The National Bank Act of 1863, an endeavor to assist in the debt financing of the Civil War, made matters worse by requiring that national bank notes be collateralized by federal government securities. In effect, Congress put a limit on the ability of banks to honor currency demands above the amount that could be collateralized by these specific bank assets.
The inflexibility of currency to seasonal demands, especially those associated with the harvest, put severe strains on financial centers. Writing in 1910 for the National Monetary Commission, whose report was instrumental in the creation of the Federal Reserve System, Edwin Kemmerer noted, "The evidence …points to a tendency for panics to 1 occur during the seasons normally characterized by stringent money markets."