Ithaca HOURS – The Most Important Economic Experiment You’ve Never Heard Of

The idea be behind the hours was people's realization that even people who had good jobs working forty hours a week were having a hard time making ends meet, which I suppose is true today also. So the idea was of the whole problem is that we just don't have any money, we'll we'll just create our own money Welcome to the Ithaca Local Economy Lab podcast, where we examine new and innovative businesses, organizations, and programs that are functioning as part of the new economy in Ithaca, New York. I'm Dia, your host and neighbor, and in today's episode, we'll hear the story of one of the most impactful economic experiments a community can undertake, the creation and utilization of a local currency Ithaca Hours had one of the longest runs in the United States, with currency circulating from 1991 until 2015, and we've got Stephen Burke, former president and board member of Ithaca Hours, here to tell us all about it.

But before we start, I need to ask you, please give us a like, share. A rating and a review would be amazing. The algorithm just doesn't do anything for us unless our listeners take action, so you mean a lot. Thank you so very much. Now, on to the show. Welcome, Steve. We're so glad you could join us. Well thank you. I'm happy to be here. Great. So I wanna start with where Ithaca was in the nineteen nineties, kind of at the very beginning. Just to set the stage and the world in nineteen ninety one, which was when um Ith ours was sort of conceived and and birthed, I guess, was let's see, we had just invaded Iraq.

Right. George Bush was president. And uh I think Twin Peaks was quite popular on television. The world was a very different place in nineteen ninety-one, but Ithaca was Still about the same size. It was uh just slightly under thirty thousand people. We're just slightly over thirty thousand people right now. So, you know, it's about the same size. We're still obviously in central New York. uh probably gotten a little bit more populous uh as a general region over the years. Yeah. But what what was the motivation? for starting a local currency at that time?

What was the what was the the expected benefit of it? Okay. Well I should say for one thing, I wasn't here at that time. I was I didn't relocate to Ithaca until the late nineties. But I had lived here I was here in the seventies actually, into the eighties as an undergraduate at Cornell. And I stayed for a few years after that and then I left in the early eighties. And I returned in the late eighties. just life things. But even when I was away and I was in Washington, DC, and uh even when I was away I can remember seeing uh a Mother Earth, I think it was Mother Earth magazine, and seeing the cover of it and it was about Ithaca hours.

And it was somebody in a print shop and holding these currency notes in their hand. And I said to the people that I work with, who like sorta knew where I was from but didn't really know what it New York was. And I said, see this is Ithaca New York. And I said, this is how crazy people are in Ethic in New York is that they start their own money. So to me and of course I read about it and I was avid to read about it. To me then I guess like really the first thing was just it was like a burst of creativity sort of. Like when I'm saying to my coworkers, this is how crazy they are.

Guess I should have said this is how creative they are. But the like the hardcore economics about it were I think the way to explain it best was that um we w also were in a recession. Um And I think the nature of of Ithaca is that, you know, it it's sort of an oasis in in upstate New York in a way, and that uh a lot of cities up here have been in decline for a long time because of manufacturing and industry moving. Ithaca has sort of a a lifeline in uh education with Cornell and Ithaca College being here. So unemployment is not so much of a problem, but wage structure is and always has been, because there's not many other places to go, you know, like Cornell is such a big employer and um So they sort of set the pace.

So the the the idea be behind the few hours was people's realization that even people who had good jobs working forty hours a week were having a hard time making ends meet, which I suppose is true today also. So uh that was the realization and it was that well it's not that there's not work to be done or businesses to be started But we need things and and there are people who need those things and there are people who can do those things. But what is missing is any kind of money to bridge those things, connect those things. Because everybody's living paycheck to paycheck pretty much.

So the idea was I think, well, if the whole problem is that we just don't have any money, well we'll just create our own money. And so then the money was created uh as a way to um help businesses start and to connect people Really? Yeah. Well that's so that's really interesting. So let's talk a minute about money because it's something that we all think about a lot, but maybe a lot of us don't really think very deeply about it and what it actually is. And So the idea of creating your own money is I don't I don't know if it was if it was more radical in the early nineties than now because now of course we have Bitcoin and things like that that are created money.

So we're a little maybe a little bit more used to the idea of something out outside of what we call fiat money, right? Just regular country issued money or state issued money. What gives val what gives money value? Is it's basically it's just we just decide that it's worth something. So as long as we all believe that it's money, right? Um 1971, I think we left the gold standard. And um so before 1971, all of our dollars were supposedly backed by gold in Fort Knox. And after 1971, we said, no, we don't need to do that. And now there are basically two ways to create money, right?

There's the Fed, which creates money by basically just increasing the numbers in the bank accounts of the banks. They just say, Okay, well now you've got this much money to lend and they let people lend it. Or they let the banks lend it, I should say, not the people. And then the banks lend that money out and they create create money through the debt that they that they allow people to take on. Now, up until 2020, this was supposed to be backed by deposits at 10%, right? It's called fractional, uh fractional lending. About 10% of all the deposits were supposed to be kept in reserve. at the banks.

