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[Footnote: Annals of Cong., 16 Cong., I Sess., 446.] The policy of
the government fostered reckless purchases of public land. In the
critical times of the closing years of the war, the treasury agreed
to accept the notes of state banks in payment for lands, on
condition that these banks should resume specie payment; and then
the banks, while taking only nominal steps towards resumption,
loaned their paper freely to the settlers and speculators who wished
to invest in the public domain.
Under the credit system already mentioned, the pioneer was tempted
to exhaust his funds in making his first partial payment, and to
rely upon loans from some "wild cat" bank wherewith to complete the
purchase of the hundred and sixty acres, the smallest tract offered
under the terms of the law; planters, relying equally on the state
banks, bought great tracts of land at absurd prices; speculators,
tempted by the rapid rise in land values and by the ease of securing
loans, purchased large quantities in the hope of selling before it
became necessary to complete their payment.


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