In the 14th century, wealthy business men in Italy would set up benches in the piazza, covered in green cloths called banca to conduct financial business.
From this humble beginning, banking as we know it today, got its start. Since then, banks have grown into complex, often international, institutions that offer what may be a confusing array of products, services and financial instruments.
Once seen as the Main Street backbone of American communities, banks today are now often lumped together with other institutions that have been the focus of the anger voiced by the Occupy movement.
In the recent book Local Dollars, Local Sense: How to Shift your Money From Wall Street to Main Street and Achieve Real Prosperity, author Michael Shuman explains the logic behind local investing as a source for regional wealth. He also calls local investment a buffer against riskier financial services, saying,
Given that level of uncertainty, smart money is beginning to look to the back roads for a living rate of return — and increasingly to local businesses. In a number of ways, Main Street investing is the opposite of Wall Street investing. While few of us ever get a glimpse of a Fortune 500 boardroom, local businesses are run by people we know and trust. Investments on Wall Street are short-term, increasingly held for mere seconds, while investments on Main Street are often held for many years. Unlike the markets on which Wall Street securities trade, which are abstract, distant and mysterious, the markets in which Main Street investors meet are typically concrete, personal, and transparent. The lure of a living rate of return, through local investing is increasingly powerful, not just because of the “push” from Wall Street’s risks, but also because of the “pull” from myriad local investments that could simultaneously do better than 5 percent per year and revitalize our communities.
Local has been the buzzword for the past few years, particularly with food, as communities have embraced the many benefits of local-focused living.
Walkability, supporting area growers, buying from mom and pop businesses, and generally taking pride and ownership in the creative genius of your own community is all the rage because it just feels right to support the people closest to us.
And going local has mattered as people have grown in consciousness about the devastating effects of industrial culture — from factory food production to the anonymity of big box stores to what it takes to ship all our “stuff” across the world in container ships.
All this has added up to a local shift that’s generating excitement and possibilities for communities everywhere.
But while the appeal of a farmers market, or a unique shopping district such as my own locality —Charlottesville’s— Downtown Mall are immediately apparent, what goes on behind the scenes to make such venues viable is a little less clear.
Because our currency is still a national one, we don’t think as much about the role of money at the local level beyond spending some some of our own cash to support local businesses.
But how do those local businesses get started? Or grow?
Local banks, such as our own Virginia National Bank, think about — and act on — local investment all the time. They see and help make the connection between local ideas by entrepreneurs and the way to bring those ideas to reality. VNB —and banks like it in other areas — help fuel the kinds of investments that spur cultural and commercial expansion, job creation and even infrastructural developments in our own communities.
Most of all, by investing locally, VNB is one of the key anchors that allows what’s truly unique about an area to shine, even if their work is less immediately evident than the fantastic shop they gave a loan to, or the great winery they helped kickstart, or even those amazing organizations they help support as part of their local giving.
And as the key sponsor of my radio show, Real Life with Jennifer Till, that last one is particularly important to the work we’re doing in trying to bring new, unique and compelling ideas and issues to the public. We’re grateful for their support, a support that is much more likely to come from a local sponsor than a large corporate one, at least at this scale.
Recently on my show I talked with VNB’s Glenn Rust about hometown banking and just what a valuable role it provides for a community. He helped fill in the blanks on what local banking is all about, and why it’s so crucial to the strength of any community for investments to start local and stay local.
I hope you’ll give it a listen and consider the bigger issues surround local economies that are so critical to the growing go local movement.
–Jennifer Till, Real Life with Jennifer Till