David Boyle

Local Currencies and the Wizard of Oz

Speech given at the Local Currencies for the 21st Century Conference, organised by the E. F. Schumacher Society, at Bard College, New York, 27 June 2004


I am enormously honoured to be here, especially to follow a pioneer like Tom Greco, from whom I have learned a very great deal.

It also makes me humble. There are people in this audience whose currency kept nearly six million people alive during the Argentinian crisis. There are people who run time dollar projects who have been able to transform people's lives.

It hardly seems right that I'm speaking and they're listening.

I also believe that this conference marks not just a critical moment in the complementary currencies movement, but a key moment in the history of money itself.

So I'm going to do what everyone warns you never to do - talk about American history to an audience of Americans. So I hope you'll forgive my inevitable inaccuracies.

Because I'm going to talk about London, the euro and the Wizard of Oz, though not necessarily in that order.

It is strange, given that the kind of money we use is almost never discussed in mainstream life, but there was a time more than a century ago when it was almost the central issue of American politics.

It was the central plank of the now defunct Populist Party, which managed to link Southern and Midwestern farmers, together with the big cities of the Mid West, in a campaign for money based on silver, rather than the less plentiful gold.

The party's tenets were put together in Omaha in 1892 by Ignatius Donnelly. This was a man who had previously devoted his life to the discovery of Atlantis and proving that Bacon wrote Shakespeare.

This is Donnelly in the Omaha Declaration.

"The newspapers are largely subsidised or muzzled, public opinion silenced, business prostrate, our homes covered with mortgages, labour impoverished and the land concentrating in the hands of capitalists. The urban workmen are denied the right of organisation for self-protection… a hireling standing army, unrecognised by our laws, is established to shoot them down, and they are rapidly disintegrating to European conditions."

It's enough to send a shiver down the spine - European conditions. Ugh.

But very modern, isn't it.

I mention the Populists because one of their most enthusiastic activists was an unsuccessful Chicago journalist called Frank Baum.

It was Baum who gave us the Wizard of Oz, as you may know a coded diatribe against money based on gold. OZ is, of course, the way we designate weight in gold.

You may remember that Dorothy sets out on the Yellow Brick Road wearing the Witch of the East's magic Silver Shoes - changed to red in the Judy Garland film.

Nobody understands the power of these shoes: "All you have to do is knock the heels together three times and command the shoes to carry you wherever you wish to go," she's told at the end.

The poor residents of Oz have to wear green-tinted glasses fastened by golden buckles.

Remember that - I'm going to come back to it later.

And - in the end - the Wonderful Wizard, the personification of the gold standard, is revealed as a fraud, hiding behind a curtain, desperately twiddling with levers.

The Populists didn't succeed. They were undermined by the adoption of Free Silver by the Democrats in the person of the great orator William Jennings Bryan - who incidentally ended his life as prosecutor at the Tennessee Monkey Trial in 1925.

But at the 1896 Democratic Convention, Bryan brought his acceptance speech to a crescendo by raising his arms above his head and then slowly down into the shape of a cross, with the words: "You shall not press down upon the brow of labour this crown of thorns, you shall not crucify mankind upon a cross of gold."

Bryan lost the 1896 election, and twice more - which must be some kind of record. But this was also a speech that inspired a generation, portraying gold as an instrument of torture, weighting us down, the very basis of sin.

An object of veneration that's turned against us because there simply isn't ENOUGH MONEY FOR LIFE.

We don't ask questions like this any more. Most of us.

Now, my parents live in a little village in England called Nether Wallop. It's easy to imagine. Thatched roofs, retired major-generals, Labradors.

A generation ago it managed to boast two shops, a post office, two pubs, a butchers, a village policeman, a doctor and district nurse, and a railway station - connected to a massive local rail network - only a couple of miles away.

That was during the impoverished years of the 1940s. Now, when we are incomparably 'richer', all that's left is one pub and a very occasional bus.

The conventional reasons for this - low taxes, over-regulation, fat cat salaries - don't really explain why, despite unprecedented prosperity, it seems so hard to afford the simplest public services, health, post and education, general stores. And the life that goes with them.

So why aren't politicians asking about this? Well, a number of reasons. I think.

First, the critique of money-creation for most of the 20th century came from the political right. It was Roosevelt's opponent Huey Long in the 1930s who exemplified the idea, later assassinated.

In England, the social credit movement regarded themselves as part of a wider reform movement that wanted a strong central state. So much so that they marched in the 1930s, a bit like the Blackshirts, but as the Greenshirts.

