Starting a Community Currency Barter System

Communities like Myrtle Beach, NC, that develop their own currency bartering system reap the rewards.
By Dan Kukulka, Ph.D.
October/November 1993
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A Myrtle Beach "Beach Buck"

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Barter is nothing new. Some people have always traded goods and services instead of buying the things they need. Today, with high taxes and a deepening depression, many modern Americans are rechecking barter opportunities. Paul Glover's article "The Ultimate Barter" demonstrated one system: trading hours of labor for a homemade currency, which is tradable for another participant's own service hours. As a MOTHER reader, I've benefited from several tips over the years, and I'd like to give something back. So I thought I'd share additional ideas on setting up community bartering systems based on my own experience.

First of all, most barter systems take one of two forms. Some systems trade through a headquarters, where each member has a "house" account-updated with "debits" and "credits" from trades. Other systems, such as Glover's, print and utilize their own currency—eliminating the need for a central agency.

Both have advantages and disadvantages. The centralized system is expensive to operate but is more secure than a currency system. However, the security problem is the same as Uncle Sam's: counterfeiting. If the barter currency becomes valuable, enterprising individuals will no doubt attempt to counterfeit. Modern photocopiers can even produce colored documents by laser technology, making the problem an even larger threat.

Many people view homemade currencies with suspicion. However, the laws that govern an auxiliary currency are not hostile. Remember, the money in your pocket is your private property, to do with as you wish. Contrary to popular belief, it's not against any law to spindle, fold, or mutilate currency—as long as no fraud is intended fraudulent. The law simply requires that imitation federal currency be 25% smaller or 1 1/2 larger than the original size.

In Myrtle Beach, SC, we've created a homemade currency called "Beach Bucks." The purpose of this currency is to invite vacationers to stay an extra day. Typical visitors stay an average of 4.2 days. A hotel owner who persuades guests to stay an extra day can significantly increase profits. So hoteliers try to keep guests by offering the extra night at a reduced rate and offering 40 Beach Bucks. Each Buck is equivalent to $1, and is exchangeable with cash at a few of the stores in town. All totaled, you're not spending extra money. You're getting an extra day at the beach for free. By next year, we hope several more local stores will start accepting these bills.

Since local hotels average approximately 66% occupancy, extra room nights sold bring in profits. The value of Beach Bucks makes a difference helping vacationers accept the offer. If they don't bring enough value to a vacationer, there is little chance of extending the visit. For starters, we insist that discount offers made for Beach Bucks exceed all other advertising deals available. Also, they are aimed at our particular market. The Myrtle Beach economy earns $2 billion per year of tourist money, so there's a definite use for a currency aimed at the vacation industry.

Here's my first tip. When planning a new barter system, decide whether it will be reserved for residents or whether it will be open to wider participation. The wider the trading range, the more attractive is the system. However, remember that the work does increase considerably with the number of participants. Here are some other suggestions to get you started:

•Decide whether you want a centralized headquarters. If so, make plans to reserve a portion (say 10%) of all trades as income to the home office. Otherwise, your operation will have to fold as it becomes successful—The workload will become too heavy for volunteers to maintain and a paid staff will be a must.
• If you opt for a local currency, design one as elegantly as you like. Be careful of counterfeiting opportunities. Consider printing small bills only. Counterfeiters rarely print U.S. currency in $1 denominations. It's more work than it's worth.
• Use an expiration date on currency you print to keep the currency changing hands. For vitality, the currency must be visible in the marketplace.
•Add a registration area to your currency. This way, you can get names and addresses of the first user of each bill. Also, valuable mailing lists come from knowing who used your currency

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