Circulating Interest-Bearing Currency: An Arkansan Experiment, 1861-1863
AbstractDuring the Civil War the Arkansas legislature funded their expenditures primarily through interest-bearing warrants and war bonds. After these issues were made legal tender in November 1861, the discount attributed to them disappeared immediately and they began to circulate widely. In mid-1862 they were being accepted on par with specie even when Confederate notes - which were also made legal tender in November 1861 - were taken only at a substantial discount. This dominance of legal tender interest-bearing currency is consistent with legal restrictions theory. Confederate notes supplanted the Arkansas issues only after the legislature suspended interest payments in November 1862.
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Bibliographic InfoPaper provided by Claremont Colleges in its series Claremont Colleges Working Papers with number 2003-04.
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Legal restrictions; interest-bearing currency; state finance;
Find related papers by JEL classification:
- N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-
- N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-04-09 (All new papers)
- NEP-CBA-2003-04-09 (Central Banking)
- NEP-FIN-2003-04-09 (Finance)
- NEP-HIS-2003-04-09 (Business, Economic & Financial History)
- NEP-IFN-2003-04-09 (International Finance)
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