Portland's Bridgetown Bucks and the Local Multiplier Effect

Bridgetown Bucks is a currency designed for local use in the Portland, Oregon area beginning in 2013. It is created and issued by the PDX Currency Corporation, an Oregon nonprofit company.

Shopping in Portland with Bucks will pull customers out of the national big box retailers and direct them into locally owned and operated Portland businesses. This PDX currency enables consumers to make well defined choices in support of the local business community.

The note’s ability to recirculate through multiple local transactions and stay within the community can help to build a more resilient local economy in the face of globalized world trade.

Bridgetown Bucks is not affiliated with any Federal, State or local government organization. This is not government issued money, this is a local currency which will begin circulating in early 2013. Bridgetown Bucks do not replace national currency (USD).

The working definition of a currency is, “an agreement within a community to use something as a medium of exchange”.

These notes can be spent at participating locally owned Portland merchants or exchanged back into national currency anytime through identified locations around town. Each “Buck” has a value pegged to the U.S. dollar and participating merchants will always accept the notes at face value.

The currency works towards building the local economy by maximizing the circulation of trade within the Portland area. The notes, which have no value outside of the Portland area, encourage wealth to recirculate within the community rather than flowing to out-of-state corporate headquarters and out-of-country suppliers. Shopping at locally owned stores, helps people take personal responsibility for the economic well-being of their community and lays the foundation for a truly vibrant, thriving local economy.

The wide use of a local currency, such as Bridgetown Bucks, can shift consumer buying patterns towards locally produced goods and help focus shoppers’ preferences away from a more unpredictable global economy.

A locally owned business generally means that “working control” of the day to day business resides in the surrounding community and the assets of the business are owned by local residents.

In Oregon, local currency is nothing new. Since 1991, there have been 4 local HOUR currency systems started and to some degree all of these are still active.

• Corvallis Hours Corvallis OR (since 2002)
• Cascadia Hour Exchange Portland OR (since 1993-4)
• RiverHOURS (since 2004)
• Emerald Ecos Eugene OR

There is even a successful Portland Time bank http://pdx.timebanks.org/ and a new Local exchange trading system(LETS). http://pdxlets.com

In Portland and throughout Oregon there are also a number of local incentive programs and reward cards. These deals reward shoppers for patronizing “local businesses”. Each of these programs has a different type of structure and several ways of rewarding customers.

Local programs include:

• Supportland Card “…a service that not only helps our lovely businesses, but also gives a boost to consumers.”
• Choose Local Card “When you show the card you are stating that you support locally owned businesses.”
• Local Bonus Rewards “…use your existing credit/debit cards to earn cash back rewards at local businesses.”
• Viva la Local Rewards Card “…will save you money at hundreds of local business”
• Rely Local “…it is a community campaign to rebuild our local economy and strengthen our community!”
• Go Local Card(coming to Portland soon)
• Local Shop Rewards “…provides a way to strengthen our local economy.”

There is even a local search engine type directory called Look For It Locally (LFIL) which is “an online database designed to connect Portland, Oregon shoppers with locally owned stores.”

Finally, there are mobile ‘local shop coupon’ applications for smart phones & local Oregon businesses.

A primary goal of “HOUR” programs is economic empowerment. The before mentioned local currency systems Corvallis Hours, Cascadia Hour Exchange, RiverHOURS, Emerald Ecos, Portland time bank and even PDX Lets, are all systems with a powerful social purpose which is to match unused and underused resources with unmet needs. These systems utilize the extra time and skills of the local community and in turn provide for other locals’ needs. It is well known that communities are vastly improved when unmet needs are matched with unused resources. Both the “HOUR” systems and the reward programs can contribute to the increased wealth and well being in a community.

None of these mentioned local “HOUR” currencies are convertible into real money (USD). When a participant receives a unit of value or a mutual credit, that person must then find a place to spend it. None of these units can be converted into dollars.

What makes Bridgetown Bucks so different from these programs?
While very successful on the East Coast, the Bridgetown Bucks local currency model has never been attempted anywhere in the Pacific Northwest. Bridgetown Bucks is a local currency with a commercial purpose. This PDX Currency is unlike all other programs currently operating in California, Oregon and Washington. Portland’s new “Bucks” are directly exchangeable into U.S. Dollars.

Unlike the local reward cards and incentive programs which stop generating benefits after each transaction, Bridgetown Bucks can be continuously circulated through many local transactions. It’s known as the “local multiplier effect” and this is what makes the new “Bucks” such a powerful economic tool.

The term Local Multiplier Effect (LME) was originally coined by John Maynard Keynes in his 1936 book The General Theory of Employment, Interest and Money. LME refers to how many times a dollar is recirculated in a local economy before leaving the area through the purchase of an imported product.

Imagine a PDX shopper with a $100 to spend. If that person visits a giant warehouse retailer, that $100 is likely to leave the Portland area moments being spent. The $100 will flow through an out-of-state bank and on to suppliers in places like China, Mexico or Chile. Consequently, those funds are now gone from the community. The $100 will not circulate through any other transactions and won’t contribute anything additional to the local economy.

Now imagine if that same shopper spends the $100 at a locally owned store. The PDX shop owner uses a local bank and sources a majority products from local suppliers. That $100 will stay in the area and likely move through 4 or 5 more local transactions before finally being spent on imported goods. The LME shows that funds spent at locally owned and operated businesses produce a much greater benefit to the local economy than money which disappears through corporate America’s big box retailers.

Research and economic studies all show that local spending translates into increasing revenue and income opportunities for local producers. This is the Local Multiplier Effect.

For the past 60 years, national and international corporations that source cheap goods from around the globe have been rapidly expanding into local domestic markets. Money that is spent in local cities and towns is now redirected out-of-state to massive national banks and centralized multinational corporations. This was not true 60 years ago. A dollar spent at a local business may have circulated through 20 or 30 local transactions.

Using Bridgetown Bucks prevents those hard earned dollars from leaving the Portland area and helps rebuild local wealth. When a consumer exchanges national currency for local Bucks, that shopper is making the decision to keep money circulating in the local community with locally owned companies.