Director,
T.E.(Terry)
Manning,
Schoener 50,
1771 ED Wieringerwerf,
The Netherlands.
Tel:
0031-227-604128
Homepage:
http://www.flowman.nl
E-mail: (nameatendofline)@xs4all.nl : bakensverzet
Incorporating
innovative social, financial, economic, local administrative and productive
structures, numerous renewable energy applications, with an important role for
women in poverty alleviation in rural and poor urban environments.
"Money is not
the key that opens the gates of the market but the bolt that bars them"
Gesell, Silvio The
Natural Economic Order
Revised English
edition, Peter Owen, London 1958, page 228
Edition 12: 18 July,
2009
The local exchange trading (LETS) systems foreseen will be set up during
Moraisian organisational workshops.
The following texts, drawings and graphs form
an integral part of this project proposal. They indicate the type of structure
which can be expected to come out of the workshops.
DRAWING OF INSTITUTIONAL
STRUCTURES.
DRAWING OF LETS
STRUCTURES.
HOW A LETS
TRANSACTION WORKS.
A SHORT LETS
COURSE.
Detailed
information on LETS systems
For this project, (one) local LETS currency
system will be set up in the project area. (Where several systems are to be set
up, define their territorial limits and give basic details).
All adults within a system should be registered
as members, but use of the system with exceptions for goods and services
necessary for the project itself, would be voluntary. Any member may usually
freely choose whether to conduct a given transaction in the local currency
system or within the formal currency system.
The LETS group will have (35000) registered
adult members. Children under the age of 14 will not be registered as they are
not, under the international convention on the rights of children, allowed to
work. They will become registered members of their local LETS systems upon
reaching the age of (14). The members of (the, each) group will be coded so
that their and tank-commission and well areas can be identified and the cost of
more local, optional, initiatives such as PV lighting for study purposes
debited to the members directly involved rather than to the whole project area.
A "catalogue" of goods and services
is prepared periodically in a form which can be understood/read by the group
members. In the various project areas what is available and who provides it
will often be widely known at local level.
All the local LETS currencies within the region
of which the project area is part will have the same reference value. This will
be decided with the local population for this project, as it is serves as pilot
project for the region.
The reference value will normally be based on
the perceived value of an hour’s
work. Since the local LETS currencies in
the region will have the same reference value, they can be transferable from
one to another. However, not all goods and services will be transferable
between the different systems, as this could lead to a drain of resources from
one system to another. LETS systems work best when the financial resources
remain balanced within each system. The LETS coordinators and the members will
decide which goods and services are "exportable". Gypsum composite
products made in group A, for instance, could be exportable to group
"B". Cloth made in group "B" may be exportable to group A.
Crops and vegetables not grown in one group could be importable from the
others.
Assume that a gypsum composite product is sold
by a group A member to a group B member. The transaction would be in local
currency A. The gypsum composite product manufacturer would be credited in
local currency A. The coordinator of group A would advise his counterpart in
group B of the debit for the group B member and separately credit group A with
the same amount in group B currency. The group B coordinator would debit the
group B buyer in local currency B, and, separately, debit group B with the same
amount in group A currency. Goods and services supplied by group B to group A
would be registered the other way round. The group A and B coordinators then
simply eliminate the respective debits and credits by pairing value units one
for one.
The following registrations take place:
a)
The group A producer would be credited in local
currency A.
b)
The coordinator of group A would advise his
counterpart in group B of the debit for the group B member.
c)
The coordinator of group A would credit his group A
with the same amount in group B currency.
d)
The group B coordinator would debit the group B buyer
in local currency B.
The group B coordinator would debit his group B
with the same amount in group A currency.
e)
Goods and services supplied by group B to group A
would be registered the other way round, following the procedures described in
steps a) to e).
f)
The group A and B coordinators then simply eliminate
the respective debits and credits by pairing value units one for one.
g)
In case of a (large) remaining credit balance of one
of the two groups at the cost of
the other, the coordinators will take whatever steps
necessary to bring the balance
of the accounts as close as possible back to zero as
quickly as possible. There are
many ways of doing this. Allowing extra goods and
services to be exported from
the debtor system to the creditor system is one way.
Organising markets or fairs
with debtor area products in the credit area is
another. Organising tourist outings
of creditor area residents in the debtor area is
another.
