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        ID-9-4          Notes on Definition.          December 11th, 1985

                               Notes on Definition.

        The bookkeeping function of the LETSystem closely resembles that 
        of a credit-union whose members can use the currency only in 
        trade with other members.  

        Hence credit transfers between accounts and the issuing of 
        periodic statements are the only necessary accounting procedures.  

        This can be done by hand or computer, as appropriate.

        The currency unit used in the system should be recognized as 
        equivalent in value to the regional legal tender so that 
        valuation between members is customary and the LETSystem can 
        associate accurately with the existing economy.

        It has to be clear to all participants that the internal currency 
        of the system has no intrinsic value.  

        It is never issued and cannot necessarily be cashed.  

        The size of the system, and the activites undertaken within it, 
        will thus tend to be naturally limited by members' appreciation 
        of mutual interest and confidence.   

        The distribution and development of LETSystems will generally 
        therefore reflect natural geographic regions and economic 

        Accounts can be positive:  when a member has earned more than 
        spent to date;  such accounts are "in credit".  

        Equally, some accounts must be negative:  to date the member has 
        received more than has contributed;  in which case the account is 
        considered to be "committed".  

        Clearly, only those accounts in credit risk loss if the currency 
        should devalue.

        The economy is thus always balanced, the total value of green 
        dollars held in credit being matched by the commitment of the 
        members in debit.  

        The individual member effectively issues money into the community 
        by spending and redeems it by earning or selling.

        All transfer from a member's account is on that member's 
        authority, and may not be enforced otherwise.  

        Landsman Community Services Ltd.              ID-9-4    Page    1

        ID-9-4          Notes on Definition.          December 11th, 1985

        Neither can a commitment be invoked.  

        The commitment is to the community as a whole, not to any one 
        person, so no member can ever demand performance from another.  

        However, a member who is reluctant to earn or receive "green 
        dollars" will find it progressively difficult to spend them.  

        A negative bank account is a private matter, but a negative LETS 
        account is an issuing of promises in a community, and is thus, de 
        facto, a public act.

        The LETSystem offers a facility, and proposes an ethic, that 
        services can be exchanged on a "cost to provide" basis (including 
        reasonable profit). 

        It is appropriate that its own service is offered in this way.

        The constitution of LETSystems as non-profit agencies paying 
        administrative staff at current market rates will obviate 
        tendencies to profiteering.

        Landsman Community Services Ltd.              ID-9-4    Page    2

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