In September 2006, banks in the Berkshires began issuing strange currencies. BerkShares, a new form of money that is exclusive to the region, came as a surprise to many residents, who found it difficult to understand how they could possibly shop with anything less than the mighty dollar. Today, however, this cash of a different color is being increasingly championed as an economic stimulus that could serve as a national model.

Opening his wallet wide, Eric Wilska exposes its contents in a quiet nook of his 33-year-old bookstore, the Book Loft, in Great Barrington.

Inside are a few tens and fives in the greenish hue all Americans recognize. And alongside those are some curious, multi-colored bills that are foreign, but do not hail from any country or republic.

In the Berkshires, though, they’re as good as cold, hard cash, and sometimes a little bit better.

They’re called BerkShares, a local currency developed to stimulate the Berkshire economy by keeping dollars, federal and otherwise, local.

“It’s an attractive concept,” said Wilska, who carries BerkShares on his person, but has also accepted them as payment in his store for more than a year. “This offers an affordable way to keep dollars at home, and I’m convinced it will fly.

“Some people are squeamish about this new cash,” he added, “but I’m going to stick with it.”

Wilska is one of about 300 vendors now accepting BerkShares, a form of limited currency devised by the E.F. Schumacher Society, an educational non-profit organization founded in 1980.

The society is named for the economist and author who wrote Small Is Beautiful: Economics as If People Mattered, and works to develop various initiatives aimed at social, economic, and environmental stability — also known as decentralism.

The society’s executive director, Susan Witt, said the ‘Small Is Beautiful’ model is one that promotes economic and social awareness through the local use of locally produced goods.

“Goods produced in a region and consumed in a region are the best model,” said Witt. “They require a low level of fossil fuels, provide jobs, and allow people to know the story of a product — everything from where it comes from to how the workers who produce it are treated.”

BerkShares is just such a ‘Small’ program. Witt said it provides a new way to facilitate the purchase of those goods, relegating funds to solely local purchases while at the same time raising the region’s economic profile through a rarely seen concept.

Achieving Balance

More specifically, BerkShares are a local, paper currency used in largely the same way as conventional cash. Currently, the bills are circulating only in South County; are accepted in dozens of stores, restaurants, hotels, and other businesses; and are disseminated by five banks with a total of 11 branches: Berkshire Bank, Salisbury Bank, Lee Bank, Pittsfield Co-op, and Lenox National Bank.

These banks have been designated ‘BerkShare Exchange Banks,’ where customers can exchange federal dollars for BerkShares at rate of 90 cents per one BerkShare dollar — creating, essentially, a 10% discount wherever a consumer uses them.

Anyone can exchange dollars for BerkShares, and vice versa, at any time during normal banking hours.

“All of these banks are local banks we approached to be involved in the program,” said Witt. “Their branch managers have a lot of autonomy, and their workforce is generally steady. At first, there was a concern of creating more work, but the branch managers wanted this, particularly for their customers.”

Witt said BerkShares is another service to differentiate small, locally owned banks from large institutions, and in turn to increase foot traffic.

Thus far, that aspect of the project seems to be proving out. Georgann Farnum, branch manager for the South Egremont location of Salisbury Bank, said BerkShares is in keeping with the bank’s community-focused model, and therefore fits well into its day-to-day operations.

“Right from the start, we agreed with what the program was trying to achieve,” she said. “It allows us to stay community-minded and increase foot traffic, which has happened.”

Farnum said she’s seen some creative uses of BerkShares through her work with customers as well, among them Christmas bonuses and tips paid in BerkShares.

“I think that’s the way the program should work,” she said. “Not just as payment for purchases, but part of everyday life. We should be living and breathing it.”

Merchants accept BerkShares for either all or a portion of their merchandise or services, and redeem them at exchange banks for the federal dollar equivalent. That means business owners are absorbing the 10% discount that is effectively created for spenders by the 90-cent exchange rate, but the driving idea of BerkShares, said Witt, is that they will keep local spending dollars close to home, thus gradually increasing traffic within the marketplace and benefiting both business owners and consumers.

“This is a region that used to have much more production,” said Witt of the Berkshires. “We are trying to come up with citizen-based solutions to shape local, sustainable economies, and local currencies are a way to do that.”

The Moneymakers

It’s a unique program, and one that has garnered some national attention already — Mayor Cory Booker of Newark, N.J. recently sent a team to the Berkshires to assess how his city could incorporate local currency, and representatives from major cities including Los Angeles and New Orleans have also inquired.

Further, news bodies including the BBC, the Christian Science Monitor, Entrepreneur magazine, ABC World News, and the New York Times have followed the story, often positioning the program as one with the potential for nationwide replication.

On a local level, merchants who’ve joined the BerkShares initiative say this national buzz is also affecting their bottom lines.

Pat Larkin, owner of Lock, Stock, and Barrel, a gourmet foods and wine seller in Great Barrington, said the recent holiday season in particular brought more inquiries about BerkShares and more transactions with the new bills.

“When people are about to pay is when they tend to ask about BerkShares,” she said, “and a couple of customers have come in to shop because they’ve read or seen something about the project. The press the Berkshires is getting is definitely working — it’s helping to raise our visibility, and people are paying attention.”

However, Witt said using local currency is not so new an initiative as many might think. She explained that in the formative years of the country, local currencies issued by various banks and even some businesses to their customers were commonplace.

“In the old days, all banks had their own currency,” she said. “It led to great economic diversity, but that was lost.”

Still, issuing currency remains a citizens’ right, though perhaps a little-known one.

“States and towns can’t issue currency, but as long as it’s not coin or lookalike federal money, any citizen can. It has to have an exchange rate with the U.S. dollar, so it can have a value and be taxed. So, instead of complaining about the state of the global economy, we can use local currency as a tool.”