The Greenshirts emerged as a breakaway movement from the Boy Scouts. How a breakaway from the scouts could transmute into a militaristic organisation dedicated to currency reform is another story.

But that's the first reason. Money reform seemed tinged with fascism.

The second reason is that, actually, shortage of money isn't really the problem.

If you flooded the world with the modern equivalent of William Jennings Bryan's silver money, we know exactly what would happen to it. With a rush of wind, like the Wicked Witch of the East, it would shoot into the City of London and Wall Street. And there still wouldn't be enough where it's really needed.

That seems to me to be the key problem, and the reason why the old money reform movements won't work any more.

The great economist John Maynard Keynes called gold a 'barbarous relic', and - especially if you look at the price of it these days - you kind of imagine the days of gold have gone for good.

But we are as much in thrall to the gold mind-set as we ever were. We are as in awe of money as Dorothy ever was as she approached the Emerald City.

And of course the euro isn't the Gold Standard. But it sometimes sounds a bit like it. It's about stability of value, about strong money.

It makes the same mistake as the Wizard of Oz - it really believes in objective values, and that somehow these values can be reflected everywhere the currency circulates.

In the year of the Monkey Trial, the year that Bryan died - the British Chancellor of the Exchequer Winston Churchill described a system of international currencies which "vary together, like ships in harbour whose gangways are joined and who rise and fall together with the tide".

It's beautiful. But this was a description of gold standard money on the eve of the world's return to it. It was a famously disastrous decision, instrumental in the Great Depression and therefore in the Second World War.

The fundamental problem at the heart of the euro, and any single currency based on the idea of objective value like gold, is this: single currencies tend to favour the rich and impoverish the poor.

They do so because changing the value of your currency, and varying your interest rate for example, is the way that disadvantaged places are able to make their goods more affordable. When you stop them from doing that, you trap whole cities and regions - the poorest people in the poorest places - without being able to trade their way out.

Now of course the USA has one currency - present company excepted. So does Britain. But if we're honest about it, we know that hasn't been satisfactory either - because central banks set their interest rates to favour their big cities.

In my country, we have interest rates set to suit the City of London, while the manufacturing regions of the north struggle as best they can. Across Europe, the effects will be so much worse.

That's the danger of the euro as presently arranged, and don't underestimate it. It means success for the cities that are already successful. It means a real struggle for the great reviving cities like Liverpool and Warsaw.

Different cities, different communities, value different aspects of life. And single currencies are not the universal measuring rods they claim to be.

Take, for example, the suburb of East Dulwich near where I live. If you want a nail in a peculiar shape, or a weird kind of screwdriver, then you can't go wrong in Lordship Lane. Because there are so many hardware shops there.

They've been there since anyone can remember, and most are staffed by ancient enthusiasts who know absolutely everything anyone could possibly want to know about plastering, emulsion and brass screws.

But they're an endangered species. A plan to build a hardware superstore on one of the last remaining bits of green nearby will probably strip Lordship Lane of this particular speciality. And although the balance sheets in the city will probably show a big boost, we locals will have lost something too.

The question is this. Why don't these aspects of wealth show up in the figures? If money is supposed to reflect people's preferences, why doesn't it reflect the preferences of the locals?

There are lots of reasons, of course, but one is that the yardstick the global players use - an international currency like the pound or the dollar - doesn't measure fine mesh local wealth like that.

And there's the problem: apart from a few communities served by people in this room, they're all we've got.

The thing is that in a modern economy - even in a modern city - there's really more than one economy at work. And big currencies don't suit them all very accurately.

Take the sheer diversity of London. We all of us - nurses and currency traders - have to get by using the one currency, the value of which is decided by tens of thousands of youthful traders in braces in Wall Street and the City.

That's fine for the international economy, the financial services sector. But there's another economy in London - or New York - which feeds off the pickings from the rich table above it, but isn't necessarily part of it. It's the economy of the rest of us - those aspects of life which have nothing to do with financial services.

The international economy brings in executives from all over the world, whose employers will pay their expenses no matter what - forcing up the value of London homes beyond anywhere else in the country, and pricing London services beyond the other economy.

So London struggles to employ nurses or teachers or bus drivers because they can't afford to live there, so the basic services suffer. It's the same in New York and so many other cities.

Worse, London's rich economy threatens to drive out the poor economy completely. You can see the same thing happen in offshore financial centres where financial services have priced everything else into oblivion. In places like Jersey in the Channel Isles, it's the cuckoo in the nest.

