Milwaukee neighborhoods could print own money

[Michael Stuart Kelly]

Milwaukee neighborhoods could print own money

By Erika Slife

Chicago Tribune

December 3, 2008

Residents from the Milwaukee neighborhoods of Riverwest and East Side are scheduled to meet Wednesday to discuss printing their own money. The idea is that the local cash could be used at neighborhood stores and businesses, thus encouraging local spending. The result, supporters hope, would be a bustling local economy, even as the rest of the nation deals with a recession.

. . .

And it's completely legal.

As long as communities don't create coins, or print bills that resemble federal dollars, organizations are free to produce their own greenbacks—and they'd don't even have to be green.

Cool.

Michael

[Chris Grieb]

Some cities during the bank holiday in the early thirties tried this. It was only temporary and in some the Secret Service did come after them. You might check Amity Shale's "The Forgotten Man" or a better history of the Great Depression.

[kiaer.ts]

Some cities during the bank holiday in the early thirties tried this. It was only temporary and in some the Secret Service did come after them. You might check Amity Shale's "The Forgotten Man" or a better history of the Great Depression.

Amity Shlaes, that is. She was a contributor for the now defunct NY Sun, the best newspaper in America. Now they are talking about a bailout plan for newspapers. Too late for the Sun - not that they would have taken the money.

[syrakusos]

Some cities during the bank holiday in the early thirties tried this. It was only temporary and in some the Secret Service did come after them. You might check Amity Shale's "The Forgotten Man" or a better history of the Great Depression.

Among the standard references are:

Standard Catalog of Depression Scrip of the US by Ralph Mitchell and Neil Shafer (318 pages)

Michigan Depression Script of the 1930's by James Curto 36pp

Stamp Scrip by Irving Fisher, LL.D.135pp

In the January issue of The Numismatist, my "Internet Connections" column will feature this website:

http://www.depressionscrip.com

I am not aware of any cases in which the Secret Service came after city governments or chambers of commerce over civic scrip.

[Brant Gaede]

Some cities during the bank holiday in the early thirties tried this. It was only temporary and in some the Secret Service did come after them. You might check Amity Shale's "The Forgotten Man" or a better history of the Great Depression.

Among the standard references are:

Standard Catalog of Depression Scrip of the US by Ralph Mitchell and Neil Shafer (318 pages)

Michigan Depression Script of the 1930's by James Curto 36pp

Stamp Scrip by Irving Fisher, LL.D.135pp

In the January issue of The Numismatist, my "Internet Connections" column will feature this website:

http://www.depressionscrip.com

I am not aware of any cases in which the Secret Service came after city governments or chambers of commerce over civic scrip.

Could they not have? The essence of tyranny is the arbitrary. They get you coming and going. One way or the other, they get you. That puts everybody into the Gulag even if they are only cowering at home. That's what happened to Russia. Destroying and destroyed. Still going down the drain it has no stopper except more Vodka.

--Brant

Edited December 7, 2008 by Brant Gaede

[syrakusos]

Could they not have? The essence of tyranny is the arbitrary. They get you coming and going. --Brant

Well, this story from Atlanta 2005 tells of a man handcuffed and cited with a misdemeanor for passing a transit token to another traveler who then gave the benefactor $1.75 for the chit.

Following the Jacksonian Era in which what we call "Hard Times Tokens" were popular for lampooning Jackson, Webster and others, tokens were outlawed. I would have to check the wording in the statutes but during the Civil War, tokens again emerged, though seldom did they have any value claimed in the legends. Mass produced by industrial processes, a common reverse chosen by issuers said "Millions for Defense NOT ONE CENT for Tribute." (A nice overview from David Powell of the London Coin Club is here.) Some time in the 1930s (again, my apologies) the Supreme Court ruled on the basis of a suit against a mine that tokens were not money: "Amercan workers deserve to be paid in American money" is how that is recorded in the common mind of US numismatics.

That said, parking meters, video games, laundromats, car washes and other use tokens every day. The Osborne Company of Cincinnati is the oldest continuing maker of tokens in America (founded 1835). Furthermore, iof you look in your local newspapers you will find many coupons that communicate value via the semata of US money.

If you want to be oppressed, it can be arranged. Just ask NORFED.