To facilitate the process of essentially minting a new form of currency, the Schumacher society created a freestanding non-profit organization, BerkShares Inc., in collaboration with the Southern Berkshire Chamber of Commerce. It’s governed by a board of directors and a membership base that includes bank representatives, business owners, and individuals, who join for $25 in BerkShares.

“The Schumacher society is the think tank, but not the issuer of the currency,” said Witt. “BerkShares is a very visible, transparent group made up of a board of directors and members, and Schumacher serves as the program’s administrator.”

The society developed the initial framework and how BerkShares would be introduced to the community in 2006, launching the program in September of that year.

Fine Art Funding

The actual BerkShare bills are a story in and of themselves. They were printed by Excelsior printing in North Adams, an affiliate of Crane paper, which prints federal paper monies. Excelsior specializes in security papers, and each BerkShare is treated with similar care, carrying individual serial numbers and delivered under lock and key to their destination after each printing.

The bills come in $1, $5, $10, $20, and $50 denominations, and each are full-color, miniature works of art designed to reflect the tenets of community, sustainability, economy, and ecology that the E.F. Schumacher Society and BerkShares Inc. aim to strengthen.

On one side of the bills, one of five ‘Berkshire Heroes’ are featured: the $1 bill carries a portrait of one of the Berkshire’s first settlers, the Mohicans, who sold portions of their land to the English in 1724. The $5 note depicts W.E.B Du Bois, a sociologist and scholar who was born in Great Barrington in 1868 and went on to found the civil rights movement.

Robyn Van En, founder of the country’s first community-supported agriculture project (CSA) in South Egremont, graces the $10, and two very recognizable icons of American history have been placed on the $20 and $50 bills: Moby Dick author Herman Melville, who resided in Pittsfield, and Norman Rockwell, who lived and worked in Stockbridge for the last 25 years of his life.

On the flip side of the bills, reproductions of original work from living Berkshire-based artists has been placed, including a scratchboard drawing by Michael McCurdy, an acrylic painting by Warner Friedman, and oil paintings by Burt Elsbach, Morgan Bulkeley Jr., Janet Rickus, and Joan Griswold.

Since the program’s inception, Berkshire-area banks have issued $1.3 million in BerkShares to about 15,000 residents in South County. Witt said BerkShares Inc. hopes to extend the program indefinitely, and is currently working toward a number of enhancements to increase circulation, including raising new funding to extend the program across the county, in part through a $5,000 planning grant from Berkshire Bank.

“We’ve seen support for extending this into Central and North counties, but we’re not ready yet,” she said. “We’re at stage 20 of 50, as we say. We need additional staff to sign up businesses and publicize the program, and we don’t want to thwart our efforts to date.”

Market Response

Wilska said as a member of BerkShare Inc., he’s identified a few areas where he thinks the project could grow or change.

“We’ve definitely had people come in to buy books with their BerkShares, but beyond that it’s so immeasurable,” he said. “One thing we’ve brought to the board is the suggestion to do some polling.”

He said tracking where BerkShares are being spent and by whom more closely would not only help in quantifying the project’s effect on local business, but also help recruit a greater number of participants. Much of the trepidation regarding accepting BerkShares hinges, he said, on that 10% discount they create for shoppers, and the fear many merchants have that they won’t be able to make up for the loss.

“I personally think that’s short-sighted,” said Wilska. “Some say they can’t afford the 10%, but the new customers the BerkShares attract take care of that. Still, the way America shops is changing, and the pie is being cut into many more pieces.”

He returned to the visual of his wallet, containing some U.S. dollars and some BerkShares. He said it’s unlikely that he’ll ever carry only BerkShares — “I love my local hardware store, but I also shop at Home Depot,” he said — but to keep them a vital part of the region’s economic picture, more people need to be convinced that they can circulate alongside federal money.

“I think marketing needs to be increased,” said Wilska. “We need more places to turn this money around, and more large vendors. The question we need to keep asking is, ‘how much is a lifelong customer worth?’ In my opinion, it’s worth much more than 10%.”

Wilska said he and other BerkShare merchants will also approach the board of directors soon with suggestions to streamline the exchange of BerkShares, such as the creation of a BerkShare debit card in the future.

“The bills are very sophisticated,” he said, “but people have a hard time with cash in general today. They’ve been conditioned to choose debit cards over paper money — it’s the new ‘cash is bad’ mentality.”

Witt also recognizes the changing face of commerce around the globe, and as such, BerkShares Inc. has been identifying its own challenges, which include the need to recruit a greater mix of businesses.

“We need more diversity,” she said. “We have Stockbridge Gas, but that’s only one utility. We have two hardware stores, but that’s only two. In general, our retail and restaurant presence is very healthy, but we’d like to see more in business-to-business exchange.”

She noted that efforts will also continue to hone in on the initiative’s effect on the local economy. Some trends are already being identified through the use of this small-scale, targeted currency, including dark spots in the economic landscape and opportunities for new business.

“We’re finding quickly where the holes are in the economy,” said Witt. “For instance, we are located in a hardwood forest, but have no furniture manufacturer.”

It’s All About the Melvilles

In addition, a BerkShares checking system is now being devised to make the currency more accessible, said Witt. As the program matures, though, she added, the BerkShare dollars have advantages of their own.

“Part of the initiative was to encourage people to make payments in person, and engage in face-to-face relationships with businesses,” she explained. “We call this slow money, like slow food. It’s good for us.”

Witt said work will continue at a careful pace that allows for organic growth. To contribute to that advancement, she gathered a few dollars — forget about the Benjamins, these were Hermans and Robyns — for her daily dose of community outreach.

“Off to do some shopping,” she announced.

Jaclyn Stevenson can be reached at stevenson@businesswest.com