Banknote prices in the United States prior to 1860

Warren Weber

No 629, Working Papers from Federal Reserve Bank of Minneapolis

Abstract: 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.

Date: 2003
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Published in Staff Report 344

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmwp:629

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