Edited December 7, 2008 by Michael E. Marotta

[Darrell Hougen]

I don't really understand the point of issuing some sort of local currency (or scrip) other than to avoid the payment of taxes. And, to the extent that people were able to avoid the payment of taxes, it seems like the system would be illegal.

For example, if I owned a local ice cream parlor, I could pay my employees in scrip. Since I didn't pay them in U.S. currency, I could presumably fly under the radar, at least for a while.

The problem is that the U.S. economy is so interconnected, there would be a tremendous need to convert back and forth between local currency and greenbacks. In reality, for example, I work for a multinational corporation. So, they're going to pay me in greenbacks rather than "Denver Dollars" or whatever the local currency is called. Then, if I wanted to buy an ice cream cone, I'd have to first exchange some of my U.S. currency for Denver Dollars first.

Similarly, the ice cream parlor would probably have to convert Denver Dollars to U.S. currency in order to buy their ice cream from out of state. So, there would be a currency exchange market, just as if Denver, Colorado were a foreign country. And, based on the exchange rate, the IRS would assess taxes on workers and the State of Colorado would assess sales taxes.

In fact, rather than avoiding the payment of taxes, it would simply complicate matters because the amount of money an employee made on a particular day would not only depend upon his wages in Denver Dollars, it would depend upon the exchange rate on that day (or on the day that he was paid).

Sounds like a mess to me, but maybe I'm missing something.

BTW, I'm not opposed in principle to localities or banks issuing their own scrip. If there were no taxes, they could do that and there might be benefits to doing so, but I just don't see the benefits in this case.

Darrell

[syrakusos]

I don't really understand the point of issuing some sort of local currency (or scrip) other than to avoid the payment of taxes. ... Similarly, the ice cream parlor would probably have to convert Denver Dollars to U.S. currency ...

While the Supreme Court ruled long ago that you have a right to arrange your affairs so as to minimize your taxes, it is nonetheless illegal to attempt to avoid taxes that you lawfully owe. If you barter, swap, buy with gold or local scrip, that is still a taxable transaction. The IRS wants its cut -- and the state, county, and city are not far behind. If you did all of your commerce in local scrip, you would need FRNs to pay your taxes.

(One set of exceptions were those Depression Scrip notes issued by cities against their taxes that were likewise acceptable for payment of taxes. Similarly, the Lansing Board of Water and Light issued scrip and paid its employees 25% in scrip. The notes were acceptable all over Lansing by anyone who had city water or light for which they could then pay with BWL Scrip.)

At the Michigan State Numismatic Society this Thanksgiving weekend, I chaired the Educational Forum. Our guest speaker was from H&R Block. Her talk was, "What the IRS Expects You to Know: Buying and Selling for the Non-professional." Just to say, using scrip is not a means of tax evasion. You still have an obligation under the law.

Walk, bicycle, car, bus, semi-truck, railroad, plane... Why walk anywhere when a jet can get you there at 600 mph? Well, obviously... So, too, is there competition among currencies. Different kinds of money serve different purposes. A local currency is intended to be spent locally, to remain local, to circulate within a closed area or closed marketplace. The ice cream store will need dollars to buy many things, but if they can buy some goods and services locally with Denver Dollars then the benefits of trade stay closer to home. There are fewer middlemen. The profits to each remain within the token ring.

Moreover, while we expect universality to be an attribute of money, some suggestions are that when there is no competition in money the economy suffers. (U of Chi economist Hugh Rockoff theorized that having a unified national currency prolonged some of the consequences of the Great Depression.) Before the euro, the differences in exchange rates created inefficiencies that were met by arbitrage. However, it also meant that financially weak governments, such as Italy, Greece, Spain, and Portugal, could not pull down the value of the German mark, Netherlands guilder, etc. With a unified currency, everyone is in the same boat, for better or worse.

If your local currency board exercises more restraint than the FRB in creating new paper, your local scrip will be stronger than the dollar.

Edited December 8, 2008 by Michael E. Marotta

[arkon]

If your local currency board exercises more restraint than the FRB in creating new paper, your local scrip will be stronger than the dollar. (sry I just copied this, still haven't figured how to quote in part)

Sounds like a pretty good idea, especially with the current instability.