It's All About The BerkShares

Small Town Switches To Local Currency System To Control Economy

By: Aaron Boyd

Posted: 12/5/07

GREAT BARRINGTON, Mass. - Strung along Route 7 in Massachusetts are the Southern Berkshire Mountain towns of Sheffield, Great Barrington, Stockbridge, Lenox and Lee. They are united by geography, common society and now a common local currency. The BerkShare dollars and the company that produces them, BerkShares, Inc., are the beginning of a movement designed to keep control over the region's economic destiny at home.

BerkShares aren't the first local currency to appear in the U.S. Some, like the Liberty dollar, are paper representations of gold and silver reserves. Others are based on philosophical ideas, like Time Bank, a "currency" based on returning service for service to promote community outreach. And still others are more virtual, such as Common Good in nearby Ashfield, Mass., a credit system meant to stabilize returns on savings, set to begin in 2008.

But the BerkShare is unique. It lingers in the gray area between coupon and currency. A 10 percent discount for use of the currency is the driving force behind the movement, giving consumers a reason to support the program.

In time, the BerkShare has the potential to become a legitimate form of currency in its own right. However, if it doesn't gain broader appeal by March, the entire community will have to exchange them at participating banks, leaving those who couldn't spend them in time to foot the 10 percent bill.

That time is a long way off, said Susan Witt, director of the E. F. Schumacher Society, a non-profit organization dedicated to promoting strong local economy. Witt said the BerkShare dollar is on step 20 of about 50 required to establishing a competitive local currency. For now, the BerkShares are tied directly to the federal dollar and any discussion otherwise is purely theoretical.

BerkShares, Inc. was started by the Schumacher Society on Sept. 30, 2006. Under Witt, the society has begun a strong values campaign aimed at keeping the focus on the local community. The BerkShares have the heart of these values printed right on the front: "Community, Economy, Ecology, Sustainability." It's about "slow money," forcing customers off the internet and into the local stores, Witt said. The transactions become more personal; community becomes a part of business.

The economic theory behind BerkShares and the Schumacher Society comes from "Small is Beautiful," a collection of essays by E. F. Schumacher on the need to balance big economics with the small. Schumacher believed that a strong economy was not about consumption or gross national product (GNP), but about the development of stable economies that focus on the individual as a part of the community.

Using a local currency means buying from local sources. Since BerkShares can only be spent in the Berkshire region, use of the currency keeps business in the hands of local merchants, not national chains.

Witt wants to make it clear that the BerkShare is more than a coupon. BerkShare bucks have the quality and value of more formal currencies and, unlike coupons, are redeemable for cash in full.

That's because it is cash, plus the 10 percent discount. For instance: A cappuccino at Fuel coffee shop on Main St. in Great Barrington costs about $3. Across the street is the Great Barrington branch of Lee Bank, where $27 can be exchanged for 30 BerkShare dollars. Back at Fuel that cappuccino will still cost 3 BerkShares, leaving 27 BerkShares, which, if spent instead of exchanged, will yield a 10 percent discount.

Some local merchants, like Adrienne Redstone-Cohen, co-owner of Crystal Essence of Great Barrington, opt to take part of their pay in BerkShare dollars. They then spend them like federal dollars in other local stores, such as Berkshire Co-op Market, a cooperative organic foods store just off Main St. in Great Barrington.

While store owners may be willing to take the BerkShares, most employees are not.

"Landlords don't take them, electric company won't, so they can't pay their workers in them," said Michelle DiSimone, operating manager in charge of BerkShares at the Co-op Market. After taking in 60,000 BerkShares, the Co-op Market had to limit their use to half of each purchase.

DiSimone said the problem is that not enough local vendors participate, so the store has few avenues for getting the money back into circulation. Thus, the burden for keeping this fledgling movement alive rests on the local merchant who can't find a way to loose themselves of the currency. It translates to a direct 10 percent discount for their customers. This has caused many businesses to enact policies similar to the Co-op Market, while others only allow BerkShare purchases on certain days of the week.

It may be extra work for local businesses, but BerkShares are a big draw for the area.

Anita Diller, the Great Barrington branch manager for the Pittsfield Cooperative Bank, said people are finding new ways of spending BerkShare bucks. More recently she has had customers come in looking for larger sums of BerkShares for payments from car repairs to landscaping.

Ten minutes south of Great Barrington along Route 7 is Main St. in Sheffield. At the Mobil station an older man says he doesn't use BerkShare bucks and doesn't know anyone who does.

The Sheffield branch of Salisbury Bank was the first bank to accept the Schumacher Society's proposition. Branch Manager Nancy Missaggia has been working with the Schumacher Society and BerkShares, Inc. to promote the use of BerkShares throughout the region.

Missaggia stressed the need for circulation. She wants to make it clear that the BerkShare does not plan on competing with the dollar anytime soon; the 10 percent incentive program is enough. But with circulation there is no 10 percent hit for the merchants - the BerkShare it is passed on indefinitely, unless they return to the bank.

The banks are integral to the program. BerkShares are backed 90 percent on the dollar in BerkShares, Inc. bank accounts. The five banks involved, Berkshire Bank, Lee Bank, Lenox National Bank, The Pittsfield Co-op Bank and Salisbury Bank, treat BerkShare dollars like any other currency and exchange them against savings accounts under the BerkShares, Inc. name. The banks don't touch the money, says Missaggia; the banks gain nothing from the BerkShares, Inc. accounts.

Nothing except a good public image, according to Cecile Snow of Lee Bank's Great Barrington branch. "It brings in non-costumers, and they see how much our bank can do for them."

Witt explained Schumacher's philosophy:

"He argued that when production is local there is a better chance of knowing the ecological and human story of the production process," Witt said - what natural resources are used in manufacturing; the process for gathering them; how waste is disposed of; what the working conditions are like; what cultural conditions are involved.

"Schumacher noted that when production is local, goods need not be transported over long distances, using precious fossil fuel and adding to climate degradation," she continued. "Further, a region making its own products retains a skilled workforce and manufacturing infrastructure and so is less vulnerable to sudden fluctuations in the global economy."

For now, it's more about garnering the BerkShare some support before its judgment day in March, when the community currency will either continue to work toward Shumacher's goals - or be cast aside as a failed experiment. But for many Berkshire residents, it's an experiment worth trying.

Contact Aaron Boyd at

Aaron.Boyd@UConn.edu.