The potential for public banking—or managing taxpayer funds through publicly controlled financial institutions rather than private banks—first became real to me in the office of my city council member in the spring of 2019. A group of us had fanned out through City Hall to speak with every member of the council about the benefits of establishing a Philadelphia Public Bank. The staffer we were chatting with was new to the idea, and grew more and more interested. “The council person would really like this idea,” he said. “It’s good for the common people. It’s good for the city budget. I’m going to talk with her about it. I think she’ll want to support it.” In that moment, the concept of public banking, which I found compelling and had been promoting informally for years, became not just another good idea but an attainable goal.
It’s been a puzzle to know how to best organize around economic issues. Once we’ve identified our economic system—and, more particularly, the financial system—as the root of so many of our problems, what do we do next? Transforming the economy is too big to easily build campaigns around, and the number of people who can be mobilized purely on ideological grounds is small. While Occupy Wall Street was a great national teach-in on wealth inequality, including a critical understanding of the importance of democracy, it didn’t offer enough focus or program to keep people in motion.
With an eye open to possibilities, I jumped at the opportunity to attend the founding conference of the national public banking movement, conveniently held in Philadelphia in 2012. The idea that our public money should be kept under the control of the public and used for the public good, rather than deposited in private banks to be used for private gain, was compelling. The reality that we have our own public banking model—in the 100-year-old state Bank of North Dakota—was grounding. We were all blown away by a 12-year-old from Canada who told their country’s story: how the creation of a national bank in the 1930s allowed them to build critical social, health, and economic infrastructure; how a political change in the early 1970s moved control of that wealth to the private sector; and how billions of dollars that could otherwise have been used for public good have since been siphoned off to private banks.
This is the situation we face in the United States. Currently, private banks create all the money in circulation—except for the bills and coins issued by the Treasury—by making loans. The Federal Reserve is a network of private banks with a special relationship to the Treasury. Interest on our growing federal deficit is paid to banks that hold Treasury notes. When banks become “too big to fail,” it is our tax dollars that bail them out. It’s clear that we have to address control of the money supply in order to solve a host of social, equity, and climate issues. Yet, where can we get the leverage to make such a massive transformation?
The distinction between revolutionary and reformist reforms can help us here. Revolution could be framed as transformation of our money system from one that is privately managed for profit to a democratically managed public utility. Visionary federal legislation to do this has been proposed, but the frame is too abstract to attract popular support. We can’t get from here to there without some steps in between.
There are many things we can do to make our current economic system more bearable and fair within the context of the current system: raise the minimum wage, oppose predatory lending, strengthen the social safety net. These “reformist reforms” are all important and totally worth doing. And any reform that builds grassroots solidarity and momentum helps create the conditions for demanding more. But in and of themselves, they don’t challenge the power dynamics that are built into a system that privileges the accumulation of private wealth at the expense of all other life on the planet.
A “revolutionary reform” is like a wedge into the power status quo, and I see public bank campaigns as playing this role. They provide a tangible local hook around which to organize, while calling into question the root issue around power and control. They get people thinking about the big questions: Why should our taxpayer dollars be held by private banks to be invested in their own interests when we have pressing needs at home? Why should half the cost of long-term public borrowing go to paying back interest to private bondholders? Why don’t we have control over our common wealth? A public banking campaign doesn’t go all the way. It doesn’t directly challenge the rights of private banks to essentially own our nation’s money supply. But it’s a clear step in that direction, and one that ordinary people can get excited about taking.
The potential of public banking as a popular issue was made clear in Los Angeles in 2018. That story started with an earlier activist campaign to get the city to divest from fossil fuels. Voters approved this measure, but the city discovered that all the banks that were big enough to handle its money were complicit in fossil fuel investment. There was no place they could move the money to. The City Council president acted that summer to put a referendum on the fall ballot to establish a public bank. With only a few months in which to organize, the divestment group pivoted to an all-out campaign to support the referendum. They did an outreach and social media blitz and got endorsements from hundreds of civic, labor, and other community groups. Measure B received over 44% of the votes, with 430,488 Angelenos voting yes to a public bank. This was not enough for a win, but it was an astonishing achievement from a grassroots, volunteer-run campaign with minimal funding—and it laid the foundation for a series of advances in the establishment of a structure for creating public banks throughout California.
As I became involved in the Philadelphia Public Banking Coalition and started talking with people around the city about the potential of a public bank, I had the same experience of people catching on immediately. They had just never considered that there might be an alternative. We led an information session with the Philadelphia Urban Coalition, a group of mostly Black church leaders who resonated strongly with the message that it’s just not right for big banks to use our public money to maximize their profits when great needs in the city are unmet for lack of financial resources.
Several of us went to our local farmers market on a series of Saturdays through the next summer, gathering petitions for a public bank. Everyone who was willing to talk not only got the logic of the concept right away, but was grateful to know about the campaign and eager to support it. Later, when we reached out to local community organizations to offer information sessions, the concept always made intuitive sense.
Fortunately, our coalition has not only engaged in community outreach efforts, but worked the inside track in City Hall. From the beginning, we have had a strong ally in City Councilmember Derek Green, and have worked closely with him over the years. One of our members, who used to work as legal counsel for City Council, actually drafted the legislation that Green introduced in January 2021 with a veto-proof majority—the result of a vigorous lobbying campaign on our part. Since then, we have continued our dual strategy of gathering more community support and working with the legal and financial departments in City Hall to hash out the details. We are working particularly hard on building in a democratic governance structure to ensure that the bank is not only insulated from political influence, but rooted in the communities it is meant to serve.
The public banking movement all across the country has experienced a groundswell since 2019, and it continues to rise. The question now is not whether there will be another U.S. bank to join the Bank of North Dakota, but when. Philadelphia is joined by the California Bay Area and Los Angeles in a race to establish our first municipal public bank. After years of dreaming and hard work, the goal of having legislation in place before the end of 2021 seems like a real possibility.
Of course, that’s not the end of the story. A reform, revolutionary or not, is still a reform. But it’s more than just an improvement in the conditions of those who suffer under our current deeply inequitable and unjust economic system. It’s an opening wedge, a beginning of a transfer from private to public control of our financial system, a shift in the story line about who rightfully owns and controls our common wealth.
This article originally appeared in Waging Nonviolence. It has been lightly edited for YES! Magazine.
Pamela Haines is a writer, workshop leader, and speaker with a common theme of demystifying the connections between economics and daily life, while challenging people to claim their power and act on their values. Lead author of Toward a Right Relationship with Finance; Interest, Debt, Growth and Security, her latest book is Money and Soul. She is also active in building leadership capacity in early childhood education, has a passion for the earth, loves repair of all kinds, and blogs at pamelalivinginthisworld.blogspot.com.