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1 11 Commercial Trade Barter A trade exchange is a business to business (b2b) marketplace to assist members in gaining new customers where transactions are facilitated electronically via the internet, selected swipe card facilities and telephone ecommerce, or by transaction vouchers similar to those used with a credit card. – Denis Orme, CEO of Bartercard New Zealand 1 Barter is often regarded as crude or oldfashioned, because the use of money superseded it. But the advent of computers changed all that. Commercial trade barter companies first started up in the US during the 1970s and spread to Australia in the early 1980s. In addition, a lot of twoway bartering is carried out between the divisions of corporates. According to the International Reciprocal Trade Association, 40 per cent of the world’s economy consists of barter, and the commercial barter industry helps businesses turn over US$7.5 billion annually, a figure that is growing at 8 per cent per year. 2 New Zealand’s annual barter exchange is worth NZ$600 million. 3 Reputable commercial trade companies are usually members of the International Reciprocal Trade Association (IRTA), which fosters the interests of this growing industry and puts out the monthly magazine Barter News. Members can effectively get interest free credit from the membership circle. Account Managers act as brokers, ensuring that money circulates, and that members are educated to use the scheme fully. Many complementary currency enthusiasts view commercial barter as an alien species because it charges commission for transactions. When I mentioned Bartercard to one green dollar activist, for example, she said disapprovingly, ‘You are talking about a business venture and a communitybased scheme’. However, I believe that the business acumen brought to commercial barter has many lessons for those administering or setting up complementary currencies. This chapter takes a look at some of the trade barter systems that currently operate and have been tried out in the past, focusing on how they work and the reasons for their success. Wirtschaftsring (WIR.) The longestrunning trade barter scheme, WIR ( short for Wirtschaftsring, which means ‘business circle’), was introduced in Switzerland during the Depression of the 1930s. It was set up by the farsighted reformers Werner Zimmermann and Paul
2 Enz, who were supporters of the freemoney theory of Silvio Gesell (see Chapter 12). The two made a trip to study barter exchanges in Norway and Denmark, and then adapted the schemes they saw there to suit the conditions of Zurich. Green economist Richard Douthwaite has described the system in many his writings. 4 Following its launch in October 1934, the scheme grew to the point where, in early 1935, some 1000 members were actively exchanging goods and services and running trade shows. 5 Very soon after, however, they faced their first challenge – massive hostility from the press. Despite this, members stood by the group and its ideology, and continued to do so through 1939 and 1940, which also proved very difficult as the standards for allowing credit were often far too lenient. The audit office investigated the situation, which resulted in WIR being brought under Swiss banking law and the introduction of new expertise. In spite of these hard times, WIR managed to cut costs and raise more capital through subscriptions. Following a decline in membership during World War II, WIR revived again through the 1950s and 1960s, only to experience another challenge. In 1973 there was an economic downturn and the WIR system suffered a drop in the volume of exchanges. WIR operators attempted to boost the volume by lowering the standards for credit, so that too many interestfree loans were consequently made to its members. This resulted in too much WIR currency in circulation, and so its value decreased and members couldn’t spend it. This, in turn, resulted in a second problem: the discount trade. Owners of large amounts of currency, unable to spend it in the system, began offering it for sale for cash, and so a black market on WIR currency developed. Discount trading occurred using WIR as credits. This almost destroyed the system. However, WIR survived because of the foresight, integrity and determination of a small group of people. They made it against the rules to buy or sell WIR for cash, they devalued the WIR by 95 per cent, and they brought about a change of management. 6 Today, the farmers, civil servants, lawyers, chimney sweeps, architects and whitecollar workers who become members of WIR have to follow a strict entry procedure. First, potential members must offer some collateral – usually in the form of a second mortgage on their house or business premises – to back an interestfree loan they may get from the system. Second, they apply for a loan to the WIR Credit Approval Committee, which often asks for a credit check from an agency, just as if the member wanted a loan from a bank. Once the potential members have passed these tests, they can start trading with other members using WIR money. New participants get a cheque book, a charge card and a large catalogue listing the other participants. The interestfree working capital used enables members to bypass the banks. According to Richard Douthwaite, in 1993 there were 60,000 account holders, turning over 2,521
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Healthy Money Healthy Planet by Dei
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2 During the 1960s I listened on th
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4 money. Richard’s enthusiasm for
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6 must first be complemented by mon
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6 For over a decade, Japan struggle
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8 interestbearing money creation.
