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Greenback-Gold Returns and Expectations of Resumption, 1862-1879


  • Gregor W. Smith

    () (Queen's University)

  • R. Todd Smith

    () (University of Alberta)


We propose a unified framework for studying the greenback-gold price during the U.S. suspension of convertibility from 1862 to 1879. The gold price is viewed as a floating exchange rate, with a fixed destination given by gold standard parity because of the prospect of resumption. We test this perspective using daily data for the entire period, and measure the effect of news during and after the Civil War. New evidence of a decline in the volatility of gold returns after the Resumption Act of 1875 provides statistical support for the importance of expectations of resumption.

Suggested Citation

  • Gregor W. Smith & R. Todd Smith, 1996. "Greenback-Gold Returns and Expectations of Resumption, 1862-1879," Working Papers 1255, Queen's University, Department of Economics.
  • Handle: RePEc:qed:wpaper:1255

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    References listed on IDEAS

    1. Burdekin Richard C. K. & Langdana Farrokh K., 1993. "War Finance in the Southern Confederacy, 1861-1865," Explorations in Economic History, Elsevier, vol. 30(3), pages 352-376, July.
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    Cited by:

    1. Maurice Obstfeld & Alan M. Taylor, 2003. "Sovereign risk, credibility and the gold standard: 1870-1913 versus 1925-31," Economic Journal, Royal Economic Society, vol. 113(487), pages 241-275, April.
    2. William A. Bomberger & Gail E. Makinen, 2010. "Seigniorage, Legal Tender, And The Demand Notes Of 1861," Economic Inquiry, Western Economic Association International, vol. 48(4), pages 916-932, October.
    3. Jean-Sébastien Pentecôte & Marc-Alexandre Sénégas, 2003. "Comment fixer les cours de change?. Annonces et correspondances maastrichtiennes," Recherches économiques de Louvain, De Boeck Université, vol. 69(1), pages 39-71.
    4. Meulemann, Max & Uebele, Martin & Wilfling, Bernd, 2014. "The restoration of the gold standard after the US Civil War: A volatility analysis," Journal of Financial Stability, Elsevier, vol. 12(C), pages 37-46.
    5. Smith, Gregor W., 1995. "Exchange-rate discounting," Journal of International Money and Finance, Elsevier, vol. 14(5), pages 659-666, October.
    6. 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.

    More about this item


    greenbacks; gold standard; regime switching;

    JEL classification:

    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913


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