Utopia for Realists by Rutger Bregman

Author:Rutger Bregman
Language: eng
Format: epub, azw3
Publisher: The Correspondent
Published: 2016-08-04T04:00:00+00:00

When Bankers Struck

“CLOSURE OF BANKS.”

On May 4, 1970, this notice ran in The Irish Independent. After lengthy but fruitless negotiations over wages that had failed to keep pace with inflation, Ireland’s bank employees decided to go on strike.

Overnight, 85% of the country’s reserves were locked down. With all indications suggesting that the strike could last a while, businesses across Ireland began to hoard cash. Two weeks into the strike, The Irish Times reported that half of the country’s 7,000 bankers had already booked flights to London in search of other work.

At the outset, pundits predicted that life in Ireland would come to a standstill. First, cash supplies would dry up, then trade would stagnate, and finally unemployment would explode. “Imagine all the veins in your body suddenly shrinking and collapsing,” one economist described the prevailing fear, “and you might begin to see how economists conceive of banking shutdowns.”6 Heading into the summer of 1970, Ireland braced itself for the worst.

And then something odd happened. Or more accurately, nothing much happened at all.

In July, the The Times of England reported that the “figures and trends which are available indicate that the dispute has not had an adverse effect on the economy so far.” A few months later, the Central Bank of Ireland drew up the final balance. “The Irish economy continued to function for a reasonably long period of time with its main clearing banks closed for business,” it concluded. Not only that, the economy had continued to grow.

In the end, the strike would last a whole six months – 20 times as long as the New York City sanitation workers’ strike. But whereas across the pond a state of emergency had been declared after just six days, Ireland was still going strong after six months without bankers. “The main reason I cannot recollect much about the bank strike,” an Irish journalist reflected in 2013, “was because it did not have a debilitating impact on daily life.”7

But without bankers, what did they do for money?

Something quite simple: The Irish started issuing their own cash. After the bank closures, they continued writing checks to one another as usual, the only difference being that they could no longer be cashed at the bank. Instead, that other dealer in liquid assets – the Irish pub – stepped in to fill the void. At a time when the Irish still stopped for a pint at their local pub at least three times a week, everyone – and especially the bartender – had a pretty good idea who could be trusted. “The managers of these retail outlets and public houses had a high degree of information about their customers,” explains the economist Antoin Murphy. “One does not after all serve drink to someone for years without discovering something of his liquid resources.”8

In no time, people forged a radically decentralized monetary system with the country’s 11,000 pubs as its key nodes and basic trust as its underlying mechanism. By the time the banks finally reopened in November, the Irish had printed an incredible £5 billion in homemade currency.

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