The Totnes Pound and the American origins of Fiscal Localism

Two hundred miles southeast of London as the crow flies is a medieval market town called Totnes. Situated on the River Dart in Devonshire, Totnes resembles a typical English parish with its Norman castle, narrow streets, and local mythology. Accessible to the hinterland in one direction and the English Channel in the other, the town attracted a sizeable merchant elite in the Tudor era.

Today, Totnes is more bohemian chic than mercantile bourgeois. It first began cultivating an alternative reputation in 1925, when Dorothy and Leonard Elmhirst transformed the medieval Dartington Hall into an experimental farm and progressive school. Frequented by English literati from Virginia Woolf to George Bernard Shaw, it was rechristened Dartington College of Arts in 1961. In more recent decades, Totnes has acquired a New Age-y vibe, calling all artists, artisans, and purveyors of things local and organic. It has its own, locally circulating currency to boot.

The town introduced the Totnes Pound in 2010, not long after educator and activist Rob Hopkins started the Transition Towns movement there a decade ago. The Transition movement aims to prepare communities for a world without oil, and calls on us to face the environmental, social, and economic challenges of climate change head on. The movement is about “resilience,” Hopkins explained in a 2009 TED talk, and doing things locally makes communities resilient to outside shocks, namely, the decline in world oil production.

Hopkins’s emphasis on fiscal localism has led some towns to adopt their own currencies. Totnes led the way, followed by Lewes, Brixton, Stroud, and Bristol; in September 2015, Exeter launched the Exeter Pound. The idea behind a local currency is to keep money cycling within a community, rather than “leaking” out.  By encouraging residents to buy local, it reduces a town’s dependence on global capital, and instead fosters interdependent economic and social linkages within the community itself.

A local currency, in turn, supports local production, from urban food schemes to community-owned energy companies. Most importantly, fiscal localism cuts the huge environmental cost of transporting goods across the globe that arrive to their destinations soaked in oil.

English Transition Towns modeled their currencies on Massachusetts BerkShares, a local American currency accepted by hundreds of businesses throughout the state’s Berkshire region since 2006. Like the Totnes Pound, which is legally backed by the British pound sterling at a one-to-one ratio, BerkShares are convertible to United States dollars. BerkShares can be exchanged at participating local banks for federal dollars at a rate of 95 cents per BerkShare, effectively giving holders a five percent discount on purchases they make with the local currency, and an added incentive to buy local.

Ithaca, New York also has a local currency called the HOUR, however, it is neither backed by, nor convertible to, US federal money. The HOUR thus bears a closer resemblance to the non-legal tender scrip currencies of nineteenth- and twentieth-century America, or to the town-issued trade tokens of seventeenth-century England.

The Totnes Pound finds its own historical counterpart in the Pennsylvania Pound, the local currency of the British Quaker colony during the eighteenth century. A scarcity of money in the New World left settlers vulnerable to international shocks like the South Sea Bubble and fluctuations in global grain prices, prompting the provincial government to establish a public land bank in 1723. Collateralized by real estate mortgages, the Pennsylvania Loan Office disbursed loan office certificates to small farmers, who used them as legal-tender money to buy tools, hire labor, pay debts, and more.

Proponents of “coined land,” as the Pennsylvania printer Benjamin Franklin referred to loan office money, recognized that a circulating currency was necessary to foster local exchange.[1]

But essayists also encouraged settlers to develop shipbuilding, textile, and brewing industries on their side of the Atlantic. In a 1725 tract entitled Ways and Means for the Inhabitants of the Delaware to Become Rich, the Philadelphia merchant Francis Rawle advised that local manufacturing would help loan office money keep up its value, and listed linen, cider, wool, and glass among the items that colonists might produce.[2] The alternative meant a reliance on British and West Indian goods, which polemicists warned bred luxury and idleness, deflated land values, and further drained gold and silver from the colony.

Fiscal localism failed in colonial Pennsylvania. Far from establishing self-sustaining, interconnected communities, settlers became buyers and sellers in a larger Atlantic marketplace of people and things. By the middle of the eighteenth century, Philadelphia was a bustling entrepot for African slaves and Scots servants, fine European furniture and clothing, exotic spices from around the globe, and Caribbean molasses and rum.

Eighteenth-century Pennsylvania provincials were not environmentalists, and in their underinflated corner of the world they commodified land, labor, and people to be bought and sold. But their communitarian ideal of monetary value remains relevant.

In the last decade, local currencies such as the Totnes Pound have offered a creative solution to the challenges of climate change. “By loving and leaving [oil],” Hopkins said in 2009, “we are able then to begin the creation of a world which is more resilient, more nourishing, and in which we find ourselves more fitted, more skilled, and more connected to each other.”

But what does last June’s Brexit mean for the local currencies of towns like Totnes, which voted to Remain? In Glasgow, Britain’s vote to leave the European Union has reinvigorated efforts to establish the Glasgow Pound, “a new citywide community currency to serve the people of Glasgow and build a stronger local economy.”

Meanwhile, post-Brexit observers of the European sovereign debt crisis are pondering the flaws of a single Eurozone. Indeed, in countries from Germany to Greece, community currencies are emerging to strengthen and protect local economies. According to Lorenzo Fioramonti, the director of the Centre for the Study of Governance Innovation at the University of Pretoria in South Africa, the key to a more sustainable European Union is flexibility and diversity. A monetary system comprising local currencies, together with a new “digital euro,” Fioramonti argues, would prevent the “dangerous regression to nationalism” that an “outright” revival of national currencies could cause. Ultimately, such a system would optimize intracontinental exchange, while at the same time enabling local economic communities to flourish and thrive.

 

[1] [Benjamin Franklin], A Modest Inquiry into the Nature and Necessity of a Paper Currency (Philadelphia, 1729).

[2] [Francis Rawle], Ways and Means for the Inhabitants of the Delaware to become Rich (Philadelphia, 1725).