One of the first problems of the new state was finance. Since the amount of money in circulation was not sufficient to meet the demands of the increasing population, a system of state banks was instituted. State bonds were issued and public lands were sold to secure capital, and the notes of the banks, loaned on security, became a medium of exchange. Prospects of an income from the banks led the legislature of 1836 to abolish all taxation for state purposes. The Panic of 1837 wiped out a large portion of the banks' assets, leaving the state poor. Next came revelations of grossly careless and corrupt management. In 1843 the banks were placed in liquidation. After disposing of all their available assets, the state assumed the remaining liabilities, for which it had pledged its faith and credit.