It is a key to the success of the system that
the imports and exports of each group remain balanced, their sum tending to
zero.
There will be an elected local LETS coordinator
in each tank commission area. The LETS coordinator will need to be literate and
will be responsible to the general LETS systems coordinator. The local
coordinators will help those members unable to write/sign their cheques (or
deal with other methods of payment), arrange distribution of chequebooks (or
other payment forms)to the LETS users, collect the used cheques (or equivalent)
deposited in the LETS POST box near the local water tank and take them to the
general LETS systems coordinator for registration. The local coordinators will
also display the monthly or weekly reports on the LETS NOTICE BOARD near or
above the LETS POST box, advise illiterate members of their LETS balances, call
a fortnightly or monthly meeting where the users can discuss the operation of
their LETS system, make special requests (such as, for example, increasing the
debt limit for sick members or for those making special purchases), and discuss
ways to use the goods and services of those with high debts so as to help
balance their trading accounts. The local coordinators will also discuss with
the members selected proposals for allowing export and import of goods and
services into the local LETS system and report back to the general LETS
coordinator.
The first general LETS systems coordinator will
be chosen by the Project Administrator. He and the locally elected LETS
coordinators will make up the LETS COMMISSION. The LETS COMMISSION will meet at
least once a month to discuss particular problems and to decide on actions
needed to balance the export/import accounts amongst the various local LETS
currencies.
The fortnightly/monthly reports for members in
each tank commission area will be published on the local LETS NOTICE board and
discussed at a general meeting of the local members. The report will show, for
each member, the previous balance, the current balance, the total number of
plus transactions and minus transactions conducted, and list each plus and
minus transaction since the previous report.
The cheque (or other transaction form used)will
have two parts. Each part will have the member's name and LETS number
pre-printed on it. The SELLER'S cheque is used in each transaction. The BUYERS
name and system code are filled in on the cheque, with the assistance of the
local coordinator where necessary, as well as a description (with LETS code) of
the goods or services sold. Finally the cheque is signed by BOTH parties and
deposited in the LETS post box. The amount credited to the seller must be
exactly the same as that debited to the buyer.
Payments for LETS services provided by members to their communities will
be debited to a special LETS code for the community. When the community debt
reaches one LETS currency unit (or other agreed amount) for each member, each
member will be debited with that amount. The community LETS code will then be
credited by the same total amount. This system allows collective communal
property to be involved in the LETS transactions. For example, the sale of wood
from communal land can be registered as a credit to the LETS group involved,
and then transferred from there to individual group members.
The processes broadly follow traditional
balance of payments transactions but the objective is to maintain a balance in
imports and exports. A large debit balance between one LETS group and another
would show resources are being transferred from one group to another. The
coordinators would then have to take steps to correct the imbalance. They
could, for example, temporarily extend the range of goods and services the
debtor group can export to the creditor group, such as by arranging a special
market.
ILLUSTRATION OF A LOCAL MONEY
TRANSACTION BETWEEN TWO
LOCAL MONEY SYSTEMS
Alpha
lives in local money system area A. His system uses local money units
called “argents”. He has a current
balance expressed in argents of 600.
Beta
lives in local money system area B. Her system uses local money units
called “busybees”. She has a current
balance expressed in busybees of 600.
The
perceived value of an hour’s work in local money system A is 10 argents per
hour.
The
perceived value of an hour’s work in local money system B is 10 busybees per
hour.
100
argents are therefore worth 100 busybees.
Local
money system A has a credit with local money system B of 65000 argents.
Local
money system B has a debit with local money system A of 65000 argents
Local
money system B has a credit with local money system A of 10000 busybees.
Local
money system A has a debit with local money system B of 10000 busybees
Alpha
sells a cow to Beta.
Alpha
is the seller. He works with “argents”.
Transactions
are always made in the seller’s units.
The
transaction is therefore expressed in “argents”.
The
agreed price for the cow is 100 “argents”.
The
seller always prepares the transaction document.
Alpha
therefore prepares a transaction slip for the sale of a cow for 100 argents
with Beta as buyer.
Beta
signs the transaction slip, and receives a confirmation note.
Alpha
deposits the transaction slip in a LETS transactions box. He keeps a
confirmation note.