Jersey's offshore status has made it rich, and yet there isn't any longer a Jersey agriculture sector to speak of, and the tourist sector is well past its prime. Why? Because nobody but bankers can afford to live and work there.

But there's a third economy in London too, and it's also threatened because we don't see it. The third economy isn't really an economy at all: it makes up the crucial human transactions that build families and neighbourhoods, look after old people, without which nothing we can do can be successful.

Economists call this 'social capital'. Edgar Cahn calls it the core economy and market forces don't apply here. Yet without it, the police can't catch criminals, doctors can't heal, children can't be educated and the other economies can't work.

This social economy doesn't appear in the GDP, so politicians assume it's inexhaustible, so they ignore it. The problem is that single currencies - whether they are the pound, the dollar or the euro - don't measure the needs and assets in these other economies very accurately.

That's the key thing I wanted to say, so you can switch off now. BIG CURRENCIES DON'T MEASURE VERY WELL. That's true everywhere, not just London.

What they miss out gets ignored. Then it gets forgotten.

Big currencies are gold-standard thinking. They condemn us all to walk around, like the people in the Emerald City, in the Wizard of Oz, wearing tinted glasses which can only recognise what Wall Street says is important.

Currencies are not just measuring systems then, they are eyeglasses. They are the way we see the world. If our currencies don't value things, we just don't see them.

Then they disappear. If you only measure GDP, then the environment, human dignity, community, family all in the end get driven out. That's what faulty measuring rods do, and currencies are measuring rods.

Monoculture money systems drive out other cultures, other species, other languages, other opinions, other forms of wealth.

We can see this everywhere.

The great harbours and rivers that have bustled for a thousand years. Empty.

The farming communities and fields of the world covered with weeds.

Even the great corporations - whatever else we may think of them - shedding all the real work until they are just shells that just do financial services.

There's a great silence descending on the world.

Citibank's profits last year were the largest of any corporation in history. Why should anyone invest in anything except financial services.

These great shell corporations now control 28 per cent of the world economy, but employ just a quarter of one per cent of its workforce.

It is happening so slowly we can barely recognise it. Money - big money - is pushing out life.

So when we feel the hurricane of a trillion dollars a day blowing through the world, remember it isn't what it seems.

The truth is it reeks of decay. Of death.

We need new kinds of money that don't drive out life, or we face what Keynes called "a perigrination in the catacombs, with a guttering candle."

And that's why I say this failure of measurement, this blindness, is the real problem of money.

AND no amount of new ways of creating it by central banks is going to solve this problem.

Different people need different kinds of money, which behave in different ways and value different assets. But we also all need different kinds of money for different aspects of our lives.

If we don't get that, some parts of our cities will be rich and some poor. And some parts of our lives will be rich and some poor.

THAT'S the issue and it's the real meaning of the Yellow Brick Road.

Now, oddly enough, the euro is becoming slowly a second currency in Britain. You can use it in the phone booths in London, for example. But of course that's not enough.

If we need a range of yardsticks, we need a range of currencies. Time dollars to underpin the social economy. Local currencies to keep money and resources circulating locally. Regional currencies to provide low cost finance to small business.

Each of them are giving value to assets and resources that the big currencies can't see. Barter currencies like trade pounds can let us exchange unsold plane seats or hotel rooms or toothpaste in last year's colour, when the market doesn't recognise them as valuable.

Five million perfectly good computers are put into landfill in the UK every year. They HAVE value - but in pounds, they're worthless. Time banks can recognise them and get them back into use.

And Martin Simon and I will be doing a workshop on time banks, so I won't pre-empt this now.

The point is that complementary currencies - and especially time dollars, which I am most familiar with - can give some value to all those assets that dollars don't recognise. Old people's time, young people's time, old computers and much else besides.

And they are directing it at the enormous weight of unmet need: loneliness, isolation, silence.

Big currencies can't do that because the messages they carry are too distant and too complex. Complementary ones can.

In fact it's happening already. All of you are testament to that.

We've got used to being on the cutting edge, but actually the business world is doing it already. Until recently Northwest Airlines used to pay their entire worldwide PR account in frequent flyer points.

International barter exchanges have been successfully using electronic currencies called trade dollars. In fact anything up to a fifth of world trade is now carried out in this way.

And when local barter exchanges can't immediately find what they need, they use an international currency called universal to barter it from elsewhere.

The business world is already using these currencies, and for precisely the same reason I want us to concentrate on them. Because big currencies don't measure their assets very well.

New currencies are in the ether. Like the NU-Spaarpas in Rotterdam where people earn credits on a smartcard for behaving in a sustainable way.

