Circulating Interest-Bearing Currency: An Arkansan Experiment, 1861-1863

Richard Burdekin () and Marc D. Weidenmier
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Marc D. Weidenmier: Claremont McKenna College

Claremont Colleges Working Papers from Claremont Colleges

Abstract: During 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.

Keywords: Legal restrictions; interest-bearing currency; state finance (search for similar items in EconPapers)
JEL-codes: N42 N21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-fin, nep-his and nep-ifn
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Persistent link: http://EconPapers.repec.org/RePEc:clm:clmeco:2003-04

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