One of the main factors preventing growth in recent centuries for most of the towns and villages on the south shore of Iceland was the difficulty of building a harbor or even a small dock on the sandy shoreline. Even though the communities on the south shore had access to fertile fishing grounds, bringing the catch to town was always a problem. Notwithstanding this fact, attempts were made to build a harbor, and in the 16th century, Eyrarbakki imported goods from Denmark as it was a location for one of the stores in the notorious Danish–Icelandic Trade Monopoly. The stores and trading were also the reasons for the village's origin.
Eyrarbakki was once the largest and busiest town in Iceland
Even after the Danish–Icelandic Trade Monopoly was abolished, trading continued at Eyrarbakki up until the early 20th century. Thus, the town was an important trading village for centuries. It was even one of the largest trading towns in Iceland for decades, as it served most of the south coast stretching east to Höfn. At one point, it was one the busiest towns in the whole country, but the lack of conditions for a good or large harbor was a major obstacle to growth. And after a bridge was built on the river Ölfusá in the late 19th century, its fate was sealed.
A village that came to a standstill in time
Eyrarbakki attempted to grow into a fishing town after losing its role as a trading post. Obviously, the same obstacle, unfriendly and almost impossible natural conditions for a harbor, always prevented growth based on the fish and rich fishing grounds. Other resources to develop the town did not appear, and at that time, Icelanders were focused on the herring frenzy in the Northern and Eastern regions. In the third and fourth decades of the 20 century, the small village basically came to a standstill.
Eyrarbakki is like a museum town for Iceland
Today Eyrarbakki is interesting because of all the old houses and their history. The town is of great historical value to Icelanders, and a lot of people, fortunately, had the resources and will to renovate the houses and make them their homes or summerhouses after the decline. Attempts were made in the fifties up until the eighties to build a fishing industry without result. At one point, the main prison in Iceland was built in the village, and that prison is still the central prison in the country's penitentiary system. In recent years, tourism has kicked in as a livelihood for the residents, and with better roads, bridges, cars, and transportation, the distance to Reykjavík has shortened. Some residents seek employment in Selfoss or Reykjavík.
Eyrarbakki is a small community in a larger municipal
The town of Eyrarbakki is a nice little community to live in. Because of its history, it has one of the oldest primary schools in Iceland. The village is now part of the municipal Árborg, which includes the small nearby village of Stokkseyri and the town of Selfoss, in addition to the surrounding agricultural communities.