But after 2020, there's no more reserves being kept. Zero percent is required to be kept in the banks. So the banks can just basically lend out whatever they have on whatever numbers the Fed gives to them, the banks can lend it all out and then they create money and so it's not backed by deposits, it's not backed by anything except the full faith of the United States government, which means the effort were labor services that are provided by the people of the United States, basically. Um and so now we've got uh in 2011 we've got all of these new types of money that have been invented, Bitcoin and whatever else, and people are starting to believe that those are worth something.

And so There were something. How did you start it here? Or how did uh I guess it was Paul Glover was the person who actually started it a little bit before you came in? So how did he get people to buy into the idea that these pieces of paper were worth actual money? Well the thing is it wasn't really that radical of an idea or I mean it has a lot of historical precedence in the United States in that for a long time there were were a lot of different local currencies in the United States. Um, like if you think about it, when you go back into like early days of whatever, the eighteenth century or nineteenth century and there were a lot of areas that were pretty far flung, like geographically.

And they didn't you know, they didn't really have all that much money. The United States issued their own money that would be used in a region. So um it was a fairly I don't know, it was common thing, but it was a widespread thing that the local bank would issue money that would be used in that area. Mm-hmm and that communities would issue uh money that would be good in that area. So it was an idea, well it's not a new idea. Yeah. Like I say it's got a lot of historical precedents in the United States. And uh so there were a group of people actually in the early nineties and Paul Glover was among them who were looking at that and doing research, there was somebody who had done a maybe a like a thesis on this or something like that.

And just looking at whether it could work here in Ithaca, because there seems to be the need for it, as I was describing, like work opportunities, work that needed to be done and people who needed that work to be done and people who could do that work. but no money to connect them. So like I say, that was the idea, well, okay, if that's the problem, then we'll just make our own money. And then it's just a matter of like you were saying a minute ago, it's just a matter of getting people to believe it. You know, which is, you know, the same thing with dollars at this point.

And really I think maybe ever. But the idea that dollars were backed by gold until the nineteen seventies, well what did that mean? You know, like you're gonna take your money and trade it in for gold or or Well why is gold worth anything? Again, it's the same thing, it's because we all say so, you know. So that was the idea with Ithaca Hours, you know, th that if the community says that it's worth Something that it is worth something. So then it was a matter of people getting together. Like I say, I wasn't here at that time, but my understanding is that It was a a core group of people who were meeting on a pretty regular basis to kind of figure it out how it could be done, the details of it, and like that.

And so were people who owned businesses and maybe social workers and people involved with municipal government and that kind of thing. My understanding is that maybe there were like a dozen kind of core of people who are meeting on a regular basis and doing these things. Ithaca is a great town for meetings, as maybe you know. It's a very there's a lot of political activity here and civic activity and so yeah people go to meetings. And uh, you know, we have the saying that the the people who run the world are the people who stay till the end of the meeting.

So it was the people who would come to these meetings time and again. And then there was the idea that it could work and I think with this core group of people it was sort of like and if you think about it, maybe say you've got a dozen. people and somebody owns a restaurant and somebody owns a clothing store and like somebody from the credit union was definitely credit union was definitely central to everything that was happening. A big food market like Green Star Co op and other businesses. And if you've got a dozen of them, that's a lot. When you can start by if everybody's and my understanding is that it pretty much was this way, like everybody shook hands, made a commitment to have this happen.

And with the idea that if okay, if I start accepting them, there's a dozen of us if we accept them from one another, then we get things going. And then if every one of us who's doing this can recruit a couple of people. You know, then all of a sudden we've got thirty six people. And then if everybody can recruit and that's how it It happened. Mm-hmm. You know, it was sort of gradual in its development, but um it was very well thought out when it was started. Was there an initial buy-in that was required or was it just the businesses and services willing to accept the dollars?

Or did you did you have to start with a a certain amount of money and did you where did you raise that? from if you did. No, I mean the key thing was the acceptance and the the you know, as I no pun intended, but the buy in of people. Right. You know, the philosophical buy in. Uh that was the key thing. The thing about the system in terms of like startup money or money to administrate it or run it, that was always very low. I guess I actually we should make the point that that um not to get ahead of the story, but Ithaca hours has not been functioning for the last ten years or so.

But always it was a very and there are other currency systems in the United States and every one of them is a little bit different. Uh the one in Ithca is um it was there was always an aim to keep it very simple. So cash money was created and and it was distributed and that's really all that the the board of directors or the administration of it I always did. People would would join as members. You would join as a member for ten dollar American because the system did need some money to, you know pay rent for an office and pay for telephone and like that.

But it was pretty ingenious, I think. And like I said, I I wasn't involved, so it's not me. patting myself on the back. But you would pay ten dollars in and for that you would become a member and you would get a listing and a directory of member businesses that would help your business by networking. And you would get twenty dollars worth of Ithaca hours. for your ten dollars. So that was a way to get the money out into the community in little bits rather than like big grants or big to-do this, you know, big steps. It was more a matter of little step.

Right. at the beginning. Right. Or have to make that much of a commitment. Right. Yeah. Right. So the people who started it at the beginning had to decide what the circulation was going to be much how many of these dollars how many ethical hours they were going to put out and and the the pacing of that distribution. Was that a group decision or how did that Come about. Yeah. Um well what I can say is I joined the board of directors, I guess when I relocated here in the late nineties. So the the whole thing was still fairly new at that point. Yeah, I mean we just kind of pegged numbers to things and we just looked at what was happening and if we had uh you know, the ten dollars was an annual fee.

