In 1970s Ireland, Pubs Briefly Replaced Banks — and It Worked

In theory, almost any business could strike at any moment. But there are certain industries most of us could hardly imagine functioning without on a daily basis, and one of them is banking. In 1970, Ireland’s citizens got a taste of life without bank tellers when most of the nation’s banks closed for roughly a year. One might think that meant the day-to-day transactions that keep any capitalist society in motion came to a sudden halt, but guess what? They didn’t. Another staple industry in Irish society decided to pick up the slack and allow its clientele to manage and borrow their money on-premise: the pubs.

The Strike Ensues

Between 1966 and 1976, three separate Irish banking strikes took place. But the strike of 1970 was the longest, with banks closing in early May and staying shuttered through mid-November. Even before the banks closed, Irish bank staff members were working short hours, and uncleared checks were piling up. By the time the banks reopened in November, there was so much catching up to do that business as usual didn’t resume until February of ‘71, so banking was disrupted for essentially an entire year.

A number of saving graces did soften the blow of the bank strike. The U.K. pound was widely accepted in Ireland at the time as it had a fixed one-to-one exchange rate with the Irish pound, so anyone traveling into Ireland from immediate neighboring countries could help bring cash into circulation. Also, not every bank was closed. Non-associated banks and the Postal Office Savings Bank remained open, albeit with a very limited branch network. That meant while many large businesses were able to continue banking via banks in Northern Ireland and Great Britain, smaller businesses and households generally didn’t have the networks necessary to do so. So while the supply of physical money shrank up nationwide, day-to-day trade and industry operations carried on more or less unscathed — and that’s where the pubs came in.

Banking Behind the Stick

Roughly 23,000 pubs and shops stepped in to fill the functional role of banks on behalf of their local communities. These businesses’ already-strong threads within the social fabric of their neighborhoods allowed them to adequately manage risk and enforce contracts to the standard of an actual bank. And since people were still drinking and purchasing goods at these establishments during the strike, these businesses often had cash on hand.

Pub-goers would bring their salary payments into the pub and convert them into cash from the register, often hanging out for a few pints afterward. While nobody knew exactly when the strike was going to end, pub owners were generally optimistic and willing to trust that their regulars’ checks would be honored post-strike.

“[I’m] holding cheques for thousands of pounds, but I’m not worried,” publican John Dempsey told the Bank of England during the strike. “The last bank strike went on for 12 weeks and I didn’t have a single ‘bouncer.’ I deal only with my regulars; I refuse strangers. I suppose I’ve been able to keep a few local factories going.”

Early on, people were writing checks on legitimate check paper, but once those dried up, they made due with any piece of paper. Sometimes folks would slap a postage stamp on ordinary paper to make it appear more legitimate, but when the postage stamps grew scarce, trusted pub regulars would scribble IOUs on spent cigarette packages, napkins, and basically anything that could hold ink.

At this point, pubs were arbiters of actual loans. Pub owners also often had a reasonable idea of their patrons’ level of income, net worth, and reliability in paying bar tabs, putting them in what could be seen as an even better position than a bank lender to evaluate the overall risk profile of a borrower. This ultimately paved the way for an unofficial, off-the-books system of borrowing, lending, and check-cashing that managed to keep the whole country of Ireland afloat for the year-long duration of the bank shutdown.

By the end of the strike, it’s estimated that about 10 million checks and IOUs worth 3 billion Irish pounds were in circulation without any certified bank backing. And somehow, only 750 fraud investigations resulted from the fray.

What Is Money, Really?

It’s safe to say that the Irish economy suffered following the strike, but thanks to the pubs and shops that stepped up, it didn’t collapse. The publican- and shopkeep-to-customer trust kept most affairs in check, but hiring slowed, and businesses had trouble gathering the funds to pay their staff. According to the Central Bank of Ireland’s “Survey of Economic Effects of Bank Dispute 1970,” 60 percent of firms reported having to divert staff to maintain alternative financial arrangements. Consequently, large corporations had to dial back on their ambitions and overall output for that year. All told, the benign effects of the 1970 bank strike suggest the physical dollar’s legitimacy only comes from the value we prescribe it. Checks and IOUs written on spent cigarette packages may have been a bit messy, but they served the same purpose as legal tender.

It’s unlikely that the Irish pub-bank swap would be successful today, given that bar regulars are a dying breed and most monetary transactions now happen digitally. But after recent issues with bank failures in Silicon Valley and elsewhere, it’s comforting to be reminded that financial systems and businesses are ultimately founded on interpersonal relationships — from the largest international bank to the sleepiest small-town pub.

*Image retrieved from Isabella – stock.adobe.com

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