A small town is Washington that printed paper dollars during the Great Depression is doing it again to help restart the local economy as households and businesses across the U.S. struggle with coronavirus-induced financial hardships.
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Mayor Wayne Fournier, of Tenino, Washington, confirmed in an interview with FOX Business on that the small town had resumed printing wooden dollars during the pandemic, which residents can use at local businesses to purchase most items, excluding alcohol and lottery tickets.
Tenino began printing its own dollars during the Great Depression, when there was a run on banks that didn’t have enough capital to service the massive number of withdrawal requests. At the time, the wooden bills were backed by bank deposits.
Tenino was the first city in the nation to create its own dollar, Fournier said.
The purpose of recirculating the Tenino Wooden Dollar is two-fold: First, it aims to help stimulate spending in the local economy, and second, it may lift morale and build pride within the community.
“We appreciate and celebrate our history,” Fournier said. “We recognize that we were in pretty unique times with this pandemic coming and all the other crazy stuff going on in 2020, [so] we felt it was appropriate to dust off the old idea.”
As lockdown restrictions in the small town of 2,000 residents ease, Fournier hopes people will not only be encouraged to go out and resume spending money – but do so within the local community. While the town has everything it needs, Fournier said, sometimes people travel to nearby areas to grocery shop at chain stores. The novelty of Tenino Wooden Dollars may inspire more people to visit local shops.
Oftentimes, particularly in rural areas, dollars earned in local communities leave local communities, which does little to benefit the rural towns, according to the Center for New Economics. Local currencies, on the other hand, can only be spent at local businesses – and therefore continue to circulate within a specified region, encouraging focused economic activity at places like small mom-and-pop shops, potentially creating new jobs.
Local currencies also allow a region to issue credit to their own community members, as was the case in Tenino during the Depression.
People who were financially harmed by the pandemic must submit an application, whereby individuals can qualify for a grant of up to 300 wooden dollars per month based on income level.
This time, however, the dollars are backed by the city. That means participating businesses can bring their Tenino Wooden Dollars to the Town Hall, where they can be exchanged at a 1:1 ratio for U.S. dollars.
However, no business has exchanged a Tenino dollar so far. That’s because the local currency is actually now worth more than a U.S. dollar.
“The Tenino dollar is now worth 7 to 8 times the U.S. dollar,” Fournier said, adding that some businesses are even allowing residents to exchange $50 worth of goods for 25 Tenino Wooden Dollars.
Tenino is not the only town with its own currency, which some experts say can help kick start local economies faster than other types of stimulus.
In Ithaca, New York, there is a local paper currency system known as Ithaca HOURS that was developed in 1991. The Ithaca HOUR is a local $10 bill, which was based on the average local earnings per hour. The bills can be used to buy local goods and services at hundreds of businesses.
Great Barrington, Massachusetts, developed a system called “deli dollars,” which were originally created to help a deli owner finance a move when he could not afford his rent and was unable to find a bank to lend to him. The system allowed “investors” to exchange $8 U.S. dollars for 10 Deli Dollars, which people were able to use on merchandise six months later, after the shop was moved.
Fournier said he has already been contacted by leaders from a number of other cities who are interested in starting their own local currencies.