>>Nor is it clear that wildcat banks are the summation of all historical experience of privately issued money. George Selgin of the Cato Institute, a libertarian think-tank, has likened the use of wildcat banking by critics of private-money issuance to the use of Germany’s interwar hyperinflation by critics of central-bank money issuance: both are extreme and negative examples, rather than representative. Scotland’s free-banking system between 1716 and 1844, for instance, is often cited as a period of stability. Three large banks and several smaller lenders all issued currency and redeemed each other’s notes at their full value.
>>Furthermore, at least some of the problems with American free banking may have reflected poor regulation rather than a total absence of it. Banks were often not allowed to have networks of branches and interstate banking was near-impossible, which limited the expansion of successful and trusted institutions. Many were also made to hold volatile state bonds as collateral. Slumps in the value of these could—and did—spark local banking crises.
In addition to the fact that it was the lack of freedom in banking that caused most wild banks in the so-called free banking era of the US, Selgin provides statistics showing that wildcat banks were actually very rare, with the pervasiveness of the phenomenon greatly exaggerated by the popular narrative that individuals in the regulatory sector, who are advocating for more centralization, promulgate, and use to justify their agenda.