This blog is about Hawaii's status as an independent country under prolonged illegal occupation by the United States, and the history, culture, law & politics of the islands.

By Scott Crawford, Hana, Maui

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Could Local Money Work on Maui?

MauiTime Article on local currenty from a couple weeks ago that I just got around to reading…

This is something I’ve been interested in for a long time, and some years back I attended a workshop with Lynette and several other folks about the LETS system version of local currencies. At that time we tried a bit to get something started but it does take a real coordinated commitment to get it going, to be accepted by enough businesses that it reaches a critical mass.

But Maui is probably a good sized community to try it out. It’s large enough that you could more easily get enough participation to make it worthwhile, yet it’s small enough that there is still a strong sense of community, lots of people know each other, social networks are strong. And that’s very important because the equity backing the currency is basically trust in your neighbors.

So anyway, I think this is worth thinking about in general, but especially among those who believe in the sovereignty of the kingdom.

Pre-contact, the Hawaiian Islands operated largely under a subsistence economy, with elements of a barter system. As the plantation era took hold, currency became necessary. In the latter half of the 19th century—before annexation and statehood—Kamehameha III presided over the creation of the Hawaiian dala. Like the American dollar, the dala was made up of 100 units, called keneta. Unlike the American dollar, the dala was relatively short-lived: in 1903, five years after annexation, the United States Congress “demonetized” it, and most of the coins were destroyed.

As Bumpy likes to quote Mayer Amschel Bauer Rothschild: “Give me control of a nation’s money and I care not who makes it’s laws.” While we work on the education and political and legal transition, the economic/monetary transition doesn’t need to wait for those. It can start with local currency, which can be done under occupation imposed law, and people can simply make their own choice to use it. Read the article to see the examples of other places, but it is quite legal to do.

The first question might be, is that legal? It is—with a few caveats. Creating and using a local currency—sometimes called complementary currency, in that it “complements,” but doesn’t replace, a national currency—will not unleash the dogs of the U.S. government, as long as it isn’t coin, isn’t referred to as “legal tender” and doesn’t look like U.S. currency.

Nothing says it can’t look like Hawaiian currency. If the U.S. doesn’t regard Hawaii as a country, then scrip that looks like Hawaiian currency would seem perfectly legal. (There’s mention in the article of Sam Slom’s attempt to reissue the dala, he’s not quite the right person to do it lol, but it just goes to show that it’s quite legal to do.)

This would serve three important purposes:

  1. It would help stimulate the local economy, just like local currency anywhere;
  2. It would stimulate curiosity and provide an opportunity to educate people about and win support for the Hawaiian kingdom; and
  3. It would be evidence of the de facto Hawaiian kingdom government effectively providing a government service to it’s citizens/residents, which is an important step in eventually restoring recognition internationally.

There are enough people/business who believe in the existence of the kingdom who would gladly use the money if it was done right, and maybe that’s how you first introduce it, but I see it being very inclusive, so people would use it just because of the benefit it provides, and you could reach out to lots of local businesses and entrepreneurs with the focus mainly on it as a form of local currency. But then as they use it they would start to ask about and identify with the kingdom. Believe me, there are lots of people on this island who would love to use a Hawaiian kingdom scrip if the system was set up well so they could believe in it and know if they accept this currency they can go spend it somewhere else useful.

Exactly how to do it and who can/will do it, I don’t yet know. Ideally, I would like to see this started by some coalition of “sovereignty groups” (for lack of a better term) along with cultural groups, who could use this as a common goal and all bring their networks into it. (It’s much better imo that it be started among the Hawaiian community and then through all their connections bring other locals into it, rather that starting among the haoles who might normally be the ones who might try this stuff but then may have a hard time getting Hawaiians/locals involved.)

And obviously, this is very complementary with a Hawaiian bank. The article mentions a bank that circulates one local currency, and a Hawaiian bank would take it to another level, but the currency can be started immediately, with no real legal/regulatory roadblocks, and maybe could help lead to a bank.

So… I think this is an idea worth putting out there for the new year…

16 comments to Could Local Money Work on Maui?

  • Islandgirl

    Companies used to offer script (their own currency)to pay off employees. The script was then only accepted in company owned and affiliated stores. It was a great way of controlling employees because the script was nearly impossible to convert to real money to use with the rest of the world.

    A Maui based script can work if, in addition to acceptance by local merchants, it can be be convereted to pay taxes, pay the mortgage to the bank, used to make purchases on Amazon, etc. If the script is difficult to convert, it will lose local confidence quickly and damage the reputation of any organizations supporting it. Will someone stand behind the currency and agree to put up American dollars at a fair exchange when the script bearer needs it? If the answer is yes, this idea is a winner. If not, it will cause only grief.

  • I can understand this point, but most of the existing local currencies throughout the world have been successful and endured without having to be directly convertible to the national currency. That isn’t necessary for the concept to work. The idea in general is to complement the national currency, not replace it. It helps fill gaps where there may be needs and resources/services in the community but what is lacking is sufficient capital for the exchange to take place. Local currency increases the liquidity within the local economy, and because it can’t be simply converted directly to national currency, it ensures that the money stays local and continues to circulate. And if you can use local currency to buy some of your other daily needs, it relieves some of the pressure on the national currency to pay for the other budget items like taxes and mortgages.

  • When you go to the annual Punahou fair, or the Waimanalo festival at the beach, the food and ride vendors do not accept real money, they only accept scrip. You have to go to a booth to trade in your dollars for scrip. The question is, at then end, if you have scrip left over, can you go back to the booth and convert the scrip into real money? By the way, every Hawaiian Kingdom coin or paper money that I have ever seen uses English language predominantly, with only one or two words in Hawaiian.