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10 provides a benefit for seller an
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2 After that, it didn’t take long
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4 Bank B. This is called a ‘depos
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6 Second comes the bit where banker
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8 debt, hence the collective debt c
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10 simply unsustainable in a finite
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12 pieces of paper grant the bearer
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14 master of all industry and comme
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16 Money Supply 1935 - 2000 120000
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18 commercial banks and is lent int
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2 And nor are things getting any be
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4 international trade in currencies
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6 The data on New Zealand mortgage
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8 The scheme has had unintended soc
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10 Household loans (1978-2000) 90 8
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12 City Council in mid2000 review
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14 Similarly, mortgages are classif
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16 And it is not just bank assets t
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18 Keeping the Secret But surely if
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20 Deputy Prime Minister. I asked h
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22 Individuals have to compete with
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24 instability. This speculation is
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51 cared for. The cancerous parts o
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53 constraints. What we need are so
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55 accelerating. Eighty per cent of
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57 waters to draw down. They also s
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59 As far back as 1987, a UN World
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61 The State of New Zealand Since 1
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63 Health and Disability Like other
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65 Low skilled jobs have largely di
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67 • One in two people in Ireland
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1 4 Unhealthy Globalisation The Sir
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3 Although the process of corporate
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5 globalisation is transnational ca
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7 Many others have spoken of invisi
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9 currencies to the US dollar. The
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11 policies of these nations in ret
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13 000). Round Tables The original
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15 annual meeting in the small ski
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17 When an enemy is powerful and ce
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19 In January 2001, protesters demo
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Martin Khor, Direitn 21
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78 Every day we hear politicians, c
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80 not return to the depression of
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82 billion, equivalent to 39 per ce
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84 which in turn rests on nature it
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86 increase. And when jobs are crea
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88 rather than adding them to the w
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90 achieved very different levels o
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92 placed at the top of the lists.
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88 6 Facing the Critics Through the
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90 the interestbased system, the
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92 good or fair or sustainable. An
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94 Certainly there are other ways o
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96 landlord who charges you rent al
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98 believe that credit to be valuab
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100 If interest rates were zero the
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102 It is quite fair that banks sho
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2 free money before, as we shall se
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4 In precolonial times, Maori tri
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6 In Maori tribes, the gift society
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9 What Gives Money its Value? To he
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11 accept money as payment, we unco
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13 goes still further and calls mon
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15 Spanish and Dutch coins from ove
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17 claimed that the UK’s financia
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19 Today, the Reserve Bank retains
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2 living systems. Finally, it discu
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4 If our species is to survive, a n
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6 with its own currencies, the patt
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8 While it is possible for each tea
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10 addiction, chronic illness and i
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12 4. Human economies can and shoul
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14 furniture transported at great c
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Page 170 and 171: 22 be a tension between the two. Th
Page 172 and 173: 24 democracy at the local governmen
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Page 176 and 177: 2 The democratisation of national c
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Page 188 and 189: 2 Michael Linton, David Weston and
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Page 202 and 203: 16 Salt Spring Island Dollars Salt
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Page 219 and 220: 4 As with WIR, businesses are regis
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Page 241 and 242: 265 Saving will become impossible.
