%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% % 3CE: Coalition for Cooperative Community Economics % %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% % Pamphlet #1: Mutual Credit % %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% EllisFBpamphlet01.txt DEFINITION A system in which participants agree to honor each others' credit in trading among themselves. It surmounts the limitations of barter, and serves as a local substitute for official money. Like money it provides an intermediary device which allows two parties to trade even though one of them may have nothing the other wants. BASIC STEPS 1) Organize a core group to begin trading among themselves using credit units as the exchange medium. It is best if the founding group know one another or have been working together for some time. 2) Add new members when the system is well established and running smoothly 3) Choose some unique name for the system credits to distinguish them for official currency. (e.g. "green dollars," "sand Dollars", "Ithaca Dollars"., "LETS credits" etc.) 4) Establish some method for members to make known to one another, their needs and offerings. (This could be a newsletter, a catalogue, or a local computer network.) 5) Place a limit on debit balances in member's accounts. (This should start low for new members, and can be increased as credit worthiness in proven.) 6) Designate someone as "registrar" to maintain a ledger recording transactions, and keeping an account of credits, bebits and balance for each member. (This can be a card file, a ledger book, or a computer.) 7) Produce and distribute regularly a report showing credits, debits, balances and trading volume for all members. 8) Charge a small percentage for each transaction or service in the system. Some of these can be in system credits, but some are needed in official currency to cover costs (e.g. printing, paper, computer time, etc..) from outside the system. Or these may be covered in part by and annual membership fee. 9) Charge a small percentage (in system credits) at the end of each reporting period on all balances, both credit and debit, to serve as a stimulus for action and prevent stagnation. 10) Schedule regular business/social meeting of all members to discuss problems and potentials, and to create community solidarity. OTHER SUGGESTIONS TO HELP FOSTER HARMONY, EQUITY AND COMMUNITY PROSPERITY. 1. Organize the system as a non-profit corporation. (Not necessarily legally incorporated; but large systems should be.) 2. Have an open membership; recruit individuals, non-profit corporations, Co-0ps, and businesses. 3. Use circulating notes, coupons, or receipts as an option to the transfer of credits though the ledger accounts. 4. Elect a Board of Overseers, with clearly defined and limited powers. 5. Do not provide th4 option of redemption of local currencies or credits in official currencies. %%%%%%%%%%%%% % RESOURCES % %%%%%%%%%%%%% Community Information Resource Center (CIRC) POBox 42663 Tuson AZ 85733 USA. http://www.azstarnet.com/~circ/index.htm. E-Mail circ@azstarnet.com. CIRC is a non-profit organization which seeks to promote community health and positive change by supporting the emergence of mutal support structures, participatory democarcy, local self-reliance, appropriate technology, sustainable living, and micro-enterprise. CIRC is a network hub, and information source, and a support organization., It provides organizing assistance, adminstrative support, instruction, access to computer and telecommuications technologies, opinion and market surveys, interdisciplinary resarch, and data analysis. Besides its regional activities, CIRC networks nationally and globally with groups concerned with intentional community, community economics, appropriate technology, right-livelihood, and sustainable living. E.F.Schumacher Society RD 3 Box 76 Great Barrington MA 01230 USA Founded in memory of the author of Small is Beautiful the Schumacher Society works fo foster appropriate technology, humans scale, and firth-livelihood. It has sponsored several local exchange experiments. Ithaca MONEY POBox 6578 Ithaca NY 14851 USA Ithaca MONEY is a tabloid newspaper which issues Ithaca HOUR notes to its advertisers. It provides information about local exchange and self-help options. Communities wishing to institute similar programs can obtain a "Home Town Money Starter Kit" for $25 or 2 1/2 hours Ithaca HOURS . The kit includes "all start-up and maintenance prcedures, forms, laws, news articles, computer programs, updates," and an Ithaca MONEY subscription. Time Dollar Network POBox 42160 Washington DC 20015 USA (202)686-5200 National clearinghouse for information about service credit/time dollar programs, including a directory and organizing assistance. Landsman Community Service, Ltd. 1600 Embelton Cres. Courtenay, BC V9N 6N8 CANADA (604)338-0213/0214 LANDSMAN is operated by Michael Linton, originatior of LETS. thios is the definitive source for information avout LETS theory and operation. Michael is available to work wiht groups who wish to set-up a LETS system. He has developed a simulation game called "LETSPlay," as well as software needed for computerized operation of a LETsystem. New improved accounting software, called "NLETS," has recently been developed by Michael Linton and Richard Knights. John Zube Libertarian Microfiche Publishing Company 7 Oxley St. Berrima, NSW 2577 AUSTRALIA This is a unique and phenomenal source opf material on free money, free banking, alternative exchange, and decentgralism. Zube has converted tro microfiche form more than 300,000 pages of material, much of which is primary resource material (letters, unpublished papers) which are hard to find or not available elsewhere. OZLETS P.O. Box 1640 Armidale, NSW 2350, AUSTRALIA National pulication for LETS in Australia and overseas. New Zealand GREEN$QUARTERLY P.O. Box 21140 Christchurch, NEW ZEALAND (03) 661-992 GREEN$QUARTERLY provides a comprehensive assemblage of information collected from the various LETS systems operating in New Zealand (41 at last count). This source is a "must" for anyone wishing to keep up on LETS system developments and "mutual credit," in general. G$Q provides information about how actual operating systems have dealt with various problems and concerns. It also provides access to resource materials such as new software and a "Management Guide." LETSLink UK Network 61 Woodcock Road Warminster, Wiltshire BA12 9DH, UNITED KINGDOM A "network for the LETSystem, which keeps groups and individuals in touch with LETS developments around the country." Offers a variety of resources and documentation, including a newsletter, a LETS "STARTER PACK," and a UK contact list (for 4 first class stamps). Books and Articles Cahn, Edgar S., and Jonathan Rowe Time Dollars. Emmaus, PA, Rodale Press, 1992. Greco, Thomas H., Jr., Money and Debt: A Solution to the Global Crisis. Second edition, Thomas H. Greco, Jr., Publisher, P.O. Box 42663, Tucson, AZ 85733, 1990. Hobson, Ruth, "The Amazing Growth of LETS in the UK." LETSlink Newsletter (UK), May, 1993. Linton, Michael, and Thomas Greco, "The Local Employment and Trading System." Whole Earth Review, No. 55, Summer 1987. Mitchell, Ralph A. and Neil Shafer, Standard Catalog of Depression Scrip of the United States: The 1930s Including Canada and Mexico. First edition, Iola, Wisconsin: Kraus Publications, 1984. Reissig, Jose, "Bonds That Brought a Boom." New Economics (London, England), #20, Winter 1991. Riegel, E. C., Flight from Inflation: The Monetary Alternative. The Heather Foundation, Box 4, Waterford, VA 22190, 1978. ---- Private Enterprise Money: A Non-Political Money System. New York: Harbinger House, 1944. Suplizio, Paul E., Commercial Barter Exchanges in Society, an address presented to the Chicago Association of Commerce and Industry, Chicago, September 18, 1985. International Reciprocal Trade Association, 9513 Beach Mill Road, Great Falls, VA 22066, 1985. %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% % MUTUAL CREDIT SYSTEM: An Example % %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% Suppose Martha knits sweaters, and John wants one but has nothing that Martha presently needs. Using a Mutual Credit (MC) system he can still get the sweater by giving Martha "credits" for price they agree on. John is given a debit in the MC ledger; and Martha is given a credit. John may then agree with Helen to fix her porch earning credits; and Helen may babysit for Martha spending her credits. As the circle is completed each participant has earned roughly the same amount in credits and debits. Each has a balance in the ledger which may be spent or paid off with exchanges with other members of the MC. Where did John get the "credits" he gave Martha? He created them. Just as banks create dollars to give to someone who requests a loan, John created credits to give Martha for the sweater. Martha then spent her credits when she had Helen babysit. And when John created the credits to pay Martha, he obligated himself to accept credits from someone else in the system, in this example, he earned credits from Helen. In this way, by providing a service, he "redeemed" the credits which he originally issued. %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% % HOW A MUTUAL CREDIT SYSTEM WORKS % %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% Mutual Credit is a generic term which includes ledger systems like LETS (Local Employment and Trading System), but isn't limited to the particular procedures and protocols which LETS uses. It might, like LETS, use a ledger of system of accounts for recording the initial obligation of its members, while also providing it members with circulating notes. These notes would be issued to members against their credit lines, in effect, providing a physical representation of that credit. Just as a cash withdrawal is debited against (subtracted from) a bank account, the amount of any notes thus issued would be debited against the member's Mutual Credit account. In a mutual credit system, the people empower themselves to do the same thing that banks do, essentially creating their own money in the form of credit, but saving the cost of interest, while distributing the money themselves according to their own needs. In such a system, holding credits is evidence that so much value has been delivered to the community, while a debit balance represents that person's commitment to deliver value to the community sometime in the near future. Over the long run individual account balances will move up and down, some months ending with a credit balance, and some months ending with a debit balance, but averaging out around a balance of zero. As long a debit balances do not become chronic or extreme, the system can handle these situations readily; indeed, since the total of credits must be balanced by an equal amount of total debits, outstanding debit balances are a necessary feature of the system and will have not adverse effect upon its operation. If a particular participant develops a chronic debit balance, steps can be taken by the group to help him/her to increase sales and/or reduce purchases. *********************** Bill Ellis TRANET PO BOX 137 Rangeley ME 04970-0137 USA (207)864-3784 URL: http://www.nonviolence.org/tranet/ *********************** 1 3