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        ID-9-5          For example.                  January 8th,   1986

                                  For example.

        Joe cuts firewood.  Peter is a welder, and he wants wood but has 
        no money.  Joe doesn't want any welding.  That's usually where it 

        However, if Joe and Peter are members of the LETSystem, then Joe 
        delivers the wood, and Peter picks up the phone.  He dials the 
        LETSystem office and says - "Hi, this is Peter, No. 48, please 
        acknowledge Joe, No.83, $75. for firewood."

        Joe's account balance increases and Peter's decreases by $75.  In 
        turn Joe employs the carpenter, the carpenter has a haircut, gets 
        some clothes made, buys food from the farmer.  The farmer now has 
        a way to pay for a welder, so Peter gets to work again.

        And so it goes. The unit of exchange, the green dollar, remains 
        where it is generated, providing a continually available source 
        of liquidity.     The ultimate resource of the community, the 
        productive time of its members, need never be limited by lack of 

        Margaret needs the brakes fixed on her car.  She is billed for 
        parts and taxes in federal dollars, which represent the essential 
        outgoing costs involved, and pays the balance in green dollars.

        The same procedure takes place when businesses trade within the 
        LETSystem.  For the retail merchant, a LETS exchange works like 
        this:  A customer buys a $30 pair of shoes;  price to a LETS 
        member could be $20 cash, $10 in green dollars, credited to the 
        merchant's account.  This credit can then be used by the retailer 
        in dealings with other LETS members, businesses, or individuals.  
        Each retailer has total control over the store's pricing system 
        to include collection of taxes, overhead, and markup.

        Any  business can use green dollars to improve its trading 
        position without causing cash flow problems or any disruption of 
        its normal business.

        Suppose a business is barely meeting overheads, has no cash to 
        spare and sees no way to  use green dollars for business expenses 
        or stock replacement.  Any trade using green dollars should then 
        be arranged so that all marginal cash costs of that trade are 
        met in cash, and further, that cash is also paid to meet tax 
        commitments, both sales tax and income tax liabilities deriving 
        from profits.  This strategy avoids all risk and the only concern 
        is whether the yield to the business justifies the time taken to 
        serve the customer.  Few transactions in the normal run of 
        business offer such high after-tax returns to shareholders.

        Landsman Community Services Ltd.              ID-9-5    Page    1

        ID-9-5          For example.                  January 8th,   1986

        Example:  A retailer whose wholesale costs are 70c in the dollar 
        of sales, can afford to retail to LETS members at 15c in the 
        dollar in green even with a personal tax rate of 50%.  If the 
        tax rate is less, more can be offered:  up to 30% in green.

        Example:  A restaurant-owner with food costs averaging 40% and a 
        personal tax rate of 50% can offer meals at 70% cash and 30% 
        green dollars.

        Example:  An accountant with low management costs of, say l5% may 
        be able to profitably offer services at up to 85% in green 

        In many cities in North America there are already commercial 
        agencies offered similar services to businesses as those offered 
        by a LETSystem.  These are, however, all organized on different 
        principles, and charge users initiation fees of at least $300 
        with a commission of about 8%, in cash, on all transactions.  
        Despite such high costs and many limiting regulations, businesses 
        find it profitable to use these services.  (In Vancouver, 
        Bartercard ITEX has over 700 members.)  LETSystems offer the same 
        services at less than a tenth of the charges of the average 
        commercial system and, access a far greater customer base.  We 
        anticipate that a business currently using a commercial system 
        will open a parallel account with the LETSystem in its region.

        If a business is meeting its overhead and has cash available, it 
        can afford to cover costs in cash and make sales fully in green 
        dollars.   In that case, considerably more vigourous marketing 
        opportunities exist and the ultimate limitation will be the 
        capacity of the business to spend its revenue.

        As more goods and services become available for green dollars, 
        businesses will be better able to absorb costs in green, thus 
        expanding their capacity to sell in green.  This will eventually 
        raise the applicability of green dollars to that of a full local 
        currency.  The effect of a local currency will be to protect 
        local producers from being undercut by imported goods, and thus 
        provide a more stable environment for developing the local 
        infrastructure.   The agricultural sector will be one of the 
        principal beneficiaries of this monetary "skin".

        Charity groups and service clubs who have found fund raising 
        difficult during a recession, will be able to raise donations 
        more easily in green dollars.  Donors will be comfortable in 
        contributing funds which must return to their income, 
        particularly since their other expenditures are not thereby 

        Some users of LETSystem will be people with full-time, cash-
        paying jobs.  They will use it for the benfit of a zero-interest 
        line of credit which, incidentally, supports their local 
        community.  They will generally balance their accounts by selling 
        cash for green dollars to other members.   

        Landsman Community Services Ltd.              ID-9-5    Page    2

        ID-9-5          For example.                  January 8th,   1986

        This exchange mechanism will allow the LETSystem administration 
        to convert the charges collected in green dollars to cash as 
        required.  If this component of the economy exceeds 0.1% it can
        meet all the cash requirements for the administration of the 

        All regional economies can be considered to be organisms with 
        internal processes and with transfers in and out across their 
        boundaries.  The level of activity at which a LETSystem will 
        stabilize in any particular community will be determined by the 
        relative strength and needs of those two processes.

        Landsman Community Services Ltd.              ID-9-5    Page    3

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