Wildcat banking

Operating in remote locations with limited or absent financial infrastructure, wildcat banks supplied a medium of exchange in the form of bearer notes that they issued on their own credit.

[5][6] A third explanation relates to an act of the Missouri Territory in 1816 to incentivize the killing of wolves, panthers, and wildcats near inhabited areas.

For each animal scalp, a person would be compensated with a certificate bearing some monetary value, which was accepted as legal tender for the payment of local taxes.

Country bankers soon understood that distance from the city was an advantage, since notes that found their way to Boston did not easily return for payment.

In the mid-1800s businessman Andrew Dexter Jr. acquired interests in several of these remote banks to support his construction of a central money exchange in Boston.

[7] When the scheme unraveled in 1809, the Berkshire Bank received more notes for payment in one day than the entire amount outstanding on its books.

The burning of Washington in late 1814 during the War of 1812 prompted bank runs across the eastern seaboard and the suspension of specie payments by state governments.

City governments and every sort of business resorted to paying their expenses with notes and shinplasters, and the expansion of money could not easily be reined in after the war had ended.

[9] The urgent need to restore coins to circulation was one argument in favor of creating a Second Bank of the United States.

[9] Unchartered banking associations were created in the western regions of Virginia and Pennsylvania to supply the credit needs of local settlers,[12] as well as in Kentucky and Ohio.

This, along with the failure of domestic businesses involved in cotton production, produced the Panic of 1837 and an economic depression lasting roughly five years.

Businesses, especially in the west, found it difficult to obtain the hard money to which they had been accustomed and turned to creative methods of finance.

Commissioner Alpheus Felch recalled that one bank's "cash reserves" consisted of boxes of nails and glass topped with silver coins.

The Ohio Railroad company, established in 1835 to build along the coast of Lake Erie, immediately used a permissive clause in its charter to begin issuing credit notes, which it redeemed from its state funding.

The company's failure left several hundred thousand dollars in worthless currency and an unusable track built upon wooden pilings.

[24] The laws of Indiana and Wisconsin allowed bankers to start business with minimal capital and accepted discounted state bonds at their face value as a security deposit.

[29] In the Swedish movie The New Land (1972), the character Robert is paid in wildcat notes, which is later discovered by his brother Karl Oskar.