  • Kaʻehunuiokaihe

    When I lived in San Francisco I attended the San Francisco Art Institute, afterward I began to plan my return home to Hawaiʻi and began also, after the Hawaiian Renaissance, to inform myself as to the illegal and continued occupation, usurpation as some call it, of the Hawaiian Kingdom. I wanted to do something concrete about it. As it happened, I came across a local currency called the “Birkshire” created in Vermont with artist pictures and other artistic monetary markings and colours. I emailed the contacts offered then and said I am an artist and I wanted to use their format to create a Hawaiian Kingdom currency model. The model is for the kala, in ones with King Kalakaua, Queen Liliuoʻkalani, Doctor Judd, other denominations, and with the 100Kala with King Kamehameha in red and yellow (with scenic views on the reverse)….I printed them out and gave them to people telling them to envision themselves free and the Kingdom again using this money, and that there is a prescedent set with the Birkshire…etc. etc….anyway, I tried to do my part to bring an idea to reality NO ENGLISH!….(spelling mistakes are my own)

  • Jct: You can have your Hawaii currency without incurring the wrath of the feds by insisting your government pay you with small-denomination bonds like the government workers did in Argentina. California IOUs worked great for those who could use $4000 credits but 400 $10 credits would have functioned far better.
    At least you can start private timetrading databases until the government wises up.

  • Islandgirl

    Second Life has the Linden Dollar. It is real currency used in a virtual environment. And it can be converted to other currencies too. Local currencies can work.

  • Makaulike

    Isn’t printing your own ‘money’ illegal?

  • No, it’s not illegal, that’s the whole point of my post and the article. There are a lot of communities in the U.S. who have a local currency that is perfectly legal to use as a medium of exchange, as long as you follow that basic rules, “as long as it isn’t coin, isn’t referred to as ‘legal tender’ and doesn’t look like U.S. currency.”

  • Makaulike

    And what about taxes? Seems like the underground barter economy.
    I’d boycott any business that would accept this. I’ve forwarded the URL and have made
    an inquiry with the Treasury Dept. Let’s see what they say.

  • Why the hate? lol

    Be my guest. I’d actually be very interested in any official response from the Treasury Department on this subject, but as I’ve already said, there are at least a dozen very well established local currencies operating in the U.S. that have had no problem with Treasury. And I would certainly advocate that any effort to start a local currency thoroughly evaluate what the requirements are in that regard, and how other communities have addressed it.

    Here’s a directory of some of the main ones…

    http://www.smallisbeautiful.org/local_currencies/currency_groups.html#local

    But taxes are actually a good question. My understanding is that the currency is actually taxable the same as the national currency.

    Here’s a Wikipedia link on LETS (Local Exchange Trading System) and taxation:

    http://en.wikipedia.org/wiki/Local_Exchange_Trading_Systems#LETS_and_taxation

    “LETS is not a scheme for avoiding the payment of taxation, and generally groups encourage all members to personally undertake their liabilities to the state for all taxation, including income tax and goods and services tax. In a number of countries, various government taxation authorities have examined LETS along with other forms of counter trade, and made rulings concerning their use. Generally for personal arrangements, social arrangements, hobbies or pastimes, there are no taxation implications. This generally covers the vast majority of LETS transactions. Taxation liabilities accrue when a tradesperson or professional person provides his or her professional services in payment for LETS units, or a registered or incorporated business sells part of its product for LETS units. In such cases, the businesses are generally encouraged to sell the service or product partly for LETS units and partly in the national currency, to allow the payment of all required taxation. This does imply, however, that in situations where national-currency expenditures would be tax-deductible, LETS must be as well.”

    So, any store that agreed to accept the currency would add the GET onto it (and I suppose they could probably even request that portion of the purchase be paid in U.S. dollars, although it is already the vendor’s choice whether they include the GET in the price or add it on, as long as they pay it, so they could just accept the local currency for the whole purchase and then pay the taxes on it). If an employee of a business or a contractor was paid in local currency, they would be required to count that as income the same as if it was federal reserve notes. But you run into the exact same challenges collecting taxes on it as you do with federal reserve notes in the informal economy. Lots of exchanges already take place with federal reserve notes that are technically taxable but never get reported. If people fail to pay their taxes, it isn’t the fault of the type of money they are using. So with a local, complementary currency, you might have the same issues, but it wouldn’t necessarily be any worse that what already exists with the national currency. And with established businesses who accepted the currency, they would treat it just like federal reserve notes when it came time to pay their GET taxes, or report the income of their employees or contractors.

    And no this is not a barter economy. Barter by definition is “a medium in which goods or services are directly exchanged for other goods and/or services without a common unit of exchange (without the use of money).” Local money or national money doesn’t matter, if you’re using money, it isn’t barter.

  • Makaulike

    Great explaination. Mahalo Scott.
    I’ll let you know what they say.

  • Scott Crawford: “this is not a barter economy.”
    Jct: Call it time-delayed multi-party barter. It certainly effects barter between players and generations.

  • Jct: Call it time-delayed multi-party barter. It certainly effects barter between players and generations.

    That describes federal reserve notes just as well lol

  • Topher

    Currently I am working on a time based regional currency system that would be divided by each of the major islands. Alternative currencies has been my emphasis with-in a sustainability degree. Would love the opportunity to help the islands strengthen its independence by introducing a complementary currency. Anyone interested in helping please reply to this and we could connect further. I have a drafted research paper on currency, why alternive currencies, and how to start one for the islands.

    Much luck!

  • I like the idea. I just don’t have time to put any energy into it now. It would take real leadership and dedication to get it going, but I do think it has potential.

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