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Banknote prices in the United States prior to 1860


  • Warren E. Weber


This paper examines the pricing of statebank notes prior to 1860 using data on the discounts on these notes as quoted in New York, Philadelphia, Cincinnati, and Cleveland. The study is organized around determining whether these banknotes were priced consistent with their expected net redemption value. It finds a bank’s notes had higher prices when it was redeeming it notes for specie than when is was suspended. However, although prices generally varied inversely with redemption costs, the relationship was not tight and persistent arbitrage opportunities existed.

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  • Warren E. Weber, 2003. "Banknote prices in the United States prior to 1860," Working Papers 629, Federal Reserve Bank of Minneapolis.
  • Handle: RePEc:fip:fedmwp:629

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    1. Gorton, Gary, 1999. "Pricing free bank notes," Journal of Monetary Economics, Elsevier, vol. 44(1), pages 33-64, August.
    2. Ravikumar, B & Wallace, Neil, 2002. "A benefit of uniform currency," MPRA Paper 22951, University Library of Munich, Germany.
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