The U.S. has been able to sit back and watch as Europe struggles to hold its currency union together.
Americans can safely assume there is no danger Illinois, as bad as its finances are, will drop out and issue its own currency in "Lincolns."
It wasn't always so.
For a quarter of a century, America's states and territories, and the institutions within them, began circulating their own currency, as the agrarian mistrust of centralized banking eventually climaxed in the destruction of the Second Bank of the United States in 1832.
This period is well known among collectors and numismatists.
But for others — even within the banking industry itself — this period remains mostly unknown.
We wanted to shed some light on this colorful but important moment in the country's growth.
The story begins in 1832. President Jackson, an agrarian and hard currency advocate, is reelected and vetoes the rechartering of the Second Bank of the United States.
Next, Congress passes legislation that the government's funds would be held by local banks instead of a centralized reserve.
Source: Krooss/Samuelson
This worked fine initially, but soon inflation begins to climb as the banks extend their circulation.
Source: Hammond
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