David Boyle

Goodbye Yellow Brick Road

The Alternative Mansion House Speech 2002 - London, 25 June 2002

I want to talk this morning about the euro, about complementary currencies, but most of all about the Yellow Brick Road.

I don't mean the song by Elton John. I mean the one that Dorothy walked along with the Tin Man, the Cowardly Lion and the Scarecrow. I mean the wish-fulfilling golden road. And I mean also the symbolic road that centuries of brave marches by ordinary people have taken to change the minds of our rulers - from the Pilgrimage of Grace to the Yarrow March.

But first let me quote you what one prominent march leader said when he arrived at the steps of the White House. "Up these steps the lobbyists of trusts and corporations have passed unchallenged on their way to committee rooms, access to which we, the representatives of the toiling wealth-producers, have been denied. For a quarter of a century, the rich have been growing richer, the poor poorer."

It sounds like the 1990s, doesn't it? But actually this was an Ohio businessman called Jacob Coxey more than a century ago, back in May 1894. It was Coxey who led a march of unemployed people along the Yellow Brick Road from the cities of the Mid West. A few seconds after he spoke these words, he was arrested for trespass.

Coxey's so-called Army was important because it marked a high point in campaigning for the now almost forgotten Populist Party in the USA.

The Populists took over the mantle of the campaign for more money in circulation from the failed Greenback Party - so you can begin to see what these have to do with an Alternative Mansion House Speech.

Or to be more precise, they were campaigning for money based on plentiful silver rather than just on the scarce commodity of gold. It was a concept known in economics as bi-metallism.

The Populist Party managed to link Southern farmers with the big cities of the Mid West, all campaigning for Free Silver. It's tenets were put together in Omaha in 1892 by Ignatius Donnelly, a man who had previously devoted his life to the discovery of Atlantis and proving that Bacon wrote Shakespeare.

The Populists came very close to breaking the mould. To coin a phrase.

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… and they are rapidly disintegrating to European conditions."

A horrible thought that - not European conditions.

I give you this Populist flavour here partly because we've had nothing like them in the UK, campaigning primarily about the amount of currency in circulation - of which more in a minute. And partly 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, a coded diatribe against the gold standard. 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 the shoes, until she's told at the end: "All you have to do is knock the heels together three times and command the shoes to carry you wherever you wish to go." The poor residents of Oz have to wear green-tinted glasses fastened by golden buckles.

The Yellow Brick Road journey is intended as a memory of Coxey's Army, and we all know that - in the end - the Wonderful Wizard, the personification of the gold standard, is finally revealed as a fraud. Hiding behind a curtain, desperately twiddling the 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.

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 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.

These great clashes between rival philosophies of money creation are all but forgotten now.

Some of the rhetoric survived with Keynes, who described the Depression as a bit like death - "a peregrination of the catacombs - with a guttering candle". We are healthy children, he said, we need money to live.

But if the Populist tradition is alive anywhere today it's in anti-globalisation - the worldwide movement created out of this very American sentiment. But even the anti-globalisers have failed so far in the UK to take on the central Populist issue - why isn't there enough money?

It's a pretty damn key question.

My parents live in a little village called Nether Wallop. 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 nearby railway station - connected to a massive local rail network.

And that was in the Austerity 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 to me why it's so hard to afford the simplest public services, health, post and education. And when we're so wealthy.

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

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

In the UK, the social credit movement saw themselves alongside reformers who wanted a strong central state. So much so that they marched in the 1930s, a bit like Mosley, but as the Greenshirts.

The Greenshirts, incidentally, emerged as a breakaway movement from the Scouts and in turn gave birth to the Woodcraft Folk. How they could transmute into a militaristic organisation dedicated to currency reform is anyone's guess - but that's another story.

That's the first reason. Money reform seemed tinged with fascism - especially as social credit unravelled into an unpleasant mix of paranoia and anti-semitism - nothing like its followers today.

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

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.

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

Keynes called gold a 'barbarous relic', and - especially if you look at the price of it recently - 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 value, and that somehow this value can be reflected everywhere the currency circulates.

In the year of the Monkey Trial, the year that Bryan died - the 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".

He wasn't an early conversion to EMU. This was a description of gold standard money on the eve of our return to it. It was a famously disastrous decision, instrumental in the Great Depression and therefore in the Second World War too.

Let me say quickly that I'm a convinced European. I am not a Europhobe, still less a xenophobe. But there is still a fundamental problem at the heart of the euro, and any currency based on the idea that money's the same everywhere, like gold.

And it's 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, is the way that disadvantaged places can make their goods more affordable. When you prevent 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. 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 capital cities. Eddie George admitted as much on the Today programme just before Christmas.

