In one of the nation simulation games I play, there is a strange phenomenon going on that I thought would be worthwhile to discuss, as it demonstrates something of the nature of banking in the 19th century during the days of the Wildcat banks of Andrew Jackson and Abraham Lincoln’s time. And the phrase wildcat banking definitely applies here, because all three of the banks that I have seen sprout up have done so in response to a bit of a void that they sense in the market as well as the desire to make money (even virtual money) by doing so. Admittedly, I have not been particularly impressed so far by the professionalism shown by everyone involved in the bank so far, but even so there is definitely enough worth that it has been deeply amusing for me to observe what is going on there. Banks, when run in a competent manner, are not very enjoyable to watch. They are, to be sure, more reliable to invest in and more trustworthy, but they are not more fun. Incompetence is amusing and sometimes charming, even if it is seldom very profitable. Still, we take what blessings and enjoyment we get, I suppose.
One of the things to note about the three banks is that they are all only in slight competition with each other. All of the banks offer some of the same services but not all of them. For example, the first bank I got involved with offered savings accounts and bonds as well as shares, and I invested some speculative funds in both of those. The second bank offered auditing services, and being an auditor within the game, I offered my services for that as a moonlighting job within the game. The third bank I have not gotten involved with at all, as of yet, but it offers jobs for those willing to find raiding targets as well as services for raid targets for nations, which I think a nice touch. Admittedly when I was raiding I had no trouble finding good raiding targets myself, but apparently others need some help and there is good room for those who are willing and able to serve to help others do what they are not competent enough to do or are too lazy to do by themselves. Whether there is enough profit in doing so remains an open question, I suppose.
The reason why these three little banks exist is that there is a lower limit to what the larger banks are willing to do as far as loans and deposits. The only bank whose operations I had previously seen has a minimum deposit of $50 million in in-game currency, which is an amount that few nations except the largest ever have on hand, which means that only the big and wealthy nations engage in that sort of banking. It is obviously a large institutional bank used to dealing with whales and alliances, and does not find it worthwhile to deal with small nations and their issues. There is another group of banks I have heard about who deal in the next layer below, going down to about $5 million or so. Microbanks being run by people whose knowledge of in-game mechanics is a bit shaky–only one of the players involved is a seasoned one–is a bit dodgy of a proposition, but we will see how things go as far as profit is concerned.
It is worth noting that in real life things did not end up so well. The lack of restraint shown by the “pet banks” or “wildcat banks” ended up leading to a specie shortage which led to a prolonged depression in the late 1830’s that was fatal to the presidency of Van Buren and led to the election of the Whigs in 1840. This was during the period between the Second Bank of the United States ending in 1836, of course, and the establishment of the Federal Reserve in 1912, although it must be conceded that there was not any appreciably different behavior among bankers whether there was a officialish bank or not for the United States. Banks have made terrible decisions and been overextended and speculated grossly regardless of whether there was a national bank of a sort or not. And that is what we see here as well even in the world of fiction, for wherever there is the opportunity for people to speculate, there will be an interest in people to do so.