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Interest Rates in the Civil War South

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  • Davis, George K.
  • Pecquet, Gary M.

Abstract

Interest rates in the Civil War South were quite stable and even declined a bit during the war. In this article we explain the mechanism that produced this puzzling result. The existence of a fixed-rate call certificate redeemable at par anchored interest rates expressed in terms of Confederate dollars. When expressed in terms of gold, they were volatile, high, and reflected war events.

Suggested Citation

  • Davis, George K. & Pecquet, Gary M., 1990. "Interest Rates in the Civil War South," The Journal of Economic History, Cambridge University Press, vol. 50(1), pages 133-148, March.
    • Handle: RePEc:cup:jechis:v:50:y:1990:i:01:p:133-148_03
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    Citations

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    Cited by:

    1. Mitchener, Kris James & Oosterlinck, Kim & Weidenmier, Marc D. & Haber, Stephen, 2015. "Victory or repudiation? Predicting winners in civil wars using international financial markets," Journal of Banking & Finance, Elsevier, vol. 60(C), pages 310-319.
    2. John Landon-Lane & Kim Oosterlinck, 2005. "Hope springs eternal… French bondholders and the Soviet Repudiation (1915-1919)," Departmental Working Papers 200513, Rutgers University, Department of Economics.
    3. Oosterlinck, Kim, 2003. "The bond market and the legitimacy of Vichy France," Explorations in Economic History, Elsevier, vol. 40(3), pages 326-344, July.
    4. Gary M. Pecquet & Clifford F. Thies, 2006. "Texas Treasury Warrants, 1861-1865: A Test Of The Tax-Backing Of Money," Eastern Economic Journal, Eastern Economic Association, vol. 32(2), pages 191-203, Spring.
    5. Lacroix, Jean & Mitchener, Kris James & Oosterlinck, Kim, 2023. "Domino Secessions: Evidence from the U.S," CAGE Online Working Paper Series 676, Competitive Advantage in the Global Economy (CAGE).
    6. Foley-Fisher, Nathan & McLaughlin, Eoin, 2016. "Sovereign debt guarantees and default: Lessons from the UK and Ireland, 1920–1938," European Economic Review, Elsevier, vol. 87(C), pages 272-286.
    7. Richard C. K. Burdekin & Marc D. Weidenmier, 2003. "Suppressing Asset Price Inflation: The Confederate Experience, 1861--1865," Economic Inquiry, Western Economic Association International, vol. 41(3), pages 420-432, July.
    8. Kim Oosterlinck & John Landon-Lane, 2006. "Hope springs eternal - French bondholders and the Soviet repudiation (1915-1919)," Post-Print CEB, ULB -- Universite Libre de Bruxelles, vol. 10(4), pages 507-535, December.
    9. Kim Oosterlinck, 2003. "Why do investors still hope? The Soviet repudiation puzzle (1918-1919)," Working Papers CEB 03-010.RS, ULB -- Universite Libre de Bruxelles.
    10. Marc D. Weidenmier & Kim Oosterlinck, 2007. "Victory or Repudiation? The Probability of the Southern Confederacy Winning the Civil War," NBER Working Papers 13567, National Bureau of Economic Research, Inc.
    11. Pecquet, Gary M. & Thies, Clifford F., 2007. "Texas treasury notes and market manipulation, 1837-1842," Explorations in Economic History, Elsevier, vol. 44(1), pages 81-99, January.
    12. Cutsinger, Bryan P. & Ingber, Joshua S., 2019. "Seigniorage in the Civil War South," Explorations in Economic History, Elsevier, vol. 72(C), pages 74-92.
    13. Zhylyevskyy, Oleksandr, 2010. "The paradox of interest rates of the Greenback Era: A reexamination," Journal of Monetary Economics, Elsevier, vol. 57(8), pages 1026-1037, November.
    14. Gary Pecquet & George Davis & Bryce Kanago, 2004. "The Emancipation Proclamation, Confederate Expectations, and the Price of Southern Bank Notes," Southern Economic Journal, John Wiley & Sons, vol. 70(3), pages 616-630, January.
    15. Weidenmier, Marc D., 2000. "The Market for Confederate Cotton Bonds," Explorations in Economic History, Elsevier, vol. 37(1), pages 76-97, January.
    16. Bryan P. Cutsinger, 2021. "Forced savings and political malinvestment: an application of steve horwitz’s microfoundations and macroeconomics," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 34(2), pages 311-322, June.
    17. Marc D. Weidenmier, 2002. "Turning Points in the U.S. Civil War: Views from the Grayback Market," Southern Economic Journal, John Wiley & Sons, vol. 68(4), pages 875-890, April.

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