US banking instability in the late 19th century stemmed from peculiar regulations: branching restrictions across and within state lines left banks undercapitalized and underdiversified, and the National Banking Acts' ceiling on banknote issuance created an 'inelastic currency.' When fall farm-labor payments required currency that banks couldn't supply as new notes, depositors drained reserves instead, country banks pulled reserves from cities and cities from New York, producing panics—events absent in countries without such legal restrictions.