Saturday, 13 March 2010

The Hawick Pound

I see that some folk in Hawick want to issue their own currency:
A pilot scheme for the "Hawick Pound" is being launched this month to try to encourage more people to shop locally.

There has been concern from traders because of the competition they face from larger retailers outside the town.

But the idea is that the local currency could only be spent in Hawick, so money would stay in the community.

I'm all in favour of towns like Hawick having strong economies. And I'm also in favour of private monetary systems. But I don't think that the good folk of Hawick have thought this through properly.

Listen to this broadcast:

Basically we are going to print up some notes and sell them into circulation.
Just like that.

When the BBC reporter asked, "How would inflation work in Hawick?" the answer was, "I don't know." Not good enough. And if the currency is just going to be "printed up", we can guess the answer on that one.

As Mises explained, a sound currency can only come into existence by winning the hearts and minds of people in the marketplace. Why would a resident of Hawick prefer a currency that was only usable in his home town, especially a currency that can be "printed up"? There's absolutely nothing to stop Hawick folk from patronising local businesses as things stand right now. By all means let that include a bank - but one founded on sound principles.

1 comment:

David Farrer said...

Comments made on previous template:

Colin Finlay
If Hawick issues its own currency I want to see Bill McLaren's face on the highest denomination banknote.

24 March 2010, 11:00:51 GMT
– Like – Reply

Jock Coats
One thing they can do to add an incentive is to get business members of the currency network to offer not necessarily discounts but, for example, something like the equivalent of Nectar points on local currency transactions, or perhaps, when they have sales, a bigger discount to people using the local currency or their loyalty points.  Also, it really needs to be not just "B2C" but "B2B" as well - indeed idelly this should be the core of the network - a mutual business to business trade credit system.  In fact there is I believe an example running via somewhere like the East Lothian Chamber of Commerce.  
There can be a lot of relatively local business to business trading - I estimate in Oxfordshire it amounts to well over £100m a year and in somewhere even more rural and isolated like the borders I imagine it could account for a whole lot higher a proportion of local inter-business trade.  
But even I have begun to have a few misgivings about such a simple system, notwithstanding the long success of things like the WIR Bank in Switzerland, and have begun to think in terms of buying some precious metal specie with the original network "membership" fee businesses would contribute in my previous scheme for Oxfordshire, simply because maintaining parity with Sterling may not be a good idea!

14 March 2010, 03:16:41 GMT