Pet banks
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Pet Banks is a degrading term for state banks selected by the U.S. Department of Treasury to receive surplus government funds in 1833, when President Andrew Jackson "killed" the Second Bank of the United States. The term implied that the state banks were controlled by Jackson. By 1836 there were 89 "pet banks" or state banks with US Treasury funds[citation needed]. The term gained currency because most of the banks were chosen not because of monetary fitness but on the basis of the spoils system, which rewarded political allies of Andrew Jackson[citation needed].
Most Pet Banks eventually lost money and failed[citation needed]. The Pet Banks and smaller "wildcat" banks flooded the country with paper currency. Because this money became so unreliable, Jackson issued the Specie Circular, which required all public lands to be purchased with metallic money. This contributed to the Panic of 1837 where there was a major dip in the economy due to the increased debt created by this banking system[citation needed].
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