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The 2019 keynote address offers an important opportunity for economic historians and policy makers to better understand the nuances associated with Detroit’s recent financial problems, ultimate bankruptcy, and its broader implications for state and local governments in general. This episode is not unprecedented in US economic history, nor is it in all likelihood the last instance of large-scale municipal bankruptcy that will occur. However, the Detroit story offers both a cautionary tale and a tale of hope centered on a path toward rebounding after financial hardship. This same story can be said of the history of US municipal bankruptcy. A major episode in particular came in the wake of the Panic of 1873 and culminated in default or repudiation of nearly 20 percent of all municipal debt (Albert Hillhouse 1936). While the problems that emerged through the nineteenth century were marked by overinvestment in public works, and especially railroad construction (Hillhouse 1936), today’s issues stem much more from unfunded liabilities that have accrued to state and local public pension systems. These unfunded liabilities have been estimated to range between $1 and $4 trillion depending on the underlying assumptions employed (Urban Institute 2018).

Wild Cat banking was only one of the factors behind the collapse of Michigan’s banking system and the state’s subsequent fall into a deep and prolonged depression. The Wild Cat period was brief, less than a year; the number of Wild Cat banks was small, perhaps a dozen; losses to note holders due specifically to Wild Cat banking would have been only about $350,000 had it not been for an interference with contract; and, there is little evidence that Wild Cat bank notes ever had a general circulation. This study argues that the Wild Cats gained the level of notoriety that they did mainly because of other events, including the state’s interference with contract. The interference first delayed and then completely undermined the collection of the debts owed to the Free Banks of the state and, in so doing, undermined all the Free Banks of the state, whether reckless or not.