So ten dollars you would pay in as a member to keep things going and you would get twenty dollars back, like I say. So we were just looking at the n the amount of money that we were putting out into the system and we would just talk with the members or particularly the big ones, like say the credit union was a big one. Green Star Co op was a big one. And to see how things were working for them, like should we consider not having it a two to one ratio that you would get back or should it be more? The only time that I can think of when we ever changed the policy was that we thought that we could use more money in circulation.

Again, we just did it like as a sort of a small step, so what we decided to do would be that if you renewed we had a membership meeting once a year, which we had to do because we were registered as a not for profit business in in New York State, so we had to have a board of directors and we had to have um a membership meeting at least once a year. So we would have a membership meeting that we would encourage people to come to. One of the ways that we we did two things, encourage them to come and also uh get more money into circulation would be that if you came to the meeting and you renewed your membership at the meeting you would get forty dollars worth of 50 hours. instead of twenty dollars worth.

Didn't really make a whole lot of difference to people, but it made a little bit of a difference enough to motivate people or enough to get people thinking about what we were doing. Um so that's the only change that I can think of that we ever made. We also would make uh grants to different organizations. Uh we would make loans to organizations and to businesses at no interest. So that was a way to get uh the currency out into public. So how would a just a regular person get involved with that if they didn't own the business? Could they buy into it with cash money or would they was there some other way that Yeah, actually that's a that's an interesting question because this was uh like I was saying that di every system is different.

And this would that was a an issue for us was that at the beginning The idea was that you had to put ten dollars in, you get twenty dollars back, and you had to um offer some kind of goods or some kind of services as a member of the system. And There was a directory, which actually I brought along a copy of the directory from back in the day. And it was a a booklet of like sort of like a yellow pages for people who remember what yellow pages were. like telephone directory of businesses. And it would list all the different businesses alphabetically.

So everybody who was a member was required to offer some kind of goods or services just as a way to build the networking capacity. And also as a way to to circulate the money. And that became an issue after a while and I can tell you about as a way with the Board of Directors like how things work. And how we made decisions. thing to do, which is exactly what the Federal Reserve for does. Yeah. But we were better at it. Well we were better at it because of you know we were closer to our constituents. Right. So that became an issue at one time because I don't know, maybe it's in the early two thousands or so.

And we were getting a more and more interest in the system. And there were people who wanted to um avail themselves of the hours, but they didn't have goods or services to offer, or they thought they didn't anyway. So we were getting a lot of feedback from people in that situation. And they were like, look, I just I don't do anything. I don't have anything. I don't you know, I work a nine to five job at Cornell or wherever, but I want to support this and I want to belong and I know if I pay ten dollars in I can get twenty dollars back and I can use that and I can start.

So that became an issue. There were people who wanted to join without offering anything. And I was an advocate of that with the board of directors. And I brought it to them and I said I thought that we should make a bylaws change to change that. And I was outnumbered, I think, completely. Whatever the rest of the board were versus me. But t you know, my to me it was like, okay, we're s we're turning all these people away who want to belong and maybe if we don't turn them away but we accept them on their own terms. Maybe eventually they could they're gonna wanna earn more of these things.

I mean that was a big thing. of why ours existed was to get more money into your life. But at the time when I was trying to make the point, I said, look, we could have some people with their back against the wall and they want to join, we're telling, well you have to offer some kind of goods and services and they would say, okay, then I I do dream interpretations. We actually had one somebody who's listening to dream interpretation. I don't know if they really how good they were because I never availed myself of it But I sort of took it as like maybe somebody who was making something up because we were forcing them to.

But the rest of the board said, okay, you know, they recognized that as a pitfall. but that it seemed to them to be minor. And that the what the policy was trying to do is to get more people involved. And maybe to look at their own situ situations like you know if you do a nine to five job and you're a really busy person, you're raising a family, you're doing all these things and you don't have a sideline or anything like that, well maybe you can think of something that you could do. Like say maybe you have gardening as a hobby. So you could put yourself in as a gardening consultant or something like that.

Or even if all a man was to run to Agway for people and get them bags of compost and deliver it to but the thinking was that everybody can do something and the more people who are involved And the more that they were involved, the better. So finally I acquiesced to that. I mean the reason I acquiesced to is because everybody put up their hands and voted. It was like nine to one. So that's why I acquiesced. No, I I bring that up, that aspect of it to show how it worked. with running the thing and making changes. Yeah, I was I was on the board for a long time and the reason why was because it was it was fun working, it was interesting working.

It was a good group of people who could disagree about things. like pretty fundamental things. It's like what I'm describing. It was a pretty fundamental thing. And then we would make a decision and we would abide by it. People would buy into it. I was like, okay, okay, okay. And I would say, Okay, I lost this one, but watch this it's just gonna come back in a couple of years and I'm gonna turn out to be right. That didn't happen. But I was just saving face, it didn't really matter. No, I mean we all we it was a good group of people that listened to each other and made decisions together that they thought were the best.