Or the Friendly Favors website, now attracting 5,000 hits a month.

Even the BBC has been broadcasting a series of five short plays every day last week about people using LETS. In fact the only one I listened to included a man who was trading his ability to get almost anybody pregnant.

To sum up: it's all a matter of what counts. We have to escape from the old idea that money is one, indivisible, totemic, semi-divine, golden truth - issued from on high by an infallible Federal Reserve and handed down to a grateful populace.

Though the gold standard disappeared from here in 1971, the attitudes lying behind the Wizard of Oz are with us still - and they blind us to our own wealth.

But complementary currencies can reveal to us that, even in the poorest places, there are vast living assets - ideas, skills, time, love even - that can turn our ideas of scarcity on their heads.

That's why I say that this conference points towards a new future, and it isn't down the Yellow Brick Road to pay homage to the Wizard. It means taking the power to create money back into our own hands.

We can do it ourselves. Not by ourselves, but with each other. We can create the basis for the wealth we need.

The Populists put their faith in silver money that only a government could provide, but I think it's the self-help message that's really at the heart of the Wizard of Oz.

When the people of Emerald City take their golden glasses off, they find the place isn't green at all, but it's still full of riches they just hadn't seen before. And they're actually rather proud to be ruled by the Scarecrow.

As they put it: "There's not another city in the world that's ruled by a stuffed man."

I'm not sure I agree with that one. I live in a country where the foreign minister is called Jack Straw.

But in the end, the Wizard very cleverly makes everyone think he provided them with brains, courage and heart when they actually did it for themselves.

"How can I help being a humbug when all these people make me do things that everybody knows can't be done," says the Wizard. "It was easy to make the Scarecrow and the Lion and the Woodman happy, because they imagined I could do anything"

And there lies the conundrum. When it comes to tackling globalisation or currencies, it's just like the Wizard of Oz.

We can make the world the way we want it, but not if we wait around for some wizard to fool us. Only if we remember it's something we're actually doing ourselves.

Finally, I just wanted to say something about what I think we should do next. Four things in fact.

First. Because there is no one right way, no perfect currency, we need to find a global way that we can hold together what we are doing, without forcing it all to be the same.

Second. We need high level political and economic backing. I know it's difficult, but we need that kind of protection.

And it is possible. I hope this works out, but at the moment Edgar Cahn will be addressing a seminar of Tony Blair's advisors at the end of September.

Third. Tolerance. We simply must be tolerant of the small differences in the ways each other do things.

Radical movements have a strange way of transforming those who are closest to you into your bitterest enemies, raising tiny differences in practice into major ideological divisions.

I speak from the bitter experience of the fall-out of the LETS movement in England.

And finally, we need more experiments. And here we need to keep the following in mind.

We need to be ambitious. The Mayor of Birmingham in the 1870s, Joseph Chamberlain, used to tell people to "be more expensive". We need to do that.

But we need to hold it in balance with the other thing we need, which is to make it simple to use the currencies.

I don't mean the back office functions. They can be as complicated as you like, but actually using the money must be easy.

Ambitious and easy: there's a trade off there, but we need them both.

There's one more trade off too. They need to be fun. Using complementary currencies must not seem like work.

But they also need to target problems. That's where the opportunities lie. They are information systems that allow specific problems to be solved by surpluses elsewhere.

Like the system in Curitiba in Brazil, where they pay credits for people for recycling or bringing in rubbish which they can use on the buses. So they are using surplus capacity on the buses to clean up the city.

We can do that, but it must be fun as well.

My wife Sarah at the New Economics Foundation runs the London Time Bank network of 35 time banks across the city.

She would be here too if it wasn't for the fact that she was about to have a baby. In fact I have my mobile phone here with me in case I need to rush off in the middle of the speech.

But since I'm about to bring a new baby into the world, the state of it has become more important to me.

That great silence that is descending, the money that is driving out life.

It MATTERS to me.

Yesterday, Dworko talked about John Ruskin's Unto This Last, so I thought I would end with a quotation from there.

"There is no wealth but life. Life, including all its powers of love, of joy, and of admiration. That country is the richest which nourishes the greatest number of noble and happy human beings; that man is richest who, having perfected the functions of his own life to the utmost, has also the widest helpful influence, both personal, and by means of his possessions, over the lives of others."

There is no wealth but life. That should be the motto of our movement.


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title: books by David Boyle
Broke Voyages of Discovery Money Matters Blondel's Song Leaves World to Darkness The Little Money Book Funny Money The Tyranny of Numbers