The
registrations:
a)
Alpha is credited with 100 argents. His balance passes
from 600 argents to 700 argents.
b)
The coordinator of group A advises his counterpart in
group B of Beta’s debit of 100 argents.
c)
The coordinator of group A credits his group A with
100 argents. Group A’s credit in argents with group B then passes from 65000 to
65100.
d)
The group B
coordinator would debit the group B buyer, Beta, in local currency B, busybees.
Beta’s balance would therefore pass from 600 to 500.
e)
The group B
coordinator would debit his group B with the 100 argents. Group B’s debit in argents would then pass
from 65000 to 65100.
f)
Since no
transaction in group B currency busybees has taken place, B still has a credit
of 10000 busybees with group A, and group A has a debit
of 10.000 busybees with
group B.
g)
Periodically,
the group A and B coordinators then simply adjust their respective trading
debits and credits by pairing value units one for one. In this
example, group A has a
balance of 65100 credit argents with group B , and group B has a balance of
10000 busybees with A. They can be paired off, so that
group A finishes with a
credit balance of 55100 argents and B a debit of 55100 argents, and groups B
and A have balances of 0 busybees.
Goods and services supplied by group B to group A would be registered
the other way round, following the procedures described in steps a) to e).
In case of a (large) remaining credit balance of one of the two groups
at the cost of the other, the coordinators will take whatever steps necessary
to bring the balance of the accounts back towards zero as quickly as possible.
There are many ways of doing this. Allowing extra goods and services to be
exported from the debtor system to the creditor system is one way. Organising
markets or fairs with debtor area products in the credit area is another.
Organising tourist outings of creditor area residents in the debtor area is
another.
In the case above, group A has a credit balance left over of 55100 argents. The coordinators of groups A
and B may therefore choose to organise the participation of some group B
producers at markets in the group A area to sell group B products to group A
users to “clean up” the credit of 55100 argents by selling mosquito nets in
area A for a value of 60000 busybees. To do this they would usually choose
products which are not in competition with group A products.
At the next reconciliation, group A, which has not in the meantime had
any more transactions in argents with group B, still has a credit of 55100
argents with group B and group B a debit of 55100 argents with group A. In the
meantime, group B has sold mosquito nets for a value of 60000 busybees to group
A. They can be paired off, so that group B finishes with a credit balance of
4900 busybees and group A a debit of
4900 busybees. Groups B and A then have balances of 0 argents.
It will be seen that:
Between periodic reconciliations, each group will have a credit balance
in its own local currency with the other group and a negative balance in
the other group’s currency.
On periodic reconciliation, there will normally be credit and matching debit balances in either one of the two local money currencies. The second currency balance must be zero. In the above example, group B finishes with a credit balance of 4900 busybees and group A with a debit balance of 4900 busybees. Their argents balances are 0.
It is theoretically possible, but obviously extremely unlikely, that, on
periodic reconciliation, the balances for groups A and B of both local
money currencies be 0. Given the complexity of trading between local money
systems, it is reasonable and normal there be a credit balance and a corresponding
debit in either one of the two local money currencies involved. Where exchanges
are seasonal in character, the balances may become quite large, as they can be
allowed to follow natural production flows. This means that while the balances
of the local currency groups are expected to tend towards a zero balance on
periodic reconciliation, the system is in fact extremely flexible. Local money system managers make decisions on inter-group import
and export on the basis of opinions and wishes expressed by users at
well-commission and tank- commission levels.
In principle, competition within a local money system is viewed
positively. However, users will be
encouraged to diversify their production and to relate it to the needs of local
consumption. Each local economy system
is intended to be as autonomous as possible. Production units should be kept
small, as near to the end consumers as possible with as few working passages as
possible. Financial and parasitic services such as packing, transport, advertising,
large-scale distribution costs should be limited. Solidarity services, including insurance and
social security, are local and cooperative.
In principle, competition amongst local money systems is
discouraged. Inter-group trading is
related to specialisation and diversification of products and services.
The structures provided are open balanced systems within
which private initiative and genuine competition can flourish and financial
leakage is inhibited.
Forward:
Micro-credit structures.
List of drawings and
graphs.
Typical list of maps.
List of key
words.
List of
abbreviations used.
Documents
for funding applications.