And so it was really it was really a good uh it was a good group to belong to. And I think that there's a lesson f about that for a lot of people everywhere that people might think about getting more involved with their community, but they think, Yeah, I'm really not a meetings kind of person And I'm not either, to tell you the truth. It's different when it's a good group of people and when the meetings are run well and efficiently and people listen to one another and they don't talk too much. You know, they listen as much as they talk. That's what I found.

When I was recruited to join the board, I told them I would think about it because like I say, I'm not really a meeting type of person, but it was for a tenure of two years. And I thought, Well, you can do anything for two years. So I said okay and um then I was there for what seventeen years, something like that, because it was interesting, it was fun and it was and productive. Yeah. So Ithaca hours is one I think for a long time it held the record for being one of the the longest lasting local currencies. Longest running local currencies. I don't know if that's still true.

It it kind of folded in what twenty fifteen? Yeah, yeah. Which was surprising to me that that it was that it lasted that long. That's great. Yeah, yeah. But the thing that that killed it, I mean I I actually um after you asked me to be here and to talk about things, I thought, well I better get up to speed a little bit about what has been happening since Ithaca hours stopped. And there's still a system called Berkshhares, B E R K S H A R E, in the Berkshare Mountain area of Massachusetts, which is Similar to our area, it's a liberal area. It's a little bit removed from cities.

It's easy to do things. There's a lot of schools there. So there are a lot of educated people. And progressive people. It still exists, but I was looking at what they do because I was like, how can they still exist? Because why did they not like the death knell that came for if you get hours was credit cards. And I thought, why did this not affect them? Why how can it be that they're still going? Um and the entire thing was credit cards. Um when Ithaca Hours was getting going in the late nineties, uh Green Star Co op is a big food store. And still and it's much bigger.

There's three branches in town. It has its one gigantic store and two satellite stores. It has ten thousand members in a you know, a town of thirty thousand people, but a county of a hundred thousand people and a very successful business. But when I first came here in the nineties, and I guess this was like other businesses too, they didn't even accept credit cards. And it wasn't a philosophical thing, it was just that people didn't use them. Yeah, in those days you needed pay an annual fee. I guess that was the main thing, you know, paying an annual fee to use them.

And so people didn't. So a Green Star Co-op, uh you know, maybe they do fifty thousand dollars worth of business a day. And they're not tak they don't take cred it's just cash and checks. Well, people use checks in those days. But then credit cards just sort of flooded the market, decided, you know, like w they were gonna eliminate an annual fee. And also they used to be harder to get. They would do credit checks that were more substantial. But then all of a sudden in the late nineties and early two thousands, you would get all these offers in the mail all the time. from from big banks, Citigroup and Wells Fargo and all these banks, wanting you to have a credit card that you could get for free.

And with minimal credit check, if any at all. And so all of a sudden everybody had them and they started to use them. And then the the credit card companies started doing things like having benefits like you would get three percent cash back or something like that. So there were all these incentives to use them. Caroline Miles. Another type of money. Another type of money, right. Yeah. So all of a sudden there were all these incentives to use them. But at the time that started happening And uh and actually I and I work at Green Star Cop, I should say.

Um and I was working there at that time and I can remember one time I went and I opened a checkout line. help check people out. And somebody came through a line and I said, okay, that's thirty dollars or whatever it was and they used a credit card to pay. And I said, Okay, thank you and they said, Oh, shucks, you know, I'm like what? And it would be like oh, I have Ithaca hours that I meant to use And I would say, Well we can redo the transaction, you know, and you can use them. No, no, no, no. It's just no no never mind. But as simple as it seems, that was a big thing, the fact that when people when they had at the hours and you were paying in cash And if you had in your wallet like a hundred dollars worth of cash and fifty dollars worth of Ithaca hours and you went to the grocery store and they took I think Greenstar took ten percent, twenty-five percent, twenty percent in Ithaca hours, something like that.

Uh but say it was even only ten percent and you you know, you're at the checkout and you're paying fifty dollars and you're using cash back in those days. So you would reach in your wallet and you would pull out two twenty dollar bills and ten dollars worth of 50 hours and you felt like you were getting away with something, you know. Or or you knew that the hours that you had was extra money that you had, that you earned. uh your sideline or your business or whatever. And you knew it was helping the community, you knew it was a creative thing to do, and you knew that then you were rather than having to take fifty dollars American out of your wallet, you were only having to take forty dollars American out of your wallet.

So you're saving that other ten dollars in a way. Um so that was a big thing. Like people would walk out feeling really good about it. But with credit cards it was a whole different thing. People don't even walk around carrying cash these days at all. So when that started to happen and I saw it happening over and over again, I thought, okay, this is gonna be trouble for us. So that's on a very like on almost physical level, you know, as well as intellectual or or economic. But it also had the ramifications of that what people would use the credit card also because then it really felt like you were getting away with something because you're not taking any money out of your wallet, you know.

Right. And you don't feel it until the end of the month and you get that bill. Once more right, it doesn't feel like money. It's just a thing. Yeah, yeah. And the thing with the guy was just it existed as a way for people to bring more money into their lives. Well the credit cards are doing that because they're lending you this money. They're lending you as much money as you want, as much as your credit line goes So if people needed more money in their lives, they didn't have to go out and earn it, or they didn't have to join a group, or they didn't have to look to their community, they could look to Wells Fargo or whoever, and they would loan you all the money that you wanted.

