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        ID-18-1         Existing LETSystems.          January 8th,   1986

        The first LETSystem was initiated in the Comox Valley, on 
        Vancouver Island, in British Columbia, Canada in January 1983.   

        The ideas were developed during the fall of 1982 and the first 
        steps towards the formal organization was a meeting of the first 
        six members on December 27th, 1982.

        This LETSystem now has 550 member accounts and has traded over 
        $250,000 green.

        From the Spring of 1984 onwards, other LETSystems have been begun 
        in Saltspring Island, Powell River, Duncan, Hornby Island, 
        Victoria, Campbell River, Seattle, Vancouver, Qualicum and 
        Arkansas and Denver, Colorado.

        Others are either started or under consideration in most major 
        cities in Canada, and in over a hundred locations across North 
        America, Europe, Australia and New Zealand. 

        While almost all the systems so far established demonstrate 
        valuable results, it cannot be argued, on the evidence to date, 
        that it is easy to start a LETSystem.

        All of the systems so far have evoked a predictable incredulity 
        in their communities, and the initiators have generally felt it 
        better to let things grow gradually rather than devote excessive 
        energy to development.

        Only in the Comox Valley has there been any major application to 
        system development.

        This has so far generated a software package, administration 
        procedures and forms, general development strategies and 
        information, all of which is made freely available.

        However, the actual performance of the Comox Valley LETSystem, 
        despite all the energy applied, remains far short of potential.

        A LETSystem of 550 or so members should be averaging at least 
        $250,000 per month of total trading.    The current monthly 
        figures are generally $8,000 - $9,000 green, only 3-4% of that 

        There are many reasons for this.

        Much can be traced to the conservative tradition of a small 
        community, with a predictable response to new ideas.

        More can be attributed to the burden, carried by this system 
        alone, of the research and development work involved, reflected 
        both in uncertain and often variable policies and in particular 
        negative biases in the system accounts themselves.

        Some have intimated that the personal style and behaviour of this 
        writer have been significant.    I shall deal with these in due 

        Landsman Community Services Ltd.              ID-18-1   Page    1

        ID-18-1         Existing LETSystems.          January 8th,   1986

        All other things being equal, or ceteris paribus, things develop 
        and expand as people find value in their use.

        It is clear that people find the LETSystem valuable.    What 
        needs to be clarified is why they only find it as valuable as 
        they do, when so much more is actually available.

        The most significant factor in the retarded development of the 
        Comox Valley LETSystem is the general difficulty that members 
        still experience in spending green dollars.

        To see why this is a factor, how it has come about and how it can 
        be easily avoided in other systems, we need to consider the 
        consequences of particular administration procedures adopted at 
        the outset and maintained to this point.

        It was clear from the outset that LETSystems are most feasible if 
        the administration costs are minimal and fairly distributed among 
        the membership.

        The actual work load of operating a LETSystem can indeed be very 
        small and does not at the outset justify full time staff or 
        premises of any significance.

        Only when a system is large and highly active need it, and can it 
        afford to ,take on such overhead.

        To do so prematurely requires excessive charges on the 
        membership, with inevitable drains on performance.

        Hence it was decided that research and development costs should 
        not be charged directly and immediately to the membership.

        Rather they should be amortized over several years operations, 
        including returns from consultancy and distribution.

        This decision was entirely correct.

        In addition it was clear that the LETSystem itself should never 
        operate a negative, committed account.   

        Not being a conventional incorporation, but rather an essential 
        non-entity, it would be entirely inappropriate for the system 
        itself, to make promises to itself, in itself.

        This definition remains absolutely essential.

        Landsman Community Services Ltd.              ID-18-1   Page    2

        ID-18-1         Existing LETSystems.          January 8th,   1986

        Further, it was considered that a few months development work 
        would be sufficient to generate sufficient interest and activity 
        to sustain the costs of such work thereafter.

        In the circumstances, this was unduly optimistic.

        However, on the above judgments, we rented an office, installed 
        telephones, invested in software, advertising and printing, and 
        went to work.

        This turned out to be a big mistake, and established a pattern of 
        cashflow dependency which has plagued us to this day.