Page 243 and 244: 267 law professor in Italy. Profess
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Page 247 and 248: 271 Currency to Support Waldorf Sch
Page 249 and 250: 20 It started in 1989 when Frank To
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Page 253 and 254: 24 The Note Corporation itself then
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3 Regardless of whether the transac
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5 payment of taxes. When the mayor
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7 within that global economy we mus
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9 Money can also be spent into exis
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11 Huber and James Robertson, 6 it
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13 apparently no one spread rumours
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15 One of the weaknesses of local c
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17 example (see page 000), the demu
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19 trading. We therefore need decen
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21 If citizens decide to build a se
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23 In Even if the Reserve Bank deci
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25 possibilities for reforming our
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27 1905. 2 Michael Reddell of the R
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2 Taxation Policies Before I discus
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4 But, like other assets, realest
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6 Most taxes fall on work. It makes
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8 slows down the increasing gap bet
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10 Bob Keall has also proposed taxe
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12 ways of avoiding paying tax. Tax
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14 Ltd, 1879. 3 Henry George, Socia
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2 of reserves, a single exchange ra
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4 revealed to show that they wanted
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6 Countries using the Australian do
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8 3 Helen Clark in an interview on
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2 community projects can be funded.
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4 feeling that the banks were not t
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6 terminals per 100,000 people, com
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8 to lend to groups rather than ind
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10 Islamic Banks Banks run along st
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12 decided to create an entirely ne
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14 Attempts to Start New Banks In 1
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16 During the local body election c
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18 Zealand Post was that there was
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20 Problem numbertwo — fees going
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22 Other microcredit schemes. A goo
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24 now operates are the Cooperati
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26 They donManchester Unity does no
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28 The Wellington Women’s Loan Fu
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30 The Future of Community Banking
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32 8 Quoted in ‘Banks Profit Exce
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34 45 Details of Consumers’ Insti
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2 created when commercial banks iss
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4 Fund (IMF) protect global corpora
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6 economic thinking and taxation sy
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8 It is not easy to start again and
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10 rest of the world, a US deficit
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12 competitive when the money syste
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14 environmentally friendly longt
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16 practitioners know a great deal
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18 moneycreation regime will natu
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20 international currencies. Some o
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22 and James Garfield have struggle
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24 away and the scientific programm
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26 Sources of Hope There are ground
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28 beneficial effects. Indigenous i
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30 taught me that some staff are re
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32 New Zealand’s isolation, humil
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34 • Visit Bali or Japan or any o
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36 Although such a system will not
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1 Ralph Chaplin Bars and Shadows. 2
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and narrated by Bill Still, and ava
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11 Lietaer, The Future of Money, p3
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37 Allison Stinson, ‘Developments
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4 Roy Madron and John Jopling, Gaia
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25 Viviane Forrester, The Economic
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2 Michael Rowbotham, The Grip of De
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25 Text of the Genoa G8 Summit, acc
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18 The Independent, 21 July 1999. 1
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14 Wolfgang Rosenberg, Money in New
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6 Fritjof Capra, The Web of Life: A
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11 Bernard Lietaer, ‘The Future o
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39 1.1 Warehouse receipts. (The fin
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41 2.3 By a commercial company, sma
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43 Summary of Complementary Currenc
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45 000) volunteers. Credits are put
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47 the currency generating enthusia
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140 Appendix 2: Useful Websites Gen
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142 writings of evolutionary biolog
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144 Green Dollars/LETS www.appropri
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146 www.earthsharing.org.au An Aust
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148 Email: bryank@earthsharing.org.
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Bibliography 1 Books and Chapters i
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3 Douthwaite, Richard, The Ecology
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5 Henderson, Hazel, Beyond Globaliz
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7 Mitchell, Ralph A., and Shafer, N
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9 Cobb, Clifford, ‘Displacing Bad
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Turnbull, Shann, ‘Why Reducing Ta
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The Guardian (UKbased daily) The
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1 Glossary Barter The direct exchan
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3 shared land ownership. Koha The M
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