So that was that was an economic problem for us too. So how how did Berkshair's get around that? Yeah. Well, they get around it because they're not doing what we did. It's not as pervasive as I don't know what they used to be like. But what it is now is you just buy perk shares with dollars. So you go into a uh an outlet or a store or a bank that that deals with them and you just buy them with dollars and then you use them around town. And if you are a business who accepts them and you find out that you're accumulating too many, which did happen with Ithaca Hours for sure, like w a big place like Green Star Market, where people went all the time, it was work for them to spend their hours.

I mean it wasn't difficult, but it took time, you know. If you're in the in the Berkshires in your business and you're accumulating too money, you can sell them back. I think there's a transaction fee of one point five percent, like to discourage people from doing that. So I looked at it and uh no shade on my ex-colleagues at Burke Sheriffs who are still doing it, but it's not the same thing. It's really just like it's it's practically symbolic what they're doing. It's okay, you spend dollars and you buy these things and you use them around town.

What that's doing is that okay, Berkshares you can't spend anywhere else. But you know, the money, the cash money that you use to buy the Burke shares, you could have used to buy the goods that you're buying with the Burke shares. So to me, I mean I looked at it and I thought, okay, well that's how they're doing it, but it's really just it's symbolic now. It's not really doing anything. Whereas with us, you know, back in the Heyday, it was really doing things. You know, it was really people were accepting this currency that you could not sell back. to anybody.

So it was real money. So that was that's a big difference. And we were making loans with it, we were making grants with it, and and creating business that wouldn't have happened otherwise. One of the things that local currency does, probably the first things that springs to people's mind is that it keeps money local, which is true. And it did with us. And it it was helpful for a long time in that way. Like I had a business at that time where I sold music C Ds and it was sort of s a locally intensive business because It's a very musical town. And we have a festival that started in the nineties called Grassroots Festival that I volunteered with from the earliest days.

And we would bring this great music into town like from all over the world, like African music and Latin music and country music and bluegrass music and blues and very, very authentic stuff and great stuff. When we started it, there were like fifteen hundred people who would come. to this festival and by the end of the nineties it was fifteen thousand people who were coming. So I had this idea with this story well, you know, you can get this music like You hear four days a year at the festival and the other three hundred and sixty-one days a year, if you want to hear it, you can't find it, you can't buy it.

So I opened a store that would have that kind of music. And then all of a sudden Amazon came along. I mean it's a much different landscape. Now, I mean, I don't have this business anymore because now you can stream music and get all you want for nothing. But the intermediary thing was Amazon. Also borders which doesn't exist anymore and Barnes and Noble's and big super stores that sold books and CDs. And so I would be getting interviewed by s you know, somebody about Ithaca hours and would talk about my business and say what you know, with the business that you you have here, how are you gonna fend off Amazon?

And how are you gonna fend off Barnes and Noble and Borders? And I said, well, it ours is something that helps. And you can see how it helps, you know, because like maybe your favorite musician has a new C D out and you want to buy it and you can get it from Amazon or you can get it from Barnes and Nobles or Borders, or you can get it from Small World Music And Amazon has the advantage of it's very fast, but small world music has the advantage of it's local. You know, you're helping a local business, it's more fun, maybe. But also you can use ethics hours there.

So if you earn ethic hours of both like, Well, I can use ethics hours there and Not on Amazon. So it was an advantage to me in that business. Keeping money local was like a real strong thing. And in fact I can remember giving interviews at that time. Um And say, come back here in five years, and I'll still be here, but Barnes and Nobles won't, and Borders won't, because they won't be able to compete with Amazon because they don't have anything like what I have the local currency. And so they have the disadvantage like with borders, they have to have an inventory of whatever mil millions of dollars of inventory, of which they're only gonna sell five, ten percent So they have to have all this money tied up in inventory, in displays, and space to have it.

And so I said, I'll be around and they won't. Barnes and Noble is still here, but Bordis is not. Then that's why they succumbed to Amazon. So the local currency did help me in that business and that it meant something to people too, to support a local business, but it meant something to people because they had this money that they wanted to spend. Yeah. You said something when you were talking about Green Star accepting all the the Ethica hours, which which kind of piqued my interest. When you had your your C D store. Uh did you also ex accept only a percentage, like a like ten percent or fifty percent of Ithaca hours?

So an Ithaca hour then would actually sort of act as a uh like a d a disc a a coupon kind of in in a sense, right? Yeah, in a way. But did that did that vary from vendor to vendor? Yeah, yeah, it did. Um And and it could vary from day to day. I mean it did for me. That if I had uh, you know, a real regular customer I would I f I think I took twenty percent. But if it was a real regular customer or somebody who's really involved with the system, I would take more. But that was one of the attributes of the system is that and I was saying at the beginning that you know, the board of directors or the organization did very, very little.

It was very, very simple. So th the member businesses were free to do whatever they wanted to do. So, you know, a big business like Green Star would take ten percent, maybe, I think, because they're such a magnet for people. You know, they have thousands of people coming in a day. Yeah. So they were in danger of getting more than they could use, which ultimately happened. There were ways that they could have dealt with that, um, but it became too arduous and uh for them, especially once they started accepting credit cards, you know, and 80% of their business was in credit cards, 90% of their business was in credit cards.