        Finally, and with probably the greatest consequence, it was 
        considered that those engaged on the research and development 
        could anticipate prompt returns for their efforts as the idea 
        spread, and were thus able to spend with some freedom in the 
        system in anticipation of later acknowledgemnt.

        This policy has had various consequences in short, medium and 
        long term considerations.

        In the short term, this enabled several people to commit energy 
        to getting things going, being partly supported in the meantime, 
        by goods and services from others in the community.

        In the medium term, the slow rate of expansion actually realised, 
        has meant that, as yet, little or no acknowledgement has 
        available to these members, in green or any other money.

        Within the system, these few negative (committed) accounts 
        necessarily reflect in many small positive accounts.

        In a mature system, this would not present any problem.

        However, most of the small positive account holders have only 
        made a few trades, and are intent on spending green before they 
        earn more.

        This diminishes the number of members willing at any time to earn 
        green and leads to an imbalance with the number of potential and 
        eager spenders.

        This is the condition most generally considered to be a problem 
        for systems of this nature, and the medium term consequence of 
        our initial policies clearly reflects in the poor system 

        Landsman Community Services Ltd.              ID-18-1   Page    3

        ID-18-1         Existing LETSystems.          January 8th,   1986

        The long term consequence of these developments is, however, 
        entirely positive.

        The principal concern raised in LETSystems has always been that 
        they are prone to abuse by persons who will run up large negative 
        accounts, fail to contribute, and thus bring down the whole 

        This criticism, always hypothetical, can now be seen to be less 
        significant than was supposed.

        Consider that, the first LETSystem :

             - was initiated with much confusion and inefficiency in a 
               conservative community,

             - enjoys neither institutional nor commercial support,

             - is either ignored or deprecated by all leaders of local 

             - has suffered persistent embarrassing and ultimately 
               unnecessary cashflow problems,

             - has, as its principal protagonist, a person generally 
               considered to have abrasive manners,

             - is considerably suppressed by the effect of almost $20,000 
               ( of a total system circulation of $60,000 ) accountable 
               to Michael Linton in one way or another, who has thus far 
               been too busy working on the system, to work in it, or 
               otherwise receive acknowledgement to offset these 

        Notice that, despite all of the above, this LETSystem :

             - has enabled over $250,000 green trading to take place 
               amongst its members,

             - records a further $8,000 - $9,000 green per month with an 
               administration load of only a few hours,

             - has effected all this without any instance of fraud, loss, 
               or any civil litigation,

             - has managed to support a research and development program 
               and the production of highly valuable materials for 
               general use.

        In short, it works.  

        Landsman Community Services Ltd.              ID-18-1   Page    4

        ID-18-1         Existing LETSystems.          January 8th,   1986

        As a first demonstration, this is not equivalent to the first 
        flight by the Wright brothers.

        It would be better compared with the first successful powered 
        flight taking place in a blizzard with a mule on one wingtip.

        Consider then, how such an operation might perform when :

             - no significant start-up costs are entailed, for software, 
               design, writing and promotion, etc.

             - no overhead burden need be undertaken,

             - the character and committment of the principal initiators 
               is beyond reproach,

             - some degree of involvement with local business is 

        All in all, the experience in the Comox Valley has been a clear 
        case of the right decisions for the wrong reasons.

        Had we made the decision to charge research costs to the initial 
        membership, through a % commission on trading for instance, no 
        significant account imbalances would have been generated, and 
        overall system development might well have been better.

        It would however have appeared that it were both legitimate and 
        indeed necessary to levy large charges on accounts, and this 
        error would likely persist in much subsequent development.

        Furthermore, no guidelines would have emerged to establish the 
        actual resilience of the system vis-a-vis unresolved 

        As it is, we now know that, even under the most extreme 
        conditions, LETSystems are

             - valuable, 
                         people use them with satisfaction,

             - viable, 
                         they are cheap and easy to run,

             - safe, 
                         nobody need be at risk, and

             - highly resilient and persisent, 
                         they will survive almost anything.

        Landsman Community Services Ltd.              ID-18-1   Page    5

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