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        ID-18-3         Effective Precedents.         January 8th,   1986

                            Effective Precedents.

        Although the LETSystem is an entirely new arrangement, almost all 
        the parts of its operation are well established procedures in the 
        world already.

        We can further establish the credibility and viability of the 
        system as a whole by comparing it to these partial applications.

        The most obvious comparable operation is the widely used 
        commercial "barter" network.

        So-called "barter" networks are rarely, in fact, engaged in barter.

        More typically transactions within these networks are one 
        directional, the administration issuing barter credits to one 
        party's account while drawing them from the other.

        They are in fact performing an identical service to that of a 

        Typically, however, they constitute themselves as intermediaries 
        in the process, as quasi-banking organizations, and claim to be 
        the originators of the money in circulation.

        It is an indication of the actual cost of money, and the 
        advantages to be gained from using such monies, that clients of 
        such networks are commonly prepared to pay at least 7% and often 
        as much as 10% commission, in hard federal cash, for the service.

        These charges have nothing to do with the cost of operating the 
        basic system; they are required to support the sales and 
        management effort required to maintain the network in good shape.

        This effort is required entirely because the relationship between 
        the operation and its members is essentially extractive.

        The operator is effectively saying to his clients, "You can use 
        this money, but I will charge you principally in cash."

        Given this basic relationship, such counterproductive 
        administrative policies as full invoicing in "barter" credits and 
        cash commission on that invoice, and the entirely authentic 
        reports of operator fraudulence, the fact that these systems 
        survive at all is excellent confirmation of the power of the idea.

        For further comments on these operations and the proper attitude 
        toward them of LETSystem user groups, see REA-10.

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

        ID-18-3         Effective Precedents.         January 8th,   1986

        Marketing Schemes.

        Every business that has ever offered sales discounts is using the 
        principle that a reduced price will bring in more customers, and 
        contribute to cashflow.

        Unfortunately, that is all it does.

        Issuing discount coupons, either through the press, by flyer or 
        at the point of sale, has the same effect.

        More customers and more money, but at a discount which is not 
        recoverable, as the coupons can only be spent at the retail 
        outlet, and are hence of no value to the retailer himself.

        The cost of printing, distributing, handling and accounting for 
        these largely worthless pieces of paper is high, no matter how 
        you count it, but the payoff apparently justifies the expense.

        Over the last few years we have seen examples of major national 
        retail stores and gas companies extending the discount voucher 
        operation into mutual acceptance.

        That is going to the second stage of a three stage process.

        Hopefully in the near future, some bright spark in a some such 
        national organization will recognise the advantages to be gained 
        from LETSystem support.

        All the advantages of price elasticity, maintained margins and 
        excellent public relations in every community they serve.

        Any department store using its own charge card system already has 
        all the facilities to offer a LETSystem to existing customers, as 
        does, for that matter, every corner grocery store.

        Don't wait for us to call you.   We just did.

        Landsman Community Services Ltd.              ID-18-3   Page    2

        ID-18-3         Effective Precedents.         January 8th,   1986

        The most ironic source of support for this concept derives from 
        the persistence of conventional currencies.

        While it may not be entirely clear at first sight, conventional 
        money can be considered as the terminal condition of an aberrrant 

        All the committment backing the process rests with those perhaps 
        least reliable - the government, which is constantly changing, 
        and draws only intermittent support from its constituency, and 
        the banks, which are simply gambling organizations of differing 
        reputation and reliability.

        The history of mismanagment, preference and deceit that is 
        inextricably entangled with these enterprizes has necessitated 
        stringent controls and regulations, few of which present problems 
        to those who can evade them, or do little but stifle the proper 
        process of business by the legitimate.

        It is as though the first wheels were squared off to prevewnt 
        them from running downhill.

        If a LETSystem were created where only a few particular people 
        were entitled to be in committment, and the size of the system 
        were unlimited so that money could be taken anywhere, it would 
        look just like a national currency.

        If we can work with conventional money, there is no limit to what 
        we can do with the real stuff, our own money.

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

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