But for smaller businesses it was an attribute because if you were a business like s well say my business, you know, if I'm taking twenty percent, it's because the you know, the C D that you're that you were paying, I don't know, t use round figures twenty dollars for. Well, the wholesale cost of that is fifteen dollars. Like I need fifteen dollars American to pay for that C D. Right. So if I'm taking twenty percent off of twenty dollars, that's what that's four dollars and it's arrows I'm taking. So I have one dollar left over, dollars, dollars.

But I but that but it worked. So that was for a business like mine where the cost of goods as they call it is very high. But it's the opposite for say a coffee shop, where if you're a coffee shop and the you know, the latte that you sell it to somebody for six dollars, you know, the cost of goods for that that went for you is negligible. Like the coffee grounds and the cup. It's like less than a dollar for sure, you know, like fifty cents worth So if you were a coffee shop and you were interested in using these hours to generate business for yourself, you could use them and you could take a hundred percent Or eighty percent or fifty percent, and you were still making, you know, good money because your cost of goods was so low.

So um a business like that, or say Used Bookstore as opposed to a new bookstore. Maybe the used book that they're selling for ten dollars, maybe they paid two dollars for it. With them also because they had a low cost of goods, they could take more, I think, hours. So we have like a Leaves bookstore in town, it was a big user of Ithaca Hours for just that reason. At its beginning, Gimme Coffee, uh which is one of the first uh like artisanal coffee businesses in the United States. They were taking a lot of it hours and they had a their s their founder was on the uh board of directors for a while.

So yeah, so it it did it did vary what people would take, but like I say, t that was an attribute and it was part of our general philosophy which is like we issue these things and they're money and it's just like money, you do whatever you want with it. There were very few rules or very few strictures. Yeah. So now you had mentioned uh just a little bit ago about how the credit union, alternatives credit union was important to the to the whole idea of Ithaca hours. What role did they play in the In the scheme of things. Well, they were very instrumental in in getting things off the ground and having financial advice. and things like that.

But as the relationship continued, they were very crucial or central in that you could use I think I was for certain things in the credit union. Like for certain fees. Like maybe the fee to open a checking account and it was five dollars. They would take Ithika hours for it or maybe a late fee or, you know, things like that. Uh but also they would take 10% Ithika hours in repayment of loans. Wow. So that was a big thing. Like when I started Small World Music, I took a ten thousand dollar loan out from them. So eventually I'm gonna pay that back and but I can pay it back I can one thousand dollars worth of it in Ithaca hours they're gonna take.

So that's a great incentive to be liberal about the amount of fifty hours that you're taking back because if nothing else you can use it to pay back your bank loan. Yeah, that's huge. So yeah, so that's You know, then you're talking about a lot of money and you're talking about major um credibility also. Sure. That when people see that a financial institution is taking these things back for on substantial loans. That yeah, that's powerful. Feels like real money then. Yeah. Yeah. Yeah. Which is important. I mean, it's everything. It has to feel like real money.

Right. Whatever it whatever it is. So you joined in the late nineties, so it it uh it hours had been in in circulation for over five years, six, seven, eight years. What was when you joined, was that the heyday? of Ithic hours was at what point did it really take off? You said it sort of started slowly. By the time you joined, was it was it already well established? Yeah, it was, but it needed some fine tuning, that's for sure. I mean we needed to accommodate the growth in certain ways. So like one thing that happened was at the very beginning the the Ithaca hour itself was worth ten dollars.

And it worked backward from there. And there was like a philosophical reason why the the basic unit should be worth ten dollars. Because at the time that was the minimum wage is probably about four dollars or something. You know, now I think the federal minimum wage isn't even eight dollars. So it was a way to illustrate um like that ten doll should be a basic uh thing in people's minds, that ten dollars should be what anybody makes for an hour's worth of work. So it was the concept of living wage before anybody was using that term. Now it's very common term.

So it started with that and then it worked backward from there. So a half an hour was worth five dollars. And that was fine. But then it got a little crazy. Oh, there was also a two hour note, which is worth twenty dollars. So there was a half an hour note that was worth five dollars. But then there was a quarter hour note that was worth two fifty. And there was an eighth of an hour note which was a dollar and a quarter, which when people would come into my store I could figure out the math. But it's a whole lot of spaces in your cash register you know.

And a little complicated to accept those the Yeah. And so what was happening at that time, late nineties, early two thousands, more brick and mortar businesses were getting interested. They're like, look, if there's hundreds of people who are using this money and there's hundreds of thousands of dollars in circulation. I want to be a part of that. So we were having these retail stores join and after a while they were coming to the board and they were saying, look, You have to have one that's worth just a dollar. Oh, like say it's like a bakery, you know, and they have a lot of staff turnover and they have big staff and somebody's coming up to them. and they buy a cup of coffee for five dollars and they're using this thing that's worth a dollar and a quarter and the cashier's like, What is this? and somebody says it's worth a dollar and a quarter and they'd be like, No, really, what is it?

