Struggling towns printing their own cash

In an echo of the Great Depression, local currencies with their own special flavors are popping up all over in attempts to give commerce and communities a lift.

[Related content: currencies, recession, Treasury, exchange rates, spending]

By SmartMoney

Last year, two Detroit tavern owners were sitting at the bar, sampling their beverages and bemoaning the local economy -- no one in the city had cash, and when they did, they spent it in the suburbs. Then the pair hit on a solution: Print their own money.

It is, after all, perfectly legal for anyone to issue currency, as long as it doesn't look too much like a U.S. dollar. Thus was born the Detroit cheer, a local scrip accepted by a handful of city businesses, including a pizzeria, an electrician and a doggy day care center.

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Residents can also exchange it at a few area bars for greenbacks, but the cheer is vastly more colorful. It features a chiseled, naked Greco-Roman superhero (the Spirit of Detroit) towering Godzilla-like over the city skyline, cupping a tiny family in one hand and a sunburst representing God in the other. He's a lot more fun than George Washington.

And Detroit isn't the only city sporting its own currency. Since the market tanked nearly 18 months ago, there's been an interest in local scrips not seen since the Great Depression.

Residents in tiny North Fork, Calif., just launched the North Fork share, and folks in Piedmont, N.C., spend the newly issued the plenty, a currency depicting local flora and fauna like the ever-popular turkey vulture. Brooklyn, N.Y., is preparing to launch the torch, while South Bend, Ind., is set to print what it calls MACs.

Susan Witt, the executive director of the E.F. Schumacher Society, a think tank devoted to decentralized economies, says she gets calls daily from towns across the nation looking to join the movement.

In most cases, these communities are simply looking to boost local commerce. The currency has to be spent in town, obviously, because it's worthless anywhere else. But a growing distrust of the U.S. dollar is also at work.

When the Treasury prints billions to bail out banks and automakers, people look for alternatives. These folks may look nutty now, goes the quip, but wait till the dollar goes the way of the Argentine peso. Then you'll be exchanging a wheelbarrow of cash for a bay buck, local currency boosters say.

Minting money isn't easy, of course. The Detroit bar owners spent $2,000 to print $4,500 in cheers, thanks in part to an initial run on flimsy paper. ("It costs money to make money," co-founder Timothy Tharp says.)

In North Fork, Josh Freeman and his crew spent days cranking out bills on the ancient letterpress in his garage. And once a local currency is printed, it's a struggle to keep the stuff in circulation.

Towns often find the scrip flowing to the local food co-op, which soon complains that suppliers won't take it. Until Piedmont's plenty was reissued with the backing of U.S. dollars, it was kept alive mainly by the local biodiesel seller, who used it to pay his interns.