Banknotes

Banknotes
A currency commonly issued by private banks in the 1800s to match newly
created goods and services; often to help create new businesses.
Banknotes were usually never backed by gold or silver, but rather, they
matched newly created goods and services.

Banknotes were often used alongside other currencies such as state
currency and US currency. New banknote currency was often printed and
lent directly into the construction of a new business or expanding
industry. Some local banks printed too many banknotes too quickly. Those
banknotes would suffer inflation and their banks would fail. Usually
there were constraints as to how many new banknotes a bank could print,
often determined by the bank's Board of Directors.

Most banks printed banknotes prudently, however, only to match the
creation of valuable new goods and services for the town (i.e.: new
farms, blacksmiths, general stores, tanneries, log mills, etc). People
could buy and sell using these banknotes as currency, which thereby
allowed people in a local town to have more money. The more new goods
and services created in a town, the more new currency could be printed
without causing inflation. Likewise, more new people arriving in a town
allowed for more banknote currency to be printed without causing inflation.