So we have these retailers coming to us and saying, You have to make one that's worth a dollar. You have to And we were like, well, in order to do that, it's gonna cost us ten thousand dollars to do that, you know, like to print them up and all like that. And the credit union stepped in, alternatives federal credit union stepped in and they paid for it. Um so they were they were a big help in a lot of ways. Yeah, they were a great partner to have. hardest decisions to make or one of the most impactful decisions to make. You talked a little bit about your about allowing individuals to buy in or not.

That's That was a very impactful decision. Was there anything else that was kind of a a crossroads or a fork in the road that things could have gone one direction or another? Yeah, yeah. Well that was a big change in uh with the printing of the annual directory. That was a big thing because it used to be that the list of members was published quarterly in like a newspaper type of format and it also had like editorials and opinion pieces and things like that in it. And I guess it had some and it had advertising to help sustain it, but probably all the advertising was being paid in it hours.

So there was that and It was a major expense to do. So we looked at that and we said, We're publishing this thing every quarter and it's costing all this money to print it. And it's not like we have that many new members every quarter. Whether we're losing that many, that we have to have a new publication, we just save look at the yellow pages. They come out once a year. So we decided that if we were to do that we would save a lot of money and also would give us more time to each year kind of call the members, make sure that the new members got in, make sure that the old members went out.

What it took away was the, you know, the editorials and the opinion pieces and like that. But to me that was a a benefit actually. Like we weren't spending a lot of money to print editorials that somebody wrote that maybe other people didn't agree with, you know. Or they dev never bothered to read, you know. So we were spending a lot of money to do that. uh to editorialize to people, which was that was sort of sort of change where we stopped doing that. It's just sort of like with the whole system, our whole thing was that we wanted to encourage you to be independent.

I mean to be a community member. but to be independent. Like we issue this money and we don't tell you what to do or how to do it or keep track of it. You do what you want to do. You think what you want to think. And so the editorializing and that kind of jazz, it would put off people in the community. I mean, you figure any time you express an opinion there's gonna be like half the people are gonna disagree with you, you know. But it definitely put us off from certain segments of the community because you think uh there's it's a liberal place, but it's also a rural place.

And there are a lot of people here who have, you know, conservative political values. And we were definitely keeping them at arm's length. I tried to tell them what to think or tell 'em what we think or what somebody thinks, you know. So yeah, like a business like Agway, which Agway is this farm and garden store that's been here forever. I mean if you walk into it, it looks like the nineteen fifties and it feels like the nineteen fifties and it's great. You know, it's a wonderful store, you know, and it's so much better than like a Home Depot or anything like that.

But the people who run it and the people who work there and I worked there for a little while. They are, you know, politically conservative people and they live out in the country here. That was a big thing, like to to um just have the directory which was just business. You know, it just printed the people who belonged and what they did. There would be a little bit of like frequently asked questions and and you know, advocating for what we did as a community group, you know. But just as community activists who were trying to build our community.

But I can remember I went and I talked to people at Agway one time about joining the system and I said, you know, you can use this because you need to compete against Home Depot. You need to compete against Lois. You need to compete against Walmart, which did not exist. when Agway got started here and now does, you know, and Agway is a great store, but it's small compared to those stores. So when I explained it to them, but they're thinking, yeah, but it's like isn't this like hippie money? And I would say, no, no, no. I know that we have that image.

I said, but look, I'm from a working class background in Brooklyn, New York. I'm I I'm not a hippie, you know. I'm a working class person. And I would say, I want you to use it ours because it benefits this community and because it benefits you. I don't care who you vote for. You know, like my guess is that probably in the last presidential election, you voted for Donald Trump and I voted for Kamel Harris. But I don't really care who you voted for and I'm not gonna tell you who to vote for. You know. We're neighbors. We live in the same community.

We may have slightly differing values or we may put more emphasis on different values, but We're still in the same place. What happens to one of us hacks us all. This is the whole idea behind this podcast, frankly, is to bring these ideas forward that a lot of people aren't aware of or have an idea that it's maybe it's too liberal or too leftist or just too crazy to even work. And it's not. You know, these are things, like you said, there's a very deep history of things like local currencies all across the world and economic circumstances very similar to the ones that we're just beginning to experience now.

So it's uh it's Fantastic that Ithaca has had such a robust history and such a successful history with Ithaca hours And I wonder what your opinion is now as you're, you know, you've got all this experience with it so far. Do you think that there's a possibility that something like Ithaca Hours could re-establish itself here? Would that be helpful? Is that something that maybe some enterprising person could do? Yeah. Um well, yeah. Let me answer that prepared just to To make a closing point about the last point, you know, like when I would go into a place like Agora and talk to them or whatever and and I would say, look, all I care about is like you said, that you are my neighbor and so like say maybe you voted for Donald Trump and I voted for Kamala Harris But uh you don't really think that Donald Trump really cares very much anything about you, you know.

And I don't know, I think Camel Harris does care about me, but not to a degree that she cares about her donors or anything like that. But in terms of those political leaders, they don't really care about us all that much, as much as I care about you, as much as you care about this community. So that's what I'm interested in. Like I'm interested in the fact that this business Agway thrives. I'm interested in that you have a paycheck. I'm interested in that you have you can repair your car and send your kids to school. I really care about that. I think if we care about each other and this is a way that we can show it.