Look at the great gulfs between rich and poor in the USA. Look at the plight of cities like Detroit or states like West Virginia. And over here, look at the way interest rates are set to suit the City of London, while the manufacturing regions of the north struggle as best they can.

Across a continent, the effects are so much worse. That's why Ireland's economy has been overheating, while east Germany's is languishing in poverty.

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 Newcastle and Sheffield. It means a potent recruiting ground for Jean-Marie Le Pen.

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, Lordship Lane in 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 East Dulwich has an absolute plethora of small DIY shops.

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 Homebase superstore on one of the last remaining bits of green nearby will probably strip Lordship Lane of this speciality. And although the balance sheets of Homebase will 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 - doesn't measure fine mesh local wealth like that. And there's the problem: because the pound is all we've got.

Whatever your attitude to the euro, we need to think about this. Take for example, the issue of feedback. The information that relative values of currencies gives us all as they change.

Of course, if there's no role for fluctuating currency values, we needn't worry. We can relax and let the currency traders do what they dare. But what if there is?

This is how the economic pioneer Jane Jacobs put it: "Imagine," she asks, "a group of people who are all properly equipped with diaphragms and lungs, but share only one single brainstem breathing centre.

"In this goofy arrangement, through breathing they would receive consolidated feedback on the carbon dioxide level of the whole group, without discriminating among the individuals producing it... But suppose some of these people were sleeping, while others were playing tennis... Worse yet, suppose some were swimming and diving, and for some reason, such as the breaking of the surf, had no control over the timing of these submersions... In such an arrangement, feedback control would be working perfectly on its own terms, but the results would be devastating."

In other words, currencies rising and falling in value provide us with a self-regulating feedback that lets disadvantaged areas lower their relative value. Different currencies, different interest rates, suit different cities and communities - just as they suit different sectors.

And this is also true of national currencies, but the distortion is bound to be bigger for multinational currencies like the euro. Hong Kong and Singapore had their own money, says Jane Jacobs. Detroit didn't.

Then there's the problem of complexity. There's really more than one economy at work in a modern city. And big currencies don't suit them all very accurately.

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

And that's fine for the international economy, the financial services sector. But there's another economy in London - or Paris or Berlin - which feeds off the pickings from the rich table above it, but isn't 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 housing 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.

That's why London struggles to employ nurses or teachers or bus drivers because they can't afford to live here, so the basic services suffer. We can all see the symptoms - expensive theme bars, estate agents, but no local shops.

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, it's the cuckoo in the nest.

Jersey's offshore status has made it rich, 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' and market forces don't apply here - people don't after all bid for food at the dinner table. Yet without it, the police can't catch criminals, doctors can't heal and the other economies can't work.

The futurist Alvin Toffler asks executives what it would cost their business in hard cash if their new recruits had never been toilet-trained. That's business without social capital.

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 other economies very accurately.

That's the third issue we have to tackle. First feedback, then complexity and now the problem of measurement.

But then all of these are related to measurement. Big currencies don't measure very well. 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 the City of London and Wall Street says is important.

Currencies are not just measuring systems, they're eyeglasses. They're 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.

This is the central issue of new economics - the way that global money systems drive out other cultures, other species, other opinions, other forms of wealth. That's why the New Economics Foundation exists.

And that's why I say this failure of measurement, this blindness, is the real problem of money. No amount of new ways of creating it by central banks is going to solve this.

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.

The solution isn't the euro, it's currency choice. But the paradox is that, even before we vote on the issue, currency choice is what we're going to get. Because most big retailers say they are going to accept the euro anyway.

So we should welcome the euro to Britain alongside the pound. We should encourage shops to accept it - and they will. We should encourage exporters to accept it, and maybe pay their staff partly in it.

We should use it as a second currency for Britain to guard us against the next generation of currency crises.

Then the euro-enthusiasts can campaign for an incremental euro, taking its place alongside the pound because people use it - and not because it's foisted on them. We can campaign step by step for local authorities to accept payment in euros. For government to accept tax in euros. For parking meters to accept euros.

That's a euro policy that suits a nation committed to internationalism, decentralisation and local control. Instead of an all-or-nothing referendum campaign, flying in the face of public opinion - with the prospect of a society even more economically divided if the government wins - we empower people to use the currency that suits them best.

Of course most people will carry on using pounds. But there'll be a radical chic about using euros, strong enough for people to carry on doing so once the novelty has worn off - especially if they do business on the continent.

We may even get dual pricing. We're a sophisticated IT society now. Tills will be able to deal with this without any trouble.

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

Business barter currencies 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.

Each money system values resources that the big currencies can't see.

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

Michael Linton, the inventor of LETS, who I'm glad to say is moving from British Columbia to Oxford, has developed a revolutionary new software that allows people - even pairs of people - to trade in an infinite number of currencies over the internet.

I recommend you look at this at openmoney.org, because I think it's a real breakthrough in mutual credit.

