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The Need for Local Currencies
by Robert Swann, E.F.Schumacher Society

 

   Here are excerpts from Swann's chapter in Putting Power in It's Place, edited by Christopher and Judith Plant (New Society Publishers, 1992). 



 

      The opportunity now exists to develop a better money system than the one we use at present. We need a system which will, by it's nature, promote and enhance small scale institutions, including small businesses, cooperatives, small communities and local towns. We need a system that will support and encourage the local supply of local business, and that will allow farmers to make a living producing food for local consumption. In short, a regionally-issued currency is essential to creating a diversified, stable, regional economy made up of many interrelating small businesses. 

      Every region has it's own distinct character that makes it different in very critical ways from other bioregions. It has it's own resources, both natural and  human, particular to the kind of land there and the people who live on it. Therefore each bioregion has it's own unique productive capacity. Since the creation of money, in order to avoid inflation or deflation, should increase or decrease with the amount of production at any time, it is essential that the supply is created at the local or regional level by institutions which are focused on their own regions.

      Decentralization and diversity [of money] have the benefit of preventing large-scale failure. This is an as true in banking as it is in the natural world. For example, take seeds. If many different strains of corn are used by different farmers, some seeds will produce more than others;  but if a disease hits the crop, some strains will resist and the total effect will not be disastrous. However, if all the farmers have shifted to a new hybrid seed and a blight hits this type of seed, the result can be widespread disaster.

      Many people assume that our centralized banking system goes back into very early history. In fact,  in the U.S. at least, it is relatively recent development; money institutions were consisted of either direct exchange of goods by barter or, later exchange with metals (gold or silver) of intrinsic value. Banking as a system grew slowly out of the medieval period when goldsmiths became first, the caretakers of gold and, later, became bankers by using the gold as a reserve for redemption.    

      The banking system that grew out of the medieval period was, by and large, very diversified, with many banks issuing their own currencies. This condition existed right down to the present century. Centralized banking had grown hand in hand with the industrialization of the country in the 19th century. As industrialization grew, the need for larger amounts of money to finance the large industries with their "economies of scale" grew also. Huge sums of money also meant the need for big banks.

      [Today] a very large part of our lives is controlled or governed by a system over which we have little or no control and do not understand. To a large extent we have accepted unconsciously a  system of money and banking and we are asleep in our relationship to it. Perhaps no one fully understands this system- even many of the bankers who use it- but it is an important factor in determining what happens in our lives, for it determines who gets credit to start what kind of business where.

       Local currencies could play a critical role throughout the bulk of America in the development of stable, diversified regional economies now bypassed by our centralized banking system. In fact, if I am right about runaway inflation coming in the future- or, as some economists are predicting, a serious depression-- such currencies will again become necessities, perhaps sooner than we would think.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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