Labor notes, a unique monetary experiment in early nineteenth-century England, bore a face value equivalent to a certain number of hours of work. The notes were the brainchild of Robert Owen (1771–1858), a successful textile manufacturer in England who rose to fame as a utopian socialist reformer at the beginning of the Industrial Age. He is famous in the United States for involvement with New Harmony, Indiana. In 1825 Owen purchased 30,000 acres of land in Indiana and launched New Harmony as a cooperative society, a project that would cost him 80 percent of his fortune before he abandoned it.
In 1832 Owen was publishing a penny journal, The Crisis, in which he publicized his plan to form an association for the exchange of all commodities upon the principle of the numbers of hours of labor embodied in each commodity. All commodities that required the same amount of labor to produce were to be traded evenly, and other commodities were to be exchanged at ratios ruled by the number of hours of labor required to produce each one. If it took two hours of labor to produce product A and one hour of labor to produce product B, then it took two units of product B to purchase one unit of product A. Owen adapted his plan from the labor theory of value, a widely accepted concept among nineteenth-century economists, which held that all value comes from labor.
To carry out his plan, Owen opened the Equitable Labor Exchange on 3 September 1832 at a building called the Bazaar on Gray’s Inn Road, London. Producers and manufacturers brought goods to the exchange, and received in return labor notes equal to the amount of labor required to produce the goods. The labor notes could be used to buy other goods at the exchange, which were priced based upon the hours of labor that went into producing each good. Exchanges opened in different regions, and one of the largest was in Birmingham, where two series of labor notes were issued in denominations of 1, 2, 5, 10, 50, and 80 labor-hours.
The exchanges were short-lived. It was a utopian idea that could not compete with a market system that incorporates all the available information that affects the prices of goods and services. Owens closed down the London exchange in March 1834 and paid off a 2,000-pound deficit the exchange had run up.