MATTOLE SELF-SUFFICIENCY PROJECT

How a Local Currency Would Work

It is rather unlikely that a national treasury money system could ever be implemented in the United States. The major stockholders in the big banks would have too much to lose and they pretty much control the US government. Hence, it is up to us, at the local level, to declare our independence from the debt-money system and adopt a local money system that is consistent with the principles of a sustainable society.

Since there is no government in the Mattole, laws, edicts, and taxes are not options. However, a properly designed money system can generate revenue from interest bearing loans and, as noted above, this can be sufficient to not only operate the money system (printing currency, minting coins, and maintaining banking hours) but to fund other needed projects in the community as well.

The introduction of a local currency would require that it be backed by something of value. A good candidate would be silver since it has traditional acceptance (world-wide) and is readily converted to Federal Reserve notes. The local currency would consist of both of paper (made from hemp) money and silver coins. The unit of currency would be the "petol" after the native tribe that inhabited the Mattole Valley before settlement by white pioneers. The petol initially would be set to have a value close to one Federal Reserve dollar.

The paper money would be readily convertible to silver coins or Federal Reserve notes at exchange rates determined by the current price of silver. Since silver is on an up trend, this means that the number of US dollars that could be obtained for one petol would increase over time, i.e., the value of the US dollar would decrease compared to the petol. This would be an advantage to Mattole residents holding petols.

Once the local currency becomes established and accepted, it then becomes feasible to make loans denominated in petols. Loans would only be made to permanent Mattole residents and, at first, only for projects that would benefit the community, such as starting a new business. Money (petols) would be created for a loan and for the interest on the loan. The money created for the interest on the loan would be used for operating expenses. As the loan is repaid, that money would be extinguished (withdrawn from circulation). Total outstanding loans would be limited to perhaps not more than 30% of the silver base of the money system.

To keep the loan process "legal," a private organization, the Mattole River Bank would be formed. Members of the MRB would be limited to permanent Mattole residents and MRB members would have voting rights to elect a board of directors for the MRB. Only MRB members would have the right to take out loans or have savings accounts in the MRB. The MRB would assume the functions of printing paper money and minting coins, as well as exchanging dollars for petols and vice versa.

Of course, the legality of local currencies is well established, for example Ithaca Hours. Privately minted coins also have a long and legal history.

Last Updated: 23 Mar 2005