I can imagine open money forming the basis of the London currency we need here, providing very low-cost loans to small businesse keeping the wealth circulating here instead of dashing off around the globe to hedge funds and tax havens.

Electronic currencies like that are designed to be put on smartcards, and I suggest we use the new smartcard that's about to be distributed to five million Londoners for underground journeys.

In fact we could use the electronic money on the cards as a currency too - let's call it tubes.

If a range of small businesses shared the ability to use these tube cards, then the underground could become a lender in itself - backed by the value their currency has in transport journeys. This is not money that's likely to seep out across the globe.

As for the time currency to underpin London's voluntary sector, that's up and running already in the shape of the London Time Bank.

There are now nine time banks in London, in health centres, schools and housing estates, measuring and rewarding the effort people put in locally in a currency called time credits.

In fact, you can go to the Rushey Green health centre in Catford and find yourself confronted, not by a doctor, but by a builder with a cupboard full of hacksaws and screwdrivers. All part of the small repair service, run by patients and paid for in time credits.

Time banks in London are already beginning to give value to other assets that pounds and euros 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 in our cities: loneliness, isolation - maybe just the need to collect medicines for someone.

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

Because just as the big currencies can't recognise assets, they also have difficulty recognising needs.

I believe, within a generation or so, we'll have regional currencies in most UK regions - based on the value of bonds and fluctuating against each other in value.

We'll have 500 mutual credit currencies underpinning small business and based on open source software.

We'll have at least 1,500 time currencies in every city, in regional networks - exchangeable around the country.

And we'll have a range of experimental currencies based on anything from renewable energy to the value of local vegetables.

Now people say this whole business of multiple currencies is never going to happen. It's pie in the sky.

But the truth is it's happening already. I don't just mean the 7,000 or so local currencies and time banks around the world - or the highly successful printed currency that grew out of the Ithaca farmers market in upstate New York.

Nor do I mean the growth of electronic currencies in the shape of loyalty points. And until recently Northwest Airlines used to pay their entire worldwide PR account in frequent flyer points.

No, I mean the way international barter has 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 Wir system in Switzerland - the only survival of the local money revival in the 1930s - is now underpinning the Swiss building and restaurant industries by providing low-cost loans in a parallel currency. And they have an annual turnover equivalent to 12 billion dollars.

That's the point. 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.

And if business can do it, I don't see why the benefits shouldn't also be made available to cities and communities - and I don't see how central banks can clamp down on it.

Multiple currencies are here already. We can't uninvent them.

But, ah you say, what about Argentina?

Well Argentina is an excellent example. First of why big currencies - in this case, the peso linked to the US dollar - can be disastrous. And second, why a diversity of currencies is important.

Yes, there's the problem with the regional notes being issued in a flurry by local government out there. The patacon, the lecop, the quebracho, federales, petrom. Even the huarpes, which sounds more like venereal disease.

Yes, they could cause the local currency baby to be thrown out with the bathwater. That's certainly what the IMF wants.

But let's face it - people who've lost faith in the national paper currency backed by debt are not going to be reassured by exactly the same thing issued at local level.

What Argentina needs is money that's based on something secure. On local produce. On the value of beef. On the value of local renewable energy. On something you can put your faith in.

You can do that if you can break away from the old idea that money is one, indivisible, totemic, semi-divine, golden truth - issued from on high by an infallible Treasury and handed down to a grateful populace.

And all the solutions an increasingly frantic Washington Consensus are trying to foist on Argentina betray the same mistake.

Though the gold standard disappeared in 1931, the attitudes lying behind the Wizard of Oz are with us still - and they blind us to our own wealth.

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 a parallel pound and euro can show us a new way forward, 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 problem is that we have little political tradition to draw on over here to help us. We never had a Dorothy whisked away by a whirlwind from Leicestershire. We never had a British Populist Party.

And maybe that's why we're not asking the key question about money. Why does there seem to be so little of it in Nether Wallop?

Once again, it isn't really about too little money. In parts of the economy it's absolutely sloshing around, but we have no tools to target our increases in money supply to one place rather than another.

Complementary currencies can do exactly that - but they're a tool we have to use ourselves. And here you can see Populist roots in the UK: in the Rochdale pioneers and the libraries, in the Liberal tradition of self-help and the socialist tradition of co-operation, in housing co-ops and mutuals and time banks and the whole gamut of new economics.

And although the American populists put their faith in silver money that only a government could provide, it's the self-help message that's 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."

That's as maybe: we are after all living in a country ruled by Jack Straw and his friends.

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.

To do that, we need the tools. So whether we keep the pound - but even more if we abolish it - we need the balancing mechanisms to help us see the world clearly, and that means a range of new kinds of money.

That's the future, and remember - as they used to say on television - you heard it here first.


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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