backing his loan because they felt they were helping him beat the bank and he was paying them back in sandwiches," says David Boyle, an alternative economist who details many other new forms of currency in his book, Funny Money. Something strange then happened - the deli dollars started acting like real money.

"Parents passed them on to their student children to make sure they were eating properly," said Mr Boyle. "Employers passed them to workers as Christmas gifts. "The minister ate at the deli and soon notes started turning up in his collection box. Even the bank which refused Frank a loan in the first place circulated deli dollars."

-From Deli-dollar offers route to business funding, The Independent, Feb 17, 1999

Why we love this story - and what it has to teach us
Frank Tortoriello was really on to something big, with significant implications for us all. He demonstrated in a very powerful way that businesses that are valued by their communities don't necessarily need to borrow money from the bank - they can be their own bank, and make their own money.


The Deli Dollar created a win-win situation for everyone involved. Frank was able to move his deli even without the bank's help, and because he raised the money by pre-selling sandwiches, he simultaneously guaranteed that his customers would follow him to his new location - something a loan from the bank could never have done. By repaying his loan from the community over time, with sandwiches, Frank's cost of borrowing was less than it would have been from a bank - and that's one less cost he would have had to pass on to his customers.


Meanwhile, to the sandwich-eaters of Great Barrington, Massachusetts, the Deli Dollar presented an investment opportunity with returns far greater - and arguably safer - than any other. By paying $8 for a voucher that could be redeemed for a $10 value in one year's time, Frank's customers were earning a 25% return on investment!


The whole community benefitted from the infusion of a new, home-grown money into their midst - one that stayed local.


The only loser in this story was, interestingly enough, the bank - and that was of its own volition.


The main principle that enabled the Deli Dollar to work - that businesses can underwrite money based on their capacity to honour it in the future - is what lies at the core of the Community Way model of community currency that Seedstock has adopted.


Brought to you by Agorabora
Empowering people to break down the barriers
between making a living and living in community.