This makes no sense: "adding nation wide collections when someone only wants to see local collections would make the card catalog useless"
Jane is searching for "local" info.
She would type in Amsterdam, NY in the card catalog. The card catalog would reference U.S. City Directories.
A person searching for just NY would also get a reference.
A person searching for just USA would also get a reference.
A person searching for directories would get a reference.
Everyone wins. What's the downside?
You do understand that one resource can be cataloged multiple ways, right?