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The Emancipation Proclamation, Confederate Expectations, and the Price of Southern Bank Notes
Author(s) -
Pecquet Gary,
Davis George,
Kanago Bryce
Publication year - 2004
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.2004.tb00592.x
Subject(s) - proclamation , emancipation , settlement (finance) , liberian dollar , economics , work (physics) , economic history , political science , law , finance , engineering , mechanical engineering , politics , payment
We examine the behavior of a semimonthly series of the Confederate dollar price of bank notes. These notes traded at par with Confederate dollars from October of 1861 until November 5, 1862. We use a model of the demand for two currencies to argue that this departure from par results from altered Southern expectations after the 1862 Congressional elections assured the enactment of the Emancipation Proclamation. Previously, Southerners believed a win or a negotiated settlement would allow a return to the Union intact. When these expectations changed, bank notes appreciated against Confederate dollars. In addition, our empirical work shows that notes appreciated following Northern victories.