The Bernal Buck starts here

Bernal Heights is a San Francisco neighborhood of about 25,000 located in the southern part of the city. The main commercial street in Bernal Heights is Cortland Avenue, a ribbon of small, community-owned businesses: the Good Life grocery store, Liberty Cafe and Bakery, Bernal Family Chiropractic, Bernal Cutlery, AnDa Piroshki...These stores, and many more, are participants in an experiment to get Bernal Heights residents to spend more of their dollars locally. It's an alternative form of currency called the Bernal Buck. What is a Bernal Buck? Charlie Mintz from the Stanford Storytelling Project lets us know.

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ARNO HESSE: Just swipe my Bernal Bucks card…

CHARLIE MINTZ: That’s Arno Hesse…

HESSE: Arno Hesse, with the Bernal Bucks group.

And he’s buying a wedding card for a friend at Heartfelt, a locally-owned gift store on Cortland Street that trades in scarves, sassy gum, and about a hundred other knick-knacks. Hesse is making his purchase with a special kind of debit card. On the top right is a Visa logo, and beside it the logo for his bank, Mission Federal Credit. But the design on its face, an illustration of Bernal Hill done by a local children's book author, shows it’s more than just a debit card. It's a tool designed to make Bernal Heights a more interconnected, resilient, and prosperous community.

HESSE: We conceived Bernal Bucks as kind of our own neighborhood stimulus program. We said, “Hey, let's take control of our own economic fate. Let's play our economic muscle that we have. And that's the muscle that we have in our wallet.”

Here's how it works: First, you go to BernalBucks.org and fill out an application. Then, you've got to sign up for a checking account with Mission Federal Credit to put money on it.

HESSE: We're using a Visa debit card, just for our neighborhood.

Ten business days later, you've got your card, and you can use it anywhere – anywhere at all. But when you use it at any participating Bernal Heights business – and there are about 20 right now – you get a reward.

HESSE: You earn 5% toward future spending at those businesses.

Five percent of what you spend, not including tax, is given back to you as Bernal Bucks. They’re worth the same as regular dollars, but they can only be spent at participating stores. They come in the form of $10 vouchers you print out from home using the Bernal Bucks website.

HESSE: Bernal Bucks is a little bit like a frequent flyer program – just on the ground and just in a neighborhood.

And it’s legal: any town can make its own currency, just as long as that currency doesn’t try to replace or imitate the dollar, which can get you in pretty big trouble.            

So let's make this concrete: Let’s say you've got a whopper of a party planned. You go to the Good Life grocery store – locally-owned and a Bernal Bucks participant – and spend $200. Chips and guac, wine and cake, everything. Five percent of that – $10 – comes back to you as Bernal Bucks. So you go to the Bernal Bucks site, and decide you want to spend those 10 bucks at the Liberty Cafe, on a few fresh whole-wheat loaves, $20 worth. You pay with 10 U.S. dollars and 10 Bernal Bucks. And voila: free bread!

And here's another cool thing: Bernal Bucks stay in circulation. Liberty Cafe can re-use them for future purchases. When you use Bernal Bucks you're not just spending money. You are, in the most literal way, making it too.

SUSAN WITT: Local currencies are a tool for keeping wealth circulating in a region.

Susan Witt founded the Berkshares local currency program in Great Barrington, Massachusetts.

Berkshares got started in 2006, and it's become one of the two or three most well-known local currencies in the United States. They work a little differently: people can buy Berkshares from their bank for 95 cents, and spend them to buy a dollar's worth of goods at local businesses – essentially a 5% discount for shopping locally. Witt says that more than three million Berkshares are in circulation. That’s only about 1% of all the money that gets spent in the region, but she thinks it’s a significant one percent.

WITT: Berkshares are a daily reminder to bring that spending power back to main street. Staying off the internet, out of the chain stores, and back in our small, local businesses.  

The case for local currencies is pretty strong. You can think of them as shock absorbers for the economy.

Picture this: The United States economy is a car. With only a single currency, that car is like an old Model-T Ford bumping down the road. Little potholes are much more jarring than they need to be. And big bumps – say a global financial crisis – can totally wreck the vehicle. Advocates say local currencies allow the economy to be more flexible, to ease through rough financial roads.

Yanay Farja is an economics professor at the University of San Francisco.

YANAY FARJA: The economy is not doing so well, right? And that's true on a national scale, but also on a more local scale. I think this will help all neighborhoods. This is a model that other neighborhoods should look at.

There’s no way to know if a local currency would work for every community, but local currencies have achieved some impressive successes. One of the most remarkable stories comes from the Great Depression. The small Austrian town of Wörgl had 30% unemployment, huge debt – basically it was a mess. Then it tried something new.

In 1932, the town began issuing its own regional currency with a built-in device to make people spend it: every month, it went down in value by 2%. The effects were immediate: revenues went up, bridges got built, and unemployment was basically eliminated. The sad coda to this story is that by 1933 the Austrian government made Wörgl stop using the currency, and things went right back to how they were: bad. Kind of the way things are now.

MICHAEL SHUMAN: The big elephant that is stomping around the United States right now is unemployment and all of the horrible consequences that come from that.

Michael Shuman is an economist and a nationally-known advocate of economic localism.

SHUMAN: And we know, from a lot of evidence, that the best way of resolving unemployment is to support, nurture and spread locally-owned businesses.

Shuman likes the touchy-feely benefits of interacting with your neighbors just fine. But he likes the trickle-down transactions that follow even more.

SHUMAN: There's been more than a dozen studies that have shown that locally-owned businesses spend more of their money locally. That means that for every dollar you spend at a locally-owned business, it generates two to four times the jobs, two to four times the income and the wealth and the tax benefits and the charitable contributions, than you get from a non-local business. And there is not a single study that shows otherwise.

There are hundreds of local currencies in effect around the country, including many in California. Sonoma County has GoLocal Bucks; a Santa Cruz foundation is working on the Sand Dollar; and here in San Francisco there are plans for Wiggle Bucks, as well as a city-wide currency to be called Emperor Norton Dollars, named after a 19th century folk hero, who was said to issue his own currency which businesses honored.

Again, Bernal Bucks advocate Arno Hesse.

HESSE: I think Bernal Heights is probably one of the smaller sizes of which you can run such a program in.  And it has a strong sense of community and identity with its neighborhood. I always say to run such a program successfully you need to have three "comms": community, commerce, and commitment.

Bernal Bucks is still a young program. Though it’s existed in a few different forms sine 2009, the debit card only launched on June 21st of this year. It's still too early to tell whether the currency will have much of an impact. Hesse says a few new people sign up every day, and businesses are seeing more and more purchases made with the debit card. No one can say what the ultimate result will be. But at a time when so much of the economy feels out of control, local currencies are evidence that some power can belong to the people.

Would you use local currencies? Do you already? And have you got any radical ideas of your own to kickstart the economy? Call our tipline at 415-264-7106 to let us know – we’d like to get your thoughts on the air.