“The purpose of the Current is to flow.” That, in a nutshell, encapsulates the economic philosophy of Chris Hewitt, publisher of the Rosendale-based Country Wisdom News. But it isn’t the waters of the Hudson River that he’s talking about when he touts his brainchild, the Hudson Valley Current; it’s a new medium for earning and spending money that keeps it within the community — in other words, an alternative currency.
Still, the analogy to the movement of water is a powerful one, especially for a currency designed to be used within a single geographically limited region that derives its identity from an estuary known for its propensity to flow both ways. Its symbol, the — or tilde, even looks a bit like a wave. And Hewitt is clearly hoping that the Hudson Valley Current represents the wave of the future for communities in Ulster and Dutchess Counties, where it has been operative since November of 2013, and eventually in Columbia, Orange and Putnam.
The idea isn’t actually a new one for Hewitt; his interest was initially sparked ten years ago when he attended a seminar at Bard College’s Schumacher Center for New Economics called “Local Currencies in the 21st Century.” He couldn’t get the notion out of his head, and teamed up with David McCarthy of Kingston to undertake a five-year process of research and development. Three years into it, Maria Reidelbach of Accord joined them. They set up a not-for-profit structure with the Connecticut-based Hygeia Foundation as their 501 (c) (3) umbrella organization, worked up a business plan and wrote a 50-page grant proposal to the New World Foundation’s Local Economies Project. A three-year grant was awarded, and the project was off and running.
“We have 141 members now,” in less than a year of operation, says Hewitt. “The funding support has helped us grow quickly — and also people’s desire to support their local economy. The fact that Currents are not convertible to dollars is a guarantee that our money will not leave the community. All the Currents that are ever created will stay local.”
His original concept was to utilize a paper voucher as a substitute for cash, Hewitt explains, but the group later decided to switch to a digital system. The Ithaca HOUR, the alternative currency probably most familiar to New Yorkers — the oldest and largest in the country that is still operating, in fact — was very successful following its founding in 1991, but its usage has declined in recent years, partly due to the ready availability of electronic funds transfers and debit cards. The digital economy is already here to stay, Hewitt and his partners reasoned, so it made more sense for the Hudson Valley Current to function that way as well. Just two weeks ago, they added the capability to make payments via texting on your cell phone. “Our future goal is to get swipe cards for all members,” which would function like debit cards, he says.
The absence of paper “funny money” not only encourages that the currency flows freely within the local economy, but also means that more Currents get virtually “minted” every time a new member signs up and begins using the alternative medium of exchange. “Digital currency creates wealth that didn’t exist before,” Hewitt points out. “It’s backed by our labor, products and services. It’s our willingness to participate that creates the wealth.” Furthermore, Currents can’t be hoarded, gambled, used for illegal transactions or lost in a house fire or flooded basement.
Alternative currencies have many other advantages over “real money.” As they enhance the local economy, they contribute to environmental sustainability and reduce burning of fossil fuels for transportation by encouraging increased consumption of locally produced food and other products. “The Current creates networks that didn’t exist before. It taps into a new market that these businesses didn’t belong to before,” says Hewitt of his membership.
Historically, alternative currencies have often functioned as “lifeboat currencies” that help to buffer and stabilize the money economy during troubled times when national currencies plummet in value. People out of work in the US during the Great Depression exchanged paper chits as they bartered work for food and consumer goods, for example. Hewitt cites the WIR Bank, which started in 1934 in response to the devaluation of Swiss franc: “The WIR got Switzerland out of the Depression, and it’s still going,” he says, representing billions of francs’ worth of transactions in that country annually. “People use the WIR more when the franc is weak.”
Hewitt emphasizes that the Hudson Valley Current is a “complementary currency,” meaning that it is intended to supplement the dollar, not replace it entirely: “It works with regular currency to keep us resilient and strong.” There are two membership categories, Business (which includes freelancers) and Individual, and the only way for Individual members to earn Currents is as a portion of their paychecks, if their employers opt into the system. Up to five percent of an employee’s salary can legally be paid in Currents, and Ulster Savings Bank has implemented a payroll service system designed to keep track of such arrangements.
Businesses, meanwhile, can receive Currents as full or partial payments for products and services provided, and can carry interest-free debt balances of up to ~300 — more if they are very active members. One Current is invariably valued at one US dollar, whatever the current rate of worldwide exchange.
Yes, there are legally enforceable rules and regulations for how a complementary currency works. It’s not just a feel-good, informal, New Agey barter system, nor a dodgy “grey market” economy where you can hide your earnings off the books. “This isn’t a way for us to dodge taxes. It’s a way for us to support local abundance,” Hewitt says emphatically. “The IRS recognizes local currencies if taxes are kept track of in dollars.” And, of course, the IRS wants your tax payments on that income in “real money.”
A visit to the Hudson Valley Current website quickly makes it clear how carefully transactions using the complementary currency are tracked in the organization’s database. Reports are generated regularly and paper copies stored as insurance against power outages or server crashes. The website also provides free marketing and promotion services to help link up members, including a map that shows the location and services offered by each participating business, with live website links.
Sellers pay a fee of 1.5 percent on each transaction, which is returned to the community, primarily in educational services, like a symposium on food security recently offered at the Rosendale Recreation Center. Another workshop on how to account for Currents for tax purposes will be presented on November 17 at the Lifebridge Sanctuary on Mountain Road in Rosendale. And Hudson Valley Current treasurer Barbara Miller is working on a booklet on the subject of “Bookkeeping for Credits.”
What happens when the three-year grant that pays Hewitt’s salary as executive director runs out? “We’re hoping that funding is fully sustainable by Year Four,” he says. “We need about 300 members to make that possible.” Beginning in 2015, Business members will pay an annual fee of $25 each to cover overhead.
Do the math and you’ll see that Hudson Valley Current is truly a shoestring operation. But shoestrings can be useful for all sorts of things, when times get tough. For more information about how to become a member, visit the website at www.hudsonvalleycurrent.org.