We'll be better off and go ahead and vote for whoever you want. I know that you're working with me on this. We're working on something together. So that's the rah-rah. Speech about that, but it's true. About it getting started again, I don't know. You know, it's interesting to me because you asked me to come and speak on this podcast this week And in a week from now, there's somebody from Cornell in the anthropology department actually who teaches a course in anthropology of money and she asked me and a couple of the other ex board members to come up and address her class So we're gonna do that.

So there's still an interest in this thing that hasn't existed in ten years, you know. How it if there's a future port, I don't know. I I haven't really I haven't really given it all that much thought. And actually the other board members of myself we do keep in touch. We go out, we have dinner every once in a while, but just because we're friends, we don't really talk about this kind of thing very much. But I think maybe we should. Maybe you should. Maybe we should. We know that there's certain things that that don't work and we saw Um like around the time that the Ithaca hours was folding, you know, we we were aware of that how much people do online these days and how much they do electronically.

So we were like, okay. So we could we convert this paper currency system into, you know, an electronic system. And somebody tried to do that. Not one of us, but somebody who started a company or an organization called Itha Cash. I think, or something like that. And came to us for advice. And we were throwing up a lot of red flags. And I think he didn't want to see those red flags. And went ahead and did what he did and it didn't work because what he was doing was he was enrolling members and there was um I don't know, I guess there was like a database or something.

So you would go into a store, say you're going into Green Star Co-op and you would use a percentage of the purchase in etiquette cash. which had to be put into a database somehow. You know, I guess on a computer and you would have an account, you know, like I would have my account, you would have your account and all like that. And then the stores of course would have to be linked up with if the caches database. And I said, from my experience that is not gonna work because it's like it's too complicated. And because you're having people register and like I have to have an account with you and like have your approval for when I wanna make a purchase.

I said, that is not gonna work. I don't think. And it's like the exact opposite of It Gowers, which is like, look, here's the money that we print, you go out and do what you want. You know, we don't keep any records of what you do. I was saying to them, so what are you gonna do? Part of the what we do is that somebody's using Ithaca, we The only thing we tell them is look, you have to pay taxes with this. But if it's a taxable situation in your life, then yes you have to pay taxes on it. Like if you're using it for your landscaping business or like me, my business, I have to report, you know pay sales tax on stuff.

Even if I took Ithic Hours for it, I have to pay sales tax for it. So we would just tell people if it but if if it's not a taxable situation, you know, like you're selling a bicycle to somebody for Ithaca Hours, that's not a taxable situation. So It's just like dollars. So we tell 'em that's all we we need to tell you is to use these things legally. But with an electronic system where they have to have an account, you're keeping a record of it. So it's like what if somebody is being audited you know, and then uh you know the IRS is calling up at the cash and saying we need the records of what this part because we're auditing this business and we need you to turn over the records.

That wouldn't have gone with it. The guy was like, no, no, no, we don't keep records on anybody. We don't We can't help you. We didn't want to have records of people that we didn't want the government calling us up and asking us. Right. We had very simple things. The government is asking us what's going on. We would show them. We would tell them. People use them just like they used dollars. We don't keep track of it. Everybody's used them legally as far as we know and they were like you're like cool. You know. We never had any issues with government or taxes.

But also with the system, people had to pay to get in and and the and the uh businesses had to pay to get in And that's another big roadblock is the you know, businesses that are just hanging on, you know, every day and you know, they have to pay for you just like they need to pay credit cards, you know, like you see in restaurants these days in a lot of businesses who are charging three percent more Yeah. If you use a credit card because it hurts them. And it was like, so you know, you're gonna do that, you're trying to sell this thing to people, but you want three percent?

For administrative costs? Well that's just like a credit card. So people are gonna tell you that t there's the door. Right. It didn't it didn't work. And so I don't know. I don't know because I I know that that doesn't work and I know that Paper money doesn't work because people don't use paper money anywhere anymore. So what does work? I don't know. Well, there's some interesting developments in digital currencies. So that's one one possibility that might be interesting to look into. I I love the idea of local currencies. I think they're a really fantastic way to um to build community and to keep them keep the money.

So I hope that you do. Meet with your group and maybe consider some different options because I would love to use uh Ithaca hours or something like it at some point. Thank you again so much for your time. And I hope that uh I hope I see Ithaca ours again someday, maybe. We'll see. Yeah, we'll see. Thanks for listening to the Ithaca Local Economy Lab. If you liked us and want to hear more, please be sure to share, rate, review, and subscribe so you don't miss a single episode. It's noisy in the podcast world, and we need you to help us find more listeners You can read the show notes, get on our mailing list, and download your own free copy of Practical Resources for Healthcare Beyond Insurance at Ithacalocaleconomylab. com.

And if you know of a local business, nonprofit, or program that you'd like to hear on the show, please send them my way. The Ithaca Local Economy Lab is produced by Practically Real Enterprises LLC. and brought to life by an amazing team, including technical advisor Jake Gribschaw, Associate Producer Stacey Cornelius, content strategist Sonia Simone, and creative advisor Erin O'Shaughnessy. Yen Ospina is our artist, and the music is by Carsie Blanton. Until next time, take good care.