Wildcat bank was the name for unstable banking institutions that issued paper money called wildcat currency. They operated under state charters, particularly in the South, during the early and middle 1800’s. Wildcat banks became especially numerous and irresponsible after President Andrew Jackson’s successful struggle against the Second Bank of the United States.
The Bank of the United States used its influence to restrain state banks from issuing more paper money, or wildcat currency, than their assets would justify. In 1833, Jackson succeeded in withdrawing government deposits from the Bank of the United States. Jackson’s victory so crippled the bank that it could no longer restrain the state banks. Many banks, especially those in the South and West, then issued unreasonably large amounts of paper money, and they lent it freely on the flimsiest security.
As a result, this caused a money inflation, followed by a period of wild speculation in Western land. The situation finally alarmed Jackson, who then issued his famous Specie Circular, ordering government agents to accept nothing but gold and silver in payment for public lands. In consequence, many of the wildcat banks were unable to meet the demands made on them and failed abruptly. These bank failures contributed to the serious financial panic in 1837.
